Dubai: Dubai’s Ruler has ordered the transfer of all legal action in the Dubai International Financial Centre courts involving Amlak Finance, an Islamic mortgage firm undergoing a government-led debt restructuring, to a special judicial committee outside Dubai’s normal legal system.
A decree issued on December 16 by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, says all Dubai courts including those in the DIFC, the emirate’s main financial hub, “shall be prohibited from the consideration and settlement of any application or claim related to Amlak Finance,” according to a translation seen by Dow Jones.
The move clarifies a decree in 2009 that established a special judicial committee to hear claims against Amlak and Tamweel, another home finance company that faced a funding crisis following the global downturn in 2008. That decree moved all cases in the Dubai courts to the committee, but did not discuss cases in the DIFC courts, which have a separate set of procedures based on English common law.
At least one DIFC case has already been transferred to the committee under the new decree. Gregory and Michelle Whetham sued Amlak last year, asking for the return of a deposit they made on an apartment in the company’s Sky Gardens project near the DIFC. Amlak responded in August, saying the couple didn’t have the right to a refund. A DIFC courts judge ordered the case transferred to the committee on December 24.
A lawyer representing the Whethams declined to comment, as did Amlak’s attorneys. But Ludmila Yamalova, a lawyer at HPL Yamalova & Plewka JLT in Dubai who has represented clients before the committee, said the case would likely have to start anew.
“Everything has to be done in Arabic,” she said. “The claim was made on the basis of the DIFC laws, but in the special committee you now have to cite a different body of laws and start anew and translate everything.”
The new decree comes as the UAE’s government tries to end uncertainty over Amlak’s future that has prevailed since late 2008, when its shares were suspended from trading on the Dubai Financial Market. The company, in which Dubai’s flagship developer Emaar Properties owns a 45 per cent stake, ran into trouble after the emirate’s property bubble burst and real estate prices fell as much as 60 per cent.
Sultan Bin Saeed Al Mansouri, the UAE Minister of Economy and head of a committee overseeing Amlak’s restructuring, said last year that the government managed to reduce Amlak’s outstanding debt by around Dh4 billion ($1.1 billion). The total debt still to be restructured is slightly above $2 billion, according to a person involved in talks with Amlak’s banks.
“Amlak is one of the problematic restructurings that need to be resolved,” a person familiar with the matter said. “It is important to find a solution because it is seen at the heart of Dubai’s real estate recovery.” KPMG was appointed to advise Amlak on its restructuring in the second half of last year, according to two people with knowledge of the matter. The law firm Allen & Overy is also advising Amlak, one of the two people said. Global accounting and consulting giant PwC is advising Amlak creditors, Banks that have lent to Amlak include Emirates NBD and Dubai Islamic Bank, sources familiar with the issue said.
KPMG, Allen & Overy, Emirates NBD, Dubai Islamic Bank all declined to comment. Amlak wasn’t immediately available to comment.