Nakheel's former CEO wins $3m claim against developer

Dubai: Nakheel lost its second lawsuit in as many days yesterday as its former CEO was awarded $3 million (Dh11.02 million) by a Dubai court.

The Dubai World Tribunal (DWT) ruled in favour of businessman Chris O'Donnell, who stood down as Nakheel CEO in 2011, just 24 hours after awarding a contractor almost Dh60 million in a separate claim against the developer.

Unpaid bonuses

O'Donnell was awarded $3.25 million, including $3 million in two unpaid annual bonuses and 54 days of paid leave, amounting to almost Dh850,000. Nakheel was also told to pay for the former CEO's business class flights back to Australia — at a cost of Dh67,000 — but not flights for his family.

In a statement following the verdict, the former CEO — who was on a salary of around Dh3.8 million a year, according to the judgment — said that while he was pleased with the decision, he was disappointed that the case had been necessary.

"Whilst I have been entirely vindicated by the Dubai World Tribunal, I am naturally disappointed that, despite my best efforts at compromise, the matter was not able to be resolved amicably without the need to take costly legal proceedings that vented Nakheel's internal business in a public forum," O'Donnell said.

Jurisdiction dispute

In a statement following the ruling, Nakheel's lawyers said the firm maintained its position that the case should not have been heard by the DWT, and should have been heard in a federal court instead.

"The Dubai World Tribunal is a court of Dubai. Its judges, like their colleagues sitting by the Dubai Creek, must administer UAE law as applied in Dubai, respecting the roles of the federal institutions, such as the Ministry of Labour, as allocated by the federal laws of the union.

"It is our client's position that the federal law prescribes that Mr. O'Donnell's claim should have been brought to the Ministry of Labour… This is a view that is held by the Ministry of Labour."

DWT argument

Nakheel's complaint about the jurisdiction was noted by the court, but rejected on the grounds that it was not clear whether the developer was registered with the federal Ministry of Labour, and therefore whether former employees could use the department to pursue their claims.

"(The) evidence… is unnecessary to determine whether or not it would have been practically or legally possible for (O'Donnell) to lodge his present claims with the Department of Labour," the court said.

It is the second time this week that the DWT has ruled against Nakheel, following the court's decision yesterday to award a contractor almost Dh60 million for work carried out on a project in Discovery Gardens that was later shelved.

Arbitration clause

In that case, Nakheel had also argued that the DWT did not have jurisdiction to try the case because, in the contract with the contractor Technical Architects General Contracting Company (TAGC), there was a specific arbitration clause.

Anthony Edwards, head of Hadef and Partners' Engineering and Construction practice in Dubai, told Gulf News that the issue of jurisdiction could become trickier in future given the recent change of ownership of Nakheel from Dubai World Group to the government's Investment Corporation of Dubai.

Change of ownership

It may be argued that DWT, which was specifically set up to try cases relating to Nakheel, has no jurisdiction to try cases relating to the developer as it is no longer part of Dubai World.

"The position is not clear as to whether or not Nakheel is still under the jurisdiction of the Dubai World Tribunal, particularly in relation to new claims, because the ownership of Nakheel itself has not been made wholly clear," he said.