Disputes involving Tamweel, an Islamic home finance company based in Dubai, are being shifted to the emirate's courts and away from a special committee set up three years ago to resolve its financial problems. The decision came in a decree last month from Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai.
Tamweel revealed the information only yesterday, however, on the website of the Dubai Financial Market (DFM), where its shares are listed.
The decree required "the transfer of all legal cases, applications, complaints and disputes filed against Tamweel before the special committee to Dubai Court of First Instance", Varun Sood, Tamweel's acting chief executive, said in a letter to the DFM. Moving cases into the courts could speed the resolution of numerous claims against the company.
Tamweel shares promptly declined on the news to a record low since its listing in 2006.
The committee was formed in late 2008 when company executives and government authorities tried to orchestrate a merger between Tamweel and Amlak Finance, another major Islamic home finance provider, to prevent both from failing. After two years of deliberations, the merger was scrapped because of the high cost of returning the companies to financial health.
They both had relied heavily on short-term external financing to maintain a portfolio of mortgages collectively worth more than Dh20 billion (US$5.44bn).
When the crisis hit, however, their financing lifelines were cut off and they did not have deposits or other sources of funding to fall back on. Trading of both companies' shares ceased as the merger talks continued. Late last year, Dubai Islamic Bank, which had a major stake in Tamweel, paid Dh375 million to take over the company and has since made it a conduit for Islamic mortgage lending.
Tamweel began offering financing again in January. Its shares resumed trading in May.