If Dana's Sukuk Is Illegal Now, It Was Illegal Then, Lawyer Says

Nothing in Islamic finance or the United Arab Emirates’ laws regarding Shariah-compliant debt has changed since Dana Gas PJSC restructured its sukuk about four years ago, Bloomberg News reported. "What makes the sukuk illegal now?” asks Rizwan Kanji, a partner at law firm King & Spalding LLP. When the gas producer started negotiations with creditors in 2012, the issue relating to mudarabah structures was “clear and settled,” said the Dubai-based lawyer who specializes in Shariah-compliant deals. Since then, there have been no changes in Islamic finance or related U.A.E. laws, so if the company’s claims that its $700 million bonds are illegal now, then they were illegal when they were issued, he said. Dana Gas said last week it no longer considered its two securities Shariah-compliant under the U.A.E.’s law. A court in Sharjah has since barred bondholders from taking any action against the bonds until it reviews the company’s application to declare its debt “unlawful and unenforceable.” Read more.