National Bank of Umm Al Qaiwain gains breathing space as a Dubai court delays the bank's repayment to Global Investment House, but the cost of the dispute are quickly mounting for the emirate's lender.
National Bank of Umm al Qaiwain wins payment reprieve
National Bank of Umm al Qaiwain, the emirate's government-owned lender, has succeeded in delaying its payment to Kuwait's Global Investment House after it lost a multimillion dollar court case.
A Dubai Court agreed to stay the execution of NBQ's payment until the final appeal is resolved, the bank said in a statement to the Abu Dhabi Securities Exchange.
The case will resume at the Court of Cassation in late September, the statement added.
In April, a Dubai court ordered the NBQ to return to Global a payment of US$250 million (Dh918.2m) plus interest, following a dispute over a cancelled capital raising.
"We believe this decision was normal practice and it's a temporary decision by the court," said Moustafa Zantout, a spokesman for Global. "It's just a matter of postponing the execution of the payment.
"Frankly speaking, we're very positive in our legal case. We've won the first case in the Court of First Instance and we won at the Appeals Court."
However, the interest payment continues to accrue at an annual rate of 9 per cent from December 2008, meaning the postponement is becoming more and more costly. An additional interest payment of $62.3m is expected, in addition to any legal fees which NBQ has to pay.