Category Archives: Real Estate and Construction

Legal Aspects To Consider While Building A Commercial Property

Commercial property, or commercial land, refers to land possessed or utilized by a business element. Commercial property is regularly not the same as private property in its plan, capacity, design, and feel. Most state laws have specific laws that manage commercial property. These are independent and unmistakable from private property laws. For example, commercial property regularly has specific protection rules than private property. Additionally, the commercial property might be related to unexpected reasonable direct in comparison to private property. Some lead might be permitted distinctly in local locations, while some direct is just permitted in industrially drafted territories (for example, business exercises).

One must have complete knowledge of legal aspects before building a commercial property. This awareness could be obtained via the internet through different websites or by the C-10 License study guide, which gives you a unique study mode. The C-10 License Study Guide is an intuitive, PC based program comprising various decision questions introduced in various investigation modes. C-10 License study guide is made explicitly for passing an exam, so it could help gain knowledge about legal aspects.

What are Some Commercial Property Legal Issues?

Because of the distinctions in commercial property laws, commercial property is regularly connected with particular legitimate issues. These can include:

  • Drafting and Land use–As referenced, commercial exercises can regularly just happen in commercial zones on commercial property.
  • In some cases, property burdens can be higher than private property burdens and might be diverse as per the sort of business set up on the property.
  • Protection Commercial property protection debates are a typical wellspring of lawful issues for some organizations.
  • Proprietorship debates Many organizations manage title, possession, and renting disagreements regarding commercial property.
  • Limit debates. Some commercial property may cause questions because of the property’s actual limits or if the property is jutting onto another neighboring zone.

Likewise, commercial property can include lawful issues with regards to the deal and acquisition of commercial structures. Such questions can include authoritative breaks, business-related debates, and issues with the use of the property.

If purchasing commercial property is essential for your business’s subsequent stages – either for exchanging use and speculation, here are five critical lawful contemplations when purchasing a commercial property:

  1. Discovering Opportunities

In contrast to the private area, you won’t discover an overabundance of commercial operators on your high road. Numerous commercial speculations are sold through private settlement in any case; barters are a helpful wellspring of good worth, especially if you are merely beginning.

Abandons saying that care is needed at any bartering – we’re not talking deal chase here – since, supposing that useful, you should hand over 10% on the day and complete inside a month.

2. Freehold Or Leasehold?

Freehold proprietors by and extensive control and own the entirety of the property: the land itself, any structures on it, the dirt beneath, and so on. If unpracticed in this world, know that a proprietorship might be limited by an outsider; for example, there might be a privilege of access over the property.

With leaseholds, the proprietor authoritatively holds the interest for a set period restricted to the rent’s length. The rent substance will rely upon the property and the connection between the landowner and the occupant.

3. Money Buyer Or Loan?

Money is regularly ruler, and business property is the same. Incredible arrangements are accessible on the off chance that you can move very fast.

On the off chance that you are utilizing an advance supplier, at that point, keep them refreshed at all times abandon saying that business property moneylenders are keener on loaning against the pay produced by very much let properties instead of void ones.

4. Expenses

Expenses for Buying business property include:

  • The underlying price tag or rent premium
  • Stamp obligation and land library charges
  • Assessor, bequest specialist, and specialist charges
  • Introductory changes or potentially embellishment
  • Prepayment of the introductory lease (for leaseholds) and protection
  • Perhaps VAT

Extra expenses for drafting the rent can be costly as there is no formal organization for purchasing a commercial property. Get due perseverance guidance (counting the standard property look yet additionally natural pursuits and enrolled charges).  

5. Occupants

As above, banks are a lot more joyful loaning against very much let properties, so except if you need to utilize the property for your motivations promptly, it’s valuable to purchase a property that has an occupant in situ.

Great inhabitants are precious, so it’s a uniquely favorable position to acquire a quick lease move which permits you to precisely spending plan your costs going ahead: the lease is fixed, you are paid ahead of time, and lease audits, for the most part, increment – however, ensure you get pre-culmination exhortation on the footing and rights you’re acquiring.

Evaluating and Managing Environmental Risk in Real Estate and M&A Transactions in the United States

The complex environmental regulatory regime in the United States can raise a variety of legal and financial risks in real estate or corporate acquisitions.  Accordingly, lawyers should understand the nature of potential environmental liabilities for different transactions, the relevant facts, and how to structure environmental due diligence tools to provide clients meaningful advice.

Tailoring Environmental Due Diligence to the Transaction

Environmental due diligence is not a “one-size-fits-all” activity.  The type of transaction, and the client’s objectives, often dictate the appropriate scope of due diligence.

Transactions take a variety of forms, such as the purchase or lease of real property, acquisition of the assets of operating businesses or facilities, stock acquisitions, corporate mergers and divestitures.  In real estate acquisitions, primary environmental due diligence concerns include identifying potential contamination, and either protecting against cleanup liability or evaluating remediation methods.  These transactions usually rely on Phase 1 and 2 environmental site assessments to identify contamination, help establish landowner liability protections, and assess cleanup strategies.  Analyzing other environmental regulatory constraints on site development may also be prudent.

Conversely, acquisitions of operating businesses or facilities, or corporate transactions such as stock deals and mergers, raise additional environmental due diligence concerns.  These include evaluating the target company or facility’s regulatory compliance status, the availability of permits to conduct and grow the business, and capital and operating costs needed to achieve compliance, implement permit conditions, and satisfy other environmental requirements.  For these deals, evaluating regulatory compliance and permitting issues may be equally, if not more, important than contamination concerns.

Superfund Liability and Defenses

In the U.S., fear of liability for contaminated property is largely driven by the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA” or “Superfund”).  CERCLA establishes four categories of parties liable for the release or threat of release of hazardous substances into the environment, including current facility owners or operators, former owners or operators at the time of disposal, those who arrange for hazardous substance disposal at a facility, and those who transport hazardous substances to a facility for disposal.   Superfund liability can be severe, as it is retroactive, strict (i.e., regardless of fault), and joint and several.

Moreover, CERCLA offers only very limited defenses for landowners.  The most useful of these is the bona fide prospective purchaser (“BFPP”) defense.  This provision allows prospective purchasers to acquire facilities that the purchaser knows to be contaminated while avoiding Superfund liability.  To establish the defense, the purchaser must satisfy several conditions.  Pre-acquisition conditions include taking title to the facility after January 11, 2002 and after all disposal occurred; making “all appropriate inquiry” into the former uses and ownership of the facility consistent with good commercial and customary standards; and not being a potentially liable party or affiliated with such a party through certain relationships.  The purchaser must also comply with several post-acquisition requirements, including making legally required notices; taking reasonable steps to stop continuing releases, prevent future releases, and limit exposure; cooperating with persons performing remediation; complying with any land use restrictions or institutional controls; and responding to governmental information requests.  (Tenants may also utilize the BFPP defense in certain situations.)

Although the BFPP defense provides a valuable tool to protect against Superfund liability when obtaining contaminated property, the defense does not protect against potential liability under other federal or state environmental statutes. It is also not a defense to claims under other liability schemes such as tort, occupational safety and health laws, or breach of contract.

All Appropriate Inquiry (“AAI”) – Phase 1 Environmental Site Assessments

While all of the statutory requirements must be satisfied to support the BFPP defense, the primary objective of environmental due diligence in the U.S. involves performing AAI.  In 2005, the U.S. Environmental Protection Agency (“EPA”) published a rule, 40 C.F.R. Part 312, establishing the regulatory requirements for AAI.  In coordination with EPA, the standard-setting organization ASTM International revised its existing standard for Phase 1 environmental site assessments (“ESAs”) to comport with the Rule.  In practice, purchasers seeking to perform AAI do so by following the ASTM Phase 1 standard (currently E1527-13).

Phase 1 ESAs are non-invasive property investigations that seek to identify and document recognized environmental conditions (“RECs”) indicating a release or threat of release of a CERCLA hazardous substance (or petroleum, which is not regulated by CERCLA). Unlike Phase 2 investigations, Phase 1 ESAs do not include sampling and analysis of environmental media.  In addition to establishing one of the CERCLA BFPP defense conditions, a Phase 1 ESA (perhaps combined with Phase 2 testing) may also provide insight into possible common law and toxic tort risks posed by acquiring property, should the investigations identify contamination that could impact residential neighborhoods, potable water sources, or other sensitive receptors.

Most AAI tasks must be undertaken by an “environmental professional” meeting certain qualifications, or someone under his or her direct supervision. Basic Phase 2 elements include interviews with the current site owner, any occupiers likely to handle hazardous substances, state or local government officials, and potentially others; review of historical information sources (e.g., aerial photographs, fire insurance maps, land title records, and building permits) dating back to the earlier of 1940 or the property’s earliest developed use; review of federal, state and local regulatory agency records involving the property and other sites within defined search radii; and visual inspection of the property and of adjoining properties.  In addition, the standard calls for certain information from the user of the Phase 1 (typically the prospective purchaser), such as a review of title and judicial records for environmental cleanup liens and activity and use limitations; any specialized knowledge the user may have of the property and surrounding area; and whether the purchase price reflects any discount for contamination. The environmental professional must document the evaluation in a written report containing, among other things, the professional’s opinion as to whether conditions indicative of a release or threatened release exist, and a list of any data gaps and their significance.

Although Phase 1 ESAs have become extremely commonplace in environmental due diligence, a few important points are worth noting.  First, to satisfy the AAI rule a Phase 1 must be completed no sooner than one year prior to property acquisition, and certain elements must be completed or updated within six months before acquisition.  Also, remember that Phase 1 ESAs are designed to identify potential contamination, and do not evaluate other environmental issues (e.g., the presence of asbestos or lead-based paint in buildings, mold damage, or wetlands and other natural constraints on site development) unless expressly added as “non-scope” items.  In addition, given increasing scientific knowledge and regulatory concern regarding the potential for certain contaminants (such as those associated with petroleum and chlorinated solvent releases) to volatilize and enter occupied structures in vapor form, a 2013 update to the ASTM Phase 1 standard now requires evaluating the vapor intrusion pathway as part of identifying RECs.  Finally, as mentioned above, the BFPP defense requires more than satisfying AAI; the purchaser must meet several post-acquisition conditions as well.

