Palm Deira sued over townhouse registration

An investor in Dubai's Palm Deira island project is suing for more than US$300,000 (Dh1.1 million) because the developer allegedly failed to register his townhouse with the authorities. Futtain al Baddad, a US citizen living in Sharjah, lodged the complaint with the Dubai World Tribunal, a special court set up to weigh claims against the Dubai World conglomerate. As one of the first cases before the tribunal, Mr al Baddad's claim could set precedents for how other claims by individual investors are treated.

Mr al Baddad is asking Palm Deira to return Dh760,000 he invested in 2005, plus 9 per cent interest and fees and expenses. He is seeking a total of US$302,966, according to a tribunal claim form. The tribunal is a central cog in Dubai's long-running effort to settle disputes, repay debts and shore up its finances. Dubai World, which owns Nakheel, the developer behind the Palm Deira, recently reached an agreement with about 99 per cent of its bank creditors on restructuring $24.9 billion of debt. In a separate deal, investors in delayed Nakheel projects are being offered the option of moving their investments to projects that are closer to completion or waiting five years for repayment.

Mr al Baddad bought a 3,500 square foot townhouse off-plan for a total of Dh3.8 million, according to a contract included in tribunal records. He says he and his brothers, Zayed and Fares, paid Dh380,000 to Nakheel as an instalment and Dh380,000 to the original buyer, an Emirati. Acting for Palm Deira, lawyers at Dalmook Mohammed Dalmook in Dubai countered in a defence filed last week that the case should not be accepted because Mr al Baddad was acting as a representative of his brothers, even though the contract was solely between him and the company.

Palm Deira's lawyers also disputed Mr al Baddad's claim that the contract was invalid because the project was not registered with the proper authorities. An agreement with the Dubai Land Department in 2007 exempted the developer from that requirement, the lawyers argued. They also said Mr al Baddad paid only Dh380,000 directly to Palm Deira and "the amount which should be refunded is this amount and not the sum of Dh760,000 as alleged".

Hearings in the case have not yet been scheduled. Seventeen cases have been filed in the tribunal so far and hearings have only recently begun. In the first set of hearings last week, involving the enforcement of an arbitration judgment in favour of an investor in Nakheel's Jumeirah Islands project, lawyers debated which jurisdiction's laws should govern the tribunal's decisions.