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Mon 26 Sep 2011 10:32 AM

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Nakheel split may shut investors out of Dubai World tribunal

Tribunal warns jurisdiction issues may affect legal cases now developer is gov’t-owned

Nakheel split may shut investors out of Dubai World tribunal
Nakheel is embroiled in at least 12 legal cases linked to The World development
Nakheel split may shut investors out of Dubai World tribunal
The Palm, Nakheel
Nakheel split may shut investors out of Dubai World tribunal

A tribunal set up to hear disputes relating to Dubai World’s debt restructuring may no longer hear cases against Nakheel after the debt-hit developer was carved out of its parent company.

The split means the tribunal may no longer have jurisdiction to rule on lawsuits concerning the developer, which was taken over by the Dubai government in August.

A directive issued by the tribunal on Monday said: “issues as to the jurisdiction of the tribunal may arise in proceedings brought by or against Nakheel and those of its subsidiaries and affiliated that have ceased to be subsidiaries of Dubai World.”

The directive, issued on Thursday by the tribunal's chairman Sir Anthony Evans, said the court would continue to oversee legal cases that commenced before Aug 23.

Rejected cases would need to seek recourse in the Dubai Courts.

Jonathon Davidson, founding partner with legal firm Davidson & Co, which last year won a landmark ruling against the developer, said the directive helped clarify the position of investors with outstanding claims against Nakheel.  

“Until now there was some doubt as to whether the issue of jurisdiction after the separation of Nakheel from Dubai World would be dealt with by the tribunal - after hearing the parties' respective arguments - or by way of a directive or regulation from The Ruler's Court,” he said.

“This statement seems to confirm the former.”

The former Dubai World subsidiary was one of the biggest casualties of the property crash after overstretching itself with ambitious projects such as the offshore World island development.

Nakheel said this month it wrote down AED78.6bn ($21.4bn) from the value of its real estate during the Dubai debt crisis, which saw house prices in the city fall more than 60 percent from their peak.

The state-owned developer became embroiled in a rash of legal battles as it struggled to finish a $16.1bn restructuring, including a lawsuit filed by its former chief executive for $3.7m.

The property developer is engaged in at least 12 legal cases relating to The World, including one lawsuit against Kleindienst Properties which demands almost $200m in unpaid installments and delay fees.

Any decision to block further cases by the tribunal could have widespread implications for individuals yet to file action against Nakheel. The Dubai World Tribunal website shows that 37 cases related to the developer have been filed.

 “Parties who have not yet filed are at liberty to do so and make their case that the tribunal still retains jurisdiction over cases involving Nakheel,” said Davidson. “The tribunal will decide one way or the other."

*With agencies

Red Snappa 8 years ago

Would not the fairest ruling be that if cases yet to be brought before the Dubai World Tribunal relate to events, disputes, claims. misrepresentation, material loss etc involving Nakheel and third parties that occurred before the 23rd of August 2011, then they still reside under the jurisdiction of the DIFC court specifically set up.

The DW Trib also operates under international legal guidelines and is also headed by a best of breed Law Lord. It also seems to work its way rapidly through what are fairly complex cases, last time I looked there were 44 cases outstanding, now down to 37.

Not Surprised 8 years ago

Pity those claimants who will be under the jurisdiction of the Dubai Courts. Their cases may not be heard......maybe for quite a while?

Mohammad 8 years ago

International City is a project by Nakheel. It was the idea (pay installment not rent) for me in 2008 when I bought an apartment in International City with the finance from Tamweel (ref. MF41975). Now ending up paying higer interest rates than anyone else in UAE i.e. 7.4% (infact they are so kind to reduce it from 7.9% to 7.4% after begging it). But not willing to reduce amount of installment. No flexibility from Tamweel. Looks to me they are charging higher profit rate to reliable customer like I & compensating their loss occured due to non-reliable people. Anyway still I hope for the best from Tamweel if they wish to support. There are banks offering 4.99% profit rates for home loans but International City home finance is black listed by many banks.