Phase 2 ESAs – Evaluating Contamination and other Due Diligence Concerns

When a Phase 1 ESA identifies one or more RECs at a property, the next step often involves performing invasive “Phase 2” testing to confirm the presence and extent of any contamination.  Information from Phase 2 ESAs can serve several due diligence purposes, including deciding whether to proceed with or terminate the transaction; identifying post-acquisition tasks to satisfy the BFPP “reasonable steps” condition; allocating environmental responsibility through contract provisions such as purchase price adjustments, indemnities, cleanup obligations, and environmental insurance; developing remediation strategies and cost estimates to obtain liability protection through federal or state voluntary “brownfield” cleanup programs; and identifying natural or other constraints to site development.

Given their varying objectives, Phase 2 ESAs, unlike Phase 1 investigations, typically do not follow a single protocol.  A Phase 2 investigation may involve one or more of several elements, such as collecting samples of soil, groundwater, soil gas, indoor air, or other environmental media for laboratory analysis; searching for underground tanks, vaults, and other subsurface structures using geophysical techniques; evaluating the presence and extent of environmental conditions inside structures such as asbestos-containing materials, lead-based paint, mold, and radon; and identifying potential site development constraints such as wetlands, endangered species, and cultural or historic resources.

Phase 1 and 2 ESA Practical Considerations

To protect their interests, both parties in a real estate or corporate transaction should negotiate access provisions governing the performance of Phase 1 and 2 ESAs during due diligence.  These provisions should cover issues including, at a minimum, submission of a work plan for  owner approval; permissible entry times, pre-entry notice requirements, and non-interference with ongoing site operations; restoration of any property damage; compliance with applicable law and proper disposal of any investigation-derived waste; provision of split samples, test results, and reports to the site owner; and insurance and indemnification related to liability arising from the investigations.

Access provisions should also address confidentiality of environmental due diligence results.  Generally, owners require buyers to keep due diligence data and reports confidential, but buyers should seek certain exceptions including the ability to share results with lenders, counsel, and other due diligence team members (who may also be required to keep the results confidential), and to make disclosures if required by law (in which case the owner will want to control the reporting process).

Aside from access and confidentiality issues, parties planning to perform Phase 1 and 2 ESAs should keep a few other points in mind.  First, although Phase 1 and 2 ESAs can be performed concurrently, it is better to use Phase 1 results to develop the Phase 2 scope.  Also, take care when identifying and retaining an environmental consultant for the due diligence team.  Phase 1 and 2 investigations can vary significantly in scope and extent, and therefore potential consultants and firms should be evaluated for the necessary experience and skills appropriate to the type of site and anticipated tasks.  In addition, carefully review and negotiate consultant proposals regarding cost structure, markup of subcontractor and other expenses, anticipated timing for deliverables, and “boilerplate” terms and conditions such as insurance coverages, indemnity provisions, limits on liability, and confidentiality.

Evaluating Regulatory Compliance in Acquiring Ongoing Operations

In addition to assessing potential site contamination and development constraints, acquisition of an active facility or business requires evaluating the target’s compliance status with environmental regulatory requirements. These evaluations typically include issues such as whether the business or facility holds all permits and other approvals necessary to continue operations; whether these authorizations can or will need to be transferred as part of the transaction; and whether the business or facility currently has any significant noncompliance, or a history of noncompliance, with regulatory requirements or permit conditions (as evidenced by notices of violation, penalty assessments, administrative or judicial orders, consent decrees, etc.).

Depending on the type of operation, regulatory programs to evaluate for compliance issues may include, among others, air pollution control, wastewater and stormwater discharges, solid and hazardous waste management, emergency planning and community right-to-know reporting, management of storage tanks, use of pesticides, and maintenance and removal of asbestos-containing building materials.  Information on a business or facility’s compliance status may be found by reviewing facility and agency files, interviewing the target’s environmental health and safety personnel, and searching agency on-line databases.  In addition to identifying regulatory noncompliance issues, the due diligence effort should also attempt to estimate the potential costs of bringing the business or facility back into compliance.

Wrapping Up

Environmental due diligence in real estate and corporate transactions can be a complex and time-consuming task.  To make this process as efficient and productive as possible, tailor the scope of the diligence effort to the type of transaction, the client’s objectives, and the time and resources available to complete the process before closing.  Assembling a qualified and experienced team of technical and legal professionals to lead the diligence effort can help ensure that the client goes into a transaction with eyes wide open to potential environmental pitfalls.

Leaving the EU – what this means for you and your business

Now that the dust is settling on the UK’s decision to leave the EU, our clients are asking what this means for them.  We are the first member state ever to  leave the European Union and as such, the result has ignited much uncertainty and debate about what lies ahead.

Change always brings opportunities, as well as challenges, and we are focused on helping our clients understand how these changes can benefit their business during the period of transition ahead.

A recent survey we commissioned suggests that only 20% of businesses had set in place a continuity plan for the leave vote. In the public sector, there is concern about what will happen to staffing arrangements as well as EU-funded collaboration projects.  We understand that there is much uncertainty at present, but we will continue to support and provide innovative solutions to help our clients invest and grow.

Of course, it’s not only businesses that are affected.  Exit from the EU will likely have a knock-on effect on a range of private and family law matters which are currently governed by a system which in many areas combines both EU and domestic legislation into an integrated European framework.

Whilst it is not clear what the exit will look like or how we will take forward the laws that the UK has adopted over the last 40 years, we do know that there will be opportunities coming out of these changes and we will be supporting our clients in understanding how these can be used to their advantage.

In this article, I explore some of our key sectors and what the implications may be for them of leaving the EU.

Real Estate

Real Estate markets, whether commercial or residential, always prefer certainty. The last few months have led to a slowdown in transactions while people awaited the outcome of the Referendum. In some recent cases, transactions have been entered into with options to determine depending on the result of the vote, and those agreements may now be determined. Now that we know that the Leave vote has won, we expect to see the Real Estate markets to pick up rapidly. Banks are still in the market to lend to the right product, and there is a significant amount of private equity cash available for property transactions. However, there may be some weakness in areas involving prime offices if companies start relocating their HQs.

Private Law

Since 17 August 2015, we have been coming to terms with new EU legislation for succession (known as Brussels IV). Paradoxically, this system is intended to unify the succession laws which apply to an estate, and now, we have voted to leave just at the point when the member states choose to change things for good!

That said, the UK opted out of the full implementation of the legislation, along with Ireland and Denmark, so the impact strangely has been simplified as there was some uncertainty as to how the legislation applied to the UK. The intention is that EU citizens are able to make an election of the law of the jurisdiction of their nationality to govern the whole of their estate (including foreign property located in another EU state). Post-Brexit the UK is clearly a ‘third state’ under the Regulation, like the USA

This means less flexibility in the choice of succession rules and potentially more tax, although double taxation treaties should continue to apply. Our EU neighbours mainly favour a succession system which includes forced heirship, and we could find ourselves in a position where there is less choice on the ultimate distribution of foreign immovable assets.


Employment law is unlikely to see too many dramatic changes as the UK leaves the EU. Despite the claims that businesses are stifled by EU labour laws, the fact is that many Employment law rights either originated in the UK or have become deeply embedded in UK law as the UK’s attitudes to social issues have evolved. A move to scale back all but the most minor Employment law rights would, in all likelihood, be politically unpopular.

In addition, potential changes could be severely limited by the subsequent trade deal negotiated – other non-EU countries such as Norway and Switzerland have not in practice been able to free themselves of many EU labour laws. In several areas, such as data protection, we are likely to produce laws that mirror EU legislation to ensure we can conduct business effectively.

Such changes as there are could be seen in the areas of collective consultation rights, clarification on Working Time rights such as paid holiday and a repeal of the 48-hour limit, tweaks to the Transfer of Undertakings (Protection of Employment) Regulations 2006, and potentially more significant changes to/removal of the Agency Workers Regulations 2010.

As well as the immediate impact on markets and the business outlook for employers, the referendum result will also throw up longer-term issues, such as the migration of staff in and out of the UK and a potential re-run of the Scottish referendum. Unfortunately, the lack of a clear indication as to what any exit deal would look like makes it very difficult for businesses to plan for it in any practical way at the present time.

Banking and Finance

The financial markets and the banking sector hate uncertainty. The government needs to move quickly to reassure the business community by setting out a clear plan to replace existing trade and other arrangements with the EU and the world as a whole.

Particularly in the short term, the role of the Bank of England will be key. At a time when the monetary tools available to them are already limited, they need to find a way to protect the pound and keep interest rates at a level that enables companies to continue to borrow and invest in what will hopefully be a prosperous economic future for the UK.


The Referendum campaign highlighted a fundamental lack of objective data regarding the impact of EU membership on our healthcare system, and therefore the effects of an exit. However, staffing is likely to be impacted as the NHS, and social care are reliant on overseas migrants to help alleviate intense staffing pressure.

The London location of the EU Medicines Agency has been cited as a positive factor in the NHS’s successful positioning of its R&D capabilities, attracting overseas investment and funding. If the EMA must now relocate, the long-term impact on trials revenue and participation will depend on the strength and depth of relationships already established.

European systems have influenced several of the new models of care programmes in the NHS.  Many independent healthcare operators have pan- European activities. Uncertainty in the short term about implications of an exit could impact collaboration and appetite for financial risk in organisations supporting the NHS.


