Tribunal rejects Nakheel motion

A special court in Dubai has rejected an attempt by the property developer Nakheel to dismiss claims against it on the basis that it is no longer part of Dubai World.

The Dubai World Tribunal has rejected an assertion that it no longer has jurisdiction over existing disputes involving Nakheel, the Dubai developer behind the Palm Jumeirah and the World.

Attorneys representing Palm Jebel Ali, a Nakheel subsidiary, argued that the tribunal did not have the right to decide cases involving the developer since it was no longer part of Dubai World. Nakheel separated from Dubai World on August 23 as part of a reorganisation plan.

The filing represented the first challenge to the tribunal's jurisdiction over existing claims.

Nakheel's attorney asked for the ruling in the case of Gaber Nema Kerger, who claims to have paid Dh6.3 million (US$1.7m) for two villas that were not built in Palm Jebel Ali.

But the tribunal rejected Nakheel's position, noting there had never been a government directive ordering the panel to stop hearing cases originally covered by a decree issued in 2009. While the ruling applied only to the Kerger case, lawyers said it clarified the tribunal's stance toward jurisdiction for the first time since the separation of Nakheel from Dubai World.

"It's certainly positive for claimants who have filed in the tribunal," said Jonathon Davidson, a partner with Davidson & Co in Dubai. Mr Davidson is involved with several disputes in the tribunal. The court's ruling was "half-expected" by the legal community, he said.

The tribunal was set up in conjunction with the restructuring of Dubai World, a government-owned conglomerate that fell into distress after the financial crisis. It completed a $24.9 billion debt restructuring last year.

"There has been no subsequent legislative act that has deprived or purported to deprive the tribunal of its jurisdiction in the proceedings," the court found.

The 2009 decree gave the tribunal the power to "hear and decide" and that "power has not been taken away".

A looming question now is whether the tribunal has jurisdiction over new claims against Nakheel. In a practice direction issued in September, the tribunal said any new cases filed in the court involving Nakheel would first need a ruling about jurisdiction. But none has been filed since the August separation.

In the Kerger case, Nakheel had asked the tribunal to rule on its jurisdiction over "all other claims by and against Nakheel and its subsidiaries". But the tribunal emphasised that its ruling applied only to the Kerger case.

Of the 71 cases filed with the tribunal in the past two years, 57 of those, worth $465m, involved Nakheel and its subsidiaries.