UAE’s Bankruptcy and Financial Restructuring Law almost ready
A couple years ago, Dubai World was about to unravel as the real estate swindle it is, but there was a problem. Sharia law prohibits the paying of interest (usury) on borrowed money. Bankruptcy law doesn’t exist in Islam because lending money doesn’t happen. How do you create a framework for resolving failed loans when loans don’t exist?
Many of the Dubai World “investors” borrowed money to “buy in” to buildings that were not yet built (and not likely to ever be built). They didn’t intend to move and live on a man made island in the middle of nowhere – they were speculators intending to “flip” the units for a profit.
So now those people have loans against them to “buy” something in advance that doesn’t exist. If they return to Dubai, they will be arrested and thrown in jail because not paying your debts is a crime.
That reality has dampened the demand for sales of new units. The emir of UAE threw some money at it to prevent the collapse, but Dubai World is probably a bigger global mess than Greece’s government debt still largely off people’s radar.
I wonder if my library has a copy of One Thousand and One [Arabian] Nights