It is impossible to ignore the fact that the higher education sector, which is presently reliant on the EU as a reliable source of funding, in the form of students, research grants, and capital finance, faces a challenging future, given the uncertain nature of the relationship between the UK and the EU. In the next five years, we may well see a more innovative approach to funding and collaboration required, with institutions looking further afield for support, or collaborations with the private sector.

Intellectual Property

For the moment it is business as usual and trade mark and design owners should not panic – European Union Trade Marks and Registered Community Designs remain valid in the UK, and there is no immediate loss of IP protection.

Once the UK formally gives notice to exit, the EU negotiations will begin on the status of EU marks in the UK and whether any transitional provisions will be required to grandfather across EU trade mark and registered design rights into the UK.


There maybe harmful consequences for major infrastructure projects as much of the funding comes from Europe including Crossrail and HS2.  How such projects will be funded in the future will apparently be included in the Brexit negotiations.

It is impossible, though, to predict what the wider impact will be on our economy or the property market at this stage but if migration is reduced, then the pressure on housing should be reduced and the housing needs assessed more accurately.

Information Governance

Most of the laws in information governance are derived from European legislation. The Data Protection Act, the Privacy and Electronic Communications Regulations, the Re-use of Public Sector Information Regulations, the Environmental Information Regulations – all of these are examples of UK laws derived from EU directives.  For primary legislation, such as the DPA, leaving the EU will have no immediate effect.  For secondary legislation, such as the EIRs, the situation is more complicated.  These were made under powers derived from the European Communities Act 1972, which is the statute that governs our membership of the EU.

Family Law

Leaving the EU will have a knock-on effect on a range of family matters governed by the current system, which pulls together strands of EU and domestic legislation into a single Family law regime. Changes are likely to be felt most keenly by international families.

In terms of jurisdiction in divorce matters, the current rule of “first in time” as to where proceedings will be dealt with will disappear. Parties will therefore potentially be afforded greater flexibility as to where they choose to divorce. However, matters could become increasingly costly if the proposed jurisdiction is contested and, in these circumstances, parties may well find themselves litigating over jurisdiction issues before the main proceedings are dealt with at all.

Enforcement of existing domestic Orders concerning maintenance, child contact, and domestic violence will also be affected. EU legislation currently works with domestic legislation to provide a relatively simple framework for enforcement of such Orders in other EU member states. Brexit means that the system will not operate as such any longer, thereby potentially undermining the current system of mutual co-operation between Courts.

The law governing international child abduction would also see some changes, albeit that these would be less significant. This is because the main international legislation governing this area is found in the 1996 Hague Child Protection Convention and the 1980 Luxembourg Convention, which will remain in force. However, changes incorporated into these Conventions by later EU Regulations will fall away, leaving gaps to be filled at a later stage. The child abduction regime may be weakened in the interim until a comparable system is put back into place through re-negotiation of bilateral agreements with different states to replicate the lost provisions.

For more information on what leaving the EU will mean for your business visit or email [email protected]

Resolving Real Estate Disputes in Indonesia Q&A

  1. Have there been any recent legislative changes or interesting developments in your jurisdiction on real estate?

Regarding legal developments and issues in Indonesia’s real estate sector, two developments are particularly interesting and merit mention here.

First, President Joko Widodo recently issued Presidential Instruction No. 3 of 2016 regarding Simplification of Licensing in Housing Construction (April 14, 2016) (“Presidential Instruction 3/2016”). This presidential instruction calls for ministers and heads of regional governments to simplify the policies, requirements, and process to obtain the licenses required for the construction of housing. The issuance of Presidential Instruction 3/2016 follows the announcement of the government’s “one million housing” program, which, as the name suggests, is aimed at building a million houses for lower-income families. It will take time to evaluate the effect of Presidential Instruction 3/2016, but in the months immediately following its issuance, developers reported the same difficulties and challenges in obtaining the necessary licenses, in particular obtaining licenses from regional government authorities (which, due to regional autonomy, have broad authority and discretion in the issuance of licenses for activities within their regions, including for real estate development).

Second, another development worth mentioning in the real estate sector relates to the controversy over reclamation work in and near Jakarta Bay. This reclamation work is essentially aimed at creating a new land area in densely crowded Jakarta for real estate developments, be it housing or commercial development. However, the reclamation work has raised a multitude of issues and concerns, including legal issues related to environmental law, administrative law, and anti-corruption law. These issues, along with various political intrigues, including a clash between the central government and the Jakarta administration over the authority to issue the permits and licenses for reclamation work, and protests by environmental activists and residents and fishermen near the reclamation site, have resulted in the reclamation work progressing very slowly (it is currently on hold), placing the developers in an uncertain position.

The above snapshot of recent developments in Indonesia underlines a few of the prevalent issues in the country’s real estate sector, i.e., a complex and lengthy licensing process at the regional level and a lack of legal certainty.

  1. How would you describe arbitration facilities and processes in the real estate sector in your jurisdiction?

Before addressing this question, two things must be noted: first, “real estate” is a very broad subject that touches many aspects of Indonesian law, e.g., administrative law, environmental law, construction law, civil law, agrarian/land law, etc. Second, there is no arbitration facility or process specifically designed to accommodate real estate matters under Indonesian law. Having established this, disputes related to real estate are treated in a similar manner as any other dispute in Indonesia.

Concerning dispute settlement through arbitration, Indonesia has enacted Law No. 30 of 1999 regarding Arbitration and Alternative Dispute Resolution (August 12, 1999) (“Arbitration & ADR Law”). Under the Arbitration & ADR Law, parties may resolve a dispute through arbitration only after they have agreed to arbitration as the dispute settlement mechanism. For agreements, including agreements related to real estate (e.g., construction agreements or lease agreements over building or office space), the parties will usually insert an arbitration clause if they prefer arbitration to settle any dispute arising from such agreements.

The most widely recognized national arbitration body in Indonesia is the Indonesian National Arbitration Board (Badan Arbitrase Nasional Indonesia or “BANI”). When a foreign counterpart is involved, the parties often choose an international arbitration body such as the Singapore International Arbitration Centre (“SIAC”) or the International Chamber of Commerce (“ICC”) to settle their dispute.

The rules of the arbitration depend on the parties’ agreement. As an illustration, if the parties choose BANI to resolve their dispute, the process is (i) submission of an application for a notice of arbitration, (ii) response to the notice of arbitration, (iii) appointment of arbitrator(s), (iv) payment of the arbitration fees, (v) examination of the case, (vi) proceedings, and (vii) award.

SIAC, ICC, and other arbitration bodies have different proceeding rules and the parties to an agreement are free to determine which rules they wish to use in the event of a dispute.  Indonesia recognizes the enforcement of foreign arbitral awards, as Indonesia is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which has been ratified according to Presidential Decree No. 34 of 1981 (August 5, 1981). Foreign arbitral awards must be registered at the Central Jakarta District Court for the purpose of execution.

  1. What are the most frequent disputes in your jurisdiction regarding real estate matters?

Land disputes are the most common disputes related to real estate matters. There are many reasons for this. Real estate developers often face difficulties in the land procurement process for real estate developments. Land disputes vary and include competing claims of ownership over a portion of land, disputes with disgruntled local communities that oppose a development, falsification of or incorrect information on a land certificate, and even issues of criminal liability.

In Indonesia, there are portions of land that are already certificated and those that are not yet certificated. The procurement of uncertificated land, commonly known as adat (customary) land, is more prone to dispute. Due to the lack of a clear certificate from the National Land Office (Badan Pertanahan Nasional or “BPN”), the authorized government agency in charge of administering land in Indonesia, tracing the actual owner of adat land can be difficult and more than one party may claim ownership of the land. It is not uncommon, for example, for one party to claim ownership of land by inheritance and another party to claim ownership of the same land because he or she has occupied the land for a long time. Demarcation of the boundaries of adat land is another source of dispute.

Adat land, when acquired by a party, including a developer, is certificated in accordance with the prevailing regulation. But even when a land certificate is obtained from the BPN, the risk of dispute still exists. Other parties could challenge and seek the annulment of the land certificate if they deem its issuance unlawful, e.g. if another land certificate was previously issued to another party for the land, the previous land owner committed fraud by selling the same land to more than one party, incorrect information was used by the BPN for the land certificate, etc. Under the prevailing regulation, a land certificate cannot be challenged after five years from the issuance of the land certificate in the name of a landowner who obtained the land validly.

Such land disputes are often settled either by arbitration, as discussed in point 2 above, or court proceedings. For court proceedings, the type of land dispute determines to which court the matter is submitted for settlement, depending on the specific authorities of Indonesian courts. For example, a challenge to the lawfulness of a land certificate issued by BPN will be submitted to the administrative court, which has the authority to annul unlawful certificates and licenses. Equally, it is common for land disputes to be brought for civil court proceedings by tort.

The above are only several examples of the type of land disputes that frequently affect real estate development in Indonesia and are far from a comprehensive list. There are also, for example, construction work disputes involving developers/contractors. Parties to a construction contract may choose foreign court proceedings for dispute settlement.  However, Indonesia does not recognize the enforcement of foreign court judgments as the country is not a party to a convention for such enforcement.

  1. Can you outline the benefits and drawbacks of typical court proceedings regarding real estate disputes?

To clarify, there are three types of legal proceedings in Indonesia relevant to the real estate sector, namely civil court proceedings, administrative court proceedings, and criminal court proceedings. Civil court proceedings deal with issues related to either a breach of contract or tort. Administrative court proceedings deal with claims by parties concerning the issuance of a decree, permit, license, or other forms of approval by the government. Criminal court proceedings deal with the determination of criminal acts.

Aside from the above, land inheritance disputes may also involve proceedings in (i) the religious court for inheritance under Islamic law and (ii) civil court for inheritance under non-Islamic law.

