Nakheel in tribunal win over 'The World' contractor

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Nakheel's The World development

Nakheel's The World development

A subsidiary of indebted developer Nakheel has won a ruling that will allow it to demand licensing fees from a firm contracted to provide transport services to ‘The World’ manmade islands.

Penguin Marine Boat Services, which has an exclusive transport contract to ferry goods and people to the islands, had asked the Dubai tribunal to release it from an annual licensing fee of AED5m (US$1.36m), arguing the lack of activity on the island made its operations unfeasible.

In the latest stage of a legal battle between the two firms, which has been ongoing since early 2011, the tribunal has ordered Penguin to pay the Nakheel subsidiary AED10m (US$2.7m).

The firm had claimed work on the islands had stalled and that The World had backtracked on a 2008 deal allowing Penguin Marine to construct a port and manage deliveries to the development.

Construction on the offshore project ground to a virtual standstill in the wake of the economic downturn, which saw real estate prices in Dubai fall more than 60 percent from their peak.

Many buyers on the project have failed to begin work, with the only notable construction work carried out on the Lebanon island.

Nakheel has said around 70 percent of the 300 manmade islands are sold and that building work is the responsibility of the owners.

In court documents, Penguin said it had spent in excess of AED20m on set–up and running costs but has been “unable to earn anything more than a small amounts of income due primarily to the fact that [Nakheel] has not carried out any development and/or infrastructure works.”

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Posted by: peter

penguin should call nakheel that they need to be reasonable and write off 85% of the money. it's just fair, nakheel handles their debts the same way!!!

Posted by: Sam from Canada

Nakheel does not deserve a dime as no marine services could have been provided cos Nakheel screwed up and did not perform. So, Penguin has the right to respond in kind.

Judgement is neither just nor fair by any measure.

Posted by: obaid

This is so funny (not for Penguin off-course).

Posted by: Sam

Its tragic, not funny. Its also injustice and non-performance (by Nakheel).

Posted by: Red Snappa

Presumably this was a watertight contract with no real get out or sanity clause, so I assume Penguin are paying two years' back license fees, but does this mean all fees are cancelled from here on in. The Dubai World Tribunal is generally pretty evenhanded in its deliberations.

The truth of the matter is, little has happened on The World for a while now, a flurry of activity in Kleindiensts 'Heart of Europe' multi-island cluster then litigation, some beach club development on 'Lebanon,' but nobody else really building. So I suppose that small amount of activity, plus raw island upkeep, was enough to justify that the Penguin agreement should still be in place?

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