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Dubai World Tribunal confirms DIAC award
Practical Law Legal Update 7-505-4843 (Approx. 3 pages)
Dubai World Tribunal confirms DIAC award
| Published on 31 Mar 2011 • International, United Arab Emirates |
Christopher Mainwaring-Taylor (Counsel) and Noor Kadim (Associate), Allen & Overy LLP (Dubai)
The Dubai World Tribunal has ordered a Dubai World company to pay damages and interest pursuant to a Dubai International Arbitration Centre (DIAC) award.
In 2009, in the aftermath of the global financial crisis, the government-owned investment corporation, Dubai World, and its subsidiaries (Dubai World) began defaulting on their obligations to creditors. This prompted the government of Dubai to establish a special tribunal (the Tribunal) to hear and decide any claims relating to the financial obligations of Dubai World.
On 30 March 2010, the Tribunal issued Practice Direction No.1 of 2010 confirming that:
- It would respect and enforce arbitration agreements made between Dubai World and its creditors.
- Where disputes had already arisen, the parties were expected to continue with arbitration proceedings in accordance with their contractual obligations.
- Applications in relation to arbitration agreements that would normally be made to a court were to be made instead to the Tribunal.
A DIAC arbitration had started before the establishment of the Tribunal and concerned construction defects in a villa that the investor had purchased on one of the Jumeirah Islands, which was developed by a subsidiary of the government-owned real estate developer Nakheel Properties (a Dubai World company). The DIAC tribunal awarded the investor more than USD750,000 in damages, plus interest.
On 23 March 2011, following Practice Direction No.1, the Tribunal ordered Nakheel Properties to pay the investor in its Jumeirah Island project the damages and interest that were the subject of the DIAC award.
This confirms the Tribunal's commitment to respect and uphold arbitration agreements and enforce awards rendered pursuant to such agreements, irrespective of whether they are adverse to Dubai World.