Viceroy says re-drafting LA lawsuit against Five in Dubai Palm hotel dispute

US judge dismissed claim against Viceroy by Five Holding this month, subject to appeal

Dubai's Palm Jumeirah island. Ali Haider / EPA

Viceroy Hotel Group, the hotels company headquartered in the United States, said it is drafting a fresh case against Dubai-based real estate company Five Holding in a Los Angeles court, as part of a dispute over alleged mismanagement of a luxury hotel on the Palm Jumeirah.

“Viceroy is in the process of expanding its lawsuit and expects to file an even more robust complaint against Five soon,” a statement from Viceroy said on Wednesday night.

Earlier in the day, Viceroy said a Los Angeles judge had dismissed a claim filed in September by Five and affiliated parties alleging financial fraud and mismanagement against the hotel group.

Five responded by sending The National a letter from its lawyer in the US, noting that Viceroy's counter-claim in the LA courts - which alleged fraud, extortion, conversion and unfair business practices against Five Holdings and affiliated companies - had also been dismissed.

This was on the grounds “Viceroy failed to state any of their claims against Five or its officers or directors”, the letter said.

But Viceroy said on Wednesday the court had granted it permission to amend and re-submit its claim.

“On March 7 the court dismissed Five’s lawsuit entirely, subject only to a right of appeal to a higher court, which — given the strength of the court’s decision — would be unlikely to succeed.”

The court found that the claimants’ “trade libel, defamation and intentional interference claims against Viceroy lacked merit”, Viceroy said.

“In contrast to Five whose claims are terminated, Viceroy was allowed by the judge to amend its claims against Five and bring them back to the same court for further review,” it added.

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Five said in a statement on Thursday: “Five will not comment on its legal strategy moving forward or any litigant’s right to amend or appeal.

“Suffice to say that on-date the Los Angeles Superior Court has thrown out all of Viceroys’ claims against Five.”

The dispute between the parties relates to the running of a hotel on Dubai’s Palm Jumeirah. In 2013, Viceroy signed a management agreement with the hotel’s owner, Five Hotel, the hospitality subsidiary of Five Holding, under which Viceroy would operate the hotel.

On June 19 last year, Five terminated the contract with Viceroy and changed all of the hotel signs overnight from the Viceroy Palm Jumeirah Dubai to Five Palm Jumeirah Dubai.

A few days later, on June 22, Viceroy obtained an injunction from DIFC Courts preventing Five from seeking to stop Viceroy managing the hotel. Five’s managing director, Indian millionaire Kabir Mulchandani, disputes the validity of the injunction.

Viceroy has since claimed a Dubai Judicial Committee decision in November ruled by DIFC Courts has the power to uphold the injunction, but Five’s statement on Wednesday contested this, arguing that it, not Viceroy, is the “legal operator”.

“[Five Hotel] would like to state that it is the legal operator of the hotel pursuant to licences issued by all the concerned authorities in the emirate of Dubai,” the statement from the company’s US lawyer said.

“We are further advised that there are no outstanding judicial orders of any nature against Five Hotel whether from Dubai Courts or the DIFC Courts.”