x Abu Dhabi, UAETuesday 25 July 2017

'VIP investor' sues Damac

A German investor is suing Damac Properties for alleged breach of contract in what could be the largest lawsuit taken by an individual against a Dubai developer.

Lothar Hardt invested heavily across five of Damac's property developments in Dubai.
Lothar Hardt invested heavily across five of Damac's property developments in Dubai.

A German investor is suing Damac Properties for alleged breach of contract in what could be the largest lawsuit taken by an individual against a Dubai developer. Lothar Hardt has filed his case against one of the region's biggest developers and four of its executives at the Dubai International Financial Centre Courts.

Mr Hardt claims to have invested US$9.7 million (Dh35.6m) across five of Damac's developments in Dubai, including one building on land he says is owned by the UN. The dispute relates to a series of off-plan investments made since 2006 in projects including: Park Towers at DIFC; Water's Edge and Lotus Residences at Business Bay; Wildflower at Jumeirah Golf Estates; and Ocean Heights at Dubai Marina.

Mr Hardt alleges the developer failed to deliver the projects on time, mismanaged escrow accounts relating to some of the projects and did not register the transactions with Dubai's Land Department, court documents show. Damac is also accused of selling property in Water's Edge, Lotus Residences and Wildflower to Mr Hardt without owning the land or obtaining construction permits. The land on which Lotus Residences is planned is owned by the UN, the court documents claim.

Mr Hardt, considered one of Damac's "VIP investors", is also suing for additional loss of income after he claimed to have signed agreements with retail outlets that were going to rent the commercial units he bought from Damac. "Through my experience with Damac I have been very frustrated," he said. "I think this has to be fought in public. When I pursue something, I will really pursue it until the end. This is a young country but I'm confident in the new laws here."

Now Mr Hardt is demanding a refund of the $9.7m he has invested in Damac projects, in addition to damages and lost profits. Damac has acknowledged the case against it and four of its executives: Hussain Sajwani, the company chairman; Faisal Sajwani; Sofyan Khatib; and Peter Riddoch, a former chief executive. But the company is contesting that the case be heard at DIFC, where it is registered and where one of the projects, Park Towers, is located.

It has until February 4 to declare its reasons for contesting the DIFC's jurisdiction, which follows English common law and, unlike the main Dubai courts system, allows foreign lawyers to represent clients and cases to be heard in English. Damac declined to comment yesterday. If all or part of the case takes place at DIFC, it will be the first major dispute against a property developer to be heard at the court since it was set up in 2004, said Ludmila Yamalova, a partner at Al Sayyah Advocates and Legal Consultants, which is pursuing the case on behalf of Mr Hardt.

"We think at least part of the case has to be heard at DIFC, such as the part that relates to projects located there, like Park Towers," said Ms Yamalova. "Damac is also a DIFC-registered entity." If Damac's bid to have the case heard elsewhere is granted, then the rest of the dispute would have to go through the main Dubai courts system, which is more costly for complainants as they have to pay separately for each contract dispute, rather than take a class action.

"Right now, investors think there is no justice or no recourse, but at DIFC we do have a world-class institution that can deal with these issues at an international level - this is what DIFC has aimed to represent," added Ms Yamalova. "If DIFC steps up to the plate and starts looking at these cases, it will give people confidence." @Email:agiuffrida@thenational.ae