The ADGM Court of First Instance ordered specific performance of an AED 105 million sale and purchase agreement for land on Al Reem Island, holding the agreement binding and enforceable notwithstanding that it was signed on 24 December 2024 — the penultimate day of the transitional period during which the property remained on the Abu Dhabi Real Property Register rather than the ADGM Register. Ocean Pearl's defences of frustration and contractual nullity were rejected, and its counterclaim for forfeiture of the AED 21 million security cheque was dismissed. Costs followed the event on the standard basis. Three points give the judgment lasting significance. First, it authoritatively settles the conflict-of-laws architecture for ADGM real property disputes: lex fori (ADGM law) governs remedies, evidence and procedure, while lex situs (Abu Dhabi law, including applicable federal law) governs underlying land rights and validity. Second, it confirms that agreements concluded during the approximately 20-month transitional window created by section 157(2) of the ADGM Real Property Regulations 2015 — when Al Reem Island was within ADGM jurisdiction but its land remained on the Abu Dhabi Register — are fully enforceable; the section 26(3) migration mechanism under the 2024 Regulations was designed to transfer title, not to invalidate pre-existing obligations. Third, the decision reinforces that specific performance is the primary remedy for land sale defaults within the ADGM, with damages available only in lieu and at the court's discretion, reflecting the English equitable principle that land is treated as unique.
Decision
The court held the Agreement to be a binding and enforceable contract and ordered specific performance: Ocean Pearl must do all things necessary to complete the sale upon Al Khaleej tendering the purchase price. The counterclaim was dismissed in its entirety, including the claim for forfeiture of the AED 21 million security cheque. Al Khaleej was granted liberty to apply for further orders to give effect to the specific performance decree or, alternatively, to seek damages in lieu should performance prove unachievable. Costs were awarded to Al Khaleej on the standard basis, to be fixed summarily in the absence of agreement, with each party's proposed draft order (or an agreed draft) to be filed by 4.00 pm on 19 June 2026.
Facts
Cabinet Resolution No. 41 of 2023, issued and brought into force on 24 April 2023, brought Al Reem Island within ADGM's territorial jurisdiction with immediate effect pursuant to Article 1 of that resolution. The legislature did not, however, apply ADGM real property law simultaneously. Section 157(2) of the ADGM Real Property Regulations 2015 expressly disapplied those regulations to Al Reem Island land between 24 April 2023 and 31 December 2024, creating a deliberate transitional period of just under 20 months. The stated purpose was to allow those involved in Al Reem Island transactions adequate time to familiarise themselves with the new regime and to enable an orderly transfer of land registration from the Abu Dhabi system to the ADGM system. During that window, transactions on Al Reem Island continued to be governed by the Abu Dhabi Real Property Register regime, including Abu Dhabi Law No. 3 of 2005 and Abu Dhabi Law No. 19 of 2005. On 1 October 2024, the 2015 Regulations were replaced by the ADGM Real Property Regulations 2024. From 1 January 2025 the 2024 Regulations applied to all Al Reem Island land. Section 26(3) of the 2024 Regulations provided the mechanism for migrating title registrations from the Abu Dhabi Real Property Register to the ADGM Register. Once a proprietor was registered on the ADGM Register, section 22 of the 2024 Regulations made that registration conclusive evidence of ownership and conferred indefeasible title. On 24 December 2024 — one week before the transitional period expired and while the property remained on the Abu Dhabi Register — Ocean Pearl Real Estate Comp LLC, a Dubai-incorporated entity, contracted to sell Plot No. RS1-C5 (S1-C11) Shams-Reem Island on Al Reem Island to Al Khaleej Investment PSC, a company incorporated in Ras Al Khaimah, for AED 105 million. The Agreement was governed by the laws of the Emirate of Abu Dhabi including applicable federal laws. Al Khaleej paid a security cheque of AED 21 million on execution. Completion was contractually required within 90 days, by 24 March 2025, with the balance to be paid by manager's cheque on settlement. Settlement did not occur. Al Khaleej commenced proceedings (ADGMCFI-2025-143) claiming specific performance or, in the alternative, damages in lieu. Ocean Pearl denied being in breach, cross-claimed that Al Khaleej was itself in default, and sought declarations that the Agreement was null and void or unenforceable, together with forfeiture of the security cheque. The matter was heard on 10 February 2026.
Issues before the court
- Was the Agreement executed on 24 December 2024 — during the transitional period when the property remained on the Abu Dhabi Real Property Register — a binding and enforceable contract?
- Which law governed the substantive land rights (lex situs / Abu Dhabi law including applicable federal law) and which governed remedies, evidence and procedure (lex fori / ADGM law), and what did that bifurcation mean in practice for the relief available to Al Khaleej?
- Did the transition of the property from the Abu Dhabi Real Property Register to the ADGM Register frustrate the Agreement or otherwise render it null, void or unenforceable?
- Was Ocean Pearl estopped by convention from denying its obligations under the Agreement, and if so, was the additional element of unconscionability established on the facts?
