By NG MIN SHEN
Malaysia has filed an application for permission to appeal against the London Commercial Court’s decision to delay a suit involving 1Malaysia Development Bhd (1MDB), the Minister of Finance Inc (MoF Inc) and two Abu Dhabi based firms.
Attorney General (AG) Tommy Thomas said MoF Inc and 1MDB had filed an application with the UK Court of Appeal to seek permission to challenge the order.
“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,” he said in a statement yesterday.
Thomas said the proceedings are steps to recover “substantial amounts of money wrongfully paid by Najib’s administration”, adding that government’s efforts in seeking justice for Malaysia are bearing fruit, as seen in the realisation of assets in recent recovery exercises.
According to Thomas, 1MDB and MoF Inc filed an application in the Commercial Court in London in October last year to challenge a consent award that the two Malaysian parties had recorded during former Prime Minister Datuk Seri Najib Mohd Razak’s tenure in May 2017, with the International Petroleum Investment Co (IPIC) and Aabar Investments PJS.
The consent award was to conclude the arbitration proceedings that IPIC and Aabar commenced against 1MDB and MoF Inc before the London Court of International Arbitration tribunal in 2016.
“Our challenge is brought on grounds, among others, of fraud and public policy. In response, IPIC and Aabar applied to strike out or stay this application by 1MDB and MoF Inc, and commenced a separate second arbitration proceedings against 1MDB and MoF Inc,” Thomas said.
Under the consent award, Malaysia is obliged to pay US$5.78 billion (RM24.3 billion) to IPIC and the bond trustee over a five-year period, due to Malaysia’s obligation to take full responsibility for all interest and principal payments under two bonds issued by 1MDB in 2012 that IPIC jointly guaranteed.
As of May 2019, US$1.6 billion has been paid, leaving a balance of US$4.16 billion which represents the remaining interest and the principal payable to the bond trustee for the two bonds issued in 2012.
“If Malaysia succeeds in the UK, 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 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,” the AG added.
According to Thomas, the allegations before the London Commercial Court are that the settlement deeds and the consent award were “engineered by Najib as part of a conspiracy to defraud”, and that IPIC and Aabar were aware that Najib was acting contrary to the interests of MoF Inc and 1MDB.
The London Commercial Court rejected IPIC and Aabar’s attempt to strike out 1MDB and MoF Inc’s application to challenge the consent award. The High Court also rejected the application by IPIC and Aabar under Section 9 of the UK Arbitration Act 1996 to stay 1MDB and MoF Inc’s application pending determination of parallel arbitration proceedings.
“While expressly recognising his concurrent jurisdiction to decide on 1MDB and MoF Inc’s application with the parallel arbitration, Justice Knowles of the London Commercial Court considered the case before him to be one of those “rare and compelling” situations where he should, as a matter of case management, permit the underlying issues between the parties to be first heard in the ongoing arbitration.
“However, the High Court emphasised that it remains ready to proceed with 1MDB and MoF Inc’s challenges at any time, having regard to the circumstances,” Thomas said.