General & Misc

IPIC and Aabar fail to strike out Consent Award Challenge - AG

Date: 30 May 2019; Type: Legal News; Source: Bernama

KUALA LUMPUR, May 30 (Bernama) - The London Commercial Court has rejected an attempt by International Petroleum Investment Company (IPIC) and Aabar Investments PJS (Aabar) to strike out the application by 1Malaysia Development Berhad (1MDB) and Minister of Finance Incorporated (MOFI) to challenge the Consent Award entered during Datuk Seri Najib Tun Razak’s administration.

Attorney-General Tommy Thomas in a statement said the court also rejected the application by IPIC and Aabar under Section 9 of the UK Arbitration Act 1996 to stay 1MDB and MOFI’s application pending determination of parallel arbitration proceedings.

He said Justice Knowles of London Commercial Court considered that the case before him to be one of those “rare and compelling” situations where he permits the underlying issues between the parties to be first heard in the ongoing arbitration.

Thomas further said that the related arbitration proceedings will now move forward in London but under the Court’s supervision.

“Needless to say, the London Court decision, which allows for the issue of massive fraud that is of public importance to be first determined behind closed door private arbitration proceedings without public scrutiny, is not satisfactory to Malaysia. 1MDB and MOFI have therefore filed an application for permission to appeal against the London Commercial Court decision to the Court of Appeal,” he said.

Thomas said that these proceedings were steps to recover substantial amounts of money wrongfully paid by Najib administration.

“As shown by the realisation of assets in recent recovery exercises, the Government’s efforts in seeking justice for the Malaysian people following what has been described as “kleptocracy at its worst” is bearing fruit. The Government remains focused in its attempts to ensure that Malaysia’s assets are recovered,” the AG said.

Thomas said 1MDB and MOFI filed the application in the Commercial Court in London, United Kingdom, in October last year to challenge a Consent Award that the two Malaysian parties had recorded under Najib administration in May 2017 with IPIC and Aabar.

He said the Consent Award was to conclude the arbitration proceedings that IPIC and Aabar commenced against 1MDB and MOFI before the London Court of International Arbitration (LCIA) tribunal in 2016.

“The challenge is brought on grounds, amongst others, of fraud and public policy. In response, IPIC and Aabar applied to strike out or stay this application by 1MDB and MOFI, and commenced a separate second arbitration proceeding against 1MDB and MOFI," he added.

The AG also said under the Consent Award, Malaysia is obliged to pay US$5.78 billion to IPIC and the Bond Trustee over a five-year period.

“This is because Malaysia is obliged, amongst others, to take full responsibility for all interest and principal payments under two bonds issued by 1MDB in 2012 that IPIC jointly guaranteed (2012 Bonds). As of May 2019, US$1.6 billion has been paid, leaving a balance of US$4.16 billion.

“The US$4.16 billion represent the remaining interest and the principal payable to the Bond Trustee for the 2012 Bonds. If Malaysia succeeds in the UK action, Malaysia will be able to proceed to seek recovery of US$3.5 billion that was paid by 1MDB subsidiaries to IPIC subsidiary, or in the alternative, reduce Malaysia’s liability to pay interest and principal under the 2012 Bonds that were jointly guaranteed by IPIC up to US$3.5 billion,” he said.

Thomas said the allegations before the London Commercial Court were that the Settlement Deeds and the Consent Award were engineered by Najib as part of a conspiracy to defraud, and that IPIC and Aabar knew that Najib was acting contrary to the interests of MOFI and 1MDB.

MY Bernama

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