- Was Al Khaleej entitled to specific performance of the land sale agreement under ADGM equitable principles, and was there any basis to decline that discretionary remedy in favour of damages?
The court's reasoning
The court's analysis proceeded through four interconnected steps. First, on the conflict-of-laws architecture, the court adopted and applied the framework established by Justice Sir Andrew Smith in Awad v 3AM Property Investment Company LLC [2025] ADGMCFI 0003. Drawing directly on Rule 3 and paragraph 4-01 of Dicey, Morris & Collins on the Conflict of Laws (16th ed. 2022), the court confirmed that all matters of procedure — including rules as to admissibility of evidence — are governed by the lex fori, namely ADGM law. Critically, the nature of available remedies is equally a matter for the lex fori: as Dicey makes clear, if the claimant is by the lex causae entitled only to damages but by English law entitled to specific relief, the latter is available in an English (and therefore ADGM) court; conversely, an ADGM court will not grant specific relief where to do so would be contrary to English law principles. That foundation meant Al Khaleej could invoke specific performance as an ADGM equitable remedy regardless of whether UAE substantive law would independently have afforded it. The obligation of the ADGM courts to apply the common law of England including equity flows from section 3(1) of the ADGM Application of English Law Regulations 2015, subject to sections 1(1)(a) and (b), which condition that application on the circumstances of the ADGM and any applicable modifications. The lex situs — Abu Dhabi law including applicable federal law as specified in clause 9(a) of the Agreement — governed the underlying land rights and the validity of the sale itself. The court drew further support from the UK Supreme Court's analysis in Kireeva v Bedzhamov [2025] AC 812 and from the Federal Properties Ltd v Ibrahim trilogy ([2025] ADGMCFI 0013; [2025] ADGMCA 0002; [2026] ADGCFI 0009), which confirmed the indefeasibility of title once registered on the ADGM Register under section 22 of the 2024 Regulations. Second, the court addressed the enforceability of the Agreement against the background of the transitional registration regime. Section 157(2) of the 2015 Regulations had disapplied ADGM real property law to Al Reem Island through 31 December 2024; the Agreement was signed on 24 December 2024 when the property was still on the Abu Dhabi Register. The court held, by reference to the purpose and structure of Cabinet Resolution No. 41 of 2023 and the 2024 Regulations, that the property's registration status at the time of contract did not affect the validity of the underlying contractual obligation. The transition mechanism in section 26(3) of the 2024 Regulations was designed to migrate title between registers in an orderly fashion, not to invalidate agreements entered into during the transitional window. The court also construed the phrase 'real estate laws of the Emirate of Abu Dhabi' in Article 22(12) of Abu Dhabi Law No. 4 of 2013 (as amended by Abu Dhabi Law No. 12 of 2020) to encompass Abu Dhabi Laws No. 3 of 2005 and No. 19 of 2005, which together governed the pre-transition register; those laws supported rather than undermined the Agreement's enforceability. Third, the court rejected the frustration defence. Applying Davis Contractors Ltd v Fareham UDC [1956] 2 All ER 145 (HL) — which requires a supervening event outside the parties' control that renders contractual performance radically different from what was undertaken — the court held that the transition of the register was a foreseeable regulatory event, not a supervening one. Cabinet Resolution No. 41 of 2023 had been public for over 20 months by the date of signing; the 2024 Regulations had been published since 1 October 2024, nearly three months before the Agreement was executed. A sophisticated commercial seller contracting on 24 December 2024 was fully on notice that ADGM real property law would apply to Al Reem Island from 1 January 2025 and that the section 26(3) migration mechanism was available to effect transfer of title. The court also applied F A Tamplin SS Co Ltd v Anglo-Mexican Petroleum Products Co Ltd [1916] 2 AC 397 (HL) for the proposition that frustration requires the contemplated purpose of the contract to be wholly defeated; performance through the established migration process remained entirely achievable, so that threshold was not met. Fourth, on estoppel by convention, the court applied the principles in Amalgamated Investment & Property Co Ltd (in liq) v Texas Commerce International Bank Ltd [1982] 1 QB 84 (CA) and the analysis confirmed in Blindley Heath Investments Ltd v Bass [2017] Ch 389 (CA) and Dixon v Blindley Heath Investments Ltd [2017] 1 All ER (Comm) 319. Whilst the court found that the parties shared a common assumption as to the contractual framework, it noted that unconscionability is a necessary additional ingredient before an estoppel by convention will operate to bind a party. The dismissal of the counterclaim rested primarily on the enforceability findings; the estoppel analysis provided supplementary support rather than an independent ground. On specific performance, the court applied the well-established equitable principle — confirmed in Johnson v Agnew [1979] 12 All ER 883 (HL) — that land is treated as unique and that damages are ordinarily an inadequate remedy for its non-delivery, making specific performance the default order. No equitable bar — whether delay, unclean hands or undue hardship — was established on the facts. The liberty-to-apply order preserved Al Khaleej's ability to seek damages in lieu if the specific performance decree ultimately proves impossible to enforce.
