DANA GAS PJSC V DANA GAS SUKUK LTD AND OTHERS

[2017] EWHC 2928 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Leggatt, 17 November 2017

Conflict of laws - Contract - Legality - Purchase Undertaking governed by and lawful under English law - Whether Purchase Agreement enforceable despite illegality under law of UAE - Construction – Mistake - Public policy

In 2007 the claimant, Dana Gas, an Abu Dhabi company, raised US$1 billion through an issue of certificates issued by the defendant, a Trustee. The Trustee held the proceeds of the issue and the assets derived from those proceeds on trust for the holders of the certificates. It was intended that the certificates would comply with Sharia law, in particular the prohibition on interest. The arrangement took the form of a Mudarabah Agreement, governed by UAE law, between Dana Gas and the Trustee under which the Trustee invested capital and Dana Gas invested skill and labour, with profits to be shared between them. It was expected that the assets would produce sufficient cashflows to fund period distribution amounts to the certificate holders. In 2013 the parties executed a Purchase Undertaking governed by English law under which Dana Gas granted to the Trustee the right to oblige Dana Gas to buy all of the Trustee's interests in the assets in the event of default. Dana Gas sought a declaration that the Purchase Undertaking guaranteed the certificate holders the return from their investment and thus was inconsistent with Sharia lawÂ’s prohibition on compensation for the use of money.