02 February, 2008

"US developer in $1bn Dubai property test case"

"A US real estate developer is suing a quasi-governmental Dubai firm for $1bn in damages, claiming its investment in a project in the emirate’s property boom was unjustly cancelled amid a contractual dispute.

The developer, Capital Partners, had in July 2005 made what was planned to be one of the largest foreign investments in the region’s business hub, when it announced plans for River Walk, a mixed-use $1bn project in the busy internet business park located on prime land near the trunk of the reclaimed Palm Island."
The dispute revolves around the existence of a protected archaeological site owned by the emirate’s tourism department within the 1.7m sq ft plot. In October 2005, Capital Partners says it refused to make a second scheduled payment as its partner, Dubai’s Technology, Electronic Commerce & Media Free Zone, or Tecom, had illegally sold it land that belonged to another government entity.

“Tecom misrepresented what they own,” said Jonathan Wride, managing director of Capital Partners. “I am very confident we will receive a judgment in our favour.” Capital Partners, which filed in August, hopes to receive a result in the summer.

Tecom, however, says it had every right to cancel the contract because of the non-payment. The media and internet business cluster owned by the ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, claims the archaeological site was never brought up by the US investors before they failed to meet the tight payment schedules. Tecom, in any case, owned the archaeological site, an official said.

--more over there


rosh said...

"revolves around the existence of a protected archaeological site"

Does anyone know of the site in reference?

DUBAI JAZZ said...

Is it possible to say (for the sake of argument) that Capital Partners may have found a loophole in the agreement with Tecom that could fetch them more money in a lawsuit than the investment itself?

Assistant Editor said...
This comment has been removed by the author.
the real nick said...

Jazz, that's unlikely. The maximum damages that could be awarded would surely not be more than the maximum profit that could feasibly be made from this investment, which would be less than the 1bn. They are unlikely to have lost all 1bn that they were going to invest?

rosh said...

Nick - perhaps they are seeking added punitive damages (which usually is the largest chunk of a lawsuit) + interest + lost business opportunity and other menial costs?

I'd still like to know of the protected archaeological site - anyone, anybody know of this?

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