Dana Gas PJSC v Dana Gas Sukuk Ltd

Neutral Citation Number: IN THE HIGH COURT OF JUSTICE FINANCIAL LIST [2017] EWHC 2340 (Comm) Case No: FL-2017-000004 Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL Date: 22 nd September 2017 Before : Mr Justice Leggatt - - - - - - - - - - - - - - - - - - - - - Dana Gas PJSC - and - Dana Gas Sukuk Limited - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Claimant Defendant Neil Kitchener QC, Sam O’Leary, Maximilian Schlote (instructed by Squire Patton Boggs) for the Claimant Richard Handyside QC and Rebecca Loveridge (instructed by Weil, Gotshal and Manges LLP) for the Proposed Additional Party Hearing date: 21st September 2017 - - - - - - - - - - - - - - - - - - - - - JUDGMENT Mr Justice Leggatt Friday, 22nd September 2017 1. The claim brought by Dana Gas in this action raises issues of whether a mudarabah agreement governed by the law of the United Arab Emirates and a purchase undertaking governed by English law are valid and enforceable agreements. 2. At a hearing on 5 July 2017, His Honour Judge Waksman QC made an order for a speedy trial. He did so at the request of both parties. Dana Gas in its skeleton argument for that hearing requested a speedy trial to ensure that a final decision can be arrived at by this court before or shortly after 31 October 2017. The defendants concurred in that request. The significance of the 31 October date is that it is the date when payment falls due under the purchase undertaking, if it is enforceable – although the defendants contend that in the events which have happened they are entitled to accelerate the date of payment. 3. The court has made considerable resources available to the parties to enable a speedy trial to take place within the relevant timescale by listing this trial for hearing in the vacation and by allocating for it (including time for preparation of a judgment) two weeks of court time which began on Monday, 18 September 2017. For their part, the parties have worked hard during July and August and this month to prepare for the trial and ensure that the case was ready to be tried this week. 4. At the same time as giving directions for the speedy trial, Judge Waksman granted Dana Gas an injunction to restrain the defendants until after the trial has taken place from taking any step to exercise or purport to exercise any of their rights under the purchase undertaking or to enforce security provided by Dana Gas for the performance of its obligations under that undertaking. That injunction remains in place. 5. Immediately before commencing the present action in this jurisdiction, Dana Gas also commenced proceedings in the UAE, and on 13 June 2017 they obtained an injunction from a court in Sharjah prohibiting the defendants here from taking any action under the mudarabah agreement or the purchase undertaking or any related agreement until a final decision has been made in the proceedings in Sharjah. 6. At the hearing in this court on 5 July 2017, Dana Gas was in effect required to elect where it preferred to have the issues raised by its claim decided. Plainly, it would be vexatious and oppressive for Dana Gas to pursue proceedings simultaneously in two different jurisdictions seeking to have the same issues determined in both. The choice made by Dana Gas was to have the issues decided here. In relation to the purchase undertaking, which is governed by English law, Dana Gas had in any event agreed that the courts of England are to have jurisdiction to settle any dispute arising out of or in connection with that agreement; it had irrevocably submitted to the jurisdiction of the English court and it had waived any objection on the ground that some other jurisdiction is a more convenient or appropriate forum. 7. In those circumstances, the order made by Judge Waksman on 5 July 2017 (in paragraph 6) required Dana Gas to: "as soon as possible, and in any event by no later than 4 pm on Friday, 21 July 2017, take all such steps as are necessary to discharge the injunction granted against the [defendants] by the Sharjah court on 13 June 2017 and to stay the proceedings commenced by [Dana Gas] in the UAE on 13 June 2017." Paragraph 6 of the order continued: "Insofar as may be necessary [Dana Gas] shall not contend prior to such discharge that any action taken by the [defendants] in these proceedings, including the service of any counterclaim, would amount to a breach of that injunction." 8. Notwithstanding that order, Dana Gas did not make any application in the UAE within the time prescribed to discharge the injunction granted by the Sharjah court. At a further hearing on 31 July 2017, I described such steps as Dana Gas had taken in the UAE in purported compliance with Judge Waksman's order – which were essentially limited to writing one letter to check in which court an application should be made – as "hopelessly inadequate". That was, if anything, a generous description. 