Sharjah-based Dana Gas has come in for pointed criticism in the High Court of Justice in London for breaching a number of court orders issued as part of an increasingly complex legal case involving its sukuk. The dispute involves legal proceedings in Sharjah and London, as the energy company tries to gain approval to cancel $700m worth of sukuk and replace them with new instruments with lower yields (GSN 1,039/10). The issue is time-sensitive as the sukuk are due for repayment on 31 October.
Over the summer, Dana Gas was granted injunctions in London and Sharjah preventing sukuk holders from taking any action until a final decision had been made by the courts. However, a series of orders and injunctions issued since then in the two jurisdictions have threatened to bring the dispute to a standstill. In a judgement issued in the High Court on 22 September, Mr Justice Leggatt tried to break the logjam; he ordered that proceedings went ahead in London, despite the objections of Dana Gas, which has been blocked by the Sharjah court from taking part in any trial in the UK.
On 5 July, Dana Gas had decided to proceed with its case at the High Court and, as a result, the court ordered the company to “take all such steps as are necessary” to stay the proceedings in Sharjah by 21 July. In his 22 September judgement, Mr Justice Leggatt noted that :“Notwithstanding that order, Dana Gas did not make any application in the UAE within the time prescribed”. At a previous hearing on 31 July he had described Dana Gas’s efforts as “hopelessly inadequate”, something he now says “was, if anything, a generous description”.
A further High Court order was issued on 31 July for Dana Gas to apply to the Sharjah court by 8 August. It eventually submitted its application on 17 August to pause the proceedings. However, on 28 August, three shareholders made their own application in Sharjah to reject the Dana Gas application. They also asked the court to prohibit all the parties to the dispute from proceeding in England until the action in the UAE was decided. By 14 September, both these orders were granted by the Sharjah court.
The complexity does not stop there. Investment giant BlackRock was granted an interim injunction by the High Court on 18 September to prohibit Dana Gas and its shareholders from taking any further steps in Sharjah. BlackRock has what the London court describes as “a substantial financial interest in the transaction”, but is not party to the Sharjah proceedings.
The following day, BlackRock applied to the High Court to allow it to join the proceedings in London, with or without the involvement of Dana Gas. Unsurprisingly, Dana Gas opposed this move; its barrister Neil Kitchener QC argued on behalf of the company that it would be impossible to have a fair trial without his clients’ involvement. Justice Leggatt rejected that argument. He argued that “Dana Gas bears a significant degree of responsibility for the situation in which it has been prohibited by the Sharjah court from taking part in this trial.” As a result, the trial began on 2 October.