Dana Gas Sukuk default: a juristic analysis of court judgement

Abstract

Purpose This study aims to analyse the facts of the case in the judgement made by the High Court of Justice, England, UK, in the case of Dana Gas Public Joint Stock Company (PJSC) v. Dana Gas Sukuk Limited (Ltd.) and Ors. Design/methodology/approach This study uses descriptive and juristic analysis to explain the factual terms in the case of Dana Gas sukuk default. It also uses juristic opinions to analyse the underpinning argument in the Dana Gas court case between the decision of Sharjah Court, UAE, and the English Court, UK. Findings The study concluded that despite the position of Dana Gas PJSC that specific element of the muḍārabah sukuk is non-Sharī’ah-compliant, the English court decision which established the enforceability of the purchase undertaking seems to be fair based on the Islamic maxims such as “Difficult situation cannot violate the right of other” and “The conditional matters among Muslims are binding.” Research limitations/implications The impact of this study is that Dana Gas sukuk default has thought stakeholders of Sukuk investment lessons on the importance of documentation and consideration of tighter clauses to ensure its bindingness in the law court. Hence, this study is expected to be a contribution towards the call for standardization of the role of Sharī’ah scholars across the globe. Originality/value This study illustrates the fact in the case of Dana Gas sukuk default and analyses the court’s decision from a fiqh perspective.

Critical assessment of Islamic financial assets pricing in South-East Asia: evidence from NARDL modelling

“…The findings show that Sukuk pricing has no significant association with Sharīʿah-compliant assets pricing. This finding may be supported by the call for global standardization of Shariah scholars role (Busari et al , 2019) to enhance the element of inefficiency in Islamic financial assets pricing. Similarly, Hassan (2009) reveals that Islamic banks in Brunei Darussalam need to pay more attention on risk identification and risk assessment and analysis.…”

“…As in the case of Islamic finance, transparency in the pricing of assets are required to preventing unfair price to the agents involved. This argument is supported by Hassan and Kayed (2009) that contractual transparency is among Shariah requirement to reduce gharar (extreme uncertainty) (Hayat and Kraeussl, 2011; Ahmed et al , 2018; Busari et al , 2019) and to prevent maysir (gambling) (Chazi and Syed, 2010; Abdul-razak and Amin, 2013; Julia and Kassim, 2019). Taking advantage of other agents due to uneven access to available information is considered as injustice, which is prohibited in Islam.…”

“…Sukuk is regarded as a new solution to the problem of budget deficit (Benbekhti et al , 2019). However, Shariah -compliance of Dana mudarabah Sukuk has been argued of having some biases elements and the study call for global standardization of Shariah scholars role (Busari et al , 2019). In addition, recent researchers focus more on studies related to Sukuk (Ahmed et al , 2018; Busari et al , 2019).…”

“…However, Shariah -compliance of Dana mudarabah Sukuk has been argued of having some biases elements and the study call for global standardization of Shariah scholars role (Busari et al , 2019). In addition, recent researchers focus more on studies related to Sukuk (Ahmed et al , 2018; Busari et al , 2019). Ahmed et al (2018) examined reaction of investors after insurance of Sukuk using 5,516 Sukuk insurance across 307 public-traded firms and reveal that on the average announcement of Sukuk attracts negative reaction.…”

Islamic banking, efficiency and societal welfare: a machine-learning, agent-based study

“…1. In this significant benchmark case, Dana Gas, a UAE company that had issued a sukuk (Islamic bond), proclaimed that its own product was no longer Shariah-compliant and moved for restructuring it, causing a legal battle with conflicting court rulings in the UK and the UAE (Busari et al , 2019; Hekmatyar and Parkar, 2018). Once Islamic banks are introduced in a conventional banking system, the legal conflicts, such as that in the Dana Gas case, can prompt market anomalies.…”