Investors embroiled in legal disputes with developer Nakheel will have their cases heard at Dubai Courts and not at the specifically-formed Dubai World Tribunal (DWT), Dubai’s Legal Affairs Department has confirmed.
The clarification follows confusion from investors looking to take legal action against the property firm, which was carved out of parent company Dubai World last year.
“Any cases involving Nakheel or any of its subsidiaries as a party will now come under the jurisdiction of the Dubai Courts or the alternative competent dispute resolution forum,” a statement from Dubai’s Legal Affairs Department said.
“It became apparent that this legal interpretation was necessary in light of the numerous enquiries it had received requesting clarification on the appropriate forum in which to file cases involving Nakheel and its subsidiaries,” it added.
Media reports in October claimed Dubai’s Department of Legal Affairs had issued a decree that ruled all Nakheel-related cases would now be heard by Dubai Courts. Lawyers said it was simply a circular suggesting that it was likely disputes
would be referred to Dubai Courts after Nakheel became a wholly government-owned firm, leaving many investors in the dark.
“For those [investors] that are in the tribunal and filed before 23rd August 2011, it now seems to be the case that those cases will remain within the tribunal," said Jonathon Davidson, founding partner with legal firm Davidson & Co.
“If they didn’t file prior to that date, this would have happened after the carve out so therefore the tribunal will sit with Dubai Courts as it would with any other non-Dubai World entity,” he added.
The confirmation has widespread implications for individuals pursuing legal action against Nakheel. The developer has faced a slew of cases from unpaid trade creditors and buyers since the tribunal was created in December 2009, to hear cases linked to Dubai World’s debt restructuring.
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 in September it wrote down AED78.6bn (US$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 US$16.1bn restructuring, including a lawsuit filed by its former chief executive for US$3.7m.