JEDDAH, 16 June 2005 — The court of grievances in Riyadh suspended the activities of Dubai-based Emaar Properties in Saudi Arabia until a lawsuit filed against it by its joint venture partner Saudi Emaar is settled. Emaar has been accused of violating a contract signed earlier with its partners to set up Saudi Emaar and failing to start profitable projects, according to reports on Monday.
Emaar has confirmed the dispute in a statement to the press.
In the statement Emaar said, “The company confirms reports in a section of the press that a dispute has arisen with a Saudi-based company which involves a conditional agreement entered into by Emaar to conduct business in the Kingdom.”
Abdul Aziz Al-Qaseer, solicitor of the plaintiff, accused Emaar of entering into another joint venture agreements with the rivals of its partners in Saudi Emaar. The plaintiffs are Mohammed Al-Jaber’s sons who own 20 percent of Saudi Emaar. They accuse Emaar Properties of entering into partnership with a rival of Saudi Emaar to develop real estate projects in Saudi Arabia under a new name, Emaar Middle East, which is a violation of their contract.
Emaar Properties last year launched Emaar Middle East, the new joint venture with Al-Oula Properties, to build 12 residential projects in different parts of the Kingdom.
The property developer said: “Emaar enters into such agreements from time to time with various investors, which do not create any obligations on either party unless the conditions are fully met.
“Emaar further assures that the dispute with the Saudi company does not go beyond the ambit of the conditional agreement and as such will have no effect on Emaar’s local or international expansion plans, including those in Saudi Arabia,” the statement added.
Aiydh Al-Qahtani, chairman of the board of directors of Al-Oula Properties, told Al-Riyadh newspaper that Emaar Middle East is completely owned by Al-Oula and that the agreement with Emaar Properties is to develop projects in the Middle East.
According to the court decision, Emaar will not be allowed to develop any projects nor establish new companies in Saudi Arabia until the lawsuit is settled. The court decision also allows the defendant to ask for financial compensation if the lawsuit is invalid.
Stocks of Emaar dropped on Tuesday after news of the lawsuit spread affecting the Dubai Financial Market which closed down 34.13 points or 3.45 percent. Emaar was founded eight years ago and Dubai government owns 33 percent of its shares. In 2003 Emaar reported net profit of $184 million, a 31 percent increase from the previous year.
