Introduction
On 28 April 2026, the Fourth Appellate Committee of the Dubai Rental Disputes Center (“RDC”) issued an important judgment in Appeal Case No. 03/20507/2026 (Commercial Rental Dispute), addressing fundamental principles relating to commercial tenancy disputes in Dubai, particularly concerning alleged unauthorized subletting, Dubai Municipality building violations, change of permitted use, and the threshold required for eviction of a commercial tenant.
The judgment is significant because the Appellate Committee partially overturned the First Instance judgment and clarified that not every municipal violation or operational arrangement constitutes sufficient legal grounds to terminate a commercial lease or evict a tenant. The decision also reaffirmed the importance of expert evidence and the necessity of proving material breach affecting the leased property.
Background of the Dispute
The dispute arose between a tenant operating a vehicle maintenance and repair business and the landlord of commercial premises located in Al Quoz Industrial Area 1, Dubai. The tenancy related to commercial premises leased for the period from 1 January 2025 until 31 December 2025, with an annual rent of AED 850,000.
The tenant commenced the original claim seeking, among other reliefs:
- Appointment of an engineering expert;
- Determination of the alleged violations existing in the premises;
- Identification of the party responsible for the violations;
- Assessment of costs for rectification and licensing;
- Compensation in the amount of AED 50,000 for damages allegedly suffered due to the landlord’s failure to remedy the violations.
The tenant argued that the leased premises contained pre-existing Dubai Municipality violations which substantially impaired its use and enjoyment of the property. The tenant further asserted that despite several legal notices served upon the landlord requesting rectification and procurement of the required permits, the landlord failed to remedy the issues and instead sought eviction of the tenant.
Conversely, the landlord filed a counterclaim seeking eviction of the tenant on three principal grounds:
- Carrying out unlicensed construction works and modifications;
- Changing the permitted use of the premises contrary to planning and zoning regulations;
- Unauthorized subletting of portions of the property to third parties.
The landlord relied heavily upon Dubai Municipality inspection reports alleging construction of unauthorized structures, mezzanine floors, partitions, and canopies without approval. The landlord also alleged that the tenant had entered into arrangements with third parties concerning parking spaces and portions of the premises.
First Instance Judgment
The First Instance Committee dismissed the tenant’s claim and accepted the landlord’s counterclaim for eviction. The Committee relied substantially on the findings of the court-appointed expert, who concluded that the tenant had:
- Constructed certain works without approval;
- Violated planning and construction regulations;
- Sublet portions of the premises without authorization;
- Failed to rectify the violations despite legal notices.
Accordingly, the First Instance Committee ordered eviction of the tenant and delivery of vacant possession of the premises to the landlord.
Grounds of Appeal
The tenant appealed the judgment and argued that the First Instance decision suffered from errors in application of law and defective reasoning. The tenant asserted that:
- The violations predated the tenancy;
- The expert report failed to properly identify the party responsible for the alleged works;
- The expert contradicted himself regarding the alleged subletting arrangements;
- The arrangements with third parties were service agreements connected to the tenant’s operational activities and did not amount to legal subletting;
- The tenant never relinquished possession or control of the premises.
The Appellate Committee subsequently appointed a three-member engineering expert panel to re-examine the technical issues.
Findings of the Appellate Expert Committee
The appellate expert panel made several critical findings that materially altered the outcome of the case.
1. No Unauthorized Change of Activity
The expert panel concluded that the tenant had not conducted activities inconsistent with its commercial license or the permitted use of the property. The lease documentation and land-use records demonstrated that the premises were classified for industrial-commercial use, and the tenant’s automotive operations fell within the permitted scope.
This finding directly contradicted the landlord’s allegation that the tenant unlawfully changed the use of the premises.
2. Major Structural Violations Were Not Attributable to the Tenant
The appellate experts determined that the tenant was not responsible for several major alleged violations, including the mezzanine structures referenced in the Dubai Municipality report.
The Committee accepted that some structures existed prior to the tenant’s occupation of the premises.
