We use cookies for analytics to improve your experience. Privacy Policy
Structuring high-value financing transactions across jurisdictions where the security interest valid in one court is unenforceable in the next — and where the margin between a performing loan and an unrecoverable position is a single clause in the documentation.
The leverage in every financing transaction shifts the moment documents are signed — after that, every option costs more than the one before it, and the decisions that mattered most are the ones that can no longer be changed.
The advice that determined whether this facility was recoverable was the advice given at structuring — not the advice sought at enforcement. By the time lenders discover their security package is defective, the borrower has defaulted and the assets have depreciated below the outstanding principal.
GSDA's finance practice is built around three specific technical capabilities that determine outcomes in cross-border financing: first, cross-jurisdictional security perfection — the engineering of collateral packages that are simultaneously valid and enforceable under UAE onshore law, DIFC law, Saudi law and French law, because a pledge valid in one jurisdiction but unregistered in another is worth nothing at enforcement. Second, Islamic finance documentation that is both Shariah-compliant and enforceable in civil courts — because a commodity murabaha that receives a fatwa but fails recharacterisation analysis in a UAE court collapses entirely. Third, covenant engineering that functions as a genuine early-warning system — financial covenants with management add-backs calibrated so tightly that they detect real deterioration before it becomes irreversible, not trip wires that trigger after the damage is done.
UAE onshore security and DIFC security are perfected under entirely different legal regimes — DIFC Law No. 1 of 2004 governs DIFC collateral while Federal Decree-Law No. 20 of 2023 on Commercial Transactions introduced new pledge registration requirements for UAE onshore assets; a security package that fails to account for both is worth nothing in enforcement
Commodity murabaha documentation carries a specific recharacterisation risk: a civil court that examines the substance of an accelerated murabaha may conclude the transaction is an interest-bearing loan, at which point the security falls away and the financier holds unsecured debt — the gap between Shariah board approval and civil court enforceability is where Islamic finance structures collapse
French nantissement (pledge over intangibles) and hypothèque (mortgage) registration requirements follow civil-law formalities that common-law-trained counsel routinely miss — creating perfection defects that surface only at enforcement, when the lender discovers the priority position it believed it held does not exist
Intercreditor standstill provisions in multi-tranche GCC deals frequently prevent junior and mezzanine lenders from enforcing for 90–180 days after a senior default — but poorly drafted standstill clauses apply to scenarios they were never intended to cover, including situations where senior lenders themselves are deadlocked on enforcement strategy
SAMA and CBUAE regulatory capital treatment under Basel III transitional provisions differs materially on the classification of hybrid capital instruments — directors who approve AT1 or Tier 2 instruments without jurisdiction-specific capital treatment opinions face personal board liability for capital adequacy misstatements
Prospectus liability under DFSA Markets Rules, SCA regulations and CMA listing standards extends to individual directors who approved the document — material omissions or misleading statements expose directors personally, not just the issuing entity, and D&O insurance policies typically exclude prospectus liability for deliberate or reckless misstatement
Related Services
The challenges you face
Every day we hear these concerns from CEOs, CFOs and general counsel across the GCC and Europe. If any of these sound familiar, you're not alone — and we can help.
You structured a UAE mortgage over the real estate, a Saudi pledge over the operating company shares, and a DIFC floating charge over the receivables. Each was registered correctly under local law. But the security trust deed that links them was drafted under English law assumptions about floating charges — which do not exist under UAE onshore law — and the pledge registration under Federal Decree-Law No. 20 of 2023 on Commercial Transactions was never updated from the original filing. The cross-jurisdictional enforcement mechanism that holds the package together has a gap.
Receivers cannot be appointed across the full asset pool simultaneously. The lender enforces the DIFC security while the borrower strips onshore UAE and Saudi assets. By the time the lender obtains a Saudi enforcement order, the share value has been diluted through a capital restructuring you were not notified of.
