The Dubai Government has established a tribunal of judges to handle disputes connected with the debt restructuring of Dubai World. Sheikh Mohammed bin Rashid, the Vice President of the UAE and Ruler of Dubai, yesterday issued a decree setting up the three-judge tribunal, headed by a senior British judge, to supervise financial claims against the Dubai Government-controlled conglomerate.
Under the decree, creditors of Dubai World will be prevented from pursuing claims through Dubai courts. Instead, they will have to go make their case in front of a special Dubai International Financial Centre (DIFC) Court, governed by regulations which have been modified to reflect US and UK insolvency laws. "DIFC laws are being substantially modified to meet the needs of one company, which is quite unusual, maybe even unique in legal terms," said Michael Grose, a partner at law firm Clyde & Co in Dubai.
The tribunal will initially be composed of three senior international judges from the Dubai International Finance Centre Courts chaired by Sir Anthony Evans, the chief justice of the DIFC Courts, and a former High Court judge of England and Wales. The other members of the tribunal are Michael Hwang, the deputy chief justice of the DIFC Courts, and a partner at the law firm of Allen and Gledhill, and Sir John Chadwick, a judge of the DIFC Courts.
"The decree establishes a clear, transparent and effective legal framework incorporating international best practices in restructuring," said Lowai Belhoul, the director general of the legal affairs department of the Government of Dubai. All proceedings before the tribunal will be open to the public and the press, except upon application and hearing, and when the tribunal orders certain proceedings to be conducted on a private basis.
The tribunal allows claims against both Dubai World and its subsidiaries and company boards of directors and employees. The code is "based on internationally accepted standards" to govern the procedure, the Dubai Government said. Until now, regulations surrounding the liquidation or restructuring of a struggling company have remained largely untested in the UAE, with only a handful of companies declaring insolvency during the global financial crisis.
Officials from the World Bank have already urged the UAE to take steps to reform procedures surrounding bankruptcy after statistics showing the country performs worse than other Arab countries in key areas of assessment on insolvency. Creditors get an average of 10.7 fils in the dirham if a company in the UAE files for bankruptcy, data from the World Bank's International Finance Corporation shows.
In MENA, only Mauritania has a lower rate of recovery, at 6.7 per cent. The Government is already putting the final touches on a new companies law, which is expected to lead to reform of bankruptcy procedure across the UAE. But companies operating in the DIFC are governed by separate regulations. @Email:email@example.com