Nakheel is facing its first claim from a company using the Dubai World Tribunal - more than Dh10 million (US$2.72m) worth of roadside billboards. Trinet Outdoor Advertising has filed a claim against the Palm islands developer for cash it says it is owed for six advertising billboards along Al Khail Road in Dubai. The case will be closely watched by contractors and service companies that are owed money by the developer, which has been hard hit by the property recession, lawyers said.
"It will be very interesting to see how it's dealt with," said Patrick Bourke, a dispute resolution lawyer at the law firm Norton Rose in Dubai. "The tribunal has not been tested yet." Mahmoud Abu al Haj, the managing director of Trinet, said he filed the case because he was "under pressure" to pay the Roads and Transport Authority for leasing space for the billboards. The billboards at the centre of the claim featured images of Nakheel's projects, such as The Waterfront and Jumeirah Park, Mr al Haj said.
"I believe in the justice of the Dubai courts," he said. "My rights will not vanish." Mr al Haj said he was "willing to compromise" with Nakheel and take 70 per cent of the money he says he is owed in cash, with the remainder paid over a longer period. "We are in the same ship," he said of his company and Dubai World (which owns Nakheel). "We have to help each other and there will be some sort of compromise."
Nakheel declined to comment. The tribunal was established by a special decree from Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, just weeks after Dubai World made a surprise announcement last November that it would seek a standstill on its debt obligations. Dubai World last week announced it had reached a deal on debt repayment with creditors representing 60 per cent of the conglomerate's total borrowings. Another 80 lenders have yet to approve the deal.
Dubai World has promised to pay trade creditors, such as construction companies and other service providers, what they are owed in the form of a 40 per cent cash payment and the remaining 60 per cent as a tradeable security with a 10 per cent annual return. Nakheel said on May 13 it had secured agreements with half of its trade creditors, representing claims worth $1.6bn. Until Trinet, just one case had been filed in the tribunal - by a former employee of the property developer Limitless.
Asmaa Abd el Ghaffar Khalil claims she is owed about Dh95,000 in end-of-service dues and holiday pay she says was never paid to her when she was laid off in June last year. The decree that set up the Dubai World Tribunal uses a combination of the Dubai International Financial Centre's insolvency law, which is based on British common law, and aspects of US law and allows Dubai World to be voluntarily restructured.
Dubai World or any of its subsidiaries may file a "voluntary arrangement notice", which will automatically grant it 120 days to negotiate with creditors, according to the decree. bhope@thenational.ae