Investors warned: Dubai's assets may be untouchable

3 December 2009

Bondholders with a stake in Dubai property firm Nakheel have been warned by experts that legal action to recover assets may be a waste of time.

A response to the debt restructuring plea made last week by state-owned Dubai World, which owns Nakheel, is yet to be forthcoming from its main creditors, which include Lloyds Banking Group, HSBC and Standard Chartered.

But if they reject the call, investors may be able to sue in courts in the United Arab Emirates or Britain, reports Reuters.

However, a victory under British law would not necessarily guarantee the return of assets, according to Essa Jawahery, a lawyer at Elham Ali Hassan & Associates in Manama.

"Once the English court gives the judgment, bringing it to Dubai to enforce it might be difficult because it's not possible to take execution measures on property owned by the government or the ruling family," he explained.

According to the Financial Times, UK banks have the biggest exposure to Dubai World's debt, with total liabilities of around $5 billion.

By Gary Cooper

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