Qatari Diar, wholly-owned subsidiary of Qatar’s sovereign wealth fund, has been told it faces losing a UK High Court case against the Candy brothers unless the leader of Qatar comes forward as a witness.
In a hearing yesterday, Judge Peter Smith warned Qatari Diar's lawyer "of things that might blow up spectacularly in your client's face at trial" if Sheikh Hamad Bin Khalifa Al-Thani, the emirate's ruler, does not testify.
The dispute is over Chelsea Barracks, which was bought by the Candy brothers and Middle Eastern developer Qatari Diar for £959m in 2007. The Candys claim to be owed £81m because their contract with Qatari Diar was breached when plans to develop the area were withdrawn for illegitimate reasons. Nick and Christian Candy allege the planning application was pulled because of a personal petition from Prince Charles to the Emir of Qatar over the Lord Rogers design.
Establishing the nature of the discussions between Prince Charles and Sheikh Hamad, and whether the Emir subsequently urged Qatari Diar to scrap the planning application, is being seen as pivotal in the case.
"The Emir is a head of state with huge concerns on his plate. A certain degree of reasonableness is required," Andrew Twigger, representing Qatari Diar, said.
Mr Twigger suggested the Emir could testify by video conference.
April 29, 2010
Analysis and Forecast: Increasing Risk
The Chelsea Barracks case is an embarrassing episode in Qatari Diar’s investments. Qatar is a highly secretive and tightly knit community and the Qatari regime attempts to avoid confrontation at all costs. However, this case is quickly dragging the head of state into what could become a hugely humiliating appearance.
If the Emir does appear in court, this will be seen by Qataris and the rest of the GCC, who have been envious of Qatar’s expansion, as a huge humiliation. If on the other hand, the Emir does not appear in court and the case is lost, it will also be a public relations fiasco for Qatar, which is extremely sensitive about its image.
Although the case carries no major long-term implications, it represents a rare situation when the Emir of Qatar will be called to answer questions, something he never did in his own country. This will undoubtedly raise question marks about the investments of Qatar’s sovereign wealth fund, as it embarks on a global buying spree. With a lot of those deals secretive and involving members of the ruling family, Qatar would have preferred those to remain so, rather than be opened in the public domain as the Chelsea Barracks case is doing.