The region’s largest listed construction conglomerate, Arabtec Holding, and Malaysian engineering firm, WCT Berhad, have initiated arbitration proceedings against Dubai-based Meydan over an alleged breach of contract for cancelling the racecourse deal in January.
The joint venture had won a contract to construct Meydan's race course in September 2007.
According to previous reports on WCT Berhad's website, the company is seeking US $460 million (AED1.69 billion) in compensation from Meydan.
Arabtec has still not announced its compensation amount but it is expected to be around the same.
Speaking to Construction Week, Arabtec Holding CEO Riad Kamal said, "the proceedings could take a year or longer, to resolve outstanding issues."
On Saturday, Arabtec Construction announced the formation of a joint venture with two Saudi partners to establish Arabtec Saudi Arabia.
The Saudi participants include CPC Services, a member of the Saudi bin Laden Group, and Prime International Group Services.
Arabtec will have a 45% stake in the partnership with CPC and Prime holding 35% and 20% respectively.
"The aim of Arabtec Saudi Arabia is to play a key role in ongoing construction and infrastructure in the country," said Kamal.
He added that the company's first project, which has been secured by CPC, would be in Riyadh and projected turnover for the new subsidiary in its first year would be around US $400 million (SAR1.5 billion). This was expected to grow to around $934 million in two to three years.
The new venture that took only a month to form is expected to compensate for the slowdown in construction in the UAE, where Arabtec has been a key player.
"The reason why this happened so quickly is because we have very fast-tracked projects in Saudi Arabia," said Moutaz Sawaf, the chief executive of CPC Services.
"We approached Arabtec a month ago and it was the right time and the right place. We (CPC and the Saudi Binladen Group) are exhausted. We need new people who are trained and can get on site immediately and Arabtec is well known. We have a backlog of work and need a company that can start right away."
Arabtec has a backlog of projects worth $10.6 billion, including $2.7 billion for Russian oil producer Gazprom's headquarters in St Petersburg which it is awaiting final approval for.For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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