For many companies facing financial stress, restructuring liabilities is the only way for their business to survive. Consensual restructuring, or voluntary workout, requires agreement from creditors to reorganise the company’s liabilities, and is typically implemented by agreement between the company and its creditors. Court-based restructuring processes, on the other hand, involve at least some degree of legal coercion of creditors to vary or release liabilities.

In a recent landmark judgment dated 21 February 2016 the Dubai Court of First Instance decided in favour of a foreign shareholder, against a local Emirati, in a winding up petition. This is contrary to the long established protectionist trend employed by Courts in the United Arab Emirates. What is even more surprising is that the Court, in reaching its decision, has adopted a purposive approach, rather than simply applying the black letter of the law, as has traditionally been the case.

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