Dana Gas PJSC v Dana Gas Sukuk Ltd & Ors

A professionally drafted contract may allocate to one party the risk that the counterparty has no title or transferable rights in the assets described in the agreement. A payment obligation is not conditional on transfer of those rights unless the contract clearly makes it so. The use of terms such as “sale” and “purchase”, or an expectation that valuable rights will be acquired, does not create such a condition. An “as is” provision may reinforce that allocation of risk.

English public policy is distinct from the conflict-of-laws rules governing the validity of a foreign-law contract. A contract governed by English law is not rendered unenforceable merely because an ancillary foreign-law agreement is invalid under foreign law, absent an applicable public-policy principle.

The claimant sought to set aside an earlier judgment on a preliminary issue under CPR r.39.3 and, alternatively, sought permission to appeal. The earlier judgment had rejected arguments that the English-law Purchase Undertaking was unenforceable because the related UAE-law transaction documents were invalid or incapable of transferring rights in the relevant assets.

The claimant renewed arguments based on contractual construction, mistake and public policy. It accepted that the mistake argument could not succeed if the construction argument failed. The central questions were whether payment of the Exercise Price was conditional on a valid transfer of rights, and whether foreign-law invalidity affected enforceability of the English-law Purchase Undertaking.

1. Application dismissed; permission to appeal refused. The court was not persuaded that the earlier judgment was erroneous. It was therefore unnecessary to decide whether the conditions in CPR r.39.3(5) were satisfied, since setting aside and immediately reinstating a correctly decided judgment would serve no useful purpose.
2. The Purchase Undertaking did not make Dana Gas’s obligation to pay the Exercise Price conditional on the Trustee having rights in the Mudarabah Assets capable of transfer. In a professionally drafted contract, a condition of such fundamental importance would be stated clearly. Clause 3.2 made delivery of an Exercise Notice the only condition preceding the payment obligation.
3. The obligations concerning execution of a Sale Agreement under clause 3.3 arose only after payment. Even if inability to execute a valid Sale Agreement constituted a breach or gave a right to terminate, termination would not extinguish the already accrued payment obligation.
4. The references to “sale” and “purchase”, the commercial expectation in clause 2.4, and the structure of the transaction did not alter that conclusion. The contract could allocate to Dana Gas the risk that the Trustee lacked title or transferable rights. The “as is” wording and the provisions identifying invalidity of the Mudarabah Agreement or Sale Agreement as Dissolution Events strongly confirmed that risk allocation.
5. The public-policy argument failed. The rule that validity is determined by the applicable governing law is a conflict-of-laws rule, reflected in Article 10 of the Rome I Regulation, rather than a rule of English public policy. It did not impeach an English-law Purchase Undertaking merely because the related Mudarabah Agreement might be invalid under UAE law. The principles in Ralli Brothers v Compania Naviera Sota Aznar and Regazzoni v KC Sethia (1944) Ltd did not apply.
6. The authorities concerning collateral contracts infected by illegality did not assist because the case did not involve a contract illegal under English law or enforcement of a penalty. The application was dismissed and permission to appeal was refused.

The judgment itself records an earlier preliminary judgment in the same proceedings, handed down on 17 November 2017. The present court dismissed the application to set that judgment aside and refused permission to appeal. The earlier judgment is part of the same litigation and is not treated as a separate cited authority.