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Damac sued in DIFC courts by German investor

with 2 comments

Multimillionaire German investor Lothar Hardt has filed a cased against the largest private developer in the Middle East, Damac Properties in the courts of the Dubai International Financial Centre.

According to a report in The National today Mr. Hardt claims to have invested $9.7 million in five off-plan developments owned by Damac in Dubai, including Park Towers in the DIFC financial zone.

Allegations

His allegations range from failure to deliver projects on time to mismanagement of escrow accounts and failure to register transactions with the Dubai Land Department. He is also suing from loss of income from the rent he would have earned on commercial units bought from Damac.

Mr. Hardt is arguing that his case should be heard in the DIFC courts, although only one of the projects – Park Towers – is actually located within the jurisdiction of these courts. The National said that he has until February 4th to declare the reasons why the case should be heard in the DIFC which has its own legal structure outside the jurisdiction of the Dubai courts.

This case is bound to attract worldwide interest from off-plan investors in Dubai who find themselves in a similar position with their off-plan investments facing an uncertain future.

Clever lawyers

Mr. Hardt’s lawyers are taking a clever route around the local courts where a clear path to decisions on these affairs is apparently not currently available. Presumably the hope is either to bypass the local courts entirely, or to set a precedent by getting a ruling on the Park Towers alone from the DIFC courts.

But this depends entirely on how the courts rule and in the DIFC courts you are innocent until proven guilty. The burden will therefore still fall on Mr. Hardt and his lawyers to prove that they have a valid case against Damac whichever court hears the case.

However, it is timely that somebody has brought forward a test-case in Dubai, and this needs to be done if the mess left over from the sudden end of the local property boom in September 2008 is to be finally cleaned up. For only once this process is concluded then the market can begin its inevitable recovery.

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Written by Peter Cooper

January 18, 2010 at 11:05 am

2 Responses

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  1. This case is critical to the survival of the whole of the middle east real estate sector, the case against DAMAC should be seen as a case against a wild west Cattle barren who operates under a lawless-west climate of making up rules as they go along and enforcing it by intimidation of smaller investors like my self and others.
    I am glad that someone of stature and international clout is prepared to fight the good cause on our behalf.
    Even now having visited one of Damac sites in Dubai they claim that work is continuing and they would meet all deadlines, which is clearly an outrageous claim, since they had already missed to completion date deadline, clearly still miss leading investors.
    I wish Mr.Hardte all the success in his fight for justice. pls keep us small people in mind too when u win your case.

    Mohammed M

    February 24, 2010 at 1:10 am

  2. This case is highly important for the recovery of the real estate market in Dubai. Investors need to get back their trust & momentum again.

    Angelika Lancsak

    January 18, 2010 at 5:03 pm


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