There is an arbitration clause in my real estate development contract. And now?

Can I no longer file a lawsuit in court against the construction company?



You bought your property on the blueprint and everything was going well, until delivery was delayed, you discovered construction defects and now you want to sue the builder or developer in court. But when he went to read the contract, he discovered an arbitration clause that says that any and all disputes arising from that contract will not be settled in the judiciary, but in an arbitration process .

This scenario has been increasingly frequent. Several developers are placing arbitration clauses in property purchase and sale promissory contracts. However, the arbitration procedure is still not known to many lawyers, and even less to consumers. Thus, when surprised by the clause, the purchaser of the property must seek a lawyer familiar with the arbitration procedure to advise him. strives to be Pakistan's biggest real estate developer ever, guaranteeing the highest international standards, prompt execution, and lifetime customer loyalty. With projects like blue world city Islamabad

First, it is necessary to say that the purchaser of the property, generally, is not obliged to take their dispute to arbitration . This stems from some formal and material requirements that the law requires for the validity and effectiveness of the arbitration clause in the context of the purchase of a property in the plant. Let's see:

  1. Most promissory purchase and sale contracts for units of a building are adhesion contracts . This means that the buyer could not negotiate the terms with the developer. The arbitration law requires that the arbitration clause in an adhesion contract be written in bold and have a separate signature or visa just for it , or that it be written in a separate document from the contract ( Law 9307 , Art. 4, §2). Check if the clause of your contract meets these requirements, if not, its validity can be ruled out.
  2. The Arbitration Law also determines that arbitration clauses in adhesion contracts will only be effective if the adherent takes the initiative to institute arbitration ( Law 9307, 4, §2). In the context discussed here, the adherent is the buyer. Therefore, if the buyer does not want to take his case to arbitration and, instead, file a lawsuit in court, the jurisprudence has recognized the jurisdiction of the court despite the arbitration clause, respecting the buyer's will.

However, dismissing arbitration simply because of ignorance or the presumption that it is not good, since it was the company that included it in the contract, is not smart. It is worth talking to a lawyer who specializes in arbitration to analyze the suitability of the arbitration procedure for your case. Arbitrage has advantages that can be very interesting depending on what is most important to you.

Arbitration, for example, is usually faster than the judiciary, which can be decisive in the purchase of a property . A simple search of the court's websites proves that between the filing of the lawsuit and a decision on the appeal, real estate lawsuits typically take more than five years to resolve and the appeal is not the last possible resort. A couple with young children who want them to enjoy the building's playground may find themselves with teenage children when the process is over. Arbitrations, when extremely complex, usually last a maximum of two years. Simple lawsuits can be tried in six months. Procedures are flexible and adjustable to the parties.

In cases that depend on technical investigation, it is interesting to be able to call an engineer or an architect to be an arbitrator. The expertise of judges in arbitration provides a quality decision. In addition, the referees have time to appreciate each test and give a quality instruction. The hearing where the parties give their evidence can be extensive, unlike the judiciary, where each judge's agenda for hearings is tight.

Much is said about arbitration being more expensive than the judiciary, however, the cost of the judicial process from the beginning to the last instance can be quite high because, for each appeal, it is necessary to pay more costs. In addition, arbitration chambers are private companies that can even negotiate their fees. It is not always necessary to use large cameras. There are smaller chambers that adapt to smaller cases and offer more affordable price lists, offering a quality service. Your lawyer will be able to analyze the choice of chamber made in the contract or suggest an appropriate option.

In general, the analysis of the suitability of the case for arbitration will depend on the circumstances of the case, the interests of the parties and also the wording of the arbitration clause and the aspects outlined therein for a future arbitration process.

Finally, it is important to point out that the arbitration award is a judicial enforceable title, as well as the judicial award and can be executed normally, following the same rite of compliance with the award ( Law 9307 , Art. 31).


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