Four companies sue The World
Four companies have filed lawsuits against The World, a subsidiary of Nakheel, claiming breach of contract. The World, located 4km off Dubai's coast, is made up of reclaimed islands resembling a map of the globe. It was one of the most expensive and ambitious projects from Nakheel during the property boom but it has since stalled because of a decline in prices and transactions during the global downturn.
Three of the claims are from developers related to the same Sharjah-based holding company, Gulf Global Group. The companies, Global Realty Partners, Gulf Developers and Frontline Developers, filed claims worth a combined total of US$15.3 million (Dh56.19m). All three list the same phone number and address in the Sharjah Airport Freezone. A fourth suit was filed by Gulf Heights Holding Investments but no damages claims are mentioned in documents currently available to the public. The claimants declined to comment yesterday.
Nakheel declined to comment on the lawsuits but a spokeswoman said construction had begun on the projects for Josef Kleindienst, who owns Sweden, Austria, Monte Carlo and Germany, as well as on projects by other developers on Lebanon, Spain and France. Deepak Arora, the managing director of City Diamond Contracting in Dubai, which is working on the Kleindienst projects, said his team had already set up on site at The World and construction would begin within a few weeks.
"We have mobilised already and set up our camp but we are sorting out a few things in the design so it will take another few weeks," he said. The Kleindienst projects, called "The Heart of Europe", will initially include 20 villas for holidaymakers before expanding to a hotel and other features. Still, many of the original buyers and developers associated with The World have said their projects are on hold because of a lack of financing available from banks and low appetite for sales of homes.
The Dubai World Tribunal, a special court set up by the Dubai Government late last year, is becoming an increasingly important venue for disputes associated with the conglomerate. While almost all the creditor banks of Dubai World agreed to restructure its $24.9 billion debt, some trade creditors and individual investors have started filing cases at the tribunal rather than come to a new agreement.
There are now a total of 17 cases with the tribunal, with total damages being sought of about $40m. However, that amount does not include all of the cases where significant money is at stake, such as the request from Bin Belaila Baytur General Contracting to stop hundreds of millions of dirhams' worth of performance bonds being cashed by Nakheel. So far, the cases include a man who claims his Maserati was destroyed by a flood caused by a pipeline owned by Dubai World and a woman seeking her end-of-service benefits after losing her job to a contractor that is trying to get full payment for contracts to build Nakheel property developments. None have reached the point of a judgment from the tribunal.
Published: October 11, 2010 04:00 AM