DUBAI, (Reuters) – A U.S. private equity firm once hailed as a major foreign investor in Dubai says it has been shut down without warning following a dispute with the government of the Gulf Arab trade hub.
Capital Partners is in arbitration with Dubai’s Tecom free zone, which is owned by the ruler of Dubai, over a dispute about the ownership of a 38-acre plot of land where the firm had agreed to build a $1.3 billion development.
Tecom said it cannot comment on the issue in line with confidentiality terms required by the Dubai International Arbitration Centre.
“Both parties to the arbitration are bound to observe confidentiality under the rules of the Dubai International Arbitration Centre which govern this proceeding. Accordingly, TECOM Investments is not in a position to comment,” a Tecom spokesman said.
“The arbitration is continuing and is not yet completed.”
Tecom, which has developed media and Internet business parks, is home to hundreds of multinationals including the world’s biggest software maker, Microsoft Corp.
Dubai, one of the seven members of the United Arab Emirates, has long sought to position itself as an international commercial, tourism and financial centre, luring businesses to its free zones with promises of tax-free earnings.
The global financial crisis has put the brakes on an economic boom in the Gulf Arab region, especially in Dubai, where a building boom is unravelling, property firms are laying off staff and banks are facing tight liquidity conditions.
Capital Partners Managing Director Jonathan Wride said he had not been warned of the decision, nor allowed to object or even sell off company assets once his firm was deregistered.
“Tecom stated that we no longer exist and thus are not entitled to wind up or liquidate, which is in direct conflict with Tecom’s own regulations and UAE law,” said Wride.
“It is of critical … importance that international companies can continue to operate in Dubai, safe in the knowledge that the UAE law will be upheld,” he said in an interview.
In August 2007, the firm filed a claim against Tecom for misrepresentation and breach of contract. Both parties confirmed to Reuters in mid-April, before Capital Partners was deregistered, that the case was under arbitration.
The case was mentioned in a letter from the U.S. House of Representatives to President George W. Bush on March 28, 2008.
The letter urged the U.S. trade representative to press for a resolution through negotiations with the UAE.
The delicensing decision was published in a local Arabic newspaper in October.
Dubai International Arbitration Centre case manager Sharon Stultz-Karim declined to comment as the arbitration is confidential.