Friday 4 December 2009

Difficult times test legal system like never before

In Dubai, simply bouncing a cheque can land you behind bars. So it should come as little surprise that since the global economic crisis slammed a painful brake on the emirate's extravagant expansion, the courts have been busy with creditors struggling to recover debts from once booming businesses fallen on hard times.

Most of the cases so far have been small and have attracted little outside attention. But now that Dubai World is seeking to restructure $26bn (€17bn, £16bn), there is the potential for the United Arab Emirates' legal system to be tested like never before.

If creditors or bondholders did pursue legal action, however, they would be entering uncharted territory and taking on a system criticised for being outdated, unpredictable and lacking transparency.

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