Lawyers rejoice as property slump turns nasty

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UK firms have asked Lord Mandelson to intervene over unpaid fees.

According to Gary Watts, head of the corporate commercial department at Dubai's Al Tamimi, evidence is mounting that the UAE companies failing to pay their contractors are in "serious trouble".

"It has become obvious that some people are tight with releasing cash, and other people are in serious trouble," he said. "They do not have the cash to release and they do not have the resources to meet their commitments."

Watts said that "an abrupt interruption of cash flowing around the system" was to blame for the situation.

Matthew Hooton, a real estate lawyer with Ashurst in Abu Dhabi, warned there may be little value in firms chasing unpaid fees through litigation.

While admitting there is "plenty of anecdotal evidence" of non-payment, he said there are limited gains for contractors pressing court action against illiquid developers.

"Any party to a potential litigation needs to take care not to kill the cash cow," he said.

"Contractors and consultants may, in some instances, be best served by taking the projects through to completion to help the developer realise his returns and so enable him to pay them

"Of course, in other cases, the pendulum may have swung too far and litigation or arbitration may be the only remedy available," he added.

Overall Hooton paints a more upbeat picture and feels that many disputes will either simmer down or be resolved out of court.

"My view is that this pendulum swings more slowly in this jurisdiction," he said. "It is not a litigious culture, people prefer to come to compromises; there is uncertainty over the court processes.

"With certain defendants, litigation can potentially be damaging for the long term business of the contractor or consultant, even if he is successful," he said.

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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.

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