IRISH LIFE has to go ahead with a three-year-old €170 million property deal in Luxembourg that it believed it was no longer obliged to honour after losing an arbitration case.

Irish Life agreed to buy a 240,000sq m office block from developer Vertigo for €170 million in 2007. The deal was due to be completed in January of this year, but Irish Life believed a clause in the original contract allowed it to back out of the agreement as the property’s price has fallen sharply since 2007. The dispute between the Irish bank and life assurer and Vertigo went into formal arbitration in April. The arbitrator has ruled against Irish Life, which must complete the deal and buy the building for €170 million.

A spokesman confirmed yesterday that the Irish company had lost, and said that it would be bound by the ruling.

Irish Life was understood to be relying on a clause in the original contract that allowed it to walk away if the value of the property fell by €8 million or more. The group believed that this was the case. The building that it is taking over is 75 per cent empty. Its sole tenant is Bank of New York Mellon.

When the dispute first broke out earlier this year, it sparked speculation that Irish Life wanted to exit some deals it had done in Europe during the latter years of the property boom. It denied this.

Formal arbitration proceedings are a common method of resolving disputes over property deals. The parties normally include a dispute resolution clause in contracts and anyone involved has to agree to be bound by the final ruling.