The benefit of court proceedings is that court fees and expenses related to handling a dispute are low. Another benefit, particularly for civil court proceedings, is that the procedural mechanisms require the parties to enter a mediation process before the proceeding advances to its merits. This provides the opportunity for a dispute to be settled amicably between the parties without a court judgment.

This does not fall under the category of benefit, but administrative court and criminal court proceedings are necessary because the issues these courts have jurisdiction over (administrative and criminal law) cannot be resolved by any other means, such as arbitration or alternative dispute resolution.

As to drawbacks, court proceedings in Indonesia tend to be lengthy. It can take up to two years to reach a final and binding decision, bearing in mind that the decision of a lower court can be appealed to a high court, and a cassation can be filed for with the Supreme Court.  For real estate developers, exposure of their involvement in court proceedings can cause damage to their reputation and good name.

  1. Can you outline the advantages and disadvantages of alternative dispute resolution for real estate matters?

Under the Arbitration & ADR Law, alternative dispute resolution (“ADR”) is defined as a dispute resolution mechanism agreed to by the parties that does not involve court proceedings, as a result of consultation, negotiation, mediation, conciliation, or expert assessment. Unfortunately, the Arbitration & ADR Law does not define each of these ADR methods. The Arbitration & ADR Law tends to leave the mechanisms for ADR up to the parties involved, but it does stipulate that the result of any settlement through ADR must be made in a written agreement and be registered with the relevant district court within 30 days after the execution of such agreement.

The advantage of ADR is that it allows a dispute to be settled without having to use the courts. The drawbacks of court proceedings as explained in point 4 above can be avoided if ADR is applied. Dispute settlement through ADR also respects the confidentiality of the parties related to the dispute.

The disadvantage of ADR is that the rules of ADR are not well established in Indonesia. As an indication of this, only one out of 82 articles in the Arbitration & ADR Law, namely Article 6, regulates the mechanisms of ADR.

However, as indicated in point 4 above, when a party submits a claim through a civil court it must first enter mediation in an attempt to reach a dispute settlement. This form of mediation is precisely regulated in Supreme Court Regulation No. 1 of 2016 regarding Mediation Procedure in Court (February 3, 2016).

  1. What are the main ADR methods used to settle large real estate disputes in your jurisdiction?

It is rare for large real estate disputes to be resolved by ADR, simply because ADR methods are not well established in Indonesia (as discussed in point 5 above). Negotiation is of course first sought to prevent any dispute from occurring. But when negotiation fails, real estate disputes, especially land-related disputes, are often brought directly to court proceedings.

Out-of-court mediation (mediation outside the required mediation process in a civil court proceeding) may be the best alternative dispute resolution mechanism to prevent a dispute going to court. In a recent development, the Indonesian Minister of Agrarian Affairs, who is also the head of the BPN, has publicly promoted the use of mediation to settle land disputes. The BPN has recently put in place internal regulations and guidelines for the mediation of land disputes. These regulations and guidelines are silent as to whether there will be any fees involved for mediation of land disputes.

Landmark High Court Decision Has Implications For All Social Housing Tenants and Local Housing Authorities

The recent High Court judgment in the case of London Borough of Haringey v Ahmed & Ahmed (Case No: HC-2015-003163) sets a precedent for altering terms in original tenancy agreements and will have far reaching implications for all social housing tenants and local authorities, advises law firm Miles & Partners LLP.

This long running case, involves Ms Ahmed, a disabled woman and the mother of 7 children, 5 of whom live with her in a four-bedroomed house owned by the Council. The family have lived in the property since 1988.

In October 1988 Ms Ahmed’s husband signed an agreement with the council naming him and his wife as the joint tenants. Just over a week later, Ms Ahmed’s husband went back to the council and asked them to change the names on the tenancy. He asked the council to take his wife’s name off the agreement and substitute his mother’s name. The Council agreed, and signed a new tenancy agreement.

Years later, the London Borough of Haringey considered Ms Ahmed to be a trespasser and they began possession proceedings in the County Court. In July 2015, the case was transferred to the Chancery Division of the High Court because of the complexities of the case. The final hearing took place on 18th and 19th May 2016.

His Honour Judge Jarman QC, sitting in this case as Chancery Judge, found that the initial agreement for the secure tenancy, which Mr Ahmed signed on his and his wife’s behalf, had never been properly determined by the Council and he dismissed the claim.

Lou Crisfield, Housing case worker at Miles & Partners LLP, who represented Ms Ahmed said: “This landmark decision means that Ms Ahmed retains her tenancy and her family can continue to remain in their home without fear of re-possession, after years of anxiety and uncertainty. In this case, the Judge found that Ms Ahmed could not have contemplated ending her interest in the tenancy so soon after finding a home for her family.

“It is not uncommon for local authorities and other social landlords to believe that they can alter the original terms of a tenancy agreement, including the names of the parties, without regard to the wishes and intentions of the original tenants. Councils and Landlords will now have to consider any changes to tenancy agreements much more carefully with more regard for the welfare of the tenants involved.”

The Curious Attraction of Israel to Foreign Law Firms

For a foreign law firm, Israel is no easy market to crack.

Israel is the ‘Lawyers’ Nation’, a country which boasts 126 lawyers per capita, with no signs of a slowdown.

Imagine: for every couple of public buses that goes past, there’s one lawyer. Attend a ball game? Probably three dozen lawyers in the stands. Someone hit your car when sitting in traffic? Put your head out the window and call for a lawyer – you’ll get a couple of quotes before the lights change. We’re being facetious; still, competition for a slice of the Israeli legal pie is cutthroat.

Add to that: Israeli legal fees are extremely low by international standards.

In Israel, a lawyer works the same long hours as their EU or US cousins, and earns a third or even a quarter of the fees. A legal intern might bill $75 per hour, and at higher rungs of the ladder, $250 per hour is considered not-too-bad of a deal for associates and partners.

In some sectors of Law, dog-eat-dog competition has lawyers scrapping for minuscule margins. In real estate, some firms charge a trifling 0.5% of transaction values. Great for buyers, virtual suicide for lawyers.

No Accounting for Taste

You’d think heavy competition and low fees would chase away foreign law firms.

Think again.

Actually, more than 85 foreign law firms operate inside Israel. In 2012 new legislation opened the door to non-Israeli firms, allowing them to practice laws of their country of origin without needing to join the Israel Bar Association.

Early arrivals were Greenberg Traurig from the US and London’s BLP (Berwin Leighton Paisner), both in 2012. It’s almost as if they were bursting for the chance to get into the Start-Up nation.

There’s been an explosion of foreign activity; large firms such as Skadden Arps Slate, Freshfields Bruckhaus Deringer, Linklaters, White & Case, and DLA Piper recently entered the Israeli market.

Mid-size firms are following suit, sometimes from unexpected countries: Ireland, Poland, Belgium, Cyprus, and Greece have turned their eyes to Israel. For some firms, presence is simply a desk occupied by a visiting partner, perhaps half a week in the month. For other, braver firms, a presence inside Israel means serious investment of money and human resources.

Yingke, China’s second-largest law firm, has made heavy inroads into Israel. Through a merger, they assembled Yingke Israel in 2013, partnering with local Israeli firm Eyal Khayat Zolty Neiger & Co (who specialize in high-tech, venture capital and corporate legislation).

It’s no accident a Chinese firm has become so prominent – here’s a clear reflection of Israeli government encouragement of stronger ties with China and Southeast Asia.

There’s something in the water

Look hard enough and you’ll find plenty of opportunities for foreign law firms.

Famously fueled by high-tech and biotech, there’s more to the Israeli market than meets the eye. Foreign investors take active interest in local industries such as food, insurance, defense and, most recently, natural gas.

As mentioned, in the Holy Land, fee rates tend to favour the client; there’s nothing too special about servicing average deals in these industries. However, from time to time a treasure chest drops, for example, in the form of massive outbound and inbound international M&A deals.

Hot sectors of the Israeli Economy


As far as High Tech is concerned, Israel remains a world leader. In 2013 a total of $380 million (USD) was raised by Israeli start-ups, of which 25% went to internet companies.

Historically, Israel has played a major role in global technological developments, with Intel’s Israel Development Centre in Haifa developing the 8088 chip used for the IBM PC, plus the game-changing Pentium and Centrino chips.

There’s big money in Israel’s App niche. The $1.1bn takeover of navigation technology-maker Waze Mobile by Google is a prime example. Waze Mobile 100 employees received a reported $120m. And the lawyers didn’t do too badly, either. Any firm taking a percentage on such a deal stood to earn handsomely.

Another Israeli navigation app, Moovit, transformed the way people use public transport, providing real-time travel information about buses and trains. The funding round was closed in 2013, at $28 million (USD). Not bad returns on a few blips on a moving screen!


Surrounded by hostile neighbors for 60-odd years, it’s no surprise that Israel makes considerable military and security investments. Lately, much has been made of Cyber security, the front line in the military-industrial merry-go round.

Cyber-Security is another profitable area for Israeli business, where canny lawyers can take a lion’s share of upside. The country boasts a newly-established National Cyber Defense Authority, described by Prime Minister Binyamin Netanyahu as an ‘air force’ to protect facilities, security agencies and civilians against cyber attacks.

This compliments the existing Israel National Cyber Bureau, created in 2011, which defends business and infrastructure. The Authority and Bureau now operate in close tandem, and wield real financial and political clout.

The sector has had significant benefits for Israel, with a recent spike in commercial activity. In November 2014 Aorato – an Israeli hybrid cloud security startup – was purchased by Microsoft for an estimated $200m (USD). In September 2014 CyberArk, Israel’s largest privately-held cyber company went public on NASDAQ, reflecting a valuation just shy of $0.5 billion (USD).


