Meydan sues arbitration panel in Arabtec dispute

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Meydan has launched legal action in the Dubai Courts against the three-member arbitration tribunal appointed to rule on its dispute with Arabtec Construction and WCT Berhard, Bader Suleiman, legal advisor to the chairman of Meydan, told dealReporter.

“We have sued the tribunal individually in the courts, seeking damages of AED 60m (USD 16.3m) jointly and severally against the three tribunal members,” Suleiman said. The panel, appointed by the Dubai International Arbitration Centre (DIAC), consists of Stephen Furst QC, Humphrey Lloyd QC, and Professor Doug Jones, Suleiman said.

Meydan’s lawsuit against the arbitration panel centres on a dispute related to the panel’s handling of private settlement negotiations conducted between Meydan and the joint venture during a mutually agreed stay in the arbitration procedure, said Suleiman.

The joint application for the stay of proceedings, approved by the three-member tribunal in April 2010, stated that the substance of the settlement talks between the two parties should remain confidential and would not be brought before the three member panel should arbitration re-commence at a later date, he said.

However, the tribunal later ruled that it had jurisdiction to examine documents from the settlement talks, in contravention of the application it signed in April 2010, claimed Suleiman. An arbitration hearing examining these documents in April 2011 was boycotted by Meydan, which launched legal action against the tribunal the following month, he said.

Suleiman said that the tribunal’s exclusion from examining documents signed during the stay period was confirmed by a separate arbitral award made by a single DIAC-appointed arbitrator in October 2011.

A DIAC official declined to comment on the matter.

The next hearing in the case against the three person tribunal was scheduled to occur on 27 September, said Suleiman. However, he noted that the three individuals have thus far boycotted the process.

Stephen Furst declined to comment on the matter. Humphrey Lloyd and Doug Jones did not respond to requests for comment.

Arabtec and WCT launched arbitration proceedings with Meydan following the cancellation of a contract signed with Meydan in 2007 for the construction of the Nad Al-Sheba racecourse in Dubai, as reported.

The contract between the parties was cancelled in December 2009 and arbitration proceedings commenced in January 2010, said Suleiman.

Meydan launched a AED 3.5bn countersuit against the joint venture in June of this year in the Dubai Courts, claiming that the arbitration proceedings had expired with the effluxion of time.

Arabtec Holding CFO Ziad Makhzoumi in late September reaffirmed Arabtec Construction’s commitment to the arbitration process and said that the arbitration proceedings could be completed next year. He added that the court was an inadequate venue for the resolution of the dispute.

In a statement issued on the Bursa Malaysia on 27 June, WCT described Meydan’s lawsuit as “frivolous and without merit”. The statement added: “There is a valid and binding arbitration agreement between Meydan and WCT’s joint venture with Arabtec Construction L.L.C., and any dispute between the parties must be resolved by way of arbitration.”

However, Suleiman said the tribunal had proved itself unequal to the task of ruling on the dispute, as a result of its improper handling of the proceedings to date, and that arbitration proceedings had gone on for longer than the maximum of 18 months allowed under DIAC’s rules and procedures.

“The rules are absolutely clear; the time allowed for a live arbitration is 18 months, and not a minute longer,” he said.

However a Dubai-based arbitration lawyer close to the situation told this news service that DIAC rules enabled the arbitration centre to extend the length of arbitration proceedings for as long as it deemed necessary.

“DIAC tries to make sure that the arbitration process doesn’t run out of time. You can see arbitration cases going on for five or six years, which is not uncommon in big complicated cases,” he said.

During hearing in the Dubai Courts on 25 September attended by this news service, documents were submitted for the judge’s attention by the defendants, with the next hearing scheduled for 6 November.

Arabtec did not respond to requests for comment. Arabtec Holding is listed on the Dubai Financial Market with a market capitalisation of USD 1.11bn.

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