Property developer Montpellier Estates is to take legal action against Leeds City Council (LCC) after losing out in the race to build a new multi-million pound entertainment arena.

In November, LCC's executive announced that the new 12,500-seat venue would be built by the council itself on a 5.1-acre (2.06-hectare) site at Claypit Lane, which is part-owned by Leeds Metropolitan University. Proposals for the new arena put forward by two developers, including Montpellier Estates, were adjudged to be too costly, and Montpellier Estates has now issued proceedings against the council to obtain information surrounding the decision which it says it is entitled to.

A spokesperson for the company said: "Montpellier Estates can confirm that it has issued proceedings against Leeds City Council in connection with the competition to award a contract to develop the Leeds Arena. "Montpellier has issued the proceedings to obtain information from LCC that Montpellier is entitled to, has requested and that LCC has refused to disclose. As the matter is sub-judice, Montpellier can make no further comment on the matter."

Plans for the new arena include two seating 'bowls', one containing 7,000 seats and the other 5,300 seats, as well as 4,000sq m (43,056sq ft) of public and retail space, 24 executive boxes and a 100-seat restaurant. Funding is expected to come from the council and the regional development agency, Yorkshire Forward. However, council and leisure bosses from the neighbouring city of Sheffield have already criticised the plans to use government money to pay for the venue because it would threaten the viability of the 13,000-seat Sheffield Arena.