Dubai: Dubai's largest construction company Arabtec may have to make provisions for most of the Dh1.4 billion it was expecting to recover from racecourse centred development Meydan, on a terminated contract early last year.
Developer Meydan Group and two contractors on a 50-50 joint-venture between Arabtec Construction and Malaysian contractor WCT Engineering Berhad have signed a document suggesting that the termination of the contractors' work in January last year was "mutually amicable," according to a document seen by Gulf News.
The three parties involved had reached an agreement in June last year on the contractors' claims and Meydan's counter-claims, reducing the disputed amount to a few hundred millions "at best" from an initial amount claimed of Dh2.8 billion and a counter-claim of over Dh2.5 billion, a source at Meydan said.
"The real issue boiled down to termination versus repudiation. It was agreed that it was neither," the source close to the matter said.
Contractor Arabtec said in November that it was expecting a positive outcome from the arbitration case, and had, therefore, not made provisions for third quarter earnings for the Dh2.8 billion. That representation by Arabtec is "utterly misleading" and "strongly denied", the source said. Arabtec and WCT had filed an arbitration case in early 2009 and negotiations took place between the parties from April to October 2010. During that time, "much was discussed. Mainly, Arabtec and WCT directly and indirectly disowned main elements of their claim," Gulf News was told.
Amount
"The actual discussions were reduced to a real disputed amount of a few hundred million dirhams only," the source said.
At the end of December 2010, Meydan filed a new arbitration case against Arabtec-WCT seeking "relief in respect of the June 2010 settlement agreement" which would allow the proceedings to continue from where the settlement negotiations ended. The current dispute between the parties was in respect of the "true meaning, effect, scope and reach" of the said settlement agreement. A single arbitrator was appointed and this new arbitration is "proceeding expeditiously," Meydan said.
The source said that Meydan "felt it had an agreement, which has to be applied and respected," while adding that "the cumulative effect of the signed agreement is that the main litigation action has actually been reduced to nothing more than a simple accounting issue. It's no longer a legal issue. All the major ‘claims' just evaporated".
Arabtec however, has said that no agreement was reached and litigation should start anew, according to Meydan. The Dubai-based contractor was not available for comment.
