Dana Gas to lift UAE sukuk injunction ‘to comply with London court’

19/07/2017 06:09 AST

Dana Gas will lift an injunction it obtained in a UAE court protecting it against claims on $700 million (Dh2.57 billion) of Islamic bonds to comply with a London court order, a source with knowledge of the matter told Reuters.

But Dana believes a stay on proceedings in the emirate of Sharjah will still permit it to resume its legal action there, if it wishes, after a London hearing scheduled for September, the source said on Tuesday.

The case is being closely watched by the Islamic finance industry around the world because it could affect the structuring and pricing of future issues by other companies.

Holders of the sukuk, which Abu Dhabi-listed Dana wants to restructure on the grounds that changes in Islamic finance since they were issued four years ago have made the bonds unlawful in the UAE, have fought the company in the London High Court.

“These cases raise serious and complex legal issues which include the applicability of different legal jurisdictions. The ultimate answer will only be known after both the UK and the UAE proceedings have reached their final outcome,” the source said.

Dana said this week that it remained keen to engage with holders of the sukuk and reach a restructuring agreement.

Last month it applied to the Sharjah Federal Court of First Instance to have the sukuk declared unlawful, and obtained an injunction blocking claims for payments pending a ruling. But a judge at London’s High Court said this month he would hold a full hearing on the case in September and upheld an interim High Court injunction blocking holders of the bonds from enforcing claims against Dana, while also ordering it to cancel the Sharjah injunction and seek a stay of proceedings there.

Although the purchase undertaking for the original sukuk is governed by English law, the validity of the mudaraba agreement underlying the sukuk will be determined in the UAE, the source said.

Mudaraba is a structure that resembles an investment management partnership and Dana argues this has become obsolete.

Gulfnews