This article first appeared in The Edge Financial Daily on May 12, 2017

KUALA LUMPUR: The London Court of International Arbitration (LCIA) has issued a consent award to the settlement for the dispute between International Petroleum Investment Co PJSC (IPIC) and 1Malaysia Development Bhd (1MDB).

In a filing with the London Stock Exchange yesterday, IPIC said with this latest development, the settlement in respect of the arbitration proceedings at the LCIA is now unconditional.

Last month, IPIC announced that it had entered into a conditional settlement agreement with Aabar Investments PJS (Aabar), Minister of Finance Inc (MoF Inc) and 1MDB over the dispute.

Under the terms of the settlement, IPIC will receive an amount of US$602.73 million (RM2.61 billion) by July 31 and a further amount of US$602.73 million by Dec 31.

In addition, 1MDB and MoF Inc will assume liability for future interest and principal payments for two tranches of bonds totalling US$3.5 billion that were guaranteed by IPIC.

In 2012, 1MDB issued two 10-year bonds of US$1.75 billion each to buy two power plants. The bonds were co-guaranteed by 1MDB and IPIC’s subsidiary Aabar. The MoF Inc was not a party to this guarantee.

In return, 1MDB was to pay Aabar a security deposit of US$1.37 billion. IPIC has since insisted that neither it nor Aabar received any of the payments and the company that did — Aabar Investments PJS Ltd (Aabar BVI) — was not part of the group.