Dana Gas PJSC v (1) Dana Gas Sukuk Ltd
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Leggatt |
| Judgment Date | 01 February 2018 |
| Neutral Citation | [2018] EWHC 278 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 01 February 2018 |
| Docket Number | Case No: FL-2017-000004 |
[2018] EWHC 278 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND WALES
COMMERCIAL COURT
FINANCIAL LIST (QBD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Leggatt
Case No: FL-2017-000004
Richard Gillis QC, Daniel HubbardandMaximilian Schlote (instructed by Squire Patton Boggs) for the Claimant
William Edwards (instructed by Fieldfisher LLP) for the 1 st Defendant
David Allison QC and Ryan Perkins (instructed by Allen & Overy) for the 2 nd Defendant
Robert Anderson QC, Stephen AthertonQC, Andrew ScottandRebecca Loveridge (instructed by Weil, Gotshal & Manges (London) LLP) for the 5 th Defendant
Hearing dates: 30 January 2018 and 1 February 2018
On 17 November 2017 I handed down judgment on a preliminary issue of law in this action. My decision was reached without having heard oral argument from counsel for the claimant, Dana Gas (although their case had been argued in written submissions). The circumstances in which this came about and other relevant background are summarised in the November judgment itself and in earlier judgments given in these proceedings. At the time when the November judgment was handed down, Dana Gas was still subject to an anti-suit injunction issued by a court in Sharjah in the United Arab Emirates, which prohibited Dana Gas and the first four defendants from proceeding with the present action. That injunction was obtained by three shareholders of Dana Gas, but in circumstances where, as I have found in a judgment given on 22 September 2017, Dana Gas did not oppose the application made by its shareholders and bore a significant degree of responsibility for the situation in which it was prohibited from taking part in the trial.
On 20 November 2017, three days after the November judgment was handed down, the Court of Appeal in the UAE quashed the anti-suit injunction granted by the lower court, leaving Dana Gas free to litigate the current proceedings. On 8 December 2017 Dana Gas issued an application under CPR r.39.3 for the November judgment to be set aside. That application is now before the court, together with an application in the alternative for permission to appeal.
CPR r.39.3(3) provides:
“(a) Where a party does not attend [the trial] and the court gives judgment or makes an order against him, the party who failed to attend may apply for the judgment or order to be set aside.”
Pursuant to CPR r.39.3(5), where such an application is made, the court may grant the application only if three conditions are satisfied. They are that the applicant:
“(a) acted promptly when he found out that the court had exercised its power to strike out or to enter judgment or make an order against him;
(b) had good reason for not attending the trial; and
(c) has a reasonable prospect of success at the trial.”
The fifth defendant, BlackRock, which was joined to the proceedings after the other defendants were restrained by the Sharjah anti-suit injunction and which appeared at the hearing of the preliminary issue, opposes the application to set aside the judgment and contends that none of those three conditions is satisfied.
Instead of hearing argument on the question whether the three conditions set out in CPR r.39.3(5) are satisfied I have thought it convenient to follow a different course, to which none of the parties objected. I have heard oral argument from Mr Gillis QC on behalf of Dana Gas on the merits of the preliminary issue. Had I concluded that the decision reached in the November judgment was wrong, it would then have been necessary to decide whether the conditions in CPR r.39.3(5) are satisfied so that the court has power to set aside the judgment, or whether the only recourse is to give permission for an appeal.
As it is, despite the eloquence of Mr Gillis, I have not been persuaded that the decision or any of the conclusions reached in the November judgment was erroneous. In these circumstances I think it unnecessary to decide whether the conditions in r.39.3(5) are satisfied, since even if they were satisfied it would serve no useful purpose to set aside the judgment and then immediately reinstate it on the basis that it was correctly decided. I also consider that the arguments advanced on behalf of Dana Gas are so weak that an appeal would have no real prospect of success and I therefore refuse permission to appeal.
The preliminary issue
The preliminary issue is set out in an appendix to the November judgment. Its purpose was to determine whether, if certain propositions of UAE law contended for by Dana Gas are correct, the Purchase Undertaking, which is governed by English law, is nevertheless valid and enforceable in accordance with its terms.
