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Dubai World’s legal battle

Dubai World’s legal battle

A subsidiary of the company has filed a suit against MGM, its Las Vegas project partner, for allegedly violating the terms of their contract.

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March 24, 2009 2:57 by



Infinity World, a subsidiary of Dubai World, has filed a lawsuit in Delaware, U.S. against MGM Mirage, for violating the terms of their agreement to build CityCenter, an entertainment complex in Las Vegas. Dubai World said that it filed the suit to protect its rights and the viability of the CityCenter joint venture.

MGM admitted recently to the Securities and Exchange Commission (SEC) that “There is substantial doubt about our ability to continue as a going concern”. The company also said it that cannot provide assurance that its business will generate sufficient cash flow or that it will be able to fund its other liquidity needs.

Dubai World said that the disclosure constituted a breach of the CityCenter joint venture agreement and put the development at risk. In its court filing, it asked for a “declaratory relief from obligations under the joint venture agreement.”

“The current path of the project is simply unsustainable given our partner’s financial troubles,” it said.

Dubai World also charged MGM of mismanaging the project, “resulting in costs significantly over budget despite downsizing certain of the facilities,” forcing Infinity World to make higher capital contributions than originally estimated by MGM.

In August 2007, MGM provided an estimate of more than $7.4 billion dollars to complete CityCenter, but it later increased the amount to $8.8 billion, of which MGM had raised only $1.8 billion. Infinity World has contributed about $4.3 billion so far, said Dubai World.

The company also said that it believed in the project’s value, and wants to complete it, which is why it took these steps against MGM. CityCenter is scheduled to open by the end of the year.



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