Dubai Debt Crisis: A Legal Analysis of the Nakheel Sukuk

Berkeley Journal of International Law, Vol. 4, pp. 19-32, 2010

TISCO Working Paper Series on Banking, Finance and Services No. 5/2010

19 Pages Posted: 22 Aug 2010 Last revised: 17 Sep 2010

See all articles by Omar Salah

Omar Salah

Tilburg University; De Brauw Blackstone Westbroek

Date Written: August 22, 2010

Abstract

On November 25, 2009, the financial world was shocked when Dubai World requested a restructuring of its debts. Much disturbance in capital markets was caused. The main concern of the ‘Dubai Debt Crisis’ was the delay in repayment of a the Nakheel Sukuk, an Islamic financial instrument. This article discusses the legal structure of these Islamic financial instruments (sukuk), followed by a case study of the Nakheel Sukuk. Several impediments of the legal structure of the Nakheel Sukuk and of the legal system of the UAE will be discussed. All of this will lead to the conclusion that the legal implications of the Nakheel Sukuk were not connected to the legal structure of Islamic financial instruments as such, but they were inherent to the legal structure of this particular transaction and to the legal environment in which it was set up.

Keywords: Dubai, Nakheel Sukuk, Islamic Finance, Financial Instruments, Debt Crisis

Suggested Citation

Salah, Omar, Dubai Debt Crisis: A Legal Analysis of the Nakheel Sukuk (August 22, 2010). Berkeley Journal of International Law, Vol. 4, pp. 19-32, 2010 , TISCO Working Paper Series on Banking, Finance and Services No. 5/2010 , Available at SSRN: https://ssrn.com/abstract=1663276

Omar Salah (Contact Author)

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

De Brauw Blackstone Westbroek ( email )

Tripolis
Burgerweeshuispad 301
1076 HR Amsterdam
Netherlands

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