Legal notes concerning the template of Musataha agreement issued by Department of Municipalities and Transport on 28/10/2014 and the template of Musataha agreement issued by Abu Dhabi Investment Office on 30/8/2020
The following are the most prominent terms and provisions stipulated in the Musataha Agreement 2020:
At least fourteen (14) days before the commencement of the project and all the pre-conditions for substantial commencement are fulfilled, the Investor must serve written notice on the Owner indicating its intention to start work.
The owner shall permit the investor during the works period to have access to (but not legal occupation of) the adjoining lands for the carrying out of the Works only (and for no other purpose) which the Investor shall be solely responsible for and shall undertake entirely at its own cost subject to the terms of the agreement.
The investor may make any alterations or additions to the plot and/or to project provided that such alterations and additions are not structural in nature. The investor may not make any other material alterations or additions to the Plot or any Improvements to the project without the prior written consent of the owner.
Musataha Agreement 2020 contains detailed provisions on the Musataha Fee and the calculation mechanism, for example the agreement clarified that the Musataha Fee commencement date is the last day of the period assigned for designing and constructing the Project.
The investor shall at its own cost obtain and maintain throughout the term, insurance with an insurer approved by the owner, and such insurances shall be in the names of both the investor and the owner, however the owner shall only be entitled to claim for direct damages suffered by it.
Mortgage to banks:
Subject to the current Laws and to the terms and conditions of the agreement, the investor may create a mortgage over the Musataha Right for the purposes of financing the Project, pursuant to a mortgage of Musataha Right to any bank as the investor shall in its absolute discretion deem fit, provided that the term of any mortgage shall not exceed the remainder of the term of the agreement.
Intellectual Property Rights:
Contrary to Musataha Agreement 2014, Musataha Agreement 2020 includes clauses to deal with intellectual property; as each Party shall retain its rights to all its own trademarks, services marks, trade name, business name, logo, trade secrets, technical expertise or any right of form of a similar nature and having equivalent or similar effect to any of those that may subsist anywhere in the world
The Investor will allow the Owner a royalty free license to use any plans for the Investor’s Works or the development of the Plot. The Owner’s license to use the plans shall be restricted to the purpose of the execution of the Investment Project on the Plot or any Improvements only.
Contrary to Musataha Agreement 2014, Musataha Agreement 2020 includes clauses to deal with the confidentiality of the information.
Transfer to an Acceptable Transferee:
This clause is a new one to deal with the assignment of the agreement as If there is no Mortgage on the Musataha Right, the Investor shall have three (3) months to transfer the Investment Project to an Acceptable Transferee, following a Notice of termination issued by the Owner in accordance with Clauses 12-1 and 12-2. If by the expiration of the ninety (90) day period, the Investor has not completed the transfer of the Musataha Right to such Acceptable Transferee, the Owner may terminate this Contract in accordance with its provisions.
Musataha Agreement 2020 sets out detailed provisions concerning the termination before the project completion and the termination after the project completion. For example, the default remedy period granted to the investor in case the default happens after project completion is more than the default remedy period for default occurs prior to the project completion.
Musataha Agreement 2020 contains many provisions protecting the lender.
For example, the owner may not terminate the contract due to the investor default except after granting written notice to the lender to give the lender a chance to remedy the default.
In case of termination due to the investor default, the lender may ask the owner to grant him new Musataha of the plot for the unexpired residue of the term.