The EBITDA definition in your loan agreement contains fourteen management add-backs — restructuring costs, one-off advisory fees, unrealised gains, and projected cost savings from an acquisition that closed eighteen months ago. After adjustment, reported EBITDA bears no relationship to cash available for debt service. The financial covenant was designed as an early-warning mechanism, but the adjustments have rendered it unable to detect real deterioration until the borrower is already in distress.
The lender arrives at a restructuring table with no leverage, a borrower who has had 18 months to entrench, and assets that have deteriorated below recovery value. The covenant breach notification comes after the window for constructive intervention has closed — not before.
The commodity murabaha received a fatwa from a recognised Shariah supervisory board and was documented to AAOIFI standards. But a UAE civil court examining the structure in an enforcement action will ask a different question: is this in substance an interest-bearing loan with commodity transactions used as a mechanism to create the appearance of a sale? If the court concludes that the commodities were never actually delivered, that the purchase and sale occurred simultaneously, and that the rate of return is economically identical to interest, the structure collapses.
An Islamic finance transaction recharacterised by a civil court as an interest-bearing loan loses its security package entirely — the pledge was granted to secure a murabaha, not a loan, and the security documentation reflects the wrong transaction. The financier holds unsecured debt, often with the rate of return also being challenged as unenforceable interest.
The project finance model stress-tested each scenario individually: revenue shortfall, contractor insolvency, force majeure delay. The DSRA was sized accordingly. But when a drawdown on the DSRA coincides with an equity cure dispute between sponsors and an EPC delay claim that has frozen the construction account, the mechanics of the waterfall break down. The accounts agreement was drafted for sequential problems, not concurrent ones — and the intercreditor provisions lock senior lenders out of reserves they were contractually promised.
Senior lenders discover they cannot access the DSRA because a subordinated intercreditor dispute has triggered a standstill provision that was never intended to apply to that waterfall tier. The project company's operating account is frozen pending resolution of the equity cure, and debt service goes unpaid while every party waits for a tribunal to interpret clauses that were never designed to interact.
The intercreditor agreement in your multi-tranche facility contains a 180-day standstill provision that prevents mezzanine lenders from taking enforcement action following a senior event of default. That standstill was intended to give senior lenders time to coordinate. But the senior lenders are themselves deadlocked — three banks in the syndicate want to accelerate, two want to extend, and the agent bank is paralysed. Meanwhile, the standstill provision, drafted broadly, prevents your enforcement as well.
The window to enforce against the most valuable assets closes during the standstill. By the time enforcement can legally proceed, the borrower has filed for a judicial composition moratorium under UAE Decree-Law No. 9 of 2016 on Bankruptcy, and all creditor claims are now subject to court supervision.
The sukuk prospectus was reviewed by counsel, approved by the issuer's board, and accepted by the DFSA for listing on Nasdaq Dubai. The directors believe that regulatory approval means personal protection. It does not. Prospectus liability under DFSA Markets Rules, SCA regulations, and CMA listing standards extends to the individuals who approved the document — and material omissions or misleading forward-looking statements expose each signing director personally.
Directors face regulatory sanctions from the DFSA, personal fines under SCA enforcement powers, and civil liability to investors for losses attributable to material prospectus defects. D&O insurance policies typically exclude prospectus liability arising from deliberate or reckless misstatement — the very category that regulators pursue most aggressively.
Don't let these problems compound.
Let's solve them together.
Upstream, downstream, and infrastructure project finance across the GCC and France. We structure and document multi-lender syndications, negotiate DSRA mechanics and equity cure provisions, draft direct agreements with EPC and O&M contractors, and build security packages around accounts agreements, step-in rights, and assignment of project revenues. Our practice covers both conventional and Shariah-compliant project finance structures from mandate through financial close to operational phase.
