Lawyers rejoice as property slump turns nasty

zoom

While the UAE grapples with the downside of the economic curve, the real estate crash is providing rich pickings for lawyers called in to deal with a rash of construction lawsuits.

There has been a sharp rise in litigation cases in the UAE as cash-short developers struggle to pay contractors, revealed lawyers from the country's largest law firm last week.

Speaking on the sidelines of a legal seminar Raza Mithani, a senior associate with Al Tamimi, told Arabian Business that construction firms are increasingly turning to the courts to recover unpaid fees.

"We are seeing a huge upturn in the amount of litigation that is coming through which suggests, among other things, that a number of contractors are not being paid," he said.

"We are experiencing a significant rise in arbitration work across a variety of sectors.

"We are dealing with a number of truly massive claims which we believe to probably be some of the largest ever arbitrated in the UAE," he continued, adding that the value of some suits exceeded $100m.

Arbitration is a legal process for resolving disputes outside of the courtroom.

A downturn in the UAE's property market, combined with a liquidity freeze caused by the global crash, has left many developers with outstanding debts totalling millions of dollars.

Some $636m is owed to British consultants and engineers alone in unpaid fees from work undertaken in the UAE, according to the UK's Association for Consultancy and Engineering (ACE).

WS Atkins, the engineering consultancy that designed the Burj Al Arab, has said it is owed $39.7m from developers in the Middle East.

ACE is reported to have asked Lord Mandelson, the British Business Secretary, for diplomatic intervention.

Cash is the lifeblood of the construction industry and, until recently, the UAE's heated real estate market ensured a steady flow of funds.

The global crash, however, sapped demand for property and as unit sales - often the only source of revenue for developers - dropped off, cash flow dried up.

Now contractors along the supply chain, from construction firms to architects, have a growing pile of invoices and little hope of them being paid.

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

Property Residence Visa Does Not Encourage Investors
Posted by Rafeek, Dubai, UAE on Saturday 30 May 2009 at 17:16 UAE time


When do you need a visa? When you don't have a job or if you are not doing any business. In both the above situations, you will hold either an employment visa or an investor visa. You may need a residence visa, when you get retired or if you work away from UAE. When you are retired, you won't be making any earnings. If the law says that the property holder has to make an earnings of AED 10,000/= , then the investor will be ineligible to get a visa. Also, the other criteria says that the investor has to go out of the country after six months and stay out of UAE at least for a month. It means, if a peson resides for 10 years (between the age of 60 to 70), he will have to be out of UAE 20 times and at least for a minimum period 20 months. The new law does not really grab the property investors. The Authorities have to review the law, in order to bring back the market.

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic. Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM