Haya Rashed Al Khalifa Attorneys Win a BCDR Verdict for Barwa International in a US$16Million plus Lawsuit

June - 2013

On 14 April 2013, Haya Rashed Al Khalifa Attorneys won at the Bahrain Chamber of Dispute Resolution (the “BCDR”), a US$16,000,000 plus lawsuit on behalf of its client, Barwa International (“Barwa”), a wholly owned subsidiary of Barwa Real Estate Company QSC. At issue was an alleged breach of contract in a SR733,250,000 Dannat Resort Development Co. Ltd private placement offering in which, Barwa International was an investor and was seeking damages following a breach of contract by the Promoters (Inovest B.S.C. and Al Khaleej Development Co. B.S.C.(c)).

In April 2008, Barwa invested SAR 60 million with Inovest B.S.C.  (then known as Tameer) through the private placement of shares in an investment special purpose vehicle, “Dannat Resort Development Company Limited”. The BCDR found that the Defendants failed to raise sufficient capital in the private placement in order to proceed with the proposed investment and the project. Indeed, the private placement raised only 40% of the target capital and yet the Defendants “short-closed” the offering and still utilized the funds raised from Barwa and other investors against the best interests of those investors. It was also confirmed that at the time of the private placement, Inovest BSC was not licensed by the CBB to be able to offer such investment products to investors or invest money on behalf of others and so any commitment received by or on behalf of the Defendants from investors at that time was therefore in violation of regulations in Bahrain. Lastly, the BCDR ruled that after more than 5 years since the investment offering took place, no substantial works had commenced on the project site in Saudi Arabia.  The BCDR further ruled that the Defendants used investors’ funds in a way that constituted a deviation from the agreed contract under the Civil Code of Bahrain.

Consequently, the BCDR ordered that the Defendants repay to Barwa the full amount of Barwa’s original investment of SAR 60 million. The BCDR also ordered that the Defendants pay Barwa compensation for lost profit of 1.5% from February 2009 until the judgment payment is received by Barwa, a further BHD 300,000 as compensation and that the Defendants pay additional costs and expenses.

Barwa is currently the largest publicly listed real estate company in Qatar in terms of real estate developments, and the group recorded a total asset value of approximately QR 50,239,531 billion at the end of 2012. Despite its short history, Barwa Real Estate Group has grown from being a purely real estate-driven company into an internationally diversified business conglomerate with a multitude of investments in real estate development in Qatar, international real estate, business services, in addition to infrastructural and financial services.

The Haya Rashed Al Khalifa team was led by partner Rashid Boghammar and included associates Atef Metwali, Ahmed Khouly and Elie Yazbeck.  This success further illustrates the dominance of Haya Rashed Al Khalifa Attorneys in banking litigation.