Commodity murabaha, ijara, diminishing musharaka, wakala, and sukuk structuring — documented to meet both AAOIFI standards and the enforceability requirements of GCC civil courts. We work with issuers, arranging banks, trustees, and Shariah supervisory boards to build structures that survive not just fatwa review but adversarial challenge in enforcement proceedings. Our capability covers sukuk al-ijara, sukuk al-wakala, and hybrid structures for sovereign and corporate issuers.
Lead arranger mandates, LMA-standard and APLMA-based documentation, participation agreements, agent bank obligations, and secondary market loan transfers across GCC and European capital markets. We act for arranging banks, participating lenders, and corporate borrowers on club deals, revolving credit facilities, and term loan facilities — negotiating intercreditor agreements, hedging documentation, and the assignment and transfer mechanics that govern syndicate composition after closing.
Multi-jurisdictional security perfection across UAE onshore, DIFC, ADGM, Saudi Arabia, and France. We design collateral packages that are enforceable under the specific legal regime governing each asset class — pledge registration under Federal Decree-Law No. 20 of 2023, DIFC floating charges, Saudi registered pledges under the Commercial Pledge Law, and French nantissement and hypothèque registrations. Every security package is stress-tested against enforcement scenarios, not just signing-day requirements.
Bond and sukuk issuance on Nasdaq Dubai, the London Stock Exchange, and Euronext Paris. We draft prospectuses, coordinate rating agency liaison, prepare board resolutions and director liability disclosures, and manage the listing process with the DFSA, SCA, CMA, and AMF. Our practice covers conventional bonds, sukuk programmes, convertible instruments, and hybrid capital — with particular focus on the prospectus liability exposure of individual directors.
Standstill negotiations, covenant amendments, maturity extensions, and security enforcement across GCC and French jurisdictions. We advise both lenders and borrowers on intercreditor disputes, receiver appointment under DIFC and UAE onshore procedures, mortgage enforcement timelines, and the interaction between contractual enforcement rights and the judicial composition moratorium under UAE Decree-Law No. 9 of 2016 on Bankruptcy.
UAE onshore security is governed by the Civil Code and Federal Decree-Law No. 20 of 2023 on Commercial Transactions, which requires specific registration formalities for pledges and mortgages to be perfected and enforceable. DIFC security is governed by DIFC Law No. 1 of 2004, which recognises floating charges, assignments by way of security, and other common-law security interests that do not exist under UAE onshore law. A security package that treats these as interchangeable — or that grants a floating charge over assets located outside the DIFC — creates a perfection gap that only becomes visible at enforcement. For cross-border financings with assets in both regimes, the security structure must be engineered specifically for each legal system, not adapted from a single template.
A UAE civil court will examine whether the commodity murabaha constitutes a genuine sale transaction or whether it is in substance an interest-bearing loan using commodity trades as a mechanism. If the court finds that the commodities were never delivered, that the purchase and sale were simultaneous and offsetting, or that the rate of return is economically identical to interest, the structure may be recharacterised as a conventional loan. Recharacterisation has severe consequences: the security package, which was granted to secure a murabaha and not a loan, may be treated as invalid, and the rate of return may be challenged as unenforceable interest. Structuring the documentation to withstand adversarial scrutiny — not just Shariah board review — is where the real legal risk sits.
Under DFSA Markets Rules, SCA regulations, and CMA listing standards, prospectus liability extends to the individuals who approved the document, not just the issuing entity. Directors who sign off on a prospectus containing material omissions or misleading forward-looking statements face personal regulatory sanctions, fines, and civil liability to investors for losses attributable to those defects. D&O insurance policies typically contain carve-outs for prospectus liability arising from deliberate or reckless misstatement — which is precisely the category that regulators pursue most aggressively. Directors should receive independent legal advice on the prospectus content before approval, separate from the advice given to the issuing entity.
