Engineering firm 'too late' with unpaid fees claim against Nakheel

An engineering firm that filed a claim this year with the Dubai World Tribunal in an attempt to win back Dh41.6 million in unpaid fees has lost its case because its claim came too late.

According to documents filed by the Dubai World Tribunal on its website this week, the court ruled that it did not have the jurisdiction to consider new cases filed against the property developer Nakheel after it separated from former parent company Dubai World in 2011 - even if both parties had agreed to it at the time.

In a court order by tribunal judges Sir Anthony Evans and Sir John Chadwick, the tribunal said it did not have the jurisdiction to hear the claim and ordered claimant US engineering firm CDM Smith to pay Nakheel's legal costs of US$24,000.

The tribunal was established in 2009 to handle claims relating to Dubai World and its subsidiaries, including Nakheel, the developer behind Palm Jumeirah and The World, the collection of man-made islands. But in August 2011 Nakheel formally severed ties with Dubai World when it completed a $16 billion financial restructuring.

Shortly after the Dubai Government's department of legal affairs issued a policy decision removing new Nakheel cases from the tribunal.

However, in its claim, issued in August 2012, CDM said that it was owed Dh38m for work its subsidiary had completed in 2007 and 2008 on the Palm Deira, Dh3.1m in fees for work on the company's Al Furjan villa project, Dh365,000 for work on Discovery Gardens and another Dh40,000 for work on Nakheel's Gardens District.

It said that even though it had issued the claim in August, well after Nakheel split from former parent Dubai government investment company Dubai World, it should be allowed to have the case decided by the tribunal because Nakheel had agreed to it in a legal agreement made when it was part of the giant state-owned investment company.

Representing CDM, Thomas Wilson of Kilpatrick Townsend legal consultancy, said: "The defendant entered into the restructuring agreement when it was a subsidiary of Dubai World. The defendant's agreement that the tribunal would have exclusive jurisdiction to decide disputes arising from the agreement and to waive any objection it might at any time have to such jurisdiction was an integral, substantive provision of the restructuring agreement."

The decision to exclude cases against Nakheel filed after the company split from Dubai World caused controversy when it was announced nearly two years ago, with many companies and property purchasers complaining that the decision would make it harder for them to get their money back.

The Dubai World Tribunal provides a streamlined process, in English, to hear complaints, using the rules of the Dubai International Financial Centre Courts. The tribunal follows international common law standards, including the recognition of binding precedent.

Final trials in the tribunal are heard by a panel of judges and decisions are posted on the court's website.

Outside the tribunal, Nakheel cases are more likely be handled by the Dubai civil courts, which have stricter rules about oral evidence and limit the opportunity to cross-examine witnesses.

"The findings confirm that the Tribunal will not handle new cases against Nakheel following its separation from Dubai World," said a Nakheel spokesman.