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civil law

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December 04, 2017

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Court rejects Ebola outbreak excuse by mining firm

The firm's decision to halt excavations resulted in equipment damage to a drilling company

The Dubai Civil Court rejected a Dubai-based company's excuse of 'Ebola virus outbreak' to halt excavations, which accrued millions of dollars in losses to a drilling company as a result of equipment damage. Dubai has long been a popular location for investors, especially expatriates. According to property lawyers in Dubai the dynamics and life style of Dubai, coupled with business opportunities stemming from its superior geographical position has now made it a global choice for investors to purchase real estate in Dubai.

A mining exploration drilling company based in Secunda, South Africa, won a $10.1m compensation (Dh37.3m) after its equipment was damaged following an order to hold works.

The court was told that in 2010, the Dubai based company won mining rights for diamond, gold and precious stones in Guinea. The company then signed an exploration drilling contract with the plaintiff on November 15, 2011.

The plaintiff, provided services ranging from accessibility of the drilling site, topography, water supply, drilling equipment and other ground conditions requirements.

Hassan Elhais, legal consultant from Al Rowad Advocates, which is representing the drilling company in court, said the plaintiff paid $400,000 to move four drilling equipment to the location before moving its staff including supervisors and maintenance technicians to start mining work.

He told the court that his client worked on its own for about three months starting on March 6, 2012, hiring 16 local workers, supplying water by installing 10km-long pipes, and opening roads to gain easier access to the drilling site that required about 12 hours through four different cities to reach to.

In July the same year, the respondent firm ordered the drilling company to stop works attributing it to Ebola virus outbreak and political unrest in the country.

Elhais said that a request by his client for their equipment to be lifted from the site and returned to its premises was rejected by the respondent firm which offered $1m as settlement. "Several other attempts to resolve the issue amicably went unsuccessful," he added.

A case was filed at the Dubai Civil Court against the respondent firm on June 16 last year after which the court assigned an audit to travel to the locations and present a report.

On March 26, this year, the audit travelled to Guinea and reached the site in 12 hours. He said in his report, submitted to court in July, that the equipment turned into home for varmints, insects and birds, following which the court pronounced its verdict. The respondent company has appealed against the verdict.

A timeline of the case

2010 > Dubai based company wins mining rights in Guinea

Nov 15, 2011 > Company signs drilling contract with South African firm

March 6, 2012 > Company starts functioning

July 2012 > Company halts its operation citing Ebola virus outbreak as reason

June 16, 2016 > South African firm lodges complaint against Dubai-based company

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