UAE mortgage enforcement follows the Civil Code pledge enforcement procedure, which generally requires a court-supervised auction. The process from default notice through to auction and distribution of proceeds typically takes 12–18 months in practice, though complex cases involving multiple properties or competing creditor claims can extend well beyond that. Private sale mechanisms included in the mortgage documentation may not be honoured by UAE courts in every circumstance. In the DIFC, the enforcement regime permits the appointment of receivers and more commercially oriented enforcement procedures, but only over DIFC-situated assets. The critical variable is not the legal mechanism but the speed of the court process and whether the borrower contests the enforcement — which, in practice, they almost always do.
A Debt Service Reserve Account holds funds set aside to cover a specified number of debt service payments — typically six months — in the event the project's cash flow is insufficient to meet scheduled payments. The DSRA is usually governed by an accounts agreement that specifies the conditions under which the lender can draw on the reserve. Disputes arise when the borrower argues that the drawdown conditions have not been met, that the lender's calculation of the shortfall is incorrect, or that a concurrent equity cure entitlement takes priority. If the accounts agreement does not clearly address the interaction between DSRA drawdowns and other waterfall mechanics, the lender may find itself unable to access reserves it was contractually promised — while debt service goes unpaid during the dispute.
In most LMA-standard syndicated facilities, enforcement action requires the consent of the majority lenders — typically lenders holding two-thirds of total commitments. Individual lenders cannot accelerate the loan or enforce security unilaterally unless the facility agreement contains a specific carve-out (which is rare for senior facilities). The intercreditor agreement in multi-tranche deals adds further constraints: mezzanine and junior lenders are usually subject to standstill periods that prevent enforcement for 90–180 days following a senior event of default. The practical consequence is that enforcement timing depends on syndicate consensus, and a deadlocked syndicate can delay enforcement long enough for the borrower to strip assets or file for bankruptcy protection.
A standstill is a contractual arrangement, typically found in intercreditor agreements, that prevents certain classes of lenders from taking enforcement action for a defined period — usually 90 to 180 days — following a default by the borrower. It is a private agreement between creditors. A moratorium is a court-ordered or statutory protection that suspends all creditor enforcement actions against the debtor, usually in the context of formal insolvency proceedings. Under UAE Decree-Law No. 9 of 2016 on Bankruptcy, a judicial composition moratorium can be granted by the court to protect the debtor while a restructuring plan is being negotiated. The critical distinction is that a standstill only binds the parties who signed it, while a moratorium binds all creditors regardless of their contractual arrangements.
We asked GSDA to review our existing security package before the second drawdown. They identified three perfection defects — a pledge registration that had not been updated under the new UAE Commercial Transactions Decree-Law, a floating charge that was not recognised under the onshore jurisdiction, and a direct agreement that had never been executed by the EPC contractor. If those defects had surfaced at enforcement, our recovery would have been reduced by at least forty percent.
CFO — Infrastructure Development Company, GCC
Insights
The GSDA advantage
We structure security packages for enforcement scenarios, not just signing day — because the question is not whether security is valid, it is whether it can be enforced under real-world conditions in the specific jurisdictions where assets sit. Every collateral arrangement we design is stress-tested against the actual enforcement procedure in each relevant jurisdiction.
Our Islamic finance practice operates at the intersection of Shariah compliance and civil enforceability — the two standards that every Islamic finance transaction must satisfy simultaneously, and that few advisors are positioned to address together. We work with Shariah boards and dispute counsel in parallel, not sequentially.
Our finance team in Paris, Dubai, and Riyadh provides genuine multi-jurisdictional continuity — not a network of referral relationships, but a single team that has structured and enforced transactions under French, UAE, Saudi, and DIFC law. The same consultants who draft the facility agreement handle the enforcement when the facility defaults.
Our offices
Our banking & finance law team operates from offices in France, the Gulf, and North Africa — ensuring local expertise wherever your business needs it.
Saudi Arabia Practice
Five offices across the Kingdom — Riyadh, Jeddah, Dammam, Makkah & Madinah — serving Vision 2030 giga-projects, MISA-licensed foreign investors, and international contractors.
Knowledge hub
Key legal terms for banking & finance law