Elsewhere in the economy, the energy sector is also booming. This is largely down to discovery of two major natural gas reserves off the Mediterranean coast: Tamar (2009), the larger Leviathan (2010), the latter being the largest gas field in the Mediterranean Sea. At 622 billion cubic metres, Leviathan reserves are too large for Israeli domestic use alone. Supplying this gas abroad will create an entirely new revenue stream for Israel. Naturally there are disputes between private sector and government-backed, concerning how best to divide the cake.

Real Estate

In Tel Aviv property prices are rocketing. The city’s prime residential property market grew 75.4 % in the five years to the first quarter of 2014, according to a report by Knight Frank. Having said that, the International Monetary Fund warns: this bubble ready to burst.

Despite the huge volume of work, legal fees on real estate deals have hit rock-bottom – sometimes less than 0.5 per cent of the transaction value. The Israel Bar Association pushed for a minimum legal fee on property transactions to prevent ridiculously low undercutting. As yet, this hasn’t budged an inch.

Foreign Takeovers

On the horizon is the serious prospect of lucrative foreign takeovers of Israeli firms. In 2015 a law was passed, forcing conglomerates to sell assets, part of a broader Israeli domestic war on monopolies.

One headline-making deal was Chinese state-owned Bright Food buying a 56% stake in major Israeli food maker Tnuva in May 2015 for $960m (USD) from UK private equity group Apax Partners.


Business in Israeli is never a walk in the park, especially for lawyers. A small competitive market with low fees never sounds as the best business plan for a law firm.

Having said that, Israel still manage to become an incredibly attractive piece of land, with industries that are in constant growth and development, offering a dynamic technological world that has much to offer to the world.

The uniqueness of Israel lies mainly on its people’s spirit of enterprise; the desire to create new and profitable ventures, tenacity in driving ideas through to delivery, sheer will power, and the relentless wish to cut inefficiencies. There’s an energy and optimism in this little country that’s hard to beat.

Israelis drive a hard, bargain and are deeply skeptical. There are many cultural barriers to overcome, not least of which a fierce independence, and lack of trust in outsiders. Israelis exude the sense ‘we know best’, even when the facts scream loudly to the contrary.

Crack past the hard ‘sabra’ shell, through to the warm, soft fruit, and you’ll find fertile soil in Israel for a patient, perhaps slightly adventurous, legal mind.

About Robus:

  • As Israel’s leading legal marketing consultants, Robus see its outbound services to foreign law firms as part of the company’s DNA.
  • Representing a full spectrum of Israeli law firms, from boutique to Israel’s largest law firms, Robus is a valuable strategic partner for foreign law firms asking to obtain a foothold in Israel.
  • Robus consult many foreign law firms, among others – US law firms, European law firms from the UK, Germany, France and east Europe, all asking to provide legal services in Israel.
  • With a team of native English speaking jurists and lawyers, rich business experience and in-depth acquaintance with the Israeli legal market, Robus is the perfect starting point from which your law firm can set sail for new opportunities in Israel.
  • Founder of Robus, Adv. Zohar Fisher is a vastly experienced strategic and business advisor, and a commercial lawyer who has been practicing Legal Marketing for many years, inter alia, as the business development manager of one of the leading and largest Israeli law firms.

Disputes in Real Estate

1. Introduction

The Swiss real estate market is very important for the Swiss economy. A 2014 study by the Federal Office for Spatial Development summed up all real estate activities (from construction to real estate lawyers to portfolio managers to cement mixers) and concluded that the Swiss real estate market contributes about 18 percent to the Swiss gross domestic product. No other single industry has the same economic impact.

As a very important asset class, Swiss real estate is also of great importance to domestic and foreign investors (although the latter are restricted by law to commercial properties when it comes to direct investments in real estate).

Given the real estate industry’s economic importance, significant interests are often at stake when it comes to disputes. Such disputes can arise between private parties (individuals or companies) (cf. section 2 below) as well as between private and public parties (cf. section 3 below). Real estate disputes can be submitted to state courts or solved by way of arbitration or mediation (cf. section 5 below). Our overview is rounded up with a short excursus on real estate and criminal proceedings (cf. section 4 below).

2. Real estate disputes under civil law

2.1 General

Real estate disputes under civil law are found mostly in the fields of landlord and tenancy law, private construction law (e.g. relating to contractors’ liens) or in connection with transactions.

In Switzerland, such disputes are subject to the Federal Code of Civil Procedure and the Federal Tribunal Act.

The proceedings usually start with an attempt at conciliation before the conciliation authority. The case can then be taken to one of three courts, depending on the type and amount in dispute (District Court, High Court and Federal Tribunal). The proceedings can take several years. Court and lawyers’ fees are awarded to the party who wins the case.

2.2 Recent case study

A recent judgement by the Federal Tribunal defined the term luxury on the basis of a landlord – tenancy dispute.

This Federal Tribunal judgement arose from a dispute concerning an increase in the rent for a ten-room house on the Zurich Gold Coast. One of the questions to be decided was whether this property qualifies as luxurious as defined in Art. 253b para. 2 of the Swiss Code of Obligations (CO). According to this clause, the provisions on protection against abusive rent (according to Art. 269 et seq. CO) do not apply to luxurious rental apartments and single-family dwellings with six or more rooms (excluding the kitchen).

It is generally recognised that the definition of luxury according to Art. 253b para. 2 CO must be interpreted narrowly. According to this definition, a luxurious dwelling is a dwelling that exceeds the usual level of comfort and is quite rare. Luxurious features include, for example, marble entrance halls, a swimming pool and/or sauna, an exercise room, exceptionally large rooms, an impressive number of ancillary rooms, expensive floor coverings, expensive materials used for the interior, a private lift, a service entrance, several bathrooms and/or showers, a particularly big living area and big rooms, a big garden, very well maintained grounds, etc. It is not decisive whether one or more of these features exist, decisive is the overall impression made by the property.

The assessment whether a property qualifies as a luxury property based on its overall impression is made by the judge at his discretion. This means that the court is regularly required to do on-site inspections when proceedings are pending.

In the case at hand, the first-instance Landlord and Tenant Court therefore inspected the property. In its judgement which was subsequently confirmed by the High Court it weighed up the elements in favour of and against a qualification as a luxury property.

The Landlord and Tenant Court listed a number of factors which opposed the qualification of this specific property as a luxury property. These included the fact that most of the toilets and bathrooms no longer meet the latest standards and that the kitchen only contains the equipment that is usual these days (oven, dishwasher, microwave, glass-top stove). The Landlord and Tenant Court bemoaned the fact that the property does not have any parking spaces or garage and that it is not possible to reach the house by car.

The court also mentioned some factors which confirm the luxurious quality of the property, such as an impressive number of ancillary rooms (laundry, drying room, exercise room/bomb shelter, wine cellar, cellar unit, dressing room, shoe room), a generous entrance hall with marble floors, three living rooms with oak/beechwood parquet floors, four toilets, two bathrooms, two balconies, two terraces, location in an exclusive residential area with a view of Lake Zurich, total usable space of more than 300 m2 and attractive grounds of around 2,300 m2.

In its final judgement the Landlord and Tenant Court concluded that a detached house in a quiet and exclusive area with such big grounds and a wide, unobstructed view of Lake Zurich is something of a rarity. The appearance of the property, the number of representative rooms and the generous amount of space also mean that the interior does not simply provide the usual degree of comfort, even though the fittings are not the most modern (sanitary facilities and kitchen). The court of first instance therefore described the property as luxurious due to its overall impression.

The tenant was not satisfied and appealed this judgement. In the appeal to the High Court he complained that the fist-instance court did not consider the fact that the grounds of around 2,300 m2 mostly consist of useless land located on a slope. These grounds demand considerable maintenance. The High Court judged this objection to be unfounded and agreed with the Landlord and Tenant Court: a detached house on grounds of this size with an unobstructed view of the lake very close to the Zurich city centre in a quiet and exclusive area is very rare. It is in particular the size of the grounds and the location against a slope that give the house its view and privacy. The High Court was not willing to deny the property’s luxurious character because the grounds do not have any other use as claimed by the tenant.

The tenant was also not happy with the judgement of the High Court. He appealed to the Federal Tribunal, which again confirmed the judgement of the High Court. The Federal Tribunal did say, however, that it is not permitted to base the rental for residential property, even if it should be luxurious, on an arbitrator’s expert opinion. According to Swiss law, expert opinions by arbitrators and arbitration proceedings only apply to the rent of residential property under very limited conditions which have not been met in this case. The dispute was therefore referred back for a new judgement to the High Court, which referred the matter back to the Landlord and Tenant Court. The latter will now determine the permissible rent, for which a court expert opinion was requested. The parties can then appeal to the High Court and the Federal Tribunal again.

3. Real estate disputes under public law

Disputes under public law are mostly found in the areas of public construction law, planning law and environmental law. Such disputes often arise from the approval or refusal of a building permit required for a new building or the renovation or conversion of an existing building.

The relevant proceedings are subject to the cantonal laws and the Federal Tribunal Act. Decisions by the building permit authorities can usually be appealed to a superordinate administrative unit or a first-instance building appeals court. From there, the stages of appeal go through the cantonal administrative courts to the Federal Tribunal.

4. Excursus: real estate and criminal proceedings

4.1 General

Criminal proceedings do also exist in the field of real estate, in particular under building and planning law and environmental law.

4.2 Case study

In practice, criminal proceedings are initiated fairly often because properties are built in deviation of or without a building permit.

For example, an affluent buyer converted a skeleton building approved as an apartment building into a single-family dwelling, i.e. a luxurious villa. There were many deviations from the original building permit (one of the approved apartments, for example, was converted into a large workroom and another apartment was converted into a wellness area). As the architect did not inform the building permit authorities of these project changes in advance, both the buyer and the architect were in the end involved in criminal proceedings.

