DUBAI (Reuters) - Dana Gas has lost an attempt to overturn English court rulings that backed creditors’ demands for the repayment of $700 million of Islamic bonds, the UAE company said on Monday.

A view shows UAE's Dana Gas building in Cairo November 2, 2012. REUTERS/Mohamed Abd El Ghany

The English Court of Appeal refused an application by the United Arab Emirates (UAE) company to appeal the November 2017 and February 2018 English High Court orders.

Dana Gas last year shocked the global Islamic finance industry when it stopped payments on its sukuk, which matured in October, saying that because of changes in the interpretation of Islamic finance rules the bond had become unlawful in the UAE.

Instead, it proposed to exchange the sukuk for new instruments with lower profit rates. The proposal was rejected by bondholders and a legal battle started over the validity of the sukuk in both English and UAE courts.

While the English Court of Appeal’s decision may complicate further legal action by the company in English courts, proceedings in the UAE continue.

A court in the emirate of Sharjah, where Dana is headquartered, issued an order earlier this month prohibiting the company from withdrawing its legal efforts in the UAE.

The order was issued at the request of a plaintiff, Marwan John Shorkry Kattan, a shareholder in Dana Gas.

The Sharjah court also added BlackRock – one of the largest creditors of Dana Gas – to the UAE proceedings and issued an injunction prohibiting it and other creditors from taking any action against Dana Gas or its shareholders in the UAE and the United Kingdom until the UK courts’ rulings “are referred to the UAE judiciary to resolve their enforceability in the UAE.”

This could mean that Dana’s creditors may not be able to advance any enforcing claims against the company and its assets as long as the UAE court orders remain in place.

Despite the ongoing legal dispute, Dana said on Sunday it would seek shareholder approval to pay a dividend for 2017 totaling about 349 million dirhams ($95.03 million).