By Yamurai Zendera
Al Falak International Ltd reached an out-of-court-settlement after nearly two hours of deliberations at Dubai World Tribunal
Nakheel World LLC, a subsidiary of Dubai World, today agreed to repay almost AED95m ($25.8m) to a private developer which bought a piece of land from it in Dubai in 2008.
The sum, to be paid to Dubai-based Al Falak International Limited, was reached in an out-of-court-settlement after nearly two hours of deliberations between both sides at Dubai World Tribunal on Monday morning.
The case arose after Al Falak lodged a claim against Nakheel World in June 2011 after it paid AED89m - 20 percent of the purchase price - for a AED446,967,100m ($121.7m) plot at Mina Rashid Port.
In papers filed with Dubai World Tribunal, Al Falak claimed that Nakheel World failed to hand over the draft of the sales and purchase agreement at the time of signing the reservation contract and also neglected to hand over the plot on December 1, 2008.
Before a special tribunal chaired by Deputy Chief Justice Sir John Chadwick, Nakheel World agreed to refund Al Falak AED89,422,228m ($24.3m) as well as pay AED5,707,024m ($1.5m) interest on a daily basis at a rate of 2.715 percent per annum. All other claims totalling around AED66m ($17.9m) were dismissed.
Al Falak was planning to develop a residential tower at the Mina Port Rashid plot in 2009. After signing the reservation contract, it hired a design consultant and started working on concepts for the project.
However, after Nakheel World as master developer failed to hand over the land, it sought to recoup the money in February 2009. Al Falak claimed it was told by Nakheel World that as compensation for the land, it would put the cash into some of its other projects, however talks regarding this eventually broke down. Al Falak then lodged a claim against Nakheel in June 2011.
Nakheel World filed a counterclaim in April 2012, rejecting the original claim and arguing that Al Falak had lawfully terminated the reservation contract.
At a special tribunal on October 7, 2013, both parties represented by their legal teams reached a deal just before the case went to trial.
Nakheel World and Al Falak both refused to comment on the outcome of the case.
Dubai World Tribunal was set up in September 2009 at the height of the emirate’s debt crisis and was designed to hear disputes relating to government-backed investment vehicle Dubai World and its subsidiaries.
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