Abu Dhabi - Mubasher: Moody’s Investors Services said that the English High Court ruling in the Dana Gas’ sukuk case is credit positive for the company’s sukuk investors because the investors’ claims are enforceable.
“The ruling, which is in line with the market’s expectation, is also credit positive for the Islamic finance industry generally because it adds certainty around the legal enforceability of the sukuk transaction documents, which tend to be complex in order to comply with Shari’ah principles”, according to a research note by Moody’s.
The court ruled that the purchase undertaking attached to the Sukuk Al Mudarabah that it issued is valid and enforceable under English law, which is the governing law of the sukuk documents, other than the Mudarabah agreement, which is governed by UAE law.
The judge made the ruling without representation from Dana Gas, which claimed it could not attend because Sharjah UAE Federal Court of First Instance issued an anti-suit injunction at the request of and in response to the action by several Dana Gas shareholders, who sought to have the UAE Sharjah Court decide the matter.
Despite the UK ruling, the case is far from ended, as Dana Gas advised that it will appeal the ruling to the English Court of Appeal.
Furthermore, the company’s injunction in the UAE courts still stands and it expects a hearing on that in December.
Still, the English court ruling is a positive outcome for the investors.
“We expect going forward that the industry will introduce tighter legal requirements to protect investors from similar issues.” said Moody’s.
In addition, regulatory efforts, especially in the Gulf Cooperation Council (GCC) countries, to standardise the Shari’ah governing module will help standardise sukuk structures and support the enforceability of the Sharia’h opinion at origination, thereby reducing the complexity and uncertainty associated with these instruments.
