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September 16, 2013 4:11 pm
A German-Emirati joint venture has filed an arbitration claim against Qatar for $250m over a disputed contract at the long-delayed new airport in Doha.
The airport is a landmark national project aiming to reflect the rising fortunes of the gas-rich state and service fast-growing Qatar Airways, but it has been hit by delays and is four years overdue.
The descent from fractious contractual dispute into legal action is another blow for Qatar as it struggles to complete the first in a long line of major projects necessary for its hosting of the football World Cup in 2022.
Lindner Depa, a joint venture between Dubai’s Depa and Germany’s Lindner had its contract to fit out 17 lounges cancelled in June last year and is now seeking redress at the International Court of Arbitration in Paris.
Akbar al-Baker, Qatar Airways chief executive and head of the new airport’s steering committee, last December threatened to sue Lindner Depa for $600m in damages for delaying the opening by a year, citing “extreme poor performance”.
Lindner Depa countered by saying it had been allowed on to the site nine months late and during a renegotiation of the contract, New Doha International Airport then imposed unfavourable contractual conditions on the joint-venture.
Dubai-listed Depa on Monday said it had been trying to resolve the matter “amicably” over the past nine months without success. Mr al-Baker’s comments had caused it “significant financial and reputational damage,” the company added.
“We consider the termination of our contract to have been wholly unfounded,” Mohannad Sweid, Depa’s chief executive, said in a statement.
The NDIA steering committee declined to comment.
Qatar is planning $205bn worth of infrastructure projects over the next five years as it gears up for the World Cup. Qatar National Bank estimates that the construction boom will create 120,000 jobs a year, pushing population growth to more than 11.3 per cent, the highest in the world.
Businessmen have urged a step up in the pace of construction to ensure an orderly completion of basic infrastructure, hotels and stadiums ahead of the planned 2022 date.
Construction firms also said the risk of a performance bond being arbitrarily cashed by counterparties – as the airport did when it cancelled Depa’s contract – is a major risk for firms seeking to do business in Qatar and elsewhere in the Gulf. Performance bonds are placed by construction firms to protect clients against contracts that are not fulfilled.
Qatar was hit by allegations, which it denies, that it paid bribes to Fifa members before it won the right to become the first Arab host of the tournament. The whistleblower who made the claims in a letter later retracted her story.
Fifa is meeting next month to consider whether the World Cup could be moved to the northern hemisphere’s winter, when temperatures in the Gulf are milder than the traditional June and July date for hosting the tournament.
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