Nakheel - Event of Default - Legal Issues?

Gassner's picture

Dear Readers,

An article in the Financial Times, has discussed the legal issues surrounding to an eventual Event of Default of the Nakheel Sukuk, which can be read here:

http://www.ft.com/cms/s/0/215c0502-e038-11de-8494-00144feab49a.html

Some comments came afterwards referring to that piece, e.g. on FT Alphaville:

http://ftalphaville.ft.com/blog/2009/12/04/86736/nakheel-and-the-sukuk-l...

Claiming that because of Sharia law in the UAE there is uncertainty regarding burden sharing.

Such a claim is an error. While the Sukuk was structured to comply with Sharia the various Agreements are either governed by English law or UAE law.

Therefore it is crucial to see how assets could be seized under UAE law not under Sharia law: A nice summary of the dispute resolution in the UAE is free for download by the law firm Afridi and Angell:

http://www.legal500.com/assets/images/stories/firmdevs/disputeresolution...

Even if the UK ruling would be fully recognised under UAE law, law firms like Tamimi point to the most critical issue: "While the ruler of Dubai and the government are subject to court orders just like everybody else, their assets cannot be seized and sold by public auction" as cited by Reuters:

http://www.reuters.com/article/idUSTRE5B21YH20091203

Best regards,

Michael Saleh Gassner

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