Nakheel ordered to pay $20m to contractor

Dubai-based Nakheel has been ordered to pay just over $20m to an Abu Dhabi contracting firm for work completed on an unfinished residential project.

Dubai’s largest developer has 14 days to pay Technical Architects General Contracting Company (TAGC) AED78m for failure to pay for work completed in Mogul 3 in Discovery Gardens, a judge at the Dubai World Tribunal said Wednesday.

“This is a significant victory for our client TAGC in its efforts to recover its costs incurred under the terms of the contract it entered into with Nakheel,” Anthony Edwards, head of Hadef & Partners’ Engineering & Construction practice in Dubai, said in an emailed statement.

TAGC was awarded an AED950m contract to build the 31 buildings in December 2007 but was forced to halt work in January 2009. TAGC in March 2009 said it was entitled to claim for AED311m for work finished.

Both parties in 2009 agreed Nakheel would pay TAGC AED58m over an 11-month period but no payment was received.

TAGC served proceedings on Nakheel in January last year claiming just over AED73m, which comprised the agreed settlement of AED58m in addition to interest charges and loss of profit.

Nakheel in June claimed it had not been served Dubai World Tribunal documents, had never entered into a settlement of AED58m and said the matter did not fall into the jurisdiction of the Dubai World Tribunal.

“The DWT dismissed Nakheel’s three grounds of challenge and allowed the judgment to stand for a total sum converted into $20,062,644 and awarded TAGC its costs of the action and is allowed to claim for further interest,” Hadef & Partners’ said.

Nakheel was hit hard by the global economic downturn, which saw property prices in Dubai decline by almost 60 percent from their 2008-peak as speculators fled the market and banks curtailed mortgage lending.

Developers cut hundreds of jobs and put projects on hold. Nakheel,which was forced to write down $21bn of assets, escaped default with the help of an $8.6bn bailout from the Dubai government.