A recent decision of a specialist tribunal in Dubai could have far-reaching consequences for the maritime industry. In this article Robert Thomas QC, of Quadrant Chambers, and Robert Lawrence and Leonard Soudagar, of Clyde & Co, examine how it is now possible, in certain circumstances, for a shipowner to set up a limitation fund in the UAE.
On April 1, 2012 Drydocks World LLC (DDW) and its subsidiary Drydocks World — Dubai LLC (DDW Dubai), a Dubai- and Asia-based ship building and repair company that is wholly owned by Dubai World, became the first company to commence a reorganization proceeding in the Special Tribunal1 (the Tribunal) created by Dubai Decree No. 57 for 2009 (Decree 57) and avail itself of Decree 57’s integrated legal framework.
On 13 December 2009, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of UAE, Ruler of Dubai, issued Decree No. 57 for 2009 Establishing a Tribunal to Decide Disputes Related to the Settlement of the Financial Position of Dubai World and its Subsidiaries (Decree No. 57). The text of Decree No. 57 is available at http://www.difccourts.ae.
Why Issue Decree No. 57?
In yet another example of the Dubai International Financial Centre (DIFC) making its company and insolvency law even more versatile, the DIFC has introduced a mechanism which will operate in a similar manner to a scheme of arrangement under English law. The law came into effect on 12 November 2018.
Key terms
In September 2018 the Dubai International Financial Centre Authority (“DIFCA”) announced that it proposes to replace its current insolvency law with a new law to update the insolvency regime in the Dubai International Financial Centre (“DIFC”) and that it has launched a consultation in relation to the same.
Why are changes proposed?
Freshfields Bruckhaus Deringer LLP Comparison of Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC), October 2015 1 Established pursuant to Abu Dhabi Law No. 4 of 2013, the ADGM is currently in the process of establishing itself as an alternative financial centre to the DIFC. It is intended that over time the ADGM will become a recognised international financial centre alongside the DIFC and other regional financial centres in Qatar, Bahrain and Saudi Arabia.
On 14 December 2009, the same day on which Nakheel, a Dubai World subsidiary, was due to make payment under its 2009 sukuk, the Government of Dubai announced that it had received support from the Government of Abu Dhabi and the UAE Central Bank and would pay the US$4.1 billion due. It also announced that it had secured funding of an additional US$5.9 billion to be used to meet “interest expenses and working capital [of Dubai World] through April 30, 2010 – conditioned on the company being successful in negotiating a standstill”.
At the same time as announcing that the Nakheel sukuk due for repayment on 14 December would be repaid in full, the Dubai government stated that it would pass a reorganisation law for the Dubai World group in case that group is unable to achieve an acceptable restructuring of its remaining obligations. The details of that new law have now been released in the form of Dubai Decree No. 57 for 2009 (the Decree).
The Decree is significant in two respects:
At the same time as announcing that the Nakheel sukuk due for repayment on 14 December would be repaid in full, the Dubai government stated that it would pass a reorganisation law for the Dubai World group in case that group is unable to achieve an acceptable restructuring of its remaining obligations. The details of that new law have now been released in the form of Dubai Decree No. 57 for 2009 (the Decree).
The Decree is significant in two respects:
As many Japanese contractors are exposed to the financial crisis in Dubai, this month our Construction Disputes Avoidance Newsletter focuses on an important recent development concerning Dubai World. At the same time as announcing that the Nakheel sukuk due for repayment on 14 December would be repaid in full, the Dubai government stated that it would pass a reorganisation law for the Dubai World group in case that group is unable to achieve an acceptable restructuring of its remaining obligations. The details of that new law have now been released in the form of Dubai Decree No.