Doubt hangs over tribunal for Nakheel legal cases

The Dubai World Tribunal's role in deciding millions of dirhams in disputes involving Nakheel is in limbo now that the developer has separated from Dubai World.
Nakheel formally severed ties with Dubai World last month. Ana Bianca Marin / The National
Nakheel formally severed ties with Dubai World last month. Ana Bianca Marin / The National

The fate of millions of dirhams worth of claims involving Nakheel in the Dubai World Tribunal are in limbo after the company's separation from Dubai World.

The tribunal was established in 2009 to handle claims relating to Dubai World and its subsidiaries, including Nakheel, the developer behind Palm Jumeirah and The World, the collection of man-made islands.

But last month Nakheel formally severed ties with Dubai World when it completed a US$16 billion (Dh58.76bn) financial restructuring, leaving the legal community doubtful about the role of the tribunal in Nakheel disputes.

"At the moment there is complete uncertainty about what will happen," said Adrian Chadwick, a partner with the law firm Hadef & Partners.

In a news conference last month, the Nakheel chairman, Ali Lootah, said existing cases in front of the tribunal would move forward. But the company's legal team, which has also used the tribunal to file claims, is evaluating how to handle future cases, he said.

"We have had no direction as to whether the tribunal will accept [new cases]," said Jonathon Davidson, who often represents plaintiffs in the tribunal.

The uncertainly has far-ranging implications for companies and individuals engaged in disputes with Nakheel, including thousands of expatriate homebuyers.

The tribunal provides a streamlined process, in English, to hear complaints, using the rules of the Dubai International Financial Centre Courts. The tribunal follows international common law standards, including the recognition of binding precedent.

Final trials in the tribunal are heard by a panel of judges and decisions are posted on the court's website.

Outside the tribunal, Nakheel cases would most likely be handled by the Dubai civil courts, which have stricter rules about oral evidence and limit the opportunity to cross-examine witnesses, lawyers say.

If Nakheel cases are removed from the tribunal's control, the result will be "chaos," said Kaashif Basit, a lawyer familiar with the tribunal.

Cases in the system might have to return to square one, and technical issues would have to be reargued.

"It's not fair to any of the parties to have that type of uncertainty," Mr Basit said. "It would be unfortunate because the tribunal has worked really well and been very fair and efficient."

Mr Basit has several Nakheel-related cases he is still considering filing with the tribunal.

For the moment, the tribunal is handling Nakheel cases, and the jurisdiction issue has not been raised by any parties.

"We have received no official notification as to any change in the jurisdiction of the tribunal," said Mark Beer, the tribunal's registrar.

Legal experts say one of two alternatives could resolve the issue.

Either the Ruler's Court will make a formal decree clarifying the tribunal's status with Nakheel, or Nakheel lawyers will argue in a case that the court no longer has jurisdiction, forcing the tribunal judges to make a decision. In recent months, multiple complaints have been filed against Nakheel in the tribunal, in anticipation of the possibility of the tribunal losing jurisdiction over new cases.

"There is a general expectation that existing claims will continue but new ones won't," Mr Chadwick said. "People want to get their claims in now."

Published: September 15, 2011 04:00 AM


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