Dana Gas PJSC v Dana Gas Sukuk Ltd & Ors

Factual and Procedural Background

On 5 July 2017, Judge Waksman QC of the Commercial Court directed an expedited trial to address questions regarding the alleged unenforceability of the Mudarabah and related agreements under UAE law, and the validity of the Purchase Undertaking under English law. An injunction previously obtained by Company A was continued to prevent the defendants from enforcing the Purchase Undertaking until trial or further order, contingent on Company A taking steps to discharge a related injunction granted by a Sharjah court and to stay parallel proceedings commenced in the UAE.

Company A failed to comply with these directions, including failing to discharge the Sharjah injunction or stay UAE proceedings, leading to opposition and rejection of its withdrawal application in the UAE. Preparations for the trial proceeded, including expert reports and written submissions on both English and UAE law issues.

On the eve of trial, shareholders opposing Company A obtained an anti-suit injunction from the Sharjah court restraining the parties from proceeding with the English litigation. Company A did not oppose this injunction. Consequently, the trial was limited to a preliminary issue concerning the validity and enforceability of the Purchase Undertaking under English law, assuming the Mudarabah Agreement was invalid under UAE law.

The preliminary issue was determined in favor of the defendants, rejecting Company A's challenge to the Purchase Undertaking. Company A intends to appeal this decision and maintains its claim that the Mudarabah Agreement is invalid under UAE law, asserting also a claim for a reconciliation process under UAE law to place the parties in the position they would have been had the Mudarabah complied with UAE law.

Company A applied to vary the original directions to stay proceedings on UAE law issues in England and allow them to be litigated in the UAE. The defendants oppose this application and support an anti-suit injunction to prevent Company A from pursuing its UAE claim concurrently.

Legal Issues Presented

1. Whether the English court should stay proceedings concerning issues of UAE law and allow those issues to be litigated in the UAE.
2. Whether an anti-suit injunction should be granted to prevent Company A from pursuing parallel proceedings in the UAE.
3. Whether the injunction restraining enforcement of the Purchase Undertaking should be continued pending appeal and further proceedings.
4. Whether summary judgment should be granted declaring the validity and enforceability of agreements other than the Purchase Undertaking.
5. Whether permission to appeal should be granted against the refusal to set aside the earlier order and related decisions.

Arguments of the Parties

Appellant's Arguments (Company A)

• There has been a material change in circumstances since the original directions, notably the court's decision that the Purchase Undertaking is valid even if the Mudarabah Agreement is invalid.
• The issues of UAE law, including the reconciliation claim, should be tried in the UAE as that jurisdiction is best placed to decide matters of its own law, especially those involving public policy.
• The Mudarabah Agreement contains a non-exclusive jurisdiction clause for the UAE courts, supporting litigating UAE law issues there.
• Company A contends that the reconciliation process under UAE law should place it in the position it would have been had the Mudarabah complied with UAE law, including reversing payments made under the Purchase Undertaking.
• Company A argues against the anti-suit injunction, suggesting parallel proceedings should be allowed.
• Company A seeks continuation of the injunction restraining enforcement of the Purchase Undertaking pending appeal and resolution of the reconciliation claim, citing risk of irremediable prejudice.

Defendants' Arguments (Trustee, Delegate, and BlackRock)

• All issues should be tried in the English court, as originally directed by Judge Waksman.
• The issues of UAE law and English law are intertwined and cannot sensibly be separated for trial in different jurisdictions.
• There is an exclusive jurisdiction clause in the Purchase Undertaking and Declaration of Trust conferring jurisdiction on English courts for claims made by Company A, limiting the UAE court's jurisdiction over the Trustee and Delegate.
• Granting an anti-suit injunction is appropriate to prevent vexatious and oppressive parallel proceedings in the UAE.
• The continuation of the injunction restraining enforcement of the Purchase Undertaking should be refused, but distribution of funds to certificateholders should be restrained pending final determination.
• The other agreements besides the Purchase Undertaking are valid and enforceable, as no substantive arguments were made against them in summary judgment proceedings.
• Permission to appeal should be refused as there is no realistic prospect of overturning the injunction decision.

Table of Precedents Cited

Court's Reasoning and Analysis

The court acknowledged the general principle that foreign courts are best placed to decide questions of their own law, especially those involving public policy and fundamental principles. However, the court identified three main reasons to refuse a stay of the English proceedings on UAE law issues:

• The issues of UAE law and English law are intertwined and cannot be sensibly tried separately. The English law issues, including exclusive jurisdiction clauses and contractual provisions, are closely connected to the UAE law claims, making bifurcation impractical and potentially unjust.
• The Trustee and Delegate have not submitted to the jurisdiction of the UAE courts and have exclusive jurisdiction agreements with the English courts, limiting the UAE courts’ competence to hear the claims against them.
• Company A initiated and pursued substantive claims in the English court, including issues of UAE law, and cannot now seek to avoid having those issues determined in England after having benefited from the court’s jurisdiction and procedural orders. Additionally, Company A bears responsibility for delays and procedural complications, including failure to comply with court orders and the effect of the anti-suit injunction obtained in the UAE.

Regarding the anti-suit injunction sought by the defendants, the court found that allowing parallel proceedings in the UAE would be vexatious and oppressive, given the substantial overlap and the choice of forum considerations. The court distinguished previous cases where the connection to England was weaker and granted the anti-suit injunction to prevent Company A from pursuing the UAE claim concurrently.

On the continuation of the injunction restraining enforcement of the Purchase Undertaking, the court refused to continue it pending appeal and the reconciliation claim, finding no exceptional circumstances to override the no set-off clause and that the Trustee would suffer prejudice if enforcement were delayed indefinitely. However, the court ordered that funds received by the Trustee from enforcement should not be distributed to certificateholders pending final determination, to mitigate prejudice to Company A.

On summary judgment, the court corrected its understanding and declared that other agreements besides the Purchase Undertaking are valid and enforceable, as no substantive opposing arguments had been presented.

Finally, the court refused permission to appeal the refusal to set aside the earlier order, finding no realistic prospect of overturning the injunction decision and noting that the appropriate recourse is to seek permission to appeal the original judgment.

Holding and Implications

The court refused the application to stay the English proceedings concerning UAE law issues, granted an anti-suit injunction to restrain Company A from pursuing parallel proceedings in the UAE, refused to continue the injunction restraining enforcement of the Purchase Undertaking except to the extent of prohibiting distribution of funds pending final determination, and granted summary judgment declaring the validity and enforceability of the other agreements.

The direct effect of this decision is that all issues, including those concerning UAE law, will continue to be litigated in the English court, preserving the jurisdiction and procedural progress achieved. The anti-suit injunction protects the defendants from duplicative and vexatious litigation in the UAE. The refusal to continue the injunction restraining enforcement balances the interests of both parties, allowing enforcement subject to safeguards preventing prejudice to Company A. No new legal precedents were established; rather, the court applied established principles concerning jurisdiction, forum appropriateness, anti-suit injunctions, and enforcement of contractual rights.