5. Alternative dispute resolution

5.1 Arbitration

Arbitration is a discrete option for resolving real estate disputes between private parties. Instead of the state courts, a private arbitrator decides the matter on the basis of an arbitration clause in the agreement between the parties. Some of the real estate associations issue such procedural codes and appoint the experts needed (such as SVIT, the Swiss Real Estate Association). Any claim freely disposable by the parties can be submitted to arbitration proceedings. Some restrictions apply to landlord and tenant law: in matters related to the lease and tenancy of residential premises the parties can only appoint the conciliation authority as arbitral tribunal.

An arbitration clause in a real estate contract could read as follows:

Herewith, the parties agree that any controversy arising out of or in connection with this agreement, including any disputes regarding the validity, legal effectiveness, alteration or termination thereof, as well as any legal relations or legal effects directly or indirectly stemming from this agreement shall be adjudicated by the Arbitral Tribunal for the Swiss Real Estate Industry. Excluding ordinary state courts, the arbitral tribunal shall apply the Rules of Arbitration for the Swiss Real Estate Industry (SVIT-Arbitral Tribunal) to resolve such controversies.

Subject to a different agreement among the parties, up to CHF 100,000 the arbitral tribunal shall be established as a one-member arbitral tribunal, exceeding that amount in dispute a three-member arbitral tribunal shall be competent. The decision of the arbitral tribunal shall be final.”

The advantage of arbitral jurisdiction is that the parties can mostly shape the course of the proceedings to meet their own needs and can also keep the dispute out of the public eye.

5.2 Mediation

Mediation is a voluntary out-of-court procedure that allows the parties to find an amicable solution with the help of a professional mediator. Mediation can replace proceedings before a state court in whole or in part and is always a good option if sustained legal peace has to be established again because the parties are co-dependent in the long term. In the real estate sector, mediation is therefore particularly suited to the settlement of disputes between neighbours.

Where Are Private Equity and Real Estate Funds Being Domiciled? What’s Changing?

The world we live in is constantly changing. It feels as if new regulation is appearing almost every day. With over 400 funds under administration, Augentius, the specialist Private Equity and Real Estate fund administrator, put together a panel to discuss what changes they are currently seeing in the market, if any, and what we are likely to see in the coming months.


Delaware and Cayman Limited Partnerships remain the popular options for both North and South American managers for funds, SPVs and related entities. It’s a “well-trodden” solution and understood by managers and investors alike. In addition some Latin American countries have recently signed double taxation treaties with Canada and this is bringing Ontario into play as a domicile.

The current exclusion of both the US and Cayman domiciled fund structures from “Passporting” under the AIFMD have created some complexities for fund raising in Europe. ESMA, the pan-European regulator is currently reviewing both domiciles but an early outcome is not expected. As a consequence ether the individual country National Private Placement Regimes (NPPRs) need to be used (appears complex and difficult at the outset – but manageable) or a “third party” manager can be set up within Europe and a “Passport” obtained to market the European parallel structure (overall a more expensive and less popular solution). There is increasing recognition that Reverse Solicitation is not the way forward.

As a general rule of thumb, it is only the larger managers that have confronted the fund raising in Europe issue. Applications under NPPRs can be time consuming and a Depositary needs to be appointed to support fund raising in Germany and Holland. However the time and effort has been rewarded and substantial sums raised. Smaller managers have been more content fund raising from their home territories although as the market becomes more comfortable with the processes this is likely to change.


Private Equity and Real Estate funds in Europe have traditionally used The UK and Channel Islands for the domicile of their funds. Luxembourg has always been popular for Special Purpose Vehicles (SPVs) and has become more popular in recent years as a fund domicile, as it has created the concept of Limited Partnerships within its fund laws. Ireland has also gained a little traction in recent months following the creation of an LP structure. Malta and others try hard to compete with the major fund domiciles but have not succeeded in attracting a large number of funds despite attractive legislation and incentives. In addition, recent changes in tax rules in different European countries have also resulted in some managers, particularly in the Nordics, reverting to locally domiciled structures.

Many countries in Europe see the advantage of maintaining/creating a financial services industry. The UK, Channel Islands, Luxembourg and Ireland have all created substantial industries (and employment) around the servicing of funds of all descriptions. To retain a competitive edge, countries often “adjust” their legislation to create an attractive environment for funds, the related structure and of course fund managers. This is exactly what Luxembourg and, more recently, Ireland have done – the result of which is that they are more accommodating to Private Equity and Real Estate funds than they have been in the past. The UK, one of the dominant domiciles in Europe, is currently reviewing its’ LLP legislation – again to ensure that the laws and applicable fund structures are attractive solutions.

As a consequence, fund managers have considerable choice within Europe as to where they can domicile their funds. Some managers selecting “offshore locations” such as the Channel Islands, with others selecting onshore locations such as the UK or Luxembourg.

However with BEPs on the horizon, and in particular the regulators attempting to stop “treaty shopping”, it is highly likely that managers will need to focus on the major jurisdictions that have been tried and tested over the years. Another issue to consider is the potential Brexit of the UK from the European Union. It is difficult to contemplate the ramifications at this early stage but for those managers considering raising a fund within the next few years this is not an issue that can be ignored.


India: GPs have typically used Mauritius to domicile their funds but since the Vodafone case, managers have been looking at alternative domiciles; notably Singapore. Although the treaty with Mauritius was recently ratified, many GPs, in particular the larger and better capitalised ones, have been building out their Singapore platforms domiciling their fund and management companies in Singapore. The country’s large network of double tax treaties and 13x and 13r tax exemptions have made the domicile attractive to many GPs. Investors are very comfortable with the robust regulatory framework put in place by the Monetary Authority of Singapore and there is an abundance of high quality service providers for managers to engage with.

The challenges that some managers face are the costs associated with operating in Singapore brought on by the significant substance requirements and regulatory hurdles. Indian managers will typically use a Singapore corporate entity, a PTE, as a pooling vehicle for offshore investors funds, via which they invest either directly into Indian portfolio companies or into an Indian domiciled investment trust.

China and Hong Kong: Chinese GPs raising USD funds will almost always structure the fund in the form of a Cayman LP. Domestic managers deploying RMB funds will use mainland vehicles such as investment trusts or domestic limited partnerships.

As China opens up its capital markets, we are seeing structures such as Shanghai’s QDLP (Qualified Domestic Limited Partnership) or Shenzhen’s QDIE, (Qualified Domestic Investment Enterprise),
allowing Chinese investors a channel via which to invest into offshore private equity.

Hong Kong based GPs either investing Pan-Asia funds or investing into China are for the most part using Cayman LPs, although with the extension of the profit tax exemption to include offshore Private
Equity funds, we may see more Hong Kong domiciled fund structures being used.

Singapore: The typical fund structure for Singapore based GPs investing into South/South East Asia is a Cayman (more often than not) or Singapore LP (we are seeing this more but not nearly as often as Cayman) with a Singapore master fund (a Singapore corporate) underneath.

This way managers take advantage of having the LP domiciled in a jurisdiction which investors are very familiar with, that has long standing tax benefits and a master fund that allows for a very wide number of double tax treaties to be accessed.

Australia: Domestic GPs will always use Australian open ended unit trusts and occasionally a Cayman LP as a feeder for offshore investors although this is not common.

Malaysia: Labuan, Malaysia’s equivalent of the Channel Islands has a Limited Partnership that we have seen used by some Malaysian GPs, but most continue to use Cayman.


In recent years the Private Equity and Real Estate world has been hit by a flurry of regulation – much of which it is still trying to digest and find the right solutions for. The next large piece of legislation in the form of BEPS is on the very near horizon and is already starting to have an effect on the way funds are structured. Some structures and domiciles may be more appropriate than others in this new environment – and the industry will go through another round of change.

The fund industry is currently in a constant state of flux – and the right structure and domicile used for the last fund isn’t automatically the right structure for the next. Managers and their advisors need to be aware of this and not just automatically “do the same as before”.

The Spanish Reits: A Valuable Instrument for Spanish and International Investors to Take Advantage of the Recovery of the Spanish Real Estate Market

1. The Socimi Regime

SOCIMIs (Sociedad Anónima Cotizada de Inversión en el Mercado Inmobiliario) are Spanish collective real estate investment vehicles that enjoy a privileged tax regime, provided that certain legislative requirements are met. The law governing SOCIMIs (the “SOCIMI Law”) was passed in 2009 but created a more restrictive and unattractive legal and tax regime that failed to satisfy investors’ expectations.

The Spanish regime departed too far from the standard European model when implemented in 2009 (19% Corporate Income Tax rate and the requirement of a minimum of €15m in share capital) and combined with the significant economic downturn’s impact on real estate transaction activity, no SOCIMIs were actually incorporated before 2014.

From 2008 to 2013, the Spanish commercial real estate market contracted in terms of volume to the point that deal activity consisted of a limited number of relatively small-scale transactions each year and there was no longer a fully functioning investment market.

This negative trend has reverted since 2014, with that year marking the inflection point for the Spanish real estate market’s turnaround. Since the end of 2013, the improvement in macroeconomic indicators has boosted confidence in Spain, resulting in greater interest and investment flows from international investors, which judged it a good moment to enter the Spanish market by taking advantage of the bottom of the cycle.

The SOCIMI Law was amended in December 2012 to make the regime more attractive. The reforms successfully converted the SOCIMI into a flexible and attractive instrument to invest in Spanish real estate assets.

