The UK Court of Appeal in London has ordered the London High Court to hear Malaysia’s bid to nullify a consent award involving 1MDB and two Abu Dhabi companies.
The new ruling overturns the high court decision to halt proceedings pending the outcome of parallel proceedings in the London Court of International Arbitration (LCIA).
The court of appeal further ordered the proceedings at the LCIA to be restrained pending the outcome of the high court proceedings.
Lauding the court of appeal decision, Malaysian attorney-general Tommy Thomas said the ruling means the dispute involving 1MDB and Minister of Finance Incorporated (MOF Inc) against the International Petroleum Investment Company (IPIC) and Aabar Investments PJS, would play out in public.
“Our setting aside application will now be heard by the High Court in London as part of an open and transparent process enabling Malaysians and the rest of the world to follow the proceedings in court.
“It is our case that the settlement deeds, signed in April 2017, further frustrate any legitimate attempt to challenge the settlement by including a condition that no court proceedings should be brought to set aside the consent award recorded following the settlement deeds.
“Under the settlement deeds, the penalty for breach included payment of a substantial sum of money,” Thomas (above) said in a statement today.
In 2017, under the BN-led government, 1MDB and MOF Inc had agreed to pay US$1.2 billion and assume responsibility for RM4.8 billion in principal and interests for two bonds that were previously guaranteed by IPIC.
This was done as part of a settlement over a dispute that was brought to the LCIA.
They also agree to enter good faith discussions about funds 1MDB had paid to “certain entities”, which is believed to refer to US$3.51 billion that went to a company bearing a similar name to Aabar but is unrelated to the IPIC subsidiary.
For the record, the LCIA is not a court of law, but a non-profit company specialising in resolving commercial disputes. As such, its proceedings are confidential even after its conclusion.
Following the 14th general election, the new government claimed the settlement was an attempt to cover up fraud involving US$3.5 billion in 1MDB funds, and brought a case to the London High Court in a bid set aside the LCIA consent award.
IPIC and Aabar had responded to the suit by initiating a second round of arbitration proceedings, and successfully persuaded the London High Court to stay proceedings pending the outcome of the arbitration.
Appealing against the High Court decision, lawyers representing 1MDB and MOF Inc had argued that IPIC and Aabar’s move merely sought to ensure that the dispute would not be resolved in the public view.
Writing about the latest ruling, Thomas quoted the unanimous decision delivered by judge Geoffery Vos saying, “The pursuit of the second arbitration seeks in terrorem to impose a large financial penalty on the claimants for having sought to exercise their agreed legal rights.
“In the circumstances of this case, however, the only appropriate exercise of discretion is to grant an injunction to restrain the pursuit of second arbitrations.
“The court applications will proceed to determine the validity of the consent award, and it is just and convenient that the second arbitrations should not proceed until that has been determined.
“The injunction will bring the defendants’ (IPIC and Aabar) vexatious conduct to an end," he said.
Thomas added that bringing the perpetrators of the 1MDB scandal to justice is a complex challenge, but the Malaysian government is committed to pursuing them relentlessly.