By Dylan Bowman
US real estate firm alleges Dubai-owned operator unjustly cancelled its contract and illegally sold it land.
Dubai-owned Tecom Investments is being sued for $1 billion by a US real estate company, claiming the free trade zone operator unjustly cancelled its development contract.
Capital Partners alleges Tecom illegally sold it land owned by another government entity and when the developer withheld a payment over the dispute Tecom cancelled the contract, the UK's Financial Times reported on Friday.
The dispute, which dates back to 2005, revolves around a protected archaeological site allegedly owned by Dubai's tourism department within the 1.7 million-square foot plot Capital was developing, according to the newspaper.
The company was planning to build a $1 billion mixed-use project called River Walk in the Dubai Internet City (DIC) business park owned by Tecom.
“Tecom misrepresented what they own,” said Jonathan Wride, managing director of Capital Partners, quoted the Financial Times. “I am very confident we will receive a judgment in our favour.”
However, Tecom says it had was within its right to cancel the contract over the non-payment and that Capital did not bring up the archaeological site until after the contract was cancelled, according to the paper.
Tecom claims it in fact owned the archaeological site.
The case is currently before the Dubai International Arbitration Centre and is being viewed as an important test case for the centre's new arbitration code passed last year, according to the newspaper.
The regulations are aimed at creating a level playing field for foreign investors when resolving disputes with local companies.