Limitless, a property developer owned by Dubai World, is suing one of its executives for Dh9.46 million, seeking partial payment for the construction of an apartment building on vacant land in Intenational City.
Tribunal tackles land gift case
Limitless, a property developer owned by Dubai World, is suing one of its top executives for Dh9.46 million (US$2.57m), seeking partial payment for the construction of an apartment building on vacant land in International City.
Abdulla al Janahi, an Emirati and the executive director of corporate operations at Limitless, is being asked to pay about half of the cost of construction on a "bare plot" in International City that he was granted in 2004, according to a claim filed in the Dubai World Tribunal on Tuesday.
International City is a sprawling residential development on Dubai's north-eastern fringe.
The Tribunal is mediating disputes involving Dubai World and its subsidiaries after its $24.9 billion debt restructuring.
Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, granted the vacant plot to Mr al Janahi in 2004, the claim says.
The gift came after Sheikh Mohammed asked Sultan bin Sulayem, then the chairman of Dubai World, to identify employees who had "displayed exceptional service".
Some were given plots of land with buildings to be constructed on them, while "others' service warranted the grant of a bare plot of land only", the court filing says.
"[Mr al Janahi's] service was determined by HH Sheikh Mohammed bin Rashid Al Maktoum to warrant the grant of a bare plot," the complaint says.
A total of 28 Dubai World employees were given property in International City.
In 2006, some of the employees went to Mr bin Sulayem and said they wanted to "convert them into income-generating assets" but "were not familiar with the development of land", the complaint says.
After consulting with management of Limitless and Nakheel, another Dubai World property company, Mr bin Sulayem arranged for the construction of apartment buildings on the plots "on the basis that [Limitless] would be reimbursed for the costs which it would incur in arranging and managing such construction", the complaint says.
To further help the Dubai World employees, Mr bin Sulayem decided 20 additional International City plots should be sold and the proceeds used to pay part of construction costs on the vacant land, giving the employees a subsidy of up to half of the cost.
Construction proceeded in 2006 on a series of seven-storey towers, each with 42 apartments and retail space on the ground floor, the complaint says. The employees "never asserted that they would receive their building free of charge".
Limitless told them they would each owe about Dh10m for the construction, which they would have to pay from their own pockets "or obtain financing from third-party financial institutions", according to the complaint.
After "a number" of the employees said they were not able to pay that amount, Limitless tried to arrange financing for them from the Islamic mortgage lenders Amlak and Tamweel, but that was deemed impossible as property values fell in 2008 and the lenders faced major funding obstacles of their own.
Once completed, the buildings were handed over in 2009 to the employees even though financing had not been arranged.
In March 2009, Mr al Janahi went to the Dubai Ruler's Court to discuss a complaint from the Dubai World employees claiming they were granted vacant land and buildings constructed on the plots.
The Ruler's Court "declined to uphold the [employees'] complaints that he was gifted a building as well as land", the tribunal claim says.
Limitless said in the complaint it "repeatedly asked" Mr al Janahi to pay the Dh10m for construction costs and offered payment terms that he rejected last year.
The complaint seeks payment of Dh9.4m for construction of the apartment building, plus interest and other costs. Lawyers acting for Limitless have filed cases with the Tribunal against four other Dubai World employees over the plots.
"This is a legal dispute and it is inappropriate for us to comment," a Limitless spokesman said.
Mr al Janahi's lawyers did not return a call for comment.