The new SOCIMI regime provides for a 0% Corporate Income Tax rate and removes the asset diversification and leverage limitations, allowing SOCIMIs to trade on Spain’s alternative investment market (Mercado Alternativo Bursátil). Combined with the recovery and improvement of the real estate sector, investment through SOCIMIs has been boosted significantly. Listed SOCIMIs have accounted for almost 33% of the total investment volume in Spain and close to 75% of domestic investment (Source: Savills Market Report – Spain Investment, February 2015). SOCIMIs also accounted for over 20% of the total investment volume in the first quarter of 2015, maintaining the high levels of investment seen in 2014.

The SOCIMI structure has become one of the preferred routes for international investors seeking to benefit from the Spanish real estate market’s recovery. Foreign investors have their eyes on “blind pool listings” and others look for tailored structures, including the conversion of former standard real estate companies into SOCIMIs. For foreign REITs interested in Spanish real estate, the use non-listed SOCIMIs may also be an option, benefiting from 0% taxation under certain circumstances.

Naturally, local investors such as Spanish family offices or certain family-run business can also benefit from this advantageous regime solving specific issues (limitations on the deductibility of interest expenses, benefiting from a more favorable divestment regime, etc), including a reduction of its tax invoice. It is therefore worth revisiting their structures.

2. Requirements of the Socimi Regime

A) Corporate form and listing

The SOCIMI must take the form of a joint stock corporation (Sociedad Anónima) with a single class of registered share capital (minimum of EUR 5 million fully subscribed). The SOCIMI’s shares must be in registered form and nominative, being this requirement met if the shares are represented in nominative book entry form. This trading requirement must be met within 24 months of the election to become a SOCIMI.

In addition, the SOCIMI must be listed on a regulated market (for example, one of the four Spanish Stock Exchanges) or multi-lateral trading systems (such as the Spanish Mercado Alternativo Bursátil or MAB) either in Spain, in the European Union, in the European Economic Area or in any jurisdiction with which there is an effective exchange of tax information agreement with Spain.

As a general rule, the minimum free float for listing on the Spanish Stock Exchanges is 25%. In the case of MAB listing, shares representing either (i) 25% of the total share capital of the SOCIMI, or (ii) an aggregate estimated market value of €2 million, are distributed among investors holding individually less than 5% of the total share capital of the SOCIMI. Such calculation will include the shares made available to the liquidity provider to carry out its liquidity duties. No minimum number of shareholders is required by the MAB regulations and, in practice, their shares are not widely distributed among shareholders. However, as a listed entity, an actual free float requirement must be appropriately met.

B) Purpose and activities

The SOCIMI must have the following as its main corporate purposes:

  1. Acquisition, development and refurbishment of urban properties to be leased;
  2. The holding of shares of other SOCIMIs, collective real estate investment funds or foreign listed REITs that meet similar requirements to those applicable to SOCIMIs;
  3. The holding of shares in non-listed Spanish or foreign companies whose corporate purpose is the acquisition, development and refurbishment of urban properties to be leased, provided that they have the same compulsory dividend distribution obligation as that which applies to SOCIMIs and the same investment requirements and wholly owned by SOCIMIs or foreign REITs (“Sub-Socimi“).

The SOCIMI can only invest in one tier Sub-Socimis (i.e. only one level of Sub-Socimis is available); Sub-Socimis cannot hold shares in other companies. Any foreign subsidiaries must be tax resident in a jurisdiction which effectively exchanges tax information with Spain.

SOCIMIs are allowed to carry out other ancillary activities that do not fall under the scope of their main corporate purpose. However, such ancillary activities must not exceed 20% of the assets or 20% of the revenues of the SOCIMI in each tax year.

C) Investment and income requirements: 80%-20% rules

At least 80% of the SOCIMI’s assets must be invested in:

  1. Urban properties for lease;
  2. Land for development into urban properties for lease (if the development activities start within the 3 years following the acquisition);
  3. Shares in SOCIMIs, foreign REITs, Sub-Socimis or real estate collective investment funds.

There are no asset diversification requirements: the SOCIMI is entitled to hold one single asset. These qualifying assets must be held for a minimum three year-period from its acquisition date (or from the first day of the financial year when the company became a SOCIMI if the asset was held by the company before becoming a SOCIMI).

This 80% threshold should be calculated on a consolidated basis, taking into account the SOCIMI and its qualifying subsidiaries and the gross value of the assets (without taking into account depreciation or impairments).

At least 80% of the SOCIMI’s net income, excluding income arising from the sale of qualifying assets after the minimum three-year holding period has expired, must derive from:

  1. Leasing of qualifying real estate to non-related parties; or
  2. dividends from SOCIMIs, Sub-Socimis, foreign REITs, or real estate collective investment funds.

The Spanish tax authorities consider that the annual income should be measured on a net basis, taking into consideration direct income expenses and a pro rata portion of general expenses. These concepts should be calculated in accordance with Spanish GAAP.

All income obtained by the SOCIMI (including 20% income deriving from other non-qualified assets) is taxed a 0% Corporate Income Tax Rate provided the 80%-20% rules on assets and income are met.

Capital gains derived from the sale of qualifying assets are in principle excluded from the 80%/20% net income test. Conversely, the sale of qualifying assets before the end of the three year period implies that (i) such capital gain would compute as non-qualifying revenue; and (ii) such gain (and the rental income generated by the asset, if any) would be taxed at the standard Corporate Income Tax rate (28% for 2015 and 25% for 2016 onwards).

D) Dividend distribution

The SOCIMI is required to adopt resolutions for the distribution of dividends within the six months following the closing of the fiscal year of: (i) at least 50% of the profits derived from the transfer of real estate properties and shares in qualifying subsidiaries and real estate collective investment funds ( provided that the remaining profits must be reinvested in other real estate properties or participations within a maximum period of three years from the date of the transfer or, if not, 100% of the profits must be distributed as dividends once such period has elapsed); (ii) 100% of the profits derived from dividends paid by Sub-Socimis, foreign REITs and real estate collective investment funds; and (iii) at least 80% of all other profits obtained (e.g., profits derived from ancillary activities). If the relevant dividend distribution resolution was not adopted in a timely manner, a SOCIMI would lose its SOCIMI status in respect of the year to which the dividends relate.

In our view, the investment model for the SOCIMI should ensure that the dividend distribution requirement is met. However, in circumstances where SOCIMI’s leasing business does not generate enough cash to service debt and pay compulsory dividends in cash, the Spanish tax authorities have previously accepted that this requirement is met if the dividends are declared, but the resulting credit against the SOCIMI, net of withholding taxes, is immediately capitalised by the shareholders.

3. SOCIMI Tax Regime

A) Opting into the SOCIMI regime

The decision to apply the SOCIMI regime has to be agreed by the shareholders in a general meeting and communicated to the Spanish tax authorities before the last three months of the fiscal year (i.e. before 1 October if the fiscal year coincides with the calendar year). The tax regime is applicable from the beginning of the fiscal year in which the communication is duly filed with the Spanish tax authorities.

It is possible to opt for the SOCIMI regime even if its requirements are not met, subject to the SOCIMI meeting the requirements in the two years after the date on which the option was made. However, certain requirements of the SOCIMI regime are essential and must be met on the date on which the option is elected: (a) the dividend distribution policy; (b) main corporate purpose; and
(c) the registered nature of the shares.

The SOCIMI will lose the benefits of the tax regime if certain circumstances take place or if certain failures are not cured the following year. In such a case, certain taxation may be triggered and the entity will not be eligible for the SOCIMI regime for three years.

B) Corporate Income Tax

Generally, all income received by a SOCIMI or a Sub-Socimi (including capital gains) is taxed under CIT at a 0% rate. Nevertheless, rental income and capital gains stemming from qualifying assets being sold prior to the end of the minimum holding period (three years) would be subject to the standard CIT rate (28% in 2015 and 25% for 2016 onwards).

The SOCIMI will not be entitled to tax losses carried forward and tax credits, although if the company had any of such tax assets in its balance sheet before its application for the SOCIMI tax regime, those assets could be used if the SOCIMI obtains income or gains subject to the general CIT rate.

Nevertheless, the SOCIMI will be subject to a special 19% levy on the amount of the gross dividend paid to shareholders which do not qualify for the SOCIMI regime and which own 5% or more in the capital of the SOCIMI and are exempt from any tax on the dividends or not subject to tax at, at least, a 10% rate on dividends received from the SOCIMI. The Spanish Tax Authorities have issued certain rulings stating that the 10% test to be carried out in order to identify substantial shareholders shall be focused on the tax liability arising from the dividend income considered individually, taking into account (a) exemptions and tax credits affecting the dividends received by the shareholder, and (b) those expenses incurred by the shareholder which are directly linked to the dividend income (e.g., fees paid in relation to the management of the shareholding in the relevant SOCIMI distributing the dividends, or financial expenses (interest) deriving from the financing obtained to fund the acquisition of the shares of the relevant SOCIMI). In addition, the Spanish Tax Authorities have confirmed that the withholding tax levied on a dividend payment (including any Non-Resident tax liability) should also be taken into consideration by the shareholder for assessing this 10% threshold. Hence, if these dividends are subject to withholding tax in Spain at a rate equal to, or higher than, 10%, said 19% levy should not be triggered. Otherwise, a careful review will need to be carried out of the substantial taxation of the shareholders’ dividend.

C) Taxation of non- resident Shareholders

Dividends distributed to non-resident Shareholders not acting through a permanent establishment in Spain are subject to Non-Resident Income Tax (“NRIT”), at the standard withholding tax rate at 20% (19% for 2016 onwards). No exemptions are allowed on dividends distributed by a SOCIMI.

This standard rate can be reduced upon the application of a convention for the avoidance of double taxation (“DTC”), or eliminated as per the application of the EU Parent-Subsidiary Directive as the SOCIMI may qualify for its application according to the Spanish Tax Authorities criterion (the application of the EU Parent-Subsidiary withholding tax exemption requires the fulfillment of certain requirements and includes an anti-abuse provision when the majority of the voting rights of the parent company are held directly or indirectly by individuals or entities who are not resident in a EU Member State or in a European Economic Area).

