Dubai: It could take “18 months” for a final verdict to be delivered in Union Properties’ Dh1.5 billion arbitration claims against a contractor.
“The arbitration proceedings are ongoing before one of the most prominent international arbitral institutions in Dubai,” the developer said in a statement issued Thursday.
A favourable verdict could be a much needed boost for Union Properties, which has delivered disappointing results in recent quarters. (The market is waiting its first quarter 2020 financials.)
“In the event that the subsidiary is able to obtain a successful award in this case, whether for the full claim amount or less, it is obvious that this will reflect very positively on the financial position of both the subsidiary as well as on Union Properties being the parent company of the subsidiary,” the statement added.
More facts revealed
It was on Wednesday the company issued a statement to Dubai Financial Market, mentioning the arbitration claims and the size of it.
It relates to a 2009 project and the claims are the “amounts owed to a fully-owned subsidiary of Union Properties,” the statement said.
“The subsidiary was the subcontractor nominated by the main contractor to carry out mechanical, electrical and plumbing (MEP) works for a major project in Dubai. “Following the delivery of the project, a dispute between the subsidiary (as subcontractor) and the main contractor arose over certain variations to the works completed by the subsidiary and for which the subsidiary was due on certain payments.”
Tried for a settlement
Since the project delivery in 2009, attempts were made by Union Properties to try and reach a settlement with the concerned contractor. But nothing could be done through these interim years.
The matter was re-visited when a new management took over at Union Properties in mid-2017.
“It was in the best interest of the company and the shareholders to pursue the recovery of the subsidiary's dues by initiating arbitration procedures,” the statement said.
“Taking into consideration the complexity of this claim and the sheer volume of document in hundreds of thousands required to be archived and studied to submit the claim, the management mobilized the necessary resources including the appointment of experts and an international American law firm which allowed the subsidiary to file the claim by.
“With the view of avoiding costs on the subsidiary in pursuing its claim, the management sought a full funding for this case, which was successfully finalized early 2020.”