In the wake of the high profile financial problems affecting the Dubai World group, the Dubai government has announced a new reorganisation law in case that group is unable to achieve an acceptable restructuring of its debts. New legislation was needed because the status of Dubai World as a company incorporated under special legislation means that the UAE insolvency laws do not apply to it. The new legislation:
- establishes a tribunal comprising three judges taken from the courts of the Dubai International Financial Centre (the DIFC) to oversee the restructuring process; and
- creates a legal framework for the financial reorganisation based on the laws of the DIFC.
This is an interesting legal development because the laws and the legal system of the DIFC do not usually apply outside of that freezone to entities and activities carried on in the mainland UAE.
Please see the Herbert Smith e-bulletin from December 2009 which discusses the role and powers of the specially constructed tribunal.