By Axel Jacob

Overview
Much talk has been made of the special Dubai World Tribunal. It may be tempting to criticize it as a media coup, a hopeless attempt to calm down restless investors or testimony to an insufficient regular dispute resolution system. But a closer look at the scope and function of the Tribunal suggests that it is a serious and balanced attempt to tackle the most critical problem that Dubai is currently facing.
It appears that the outsourcing of specifically problematic legal disputes to special tribunals has some tradition in the UAE. There are other special dispute resolution committees e.g. for the resolution of tenancy issues or for bounced cheque cases in real estate matters. The rental committee shows that such a special committee can be good for the balance between the parties involved and can play an important role in rule making and appeasing the commercial society.

The legal foundation for the Dubai World Tribunal has been laid down in Rulers Decree No. 57 of 2009 that became effective on 13 December 2009. Dubai World itself was established through a Ruler’s decree and thus enjoys a special and unique legal status, as a result of which the provisions of the bankruptcy and insolvency regime as contained in the UAE Commercial Companies Code do not apply to Dubai World. At the same time, contrary to what many may have believed, the Government of Dubai does not guarantee Dubai World’s obligations.
Dubai World is a conglomerate of a number of diversified subsidiaries under the Dubai World umbrella. Amongst them are not only real estate developers like Limitless, Leisurecorp and the most commonly known Nakheel but also highly profitable businesses like DP World and Dubai Drydocks, as well as free zones, such as the Dubai Multi Commodities Centre and even JAFZA under the Economic Zones World subsidiary.
Recently Dubai World has made the news when it asked its creditors to agree on a moratorium to postpone repayment of debts in order to restructure the group of companies. The total debts of Dubai World are rumored to be around 60 billion USD. It is largely expected that its subsidiary Nakheel faces the largest problem with the mega projects of Palm Jebel Ali and Dubai Waterfront currently at a complete standstill.

Structure of the Tribunal
The Tribunal consists of a three judge penal. All three judges are international judges from the DIFC Courts. Amongst them is Justice Sir Anthony Evans, Chief Justice of the DIFC Courts. It is interesting and understandable that the Tribunal has been modeled after the DIFC Court system. The DIFC and its Courts for their modulation in accordance with mainly British principles are famed for being up to international standards. Consequently the Decree states that the DIFC Court Law and the DIFC Court Rules apply, save a few necessary exceptions and limitations due to the nature of the Tribunal.

Scope of the Tribunal
The Tribunal will oversee and supervise the restructuring process of Dubai World. It is exclusively authorized to hear all claims against Dubai World or any of its subsidiaries including any demand to dissolve or liquidate Dubai World or any of its subsidiary. The decisions of the Tribunal are binding and final. There is no recourse to any other judicial body.

The Applicable Rules
The Decree has also established the legal regime for the restructuring process of Dubai World. It has rendered the DIFC Insolvency Law and DIFC Insolvency Regulations applicable to Dubai World and its subsidiaries, safe a number of restrictions and limitations.
The main difference to the normal cause under the DIFC Insolvency law is the creditors may not simply file a petition for the winding up of the company. The decree lays emphasize on a voluntary arrangement. The Company will have to make a proposal to its creditors for such a voluntary arrangement. Once the company notifies the Tribunal that it intends to make such a proposal (Voluntary Arrangement Notification) two consequences will occur: 1) an automatic moratorium will take effect in respect to the company’s creditors and assets resulting in a standstill of any proceedings against the company or its assets and 2) each creditor will have 60 days from the date of the Voluntary Arrangement to submit proof of their claim (Claims Bar Date). After the Claims Bar Date creditors will be forever banned with their claims. 
Any offer for a Voluntary Arrangement will have to be accepted by the Creditors. Only if they don’t reach the necessary majority of creditor approval, the Tribunal will proceed to wind up the company. It is expected that this process will be considered for each subsidiary on a case by case basis and that it will thus not be required for every subsidiary of Dubai World.

What is to be done if you are a creditor?
As a creditor or potential creditor of Dubai World or any of its subsidiaries including Nakheel, Limitless and Leisurecorp it is important to anticipate the expected Voluntary Arrangement Notification and prepare any claims one wishes to raise and to substantiate and proof them as good as possible, best with legal guidance and support of DIFC Court registered practitioners.
Otherwise, should one miss the 60 days claims bar, the claim would be forever barred and extinguished.
This applies to large institutional investors or finance providers and bond holders as much as to small private investors who bought a unit off plan in a now halted development such as Palm Jebel Ali or Dubai Waterfront.
Fichte & Co offers guidance, assistance and representation of creditors vis-à-vis Dubai World or any of its subsidiaries.