The Abu Dhabi Authority for Culture & Heritage (ADACH) is locked in a dispute with a UK architect over £11.3 million (Dh65m) in fees on the development of its Qasr Al Hosn cultural centre.
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Austin-Smith:Lord, a 62-year-old architecture firm, entered insolvency last week, saying it could not pay its bills due to the money owed on the project.
ADACH is challenging the architect's claims.
"There was a contractual obligation to Austin-Smith:Lord that has been paid in full," ADACH said. "There are other amounts that are being reviewed thoroughly, however."
The fees in dispute were not covered by the contract, ADACH said.
"Due diligence is being carried out on this matter as a matter of urgency as part of a settlement process," the authority added.
Jennifer Dixon, a partner at the London-based architect, said ADACH had stopped making payments in June, but had since paid £3.1m. The recent payment was not enough to save the firm from filing a company voluntary agreement (CVA) to protect against creditor claims, Ms Dixon said.
Austin-Smith:Lord, which has five offices in the UK, was already affected by the slowdown in Britain's construction industry. Two years ago it had 280 staff; now it has 65.
Most of the remaining staff are two months behind on salary, Ms Dixon said. ADACH had agreed to pay the money owed by September, but it did not happen, she said, with some of the delayed payments dating back to the spring of last year.
"They started paying less than the invoices," Ms Dixon said. "They built up a cumulative deficit and it became increasingly unbearable."
ADACH said the disputes had stemmed from a standard review of payments in Abu Dhabi.
"In the current global economic climate it is not uncommon for government contracts to be reviewed and or delayed," ADACH said.
ADACH has been cutting back on staff recently, but the payments on the cultural project were unrelated, the agency said.
"There is an Emiratisation programme being carried out across all major UAE entities, and those staff cuts were a part of that process," the authority said. The Austin-Smith:Lord "contract is a unique stand-alone project, in terms of ADACH's business, and separate from the day-to-day running costs of the authority".
Austin-Smith:Lord's major creditors were the engineering firm Arup, and Buro Four, a consultancy that also worked on the Abu Dhabi centre.
Last month the creditors agreed to a settlement that would allow the architect to continue operating, accepting 85p for every £1 owed, according to reports in the British trade press.
Austin-Smith:Lord is still hoping for a settlement, Ms Dixon said. "There is still time to limit the collateral damage and human damage."
The cultural centre is an important project for the UAE and Austin-Smith:Lord would "do everything in its power" to make sure it continued, she said.
"This is not malice on anybody's part," she said. "This is the inability to communicate up through the levels of the Abu Dhabi Government the criticality of our situation. I do not believe for a moment any harm was intended."