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Will speeding up Equanimity's sale be for the better?

LETTER | The Equanimity is a yacht registered in Cayman Islands and owned by an offshore Cayman Islands company called Equanimity Cayman Ltd. She was managed by Wilson Yacht Management Ltd, UK.

The Equanimity was arrested by a warrant of Kuala Lumpur High Court on Aug 7 in Port Klang waters on a claim for ownership (or partial ownership) by 1MDB Global Investments Ltd, 1MDB Energy Holdings Limited, 1Malaysia Development Bhd and Government of Malaysia. The action was filed against the "owners of Equanimity".

The 1MDB group obtained an omnibus order to provide for the maintenance of the yacht on Aug 14, which among others facilitated management services to be rendered by Marine & Offshore Solutions Sdn Bhd.

Following that, the 1MDB group applied for an order for the sale of the Equanimity on Aug 21, with a request for urgent hearing on grounds that the cost of maintenance is enormous.

The value that can be fetched on such a sale is highly dubious, given the Equanimity is an ultra-luxurious yacht, as Council of Eminent Persons chairperson Daim Zainuddin recently pointed out. It is not clear whether a rushed sale will be for the better.

Once a ship has been arrested (and in-rem writ served on the ship), the law requires appearance to be filed by the ship owner within 14 days, which came to an end on Aug 21 in the case of the Equanimity. Quite strangely, so far no lawyer has appeared for the owners of RM1 billion Equanimity and no appearance has been filed.

However, 1MDB group cannot yet rule out the possibility of the owner coming to contest. 1MDB may face various legal and technical challenges if the yacht’s owner contests, for which they must get themselves ready.

It must be remembered that the owner, at least on the face of records, is a company and not any individual. There are ways litigations may possibly be pursued without the parties appearing in person - that depends on how the litigations go.

If the owner contests, the 1MDB group will have to fight the battle. The burden on the 1MDB group will be to prove on a balance of probabilities that the 1MDB group monies were used to purchase the ship.

In my considered view, the proof cannot be that the US Department of Justice (DOJ) said 1MDB funds were used to buy the yacht, and that the DOJ's statement has been verified against a penalty of perjury. That would be hearsay evidence and inadmissible in court.

However, if DOJ personnel come to our court to testify and produce the evidential basis for the DOJ’s statement, that may be good.

If the owner fails to contest, then 1MDB will, in all likelihood, apply for a default judgment that will result in the sale of the yacht and passing of good title to the buyer.

At present, the next court dates are on Aug 24 and Aug 29. The fate of the undefended RM1 billion Equanimity’s litigation remains to be seen.

ARUN KASI is a lawyer and arbitrator.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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