Tecom Investments

Negative publicity in the heart of a property boom can never have positive effects and a $1 billion lawsuit for illegal activities by Tecom Investments is negative publicity of the highest kind.

While disagreements in the heart of a property boom occur and occur frequently, at the same time few of those disagreements accelerate to the point of becoming a heated legal battle.

That appears to be what has happened in this case however, as US real estate company Capital Partners is suing Dubai-based Tecom Investments for $1 billion. The reason for the suit, according to the plaintiff, is that Tecom investments illegally cancelled a development contract with CP in the wake of a contractual dispute between the two companies.

According to CP, the land that was sold to them by Tecom Investments was land that was not owned by Tecom in its entirety. Part of the land plot sold by Tecom (totalling 1.7 million square feet) included an archaeological ruin site that is protected by the Dubai government. When CP discovered this, according to their representative, they refused to pay until the situation was resolved. This led Tecom to cancel the contract and a chain reaction of events have now led to a court battle worth $1 billion between the two companies.

CP's project for a $1 billion mixed-use area has been on hold since 2005, when the dispute started.

Jonathan Wride, the managing director of CP, alleges that Tecom Investments was not entirely straightforward in their holdings and in fact actually misrepresented the archaeological site as being part of their holdings within the 1.7 million square feet.

According to Tecom however, they did own the archaeological site and they also allege that CP did not bring up the issue of the site until after Tecom cancelled the contract. Furthermore, a statement by Tecom states that they were well within their rights to cancel the agreement since CP did not make the required payments.

Both sides appear confident that theirs will be the winning side in the case which is currently being heard by the Dubai International Arbitration Centre. While this case will be interesting for foreign property investors that want to see how well the law system in Dubai operates with reference to property, at the same time it is important to remember that no work will be done on the mixed-use property itself until this case is resolved.

BOOKMARK THIS PAGE (What is this?)