9. On 31 July 2017 I made an order which specifically required Dana Gas to make an application to the Sharjah court to discharge the injunction and stay the proceedings there by 8 August 2017. Dana Gas did not, however, make the application to the Sharjah court by that date. Nor did it ask the English court for any extension of time. 10. Ultimately, an application to the Sharjah court was submitted by Dana Gas on 17 August 2017. On 28 August 2017 three of its shareholders issued an application to intervene in the proceedings in the UAE and to seek to have those proceedings expedited. On 29 August 2017 those shareholders petitioned the court in Sharjah to make two orders: first, an order rejecting the application of Dana Gas to discharge the earlier injunction; and second, an order prohibiting all the parties to those proceedings, who include all the parties to these English proceedings, from proceeding in England until the substantive action in the UAE has been decided. 11. On 4 September 2017 the court in Sharjah granted the first of those orders and dismissed the application made by Dana Gas to discharge the earlier injunction. However, the court refused to make the second order requested by the shareholders consisting of an anti-suit injunction. 12. On 5 September 2017 the shareholders filed what is described in translation as a "grievance" against the second part of that decision, asking the court to reconsider its decision to refuse to grant the anti-suit injunction sought by the shareholders. After hearing argument, on 14 September 2017 the court in Sharjah allowed the grievance and made an order prohibiting all respondents to the grievance – who, as mentioned, include both Dana Gas and the defendants to this action – from continuing with the proceedings before the English court until such time as the Sharjah court has decided the substantive action in the UAE. I am told that the action in the UAE has been listed for trial on 3 October 2017. 13. In the light of the anti-suit injunction ordered by the Sharjah court, both Dana Gas and the defendants have understandably taken the view that they cannot at present participate in the trial in this court which was due to commence at the beginning of this week. 14. There have this week been the following further developments: (1) On Monday, BlackRock, which has a substantial financial interest in the transaction but is not a party to the proceedings in Sharjah and is therefore not subject to the injunctions granted there, applied to this court without notice and was granted an interim anti-suit injunction prohibiting Dana Gas and its shareholders from pursuing or taking any further step for the time being in the Sharjah proceedings. (2) On Tuesday, BlackRock applied to be joined as an additional party to these proceedings, with the aim of effectively stepping into the shoes of the defendants and presenting their case at the trial. Mr Handyside QC, who was previously instructed by the defendants and now appears for BlackRock, argued that on that basis the trial should go ahead. That application was opposed by Dana Gas. (3) In my judgment given at that hearing, I made it clear that, if the trial proceeds, this court will not decide any questions of UAE law but will decide only the question whether the purchase undertaking is enforceable as a matter of English law, which is the governing law of that agreement, and will do so on assumptions that the mudarabah agreement is invalid under the law of the UAE and that the parties were mistaken in believing it to be valid when they entered into the transaction. I also ordered a short adjournment to allow Dana Gas to see if it could obtain a variation or discharge of the anti-suit injunction issued by the Sharjah court so as to enable it to participate in the trial here. (4) On Wednesday, Dana Gas lodged an appeal with the Court of Appeal in Sharjah asking that court to overturn the anti-suit injunction. No date for the hearing of the appeal has yet been given but I have been told that the most likely date is 8 October 2017, which is when an appeal against the same order already lodged by another party to those proceedings, Deutsche Bank, is due to be heard. (5) Yesterday, I heard argument on whether the trial in this court should proceed immediately, as Mr Handyside on behalf of BlackRock submitted it should, or whether, as Mr Kitchener requested on behalf of Dana Gas, the trial should be adjourned and relisted for hearing on a date not before 16 October 2017 so as to give time for the appeal in the UAE to be heard and, if it is successful, enable Dana Gas to take part in the trial. 15. Mr Handyside in his submissions distinguished two questions: (1) if the trial proceeds now in the absence of Dana Gas, can there be a fair trial; and (2) if so, should the court nevertheless grant an adjournment? Whilst those two questions may be logically distinct, in practice they blend into each other because – as authorities cited yesterday, in particular the case of R (Heather Moor and Edgecomb Ltd) v Financial Ombudsman Service [2008] EWCA Civ 642, confirm – what is fair depends on the circumstances of the particular case. Furthermore, in judging what is fair, it is the whole process which must be looked at and not just any discrete part of it. 16. What the court must try to do, as it seems to me, is if at all possible find a solution which enables the trial to proceed immediately if that can be done, but in any event in such a way as will enable a decision to be arrived at before or at latest very shortly after 31 October 2017, through a process that is fair overall in the circumstances of this particular case. 17. If and insofar as Mr Kitchener QC on behalf of Dana Gas was contending that it is simply impossible to have a fair trial of this case if it proceeds while his clients are prohibited from taking part by an order of the Sharjah court, I reject that contention. I do so for the following reasons. 