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Abu Dhabi, UAESaturday 15 December 2018

Viceroy vows to keep fighting Dubai’s Five Holdings after US court decision

Los Angeles court dismisses Five’s lawsuit alleging mismanagement of luxury Palm Jumeirah hotel

Dubai's Palm Jumeirah island. Ali Haider / EPA
Dubai's Palm Jumeirah island. Ali Haider / EPA

A Los Angeles court threw out claims by affiliates of Dubai hotel operator Five Holdings that US-based Viceroy Hotel Group “mismanaged” a luxury hotel on Dubai’s Palm Jumeirah island, a statement from Viceroy said on Wednesday.

“We are pleased that the Los Angeles Superior Court held that this lawsuit has absolutely no merit,” a spokesman for Viceroy said, adding that the hotel group would continue to pursue its own claims against Five Holdings in the US court, which include fraud, extortion and unfair business practices.

The decision is the latest development in a complex management dispute between Viceroy Hotel Group and Five Holdings, a real estate company led by Dubai-based Indian millionaire Kabir Mulchandani.

The dispute has seen numerous court cases filed in the UAE and US. Five said it is "business as usual in Dubai" and declined to comment on its legal strategy when approached by The National.

In 2013, Viceroy signed a management agreement with the hotel’s owner, an affiliate of Five Holdings, under which the hospitality company would operate the hotel with its name above the door.

However, on June 19 last year, Five seized back control of the hotel, terminating the contract with Viceroy and changing all of the hotel signs overnight from the Viceroy Palm Jumeirah Dubai to Five Palm Jumeirah Dubai.

A few days later, on June 22, Viceroy obtained an injunction from DIFC Courts preventing Five from seeking to stop Viceroy managing the hotel.

But Five managing director Mr Mulchandani disputed the validity of the injunction, claiming DIFC Courts was not the correct jurisdiction to grant and enforce such an injunction. Viceroy has since claimed that a Dubai Judicial Committee decision in November ruled DIFC is the correct jurisdiction to lead on the matter.

Two months earlier, in September, Five Holdings and affiliated parties filed a lawsuit against Viceroy in LA alleging multiple counts of financial fraud and mismanagement against the hotel group.

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Read more:

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The following month, Viceroy filed a counter-claim in LA alleging fraud, extortion, conversion and unfair business practices against Five Holdings and affiliated companies.

According to the statement from Viceroy on Wednesday, the judge decided to dismiss the lawsuit “on grounds including that it was filed for harassing and improper purposes”, under a California law prohibiting Strategic Lawsuits Against Public Participation.

Viceroy said it will seek recovery of its legal fees and continue to pursue claims for fraud, extortion, conversion and unfair business practices against Mr Mulchandani and his affiliates in the Los Angeles Superior Court.

Meanwhile in Dubai, Viceroy “intends to continue to take all steps necessary to ensure the DIFC Court’s injunction is finally implemented, and we are confident that with the assistance of the local authorities in Dubai, Viceroy will ultimately be reinstated as the manager of the Viceroy Palm Jumeirah Dubai,” the statement added.