3. Minor Violations Were Easily Remediable
The only violations attributable to the tenant related to temporary partitions and a canopy/shaded structure. However, the expert panel specifically noted that these were temporary and easily removable works which did not materially affect the property.
The Appellate Committee considered this distinction highly significant.
4. No Legal Subletting Established
Perhaps the most important aspect of the judgment concerned the allegation of unauthorized subletting.
The Appellate Committee carefully distinguished between:
- Genuine subletting creating possessory rights in favor of third parties; and
- Commercial service arrangements entered into by a tenant in the ordinary course of its business operations.
The Committee emphasized that legal subletting requires transfer of possession or control over all or part of the leased premises to another party in exchange for rent or consideration.
The evidence demonstrated that:
- The tenant remained the sole actual occupier of the premises;
- No independent company signage existed at the property;
- The premises continued to operate under the tenant’s business activity;
- The agreements relied upon by the landlord were operational service agreements connected to vehicle maintenance, storage, and related services.
The Committee therefore ruled that the arrangements did not constitute unlawful subletting within the legal meaning contemplated under Dubai tenancy laws.
The Appellate Judgment
After reviewing the evidence and the appellate expert report, the Fourth Appellate Committee partially overturned the First Instance judgment.
The Committee held that the alleged violations relied upon by the landlord were either:
- Not attributable to the tenant;
- Minor and removable in nature; or
- Insufficiently serious to justify termination of the tenancy relationship.
The Committee further held that the alleged subletting was not legally established.
Accordingly, the Appellate Committee:
- Reversed the eviction order issued in the counterclaim;
- Dismissed the landlord’s eviction claim;
- Upheld dismissal of the tenant’s original compensation claim;
- Ordered the parties to bear the appeal costs equally.
Legal Significance of the Judgment
This judgment provides several important legal principles relevant to commercial leasing disputes in Dubai.
A. Not Every Municipal Violation Justifies Eviction
The decision confirms that courts and RDC Committees will assess the seriousness, materiality, and impact of alleged violations before ordering eviction.
Minor or removable works that do not materially alter the property or prejudice the landlord may not justify termination of the lease.
B. Burden of Proof Remains Critical
The landlord bears the burden of proving that:
- The tenant committed the violations;
- The violations are substantial;
- The violations justify eviction under applicable law and contractual provisions.
The appellate proceedings demonstrated the importance of technical expert evidence in establishing these elements.
C. Operational Commercial Arrangements Are Not Necessarily Subletting
The judgment draws an important distinction between:
- Commercial operational/service arrangements; and
- Legal subleasing creating possessory interests.
Where the tenant remains in actual occupation and control of the premises, courts may reject allegations of unlawful subletting despite the existence of third-party commercial arrangements.
D. Appellate Courts Retain Broad Powers to Reassess Facts
The Appellate Committee expressly reaffirmed that under Article 167 of Federal Decree-Law No. 42 of 2022 concerning the Civil Procedure Law, appellate courts are not confined to reviewing errors of law alone, but may fully reconsider evidence, factual findings, and expert conclusions.
Conclusion
The RDC Fourth Appellate Committee judgment dated 28 April 2026 in Appeal Case No. 03/20507/2026 represents a notable precedent in Dubai commercial tenancy disputes. The decision demonstrates the judiciary’s balanced approach toward alleged lease violations and clarifies that eviction is not an automatic consequence of every municipal or contractual breach.
The judgment further reinforces that courts will closely examine the actual nature of commercial arrangements and will not automatically characterize operational service agreements as unlawful subletting absent evidence of transfer of possession or control.
For commercial landlords and tenants alike, the case highlights the importance of:
- Proper drafting of lease agreements;
- Careful documentation of operational arrangements;
- Technical expert evidence;
- Timely rectification of municipal issues; and
- Clear proof of material prejudice before seeking eviction remedies.
The judgment therefore provides valuable guidance for businesses operating commercial and industrial premises in Dubai.
If you require further clarification or legal assistance concerning the matters discussed in this article, please do not hesitate to contact Kh legal Advocates & Legal Consultants LLC. Our lawyers would be happy to assist you.
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