Three grounds were relied on by Dana Gas in its amended particulars of claim and in its written submissions for the trial for arguing that, on the relevant assumptions, the Purchase Undertaking, and in particular the obligation to pay a sum of money referred to in the Purchase Undertaking as the “Exercise Price”, is unenforceable. Those grounds were: (1) an argument that, on the proper interpretation of the Purchase Undertaking, on the assumed facts Dana Gas has no obligation to pay the Exercise Price; (2) an argument that on the assumed facts the Purchase Undertaking is void for mistake; and (3) an argument that on the assumed facts any obligation of Dana Gas to pay the Exercise Price is unenforceable as a matter of English public policy.
I rejected each of those arguments for reasons given in the November judgment and therefore decided the preliminary issue in favour of the defendants.
On this application Mr Gillis QC, who has performed the difficult task of arguing the case for Dana Gas with great skill, renewed the construction argument, which he put at the forefront of his submissions. He accepted realistically that, if that argument is rejected, Dana Gas cannot succeed on the ground of mistake. On the third issue he advanced a narrower argument of public policy than the one previously put forward. I will deal first with the construction argument before turning more briefly to the argument of public policy.
The construction argument
The argument of Dana Gas is that on the proper interpretation of the Purchase Undertaking its obligation under clause 3.2.1 to pay the Exercise Price is conditional on the parties being able to enter into a valid Sale Agreement pursuant to clause 3.3, which will have the effect of transferring the Mudarabah Assets to Dana Gas. At paragraphs 52 to 54 of the November judgment I set out shortly my reasons for the view expressed in paragraph 51 that this interpretation of the Purchase Undertaking is untenable and flatly inconsistent with the express wording.
On behalf of Dana Gas, Mr Gillis made the following principal points. First, he submitted that insufficient attention has been given to the commercial purpose of the Purchase Undertaking and whether the interpretation accepted in the November judgment makes commercial sense. That interpretation has the consequence that Dana Gas is obliged to pay the Exercise Price even if it gets nothing in return, either because the Trustee has no rights to the Mudarabah Assets which it can transfer to Dana Gas, or because it has rights which cannot be transferred by the execution of a Sale Agreement as envisaged in clause 3.3 because any such Sale Agreement would be invalid. Such a result, Mr Gillis argued, is wholly uncommercial and not one that the parties would reasonably be understood to have intended.
Second, Mr Gillis submitted that the Purchase Undertaking is reasonably to be understood as providing for a sale and purchase in specified circumstances of the Mudarabah Assets. Both in its title and throughout the operative clauses the word “purchase” is used. One party's purchase is the other party's sale and there is also a specific provision made for the execution of a “Sale Agreement” in a form set out in a schedule to the contract. Mr Gillis quoted a statement of Atkin LJ in Rowland v Divall [1923] 2 KB 500 at 506–507 that:
“There can be no sale at all of goods which the seller has no right to sell. The whole object of a sale is to transfer property from one person to another.”
Mr Gillis might also have made the same point by reference to section 2 of the Sale of Goods Act 1979, which in section 2(1) defines a contract for the sale of goods as “a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called the price.” In addition, section 2(4) states:
“Where, under a contract of sale, the property and the goods is transferred from the seller to the buyer, the contract is called a sale.”
Mr Gillis submitted that, although the Purchase Undertaking is not a contract for the sale of goods but is concerned with intangible assets, the words “sale” and “purchase” used in the contract connote a transfer of property. It is therefore inconsistent with its character as a purchase undertaking to interpret the contract as requiring payment of the Exercise Price irrespective of whether the Trustee is able to transfer any property to Dana Gas in return for such payment.
Third, Mr Gillis submitted that it is also implicit in other wording contained in the Purchase Undertaking that Dana Gas will receive valuable rights in the Mudarabah Assets in return for payment of the Exercise Price. He drew attention, in particular, to clause 2.4 by which Dana Gas declares that:
“it provides this undertaking having evaluated the nature of and anticipated return on...
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