18. First, the issues in this case in their revised form are points of law and contractual interpretation on which Dana Gas has already made written submissions in their opening argument. No questions of fact are now going to be decided on which oral evidence and cross-examination are necessary. The court has therefore already received representations from Dana Gas on the issues to be decided. 19. Second, a judgment given after a hearing which takes place in the absence of Dana Gas will be capable of reconsideration if the conditions set out in CPR 39.3 are met. To that extent there could still be an opportunity for Dana Gas to make oral submissions, if justified, before a final decision is made, even if Dana Gas does not appear at the trial. 20. Third, as well as fairness to the claimant, I have to consider what fairness to the defendants and to parties such as BlackRock with similar interests to the defendants requires. I think it clear that any delay will prejudice them. It is not simply the case, as Mr Kitchener suggested, that, if they are right, they will be kept out of very large sums of money owing to them for longer than they should have been – significant though that is. They are also currently subject to an injunction granted by this court which prevents them from exercising their rights under the purchase undertaking and related security agreements. Dana Gas is currently enjoying the benefit of that injunction. The basis on which that injunction was granted on 5 July 2017 was that there would be a speedy trial which would result in a decision given by the end of October 2017 or very shortly afterwards. I consider that the defendants have a strong and legitimate interest in receiving a decision from the court by that date, even if it cannot in the circumstances necessarily be a final decision. That is all the more so in circumstances where the defendants will in the meantime continue to be prevented from enforcing their rights by the injunction which remains in place. 21. Fourth, I think it relevant to take account of the claimant's conduct. I cannot decide whether an allegation made by BlackRock that Dana Gas colluded with its shareholders and deliberately brought about the present situation is well-founded and I proceed on the footing that it is not. However, on the evidence before the court, certain points seem to me to be incontrovertible. (1) First, in breach of the order made by Judge Waksman, Dana Gas did not, by no later than Friday, 21 July 2017, take all such steps as were necessary to discharge the injunction granted against the defendants by the Sharjah court. (2) Second, in breach of the further order made by this court on 31 July 2017, Dana Gas did not make its application to the Sharjah court to lift the injunction by 8 August 2017 and did not make it until 17 August. Had the application been made timeously, the shareholders might still have intervened in the Sharjah proceedings but matters might then have come to a head in time to sort them out before the start of this trial. Moreover, although the claimant's solicitors issued an application on 8 August for an extension of time for compliance with this court's order, they – inexcusably – refused to have that application listed. Had that application been put before a judge (preferably the trial judge) as it should have been, the most likely outcome would have been that an “unless” order would have been made under which the claim of Dana Gas in these proceedings would have been struck out and judgment entered for the defendants unless Dana Gas had forthwith filed its application with the Sharjah court. As it was, Dana Gas simply violated the order of this court and made no attempt to regularise the position. (3) Third, when the shareholders issued and pursued their grievance seeking an anti-suit injunction in Sharjah, Dana Gas did not oppose the grant of such an injunction. They lodged a written memorandum in relation to that application. In that memorandum they set out their position as being that they had not abandoned the jurisdiction of the UAE courts to hear the dispute but, on the contrary, insisted on the jurisdiction of the UAE. They also submitted that their resort to the English court was limited to the purchase undertaking but that their adversaries in Britain had violated the order issued in the UAE on 13 June 2017 by filing a counterclaim in an attempt to widen the examination of the case before the UK courts which was forbidden by the order issued by the Sharjah court. Not only was that submission misleading, but, despite the best efforts of Mr Kitchener QC yesterday to defend it, I think it plain that it was in direct contravention of paragraph 6 of the order made by Judge Waksman which I quoted earlier. (4) I have been informed that, at the oral hearing in Sharjah on 14 September 2017, the representatives of Dana Gas made no further submissions. They, therefore, gave no indication that they opposed the application made by the shareholders. (5) So far as the evidence shows, therefore, Dana Gas on that application in Sharjah said nothing to indicate to the Sharjah court that they had requested a speedy trial of issues in England which encompassed the validity both of the purchase undertaking and of the mudarabah agreement. Nor did they say anything to request that they should be allowed to participate in the trial or to suggest that the anti-suit injunction sought by the shareholders should be refused. To the contrary, the tenor of their written submissions seems to me to have been likely to have encouraged the court to grant that injunction. 