Capital gains derived from the transfer or sale of the shares are deemed income arising in Spain, and, therefore, are taxable in Spain at a general tax rate of 20% in 2015 (19% in 2016 onwards), unless the relevant DTC prohibits Spain from taxing such capital gains.

Nevertheless, capital gains obtained by non-Spanish Shareholders holding a percentage lower than 5% in a listed SOCIMI will be exempt from taxation in Spain provides the shareholder is tax resident in a country which has entered into a DTC with Spain which provides for exchange clause information (most of the DTC entered into by Spain). This exemption is not applicable to capital gains obtained by a non-Spanish shareholder acting through a country or territory that is defined as a tax haven by Spanish regulations

Strategic Development Zones – A look at Dublin Docklands

In Ireland, Strategic Development Zones (SDZs) are designated by the Government pursuant to Section 166 of the Planning and Development Act 2000. The advantages of a Strategic Development Zone designation is that special planning and development rules pertain in an SDZ. Essentially the rules make it simpler and faster to obtain planning permission for a development which is in unison with the planning scheme in a particular SDZ. There is also the ancillary benefit that the decision of the planning authority cannot be appealed to An Bord Pleanála (Ireland’s Planning Appeals Board) by either the applicant or a third party, thus fast-tracking the planning process.

An SDZ planning scheme sets out how a zone will be developed, the type and extent of the development, the design of the development such as maximum heights, external finishes and general appearance, proposals in relation to transport/traffic management and parking, proposals regarding the provision of services on site, proposals to minimise adverse environmental consequences and for residential developments proposals relating to the provision of amenities, facilities and services for the community.

Prior to the introduction of the SDZ planning scheme, planning and development in the Dublin Docklands was governed by section 25 of the Dublin Docklands Development Authority Act, 1997 and administered by the Dublin Docklands Development Authority (which is in the process of being dissolved). The benefit of a Section 25 planning for developers was (a) it short-circuited development commencement and completion time lines, (b) created a cohesive and financially viable strategy for local development, ensuring local infrastructure issues and site specific issues were addressed, and (c) resulted in prior consultation with the community and businesses in the area.

Regrettably due to the Irish banking implosion and economic downturn, investor confidence was depleted and the regeneration of the Dublin Docklands lapsed into a developmental coma. In an attempt to reignite development in the Docklands, the Government on 18th December 2012 designated the North Lotts (which is located on the north side of the river Liffey in Dublin 1) and Grand Canal Dock (located on the south side of the river Liffey in Dublin 2) as a new SDZ. The new SDZ planning scheme seeks to unlock the potential of the Docklands, Dublin’s inner city, the city’s proximity to the sea and its cultural and historical buildings. The Government believes by leveraging such potential the State will benefit both economically and socially. The North Lotts and Grand Canal SDZ are divided into five hubs:-Spencer Dock, Point Village, Grand Canal Dock, Britain Quay and Boland’s Mill.

North Lotts and Grand Canal were designated as an SDZ due to:-

  • their economic and social potential to the State;
  • the utilisation of public investment in infrastructure; and
  • to effect policies contained in the Dublin City Council Development Plan.

Over the last 20 years and to much fanfare a good portion of the Docklands has been redeveloped. However, there are still a number of sites and vacant plots around North Lotts and Grand Canal which have latent developmental potential. The North Lotts and Grand Canal Docks SDZ comprises 66 hectares with approximately 22 hectares yet to be developed. This area has the potential to create accommodation for 5,800 people and 23,000 workers. The Samuel Beckett Bridge is seen as the link between the North Lotts and Grand Canal Docks and brings both areas under one SDZ. In addition two new pedestrian and cycle bridges are also planned across the river Liffey from Forbes Street to New Wapping Street and from Sir John Rogerson’s Quay to Castleforbes Street (costing up to €7m each). There is also a proposal under the Transport 21 and Smarter Travel plan for an underground Dart with a station at Spencer Dock, Dublin 1. This will facilitate the interchange of the Dart, Luas and regional trains. The Dublin City Development Plan 2011-2017 notes the Docklands as one of few locations in Dublin with sites capable of hosting capital city landmark buildings. It is no coincidence that Google, Twitter, Facebook, Dogpatch Labs and Yahoo have decided to open their European head quarters in an SDZ and the area is fast becoming known as the “Silicon Docks”.

The Docklands SDZ planning scheme identifies six key themes:-

  1. Sustainability based on meaningful civic governance and engagement with the community.
  2. Economic renewal and employment. The Docklands is well placed given the variety of sites it holds to endorse national, international and local enterprises.
  3. Quality of living – the planning scheme seeks to ensure a balance between modern living, quality of life and access to employment for current and future residents.
  4. Identity – Dublin has a unique maritime character which can be utilised to advertise its heritage and rich landscape.
  5. Infrastructure – good infrastructure is essential to support the four themes mentioned above.
  6. Movement and Connectivity- this theme recognises the importance of connecting the east, north and south of the city with the city centre, with supports such as drainage, social infrastructure, electricity, health and educational facilities. Movement and connectivity is also required to support themes 1-4 mentioned above.

The above themes provide the outline for proposed developments in the SDZ across the five hubs. While particular planning requirements apply to each hub, certain elements are deemed critical/fixed for a sustainable Docklands and must be complied with, while others which provide for local conditions are treated more flexibly. Fixed elements relate to:-

  • development quantum. It is calculated that 1,800 residential units and 200,000m2 commercial space can be built on North Lotts and 830 residential units and 105,00m2 commercial space in Grand Canal,
  • the use ratio. The target is a 50:50 residential/commercial ratio over the area with 30:70 in the commercial hubs,
  • the public realm. The public realm is a fixed element so as to ensure public areas, new streets and lanes are constructed within the development timeframe,
  • the block building line. The block building line seeks to ensure a congruent street scape and avoid buildings with projecting canopies or kiosks which could impinge on the character of buildings already in the area,
  • the height of the block. The height of buildings is also taken into consideration. Large city blocks facing onto Mayor Street in Dublin 1 can be 6 storeys for commercial or 7 storeys for residential. Due to the width of the river and campshires an 8 storey commercial or 10 storey residential will be permitted. In four of the hubs e.g. Point Square located in The Point Village, 22 storeys can be accommodated while 12 storey’s commercial can be accommodated in Station Square. In the Boland’s Mill hub, buildings can be no higher than 15 storeys,
  • other matters such as block shadowing, heritage and protected structures, density and plot ratio, design material and external finishes are also considered.

The Grand Canal Dock and North Lotts Section 25 Planning Scheme (the predecessor to the SDZ planning scheme) resulted in the construction of the Grand Canal Theatre, the trendy mixed residential and commercial quarter in the Grand Canal area, the Convention Centre and Point Village.   These developments have been huge influencers in attracting Google, Twitter, Linkedin and Synga Games to Dublin. With the decision to dissolve the Dublin Docklands Development Authority many queried the validity of existing Section 25 Certificates, which have yet to be acted upon. The Dublin Docklands Development Authority (Dissolution) Bill 2014 proposes the following for existing Section 25 Certificates:-

  1. The Section 25 Certificate will be treated as abandoned where the application was submitted but had not yet been determined from the date to be designated by the Minister;
  2. A Section 25 Certificate will no longer be valid (from a date to be designated by the Minister) where the certificate has issued but substantial works have not been carried out or the development has not commenced. Unhelpfully, the Dublin Docklands Development Authority (Dissolution) Bill 2014 does not define “substantial works” so the legislators may need to look at that before finalising the Bill;
  3. Where a Section 25 Certificate has issued and substantial works have been carried out these certificates will be effective for a period of 3 years but if the development is not completed within the 3 year period the Certificate will no longer be effective;
  4. Where substantial works have been carried out under a section 25 Certificate, in order to complete those works, an application for a section 34 permission under the Planning and Development Act 2000 can be applied for. This section 34 permission (upon being granted) would replace the section 25 Certificate albeit any works carried out prior to the section 34 permission would not be prejudiced and invalidated.

The Government has also introduced other initiatives which are aimed to facilitate regeneration in the Dublin Docklands and utilise unexploited amenities such as:-

the Cruise Traffic and Urban Regeneration of City Port Heritage (Local Action Plan for Dublin) which seeks to develop cruise tourism, contribute towards the regeneration of North Lotts and Grand Canal Dock leading to the creation of employment and a synergy between Dublin City and Dublin Port.

The Government has also introduced (the “Green IFSC”) initiative which will back public private partnerships in the green finance sector. The initiative focuses on low carbon emissions and aspires to attract companies to a green financial services hub where finance, trade and skills can be exchanged. The planned Green Irish Financial Services Centre seeks to anchor itself on the success of the IFSC and become a key player in the global carbon market and promote Ireland as a carbon management centre of excellence.


The SDZ designation should allow for a fast tracking of the construction of office and residential accommodation within the SDZ, helping to alleviate any current perceived shortages. The National Asset Management Agency (NAMA) which controls 70-80% of sites and buildings in the Docklands area plans to invest c.€2bn in redeveloping the area and has indicated it is amenable to entering joint ventures and releasing sites for development. There are other proposals, such as the €150m redevelopment of the landmark Boland’s Mill property. The planning application includes proposed office, residential, cultural and retail development, totalling almost 400,000 sq. ft. (approx. 36,800 sq. m.). The development will comprise mostly offices, 42 apartments, a cultural and exhibition space, in addition to retail and restaurant space. The planning application also envisages the creation of a new urban quarter with new streets and open spaces, including a large public square, which will open on to Grand Canal Dock. Public commentators have opined that all this bodes well for the economy and property market, leading to the creation of jobs, which was one of the primary drivers in the regeneration of the Docklands.