Dana Gas #Sukuk: A red herring or cause for concern?

The recent move by Dana Gas to declare its approximately US$700 million of outstanding trust certificates unlawful has been a troubling development for the Islamic finance industry. Dana Gas has initiated proceedings in the UAE to declare the sukuk illegal and has secured a series of injunctions preventing enforcement by creditors, but the key question remains unanswered. That is whether non-compliance with Shari'a principles would have any bearing on the legal enforceability of these instruments. Any judgment in favour of Dana Gas could have wide ranging implications on the sukuk market. White & Case LLP argue that the concept of Shari'a-compliance should be treated as distinct from legal enforceability. Dar Al Sharia Legal & Financial Consultancy issued a pronouncement on the Shari'a-compliance of Dana Gas' sukuk at the time the sukuk were issued. Pronouncements of such nature are generally not open to retroactive invalidation as is being sought by Dana Gas.

Chelsea Barracks: #Tax consequences of Islamic Finance product heard by the Court of Appeal

In 2008 the #Qatar owned Project Blue entered into an arrangement to acquire the former Chelsea Barracks in West London from the Ministry of Defence for £959 million. Monies were advanced by Masraf al Rayan Bank using an ijara arrangement for the transaction. Now the Court of Appeal has found that the Revenue and Customs authority should have sought Stamp Duty Land Tax from the bank rather than the purchaser, but was apparently out of time to raise such an assessment. Eventually, the machinery in the Finance Act 2003 was not up to the task of ensuring an ijara was treated for tax purposes in the same way as any other transaction. As the adoption of Islamic Finance instruments increases, British tribunals, courts and regulators will need to understand the structures more clearly.

#Oman heralds a new framework for #Sukuk issuances and new listing categories

After the publication of Oman's new Sukuk Regulations on 5 April 2016 new listing categories have been introduced on the Muscat Securities Market (MSM). The Capital Market Authority (CMA) introduces a new "Bond and Sukuk Market" on the MSM. The CMA intends to have existing and future bonds and Sukuks listed on the MSM to be placed into this new category. A number of other new categories also being introduced, such as "Under Monitoring Market" and a "Rights Issue Market".

BCCI case: The Luxembourg Court of Appeal refuses to reopen the liquidation proceedings

On 2 March 2016, the Luxembourg Court of Appeal has denied an appeal filed by Dr. Adil Elias, Faisal Islamic Bank of Egypt and a handful of other creditors of BCCI against a judgment previously rendered by the Luxembourg Commercial Court, which had refused to reopen the liquidation proceedings of Bank of Credit and Commerce International S.A. (“BCCI S.A.”) and BCCI Holdings (Luxembourg) S.A. (“BCCI Holdings”). Back in July 1991, the Luxembourg, English and Cayman Islands regulators undertook a joint action to close down the operations of the BCCI banking group, and in all three jurisdictions, joint liquidators were appointed to deal with one of the largest bankruptcies of a banking institution ever.

Turkey sets up Islamic finance coordination committee

On December 15, 2015, the Prime Ministry of the Republic of Turkey issued a circular on the formation of an Islamic Finance Coordination Committee (Faizsiz Finans Koordinasyon Kurulu) to accelerate the development of Turkey's Islamic finance markets. The Islamic Finance Coordination Committee will be chaired by the minister responsible for the Undersecretariat of Treasury and will include top financial markets regulators from the Ministry of Development, the Ministry of Finance, the Central Bank, the Banking Regulation and Supervision Authority, the Capital Markets Board, Borsa Istanbul, and the Islamic Banks Association of Turkey. The Islamic Finance Coordination Committee will also consult with non-governmental organizations, academics and professional organizations.

The takaful regulatory landscape across the Gulf Cooperation Council (GCC)

Takaful regulation across the GCC remains fragmented between specialist takaful regimes, general insurance regimes that are also applicable to takaful insurers and regimes which have little or no specific recognition of takaful. Despite this, the GCC takaful market remains one of the most important and fast growing in the world. The relatively recent introduction of specialist takaful regimes means we are still very much in the developmental stage of regulatory oversight. The recent introduction of the new Financial Regulations in the UAE and the potential establishment of a Shari’a Oversight Committee represents steps firmly in the direction of closer and more robust regulatory scrutiny of takaful in the UAE. We are yet to see if other GCC States will follow.

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