Applicable law
- Cabinet Resolution No. 41 of 2023, Article 1 — brought Al Reem Island within ADGM jurisdiction with effect from 24 April 2023
- ADGM Real Property Regulations 2015, section 157(2) — disapplied those Regulations to Al Reem Island land between 24 April 2023 and 31 December 2024, establishing the transitional period of just under 20 months
- ADGM Real Property Regulations 2024 (replacing the 2015 Regulations from 1 October 2024), section 26(3) — mechanism for migrating title registrations from the Abu Dhabi Real Property Register to the ADGM Register
- ADGM Real Property Regulations 2024, section 22 — registration on the ADGM Register constitutes conclusive evidence of ownership and confers indefeasible title on the registered proprietor
- ADGM Application of English Law Regulations 2015, section 3(1) — obliges ADGM courts to apply the common law of England (including the principles and rules of equity) as it stands from time to time as part of ADGM law
- ADGM Application of English Law Regulations 2015, sections 1(1)(a) and (b) — equity and common law apply only so far as applicable in the circumstances of the ADGM and subject to such modifications as those circumstances require
- Abu Dhabi Law No. 4 of 2013 Concerning Abu Dhabi Global Market (as amended by Abu Dhabi Law No. 12 of 2020), Article 22(12) — definition of 'real estate laws of the Emirate of Abu Dhabi', construed to include Abu Dhabi Laws No. 3 of 2005 and No. 19 of 2005
- Abu Dhabi Law No. 3 of 2005 Regulating the Real Estate Register in the Emirate of Abu Dhabi — governed the Abu Dhabi Real Property Register regime applicable to Al Reem Island during the transitional period
- Abu Dhabi Law No. 19 of 2005 Concerning Real Estate Ownership — part of the Abu Dhabi substantive law framework governing land rights during the transitional period
- UAE Civil Code (Federal Law No. 5 of 1985) — applicable as part of 'UAE Law' under clause 9(a) of the Agreement, which subjected the Agreement to the laws of the Emirate of Abu Dhabi including applicable federal laws
Practical implications
Parties holding sale and purchase agreements for Al Reem Island property executed during the 24 April 2023 to 31 December 2024 transitional window should treat this judgment as authoritative confirmation that those agreements are enforceable. A seller who refuses to complete cannot credibly invoke the register transition as frustration: the 20-month public transitional period and the pre-published section 26(3) migration mechanism in the 2024 Regulations (available from 1 October 2024) defeat any argument that the shift in registration regime was unforeseen or unforeseeable. For transaction structuring and drafting, governing law clauses in ADGM real property contracts should expressly address the lex situs/lex fori bifurcation. The better practice is to specify Abu Dhabi law (including applicable federal law) for questions of land rights, title validity and the obligations of the parties as landowners, while separately acknowledging that ADGM law governs remedies, evidence and procedure. A single undifferentiated governing law clause — as used here — leaves the allocation to be resolved by conflict-of-laws rules operating independently of party intention, creating avoidable interpretive uncertainty. On litigation strategy, buyers facing a defaulting seller of ADGM-registered or transitionally-registered land should plead specific performance as the primary claim from the outset rather than treating it as a secondary or alternative remedy. This judgment confirms that the uniqueness of land is a sufficient basis for the order without requiring additional proof of damages inadequacy on the particular facts. The liberty-to-apply order — permitting Al Khaleej to convert to a damages claim if specific performance proves unachievable — is a practical reminder to preserve the alternative claim in the pleadings and not to abandon it at an early stage. Security cheque mechanics deserve particular attention. Ocean Pearl's attempt to retain the AED 21 million security cheque as a forfeiture failed entirely. Sellers should ensure that any forfeiture provision is unambiguous, commercially proportionate and supported by clear evidence that the buyer — and not the seller — was in default. Courts will not permit a seller who is itself in breach to invoke a forfeiture clause as a windfall.
Precedent value: As a decision of the ADGM Court of First Instance, the judgment is persuasive rather than binding authority. It is nonetheless the most detailed judicial treatment to date of the lex situs/lex fori bifurcation in ADGM real property disputes, the enforceability of sale agreements executed during the Al Reem Island transitional period, and the application of the English law of frustration in that context. Practitioners advising on ADGM land transactions — particularly those concluded between 24 April 2023 and 31 December 2024 — should treat it as the leading reference point. The judgment also builds on the Federal Properties Ltd v Ibrahim trilogy and Awad v 3AM, contributing to a growing body of ADGM real property jurisprudence that is developing consistent principles across first-instance and appellate decisions.
Action point
Any party that entered into a sale and purchase agreement for Al Reem Island property between April 2023 and December 2024 — whether as buyer or seller — should review the current status of that transaction and assess whether completion obligations have been discharged, given that the enforceability of such agreements is now judicially settled.
Source
This case note is generated from a public court record and reviewed under the firm's automated editorial quality gate. General information only — it does not constitute legal advice. For advice on a specific matter, please contact us.