A high-profile London High Court trial over a $700 million Islamic bond will go ahead next week without Dana Gas, a UAE-based energy company, according to Financial Times.

A civil trial between Dana Gas and its investors was due to open in the High Court this week but was delayed after three shareholders obtained a last-minute injunction from a UAE court preventing the London trial from going ahead.

The UAE court order effectively prohibits Dana Gas from taking part in an English trial, stated the report.

The case is being closely watched by the markets because it could set a precedent for other sukuk issuers to refuse to redeem their bonds on the grounds they are no longer sharia-compliant.

The dispute is significant because sukuk bonds are relatively new and the design of the bonds is based on the judgments of Islamic scholars about which structures are compliant., said the Financial Times report.

Dana Gas has been in a legal battle with bondholders after it rejected an offer by creditors to restructure $700 million of the debt.
 
The high-profile dispute centres around a sukuk bond sold to global investors, including BlackRock and Goldman Sachs, that Dana Gas announced in June was no longer compliant with Islamic law, it stated.

London is a centre for Islamic finance and UK became the first western country to issue a sukuk in 2014, said the report.

On Friday, Justice Leggatt ruled that a limited trial of English law issues relating to the sukuk bond’s purchase agreement will start next week.

BlackRock, one of the investors, will make its submissions on Monday, it added.