This post discusses these issues in Dana Gas sukuk matter and offers some observations and lessons that can be drawn from the governing law and forum selection questions raised by the Dana Gas sukuk matter. As this post entails post hoc discussion of the Dana Gas sukuk offering based on publicly available information, there is an element (or more) of Monday morning quarterbacking, and this should be borne in mind. Nevertheless, the general observations and potential lessons—which are not unique to the Dana Gas sukuk or Islamic transactions—should be read for their generality.
Dana Gas PJSC, the Sharjah, UAE-based gas producer, has unilaterally declared “unlawful” sukuk instruments issued by the company in 2013  (through, as issuer, Dana Gas Sukuk Limited, a Jersey public company with limited liability). This post discusses some of the Shari’ah, UAE law, and factual issues triggered by the Dana Gas statement on the unlawfulness of its sukuk.
Dana Gas’ move to halt its obligations under the sukuk terms on the grounds that the instruments are unlawful under Islamic law triggers many issues for discussion, including: (1) the legal and tactical soundness of its actions, (2) implications for the sukuk market and Islamic finance generally, and (3) the real and perceived quality of Shari’ah governance (both with respect to the sukuk at issue and sukuk and Islamic finance generally). This is not the first time that an Islamic instrument has been deemed unlawful by the originating party in an effort to avoid payment obligations. Years ago, an Islamic financial institution,The Investment Dar, asserted in an English court that a wakalah investment product that it offered and managed was not Shari’ah compliant and therefore unenforceable.