Trade dispute hearings in Dubai doubled last month to reach a total of 40 as a result of the economic crisis, it was reported on Tuesday.Cases are heard at the Dubai Chamber of Commerce and Industry (DCCI) after being filed at the Dubai International Arbitration Centre received.
In March, 20 cases were heard compared with 40 in April, which took the total number of disputes in Q1 to 80 according to data released by the chamber and reported by UAE daily The National.
Of these 28 were arbitration cases, a legal process which resolves disputes by a third party without litigation, for the whole of last year, the DCCI said in its monthly report.
Finance analysts have predicted that this is just to start of an upward turn in disputes until the banks ease current lending restrictions.
“Banks basically have closed shop and are not lending, so businesses have serious issues [about] how to get hard cash,” said Aymen Al Saheb, head of operations at Drahem Financial Brokerage in Dubai.
“Until banks make the liquidity available, we will see business disputes rising in the country. The market needs pressure-reducing measures and that is all in the hands of banks,” he added.
The DCCI data also shows that its legal services department received 156 cases of business mediation last month, taking the total number so far this year to 322.
This represents an 80 percent increase on the 182 cases for the same period last year.
However, banks remain cautious about expanding their loan books, predicting that they will have to deal with more loan defaults as the real estate slowdown contiunes.
Abu Dhabi Islamic Bank said it expected bad loans to have risen last month.
Emirates NBD, the region’s largest bank by assets, also said it expected non-performing loans to rise to as much as 1.7 per cent of lending by the end of the year.Last year the UAE set up a $19.06bn emergency fund for banks to boost liquidity.
In February Dubai government launched a $10bn bond, part of a $20bn scheme, to ease cash flow problems for government related entities in a bid to revive the economy.
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