Meydan has launched a Dh3.5 billion (US$952.8 million) legal claim against the UAE builder Arabtec and the Malaysian contractor WCT over the construction of the racecourse that hosts the Dubai World Cup.
It is the latest legal twist in a dispute sparked by the cancellation of the original construction contract three years ago.
WCT, which won the order to build the development with Dubai-based Arabtec Construction, dismissed the claim as "frivolous and without merit".
The pair originally won the contract to construct the lavish horse-racing development in September 2007 at the height of Dubai's six-year construction boom. But Meydan cancelled the contract 16 months later, saying the contractors had not kept to the construction timetable.
The joint venture subsequently launched an arbitration action against Meydan, alleging breach of contract. That claim currently stands at Dh2.8bn.
Meydan has now responded with its own civil suit in the Dubai Courts, arguing that the original arbitration had expired. Arbitration is a legal process often used as an alternative form of dispute resolution in the construction industry.
WCT said it would continue with arbitration and vowed to fight the civil suit brought by Meydan.
"There is a valid and binding arbitration agreement between Meydan and the joint venture and any dispute between the parties must be resolved by way of arbitration," WCT said in a regulatory filing to the Malaysian stock exchange.
Arabtec was unavailable for comment yesterday. A Meydan spokesman said officials could not be reached.
The Malaysian builder said the tribunal hearing its case at the Dubai International Arbitration Centre had on June 9 "rejected conclusively Meydan's submission that the arbitration proceedings have expired".
The Meydan racecourse, which hosts the $27.2m Dubai World Cup meeting, is one of the most ambitious equestrian projects ever designed. It incorporates a 60,000-seat grandstand and a five-star trackside hotel.
The Dubai World Cup has grown to become the world's richest horse race since its first running in 1996. Traditionally held on the last Saturday of March, it is one of the biggest draws on the international racing calendar.
The Meydan contract was one of the largest ever awarded to the Malaysian builder, which also helped to construct the Formula One circuit in Abu Dhabi as well as the Bahrain City Centre shopping mall in Manama.
The collapse of property prices in late 2008 in the Emirates produced a rash of legal disputes between builders and developers over delayed projects as financing dried up and investors withdrew.