A London lawsuit over $700mn in Shariah-compliant bonds issued by Dana Gas will go ahead despite a last-minute UAE court order that attempted to stop the company from taking part in the trial.
Dana Gas stunned investors and the Islamic finance community when it announced in June that it had reviewed its own bonds and found they were not Shariah compliant. Bondholders, led by Goldman Sachs Group Inc and BlackRock Inc, hired investment bankers and then lawyers when it became clear they were facing losses of 90% or more.
But yesterday, on the first day of the trial, lawyers said an order issued by a court in the UAE, where Dana is based, prevented the company from participating in the London case. Judge George Leggatt postponed the start of the trial until Thursday and said that the dispute could go ahead without Dana.
“That is very much a last resort,” Leggatt said at a hearing, ruling that English courts have the right to decide English legal issues. “It is an essential ingredient of a fair proceeding that each party should have the opportunity to participate.”
BlackRock and Dana Gas’ spokespeople weren’t immediately available to comment by e-mail and telephone. Dana viewed a last-minute settlement offer by the ad hoc committee last week as unrealistic, according to a person familiar with the matter.
BlackRock’s attorneys said the UAE order, obtained by three Dana Gas shareholders, was a last-minute tactic to halt the proceedings.
“Dana deliberately frustrated” to obtain a ruling in the UAE city of Sharjah “to prevent these proceedings,” Robert Anderson, a lawyer for BlackRock told a London judge yesterday.
Neil Kitchener, Dana’s lawyer, said that the UAE order effectively halted the London case because it would not be possible to have a trial without the energy producer.
Sunday’s UAE order was obtained by the Dana Gas shareholders in Sharjah to prevent any London trial from going ahead until the UAE proceedings had been resolved, the judge said.
BlackRock, which asked to become a party in the case, pushed for the proceedings to resume as soon as possible, arguing the company could be targeted by a similar injunction.
“It is simply too important and too much money to kick it down the road,” said Richard Handyside, another BlackRock lawyer.
The case is Dana Gas PJSC v. Dana Gas Sukuk, High Court of Justice, Queen’s Bench Division, Commercial Court, Financial Listings, FL-2017-000375.
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