22. In those circumstances, assuming as I do that there was no collusion between Dana Gas and its shareholders and no deliberate attempt by Dana Gas to derail this trial, it nevertheless seems to me that, by its breach of this court's orders and by its stance towards the shareholders' application for an anti-suit injunction in Sharjah, Dana Gas bears a significant degree of responsibility for the situation in which it has been prohibited by the Sharjah court from taking part in this trial. 23. All that said, I still consider, as I said on Tuesday, that holding a trial in which Dana Gas is prohibited from taking part, even though it is partly responsible for that situation, is a last resort. Clearly, the court would not normally think it right to decide issues at a trial solely on the basis of written submissions and without hearing oral argument from both parties. That is so not only in the interests of the parties themselves but because oral argument assists the court. 24. I also take account of the fact that Dana Gas, since the hearing on Tuesday, has lodged an appeal with the Court of Appeal in the UAE and appears now to be doing what it can to have the anti- suit injunction in Sharjah discharged or varied so as to allow it and the defendants to argue the issues of English law which will now be decided here as preliminary issues. It seems clear, however, that that appeal will not be heard in time for this trial to proceed with the participation of Dana Gas within the two week period that has been allotted. Moreover, when the appeal is heard in Sharjah, there is of course no guarantee as to when the court there will give judgment or whether the appeal will be successful. 25. As I have indicated, the application made on behalf of Dana Gas in those circumstances is that this trial should be adjourned until a date not before the week commencing 16 October 2017. If the only people whose interests were affected were those who are parties to or concerned with this action, that might have been a possible course. 26. However, a further factor in deciding what fairness overall requires, which I have not yet mentioned, is fairness to other litigants. The court has gone out of its way to make a judge of the Financial List available to hear this case during this week and next. There is only a limited number of judges who are authorised to sit in the Financial List and there are very heavy demands on the time of the Commercial Court. After the hearing yesterday I made inquiries to find out if it would be possible for a judge of the Financial List to hear this case in the third week of October or, failing that, in the last week of October. The answer that I received is that this cannot be done without breaking other fixtures. That would mean that other parties who are currently preparing for a trial that will have been fixed no doubt many months ago and which is due to start in three or four weeks' time cases would have their case taken out of the list. That would be a serious disruption and interference with the fair and efficient administration of justice. The situation is no better if one looks at dates in November. 27. In these circumstances, I have given anxious thought to what course of action the court can and should adopt which takes account of all the considerations I have mentioned and strikes the fairest possible balance between them. My decision is as follows: (1) The trial will proceed on Monday. I will treat the defendants' counterclaim as the primary claim and will hear oral argument on behalf of BlackRock as intervenors. They will be opening the case. (2) As things presently stand, it is apparent that Dana Gas will not be represented before the court on Monday but there will be a transcript of the hearing and it will of course be a public hearing, so that if Dana Gas wishes any of its legal representatives to attend to observe they are naturally free to do so. (3) After BlackRock has presented its case, I will then adjourn the trial. I will seek to arrange for the case to be listed for a further day of oral argument on Thursday, 12 October. If by that date a court in Sharjah has given a decision which discharges the anti-suit injunction currently prohibiting Dana Gas from taking part in the trial, Dana Gas will be able to present oral argument on that date to which BlackRock or the defendants will then have an opportunity to reply. (4) That listing will be subject to the following conditions. First, I will adjourn the trial to 12 October only if Dana Gas gives an undertaking to the court that it will use its best endeavours to ensure that the hearing of the proceedings in Sharjah currently listed for 3 October is vacated and does not proceed on that day. Second, I will reserve the right to vacate any hearing listed for 12 October and to proceed directly to give judgment if there is any development in the meantime which, in the opinion of the court, warrants doing so. All parties will have liberty to apply to the court at any stage for further directions.