Qatari Diar gets partial reprieve in UK law suit

CW staff , June 28th, 2010

By Orlando Crowcroft and Ben Roberts

Qatari Diar this week lost its case against UK property company CPC Group Ltd after a British court ruled that the developer had wrongfully withdrawn plans for the development of the luxury Chelsea Barracks development.

The company was said to have breached its contract with CPC Group controlled by real estate entrepreneur Christian Candy, and must pay damages in an amount to be determined later, Judge Geoffrey Vos ruled on Friday after a month of court activity.

The ruling decided that Qatari Diar, the real estate arm of the state’s sovereign wealth fund, had withdrawn its design for the development following pressure from Sheikh Hamad Bin Khalifa Al-Thani, the emir of Qatar following discussions and letter correspondence with HH Prince Charles, who was said to have opposed the prospective design.

However, the judge ruled that Qatari Diar was “between a rock and a hard place” and had not acted in bad faith.

“The effects were, I suspect, exacerbated by the inevitable publicity which followed,” he added, referring to the opposition of the British heir to the throne which was "unexpected and unwelcome".

The ruling has brought stern criticism of the prince by Ruth Reed, president of the Royal Institute of British Architects. She said that Prince Charles used inappropriate and 'behind the scenes' tactics to have the plans withdrawn.

"The UK has a democratic and properly constituted planning process: any citizen in this country is able to register their objections to proposed buildings with the appropriate local authority," she said.

Candy, well-known as one half of the highly successful British luxury apartment developer Candy & Candy with his twin brother Nick, bought the Chelsea Barracks plot in February last year, paying the Ministry of Defence an estimated GBP959 million with help from the Qatari government.

CPC had sued Qatari Diar for as much as GBP80 million.

One ConstructionWeek reader commented on the case in May: “It's a bit much to be suing Qatari Diar for GBP 80 million when the project (the actual construction and plotting) is an estimated GBP 30 million.

“How can you sue someone for breach of contract on a project you were somewhat forced to halt by the Prince of Wales? Considering that Qatar helped pay for the Chelsea Barracks plot last year, it's completely unfair to sue at all. This needs to be reconsidered.”

Walid Jaafar, a partner in Dubai law firm Fichte & Co, said in such cases generally the judge has to focus on the details of the signed agreement between the two firms.

“A judge always has to go back to the details of the contract and the execution of that contract, look at the obligations of the two parties and look at other issues, such as force majeur [clauses that excuse a party from liability if some unforeseen event beyond the control of that party prevents contract fulfillment],” he said.

“A number of things can trigger such a breach in that contract and it’s to that which the judge has to go back.”