Nakheel counter-sues firm in property maintenance case

Nakheel has hit back at a contractor seeking payments in the Dubai World Tribunal, claiming that the company has not properly completed its end of the bargain.

Nakheel has struck back at a construction contractor seeking Dh49 million (US$13.3m) in allegedly unpaid fees and damages, claiming the company did not properly maintain more than 1,300 villas on the Palm Jumeirah.

Construction Delivery Group (CDG), registered in the Ras al Khaimah Free Zone, originally filed the lawsuit against Nakheel, Nakheel Asset Management and Propertycorp, another subsidiary of Nakheel, in the Dubai World Tribunal in August. Nakheel is owned by Dubai World.

CDG had been hired to provide facility management services to 1,224 villas and 114 "Canal Cove" homes on the Palm Jumeirah between March 2007 and January last year, but it claims it had not been fully paid and that the contract was wrongfully terminated.

Nakheel has denied those claims and is now seeking its own damages from CDG, claiming it did not appropriately repair or report defects in the villas.

Failure to document problems correctly in the villas also led to Nakheel and its subsidiaries being unable to recover money from the original contractors that built the villas, legal documents allege.

The claim cites one case in which Propertycorp discovered that JC Maclean - a contractor hired to address nagging problems in the villas - had charged Propertycorp for Dh12.6m of costs that should have been paid by a warranty issued by the original contractors.

The losses have not yet been quantified, the documents say. The Dubai World Tribunal was set up in December last year to handle claims against the conglomerate after it entered financial difficulties.

So far, 29 cases worth a total of $376.3m have been filed. CDG's case was the first filed by a construction contractor.

Nearly all of the 91 banks owed money by Dubai World have agreed to a restructuring plan for $24.9 billion worth of debt, it was announced on September 9.

Now the conglomerate is trying to finalise negotiations with trade creditors, including construction companies.

Cases in the tribunal range from a dispute about end-of-service benefits to buyers of several islands on The World seeking to cancel their purchases because Dubai World subsidiaries allegedly breached their contracts.