The Dubai World Tribunal has ruled that the investor which agreed to buy Sao Paulo island in Nakheel's ambitious The World scheme off the coast of Dubai has to go ahead with the purchase after a long running court battle.
Nakheel wins fight over islands
Nakheel has won a significant battle in its long-running legal fight to force buyers at its Dubai World island project to go through with their purchases.
According to documents filed online with the Dubai World Tribunal yesterday, the court found in favour of Nakheel, ordering an investor that had agreed to buy the Sao Paolo island on the ambitious island scheme in 2008 to pay Dh127.7 million (US$34.7m) in unpaid instalments on the purchase.
In a judgement handed down on Thursday by Sir Anthony Evans and Sir John Chadwick, the tribunal ordered the British Virgin Islands-based property developer Sao Paolo Development to pay the outstanding cash "to cover outstanding instalments owed on the island and accrued delay fees."
The Dubai-based company Diamond Developers was ordered to pay Nakheel's Jumeirah Village subsidiary Dh10.9m.
The move comes four months after the tribunal dismissed a claim by Sao Paolo Development suing Nakheel's holding company and three of its sister companies for backing out of a deal to transfer the Dh17.4m payments it had made on the island into another Nakheel development.
In its claim, Sao Paolo said that after the global financial downturn hit The World, it had reached a deal with Nakheel to transfer the downpayments it had made, along with Dh3.5m of fresh equity to plots in other Nakheel projects, including plots in the developer's Jumeirah Village scheme originally reserved by Diamond Developers.
Although Nakheel had reached similar consolidation agreements on projects, which had been stalled by the property crash, such as the Palm Jebel Ali, and had held initial discussions with Sao Paolo regarding a consolidation, the master developer denied that it had entered into any binding consolidation agreements on The World. Nakheel said The World was not a stalled project but was delivered to the property investors to develop themselves.
In a statement yesterday Nakheel said: "In this case, Sao Paolo Development had sought to renege on its commitment to purchase The World island of Sao Paolo. However, The Dubai World Tribunal held that the reservation contract for The World island of Sao Paolo was enforceable and binding."
Sao Paolo Development could not be reached for comment.
The news follows the Dubai World Tribunal's decision in December to order Penguin Marine Boat Services, which had the exclusive contract to ferry goods and people to the islands to pay a Nakheel subsidiary Dh10m in licensing fees - a payment the ferry company disputed on the grounds that the lack of construction activity on the islands made its operations unfeasible.
Two months ago Dubai Land Department data revealed that Lebanon Island, the first hotel resort to be built in The World project had been sold for Dh35m - a Dh25m loss on the original purchase price by the Indian investor Wakil Admed Azmi.
Meanwhile for Nakheel's sister company Limitless, there was more positive news. The company which, like Nakheel, is being transferred from the Dubai World conglomerate to Dubai Government ownership, announced yesterday that it signed tenants to take 50,000 square feet of its The Galleries mixed-use scheme in Jebel Ali during the first three months of the year.
Limitless said that this meant that it had now signed up tenants for a total of 613,500 sq ft of office space - 73 per cent of the office component of the project with petrochemicals companies BASF and DuPont taking a total of 21,500 sq ft, Siemens Middle East taking 7,900 sq ft and International Energy Resources taking 3,900 sq ft during the first three months of the year.