Swedish-owned retailer IKEA Portugal confirmed today that it has started an administrative action in the Court of Loulé to defend its ground over the retail centre and store project that it aimed to have completed sometime in 2015.
This Thursday, a spokesman for the Association of Entrepreneurs of Quarteira and Vilamoura said that it was mounting a class action against the proposers of the development.
Loulé council gave permission for the building of a commercial center and IKEA store a year ago, amid whoops of joy from the local council and criticism that the compensation councillors negotiated was a poor deal for the local area.
IKEA Portugal is now to "start appropriate legal measures to defend its legitimate rights and interests with regard to this project, and will seek the payment of costs, expenses and damages incurred as a result of legal actions from those associations that have contributed the delay of the project."
According to the Association of Entrepreneurs of Quarteira and Vilamoura, a letter dated February 17th 2014 notified the developers of a class action whereby the association would “proceed with all legal means to defend its legitimate interests and also will request financial compensation from the developers for both the associations and for us as individual people."
The Association of Entrepreneurs of Quarteira and Vilamoura are joined by the Association of Young Algarve Entrepreneurs, the Association of Trade and Services of the Algarve Region, the Association of Hotels and Resorts in the Algarve, and some individuals.
IKEA claims that "the project to be developed by IKEA Portugal is for a an IKEA store and a shopping centre, enabling the creation of 3,000 directly and indirect jobs in a total investment of €200 million."
IKEA stated on February 3rd that it plans to open the Loulé store in 2015, not 2014 as originally hoped, and admitted that its management was still 'in talks' with the newly elected board of Loulé council but did not reveal any detail. Now the company faces a legal challenge for compensation despite the council having granted planning permission a year ago.
When foreign-owned companies look at Portugal with a view to investing, a sound and fair legal system is high on the list of influential factors. Against savvy and well-embedded local opposition the Swedes may simply cut their losses and leave rather than mount a series of defences with no end in sight.
