KUALA LUMPUR (Nov 26): The UK Court of Appeal has ruled in Malaysia's favour to have its bid to challenge a US$5.78 billion settlement made by the previous government with Abu Dhabi's International Petroleum Investment Co (IPIC) to be heard in open court.
Attorney-General Tan Sri Tommy Thomas said in a statement today that as a result of the Court of Appeal's decision, the matter will now proceed to a hearing in the High Court in London at a date to be fixed.
The Court of Appeal, comprising Chancellor Sir Geoffrey Vos, Lord Justice Newey and Lord Justice Males, also ordered that the parallel arbitration proceedings commenced by IPIC and Aabar PJS be restrained, said Thomas.
The London case is one of a series of legal and regulatory probes around the world surrounding 1Malaysia Development Bhd (1MDB).
Malaysia's new government last year challenged the 2017 IPIC deal in the UK courts, saying that IPIC and Aabar were aware of fraud allegations against former prime minister Datuk Seri Najib Razak at the time the deal was struck.
Najib was "principally responsible" for consenting to the US$5.78 billion award, and he "could not possibly have acted in the best interests of his country and his company", Thomas had said when initiating the legal challenge.
The court proceedings were filed in October 2018 on grounds that the Consent Award and underlying Settlement Deeds were engineered by Najib and others, as part of a conspiracy to defraud, and that IPIC and Aabar PJS knew that Najib was acting contrary to the interests of 1MDB and its shareholder, the Minister of Finance Inc (MoF Inc).
IPIC guaranteed two separate dollar-denominated bonds for 1MDB in 2012 in deals arranged by Goldman Sachs Group Inc that raised US$3.5 billion.
"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," said Thomas.
"It is our case that the Settlement Deeds, signed in April 2017, further sought to 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," he added.
The AG's statement also quoted Vos, in delivering a unanimous judgment on behalf of the Court of Appeal, as saying:
"As matters stand, therefore, the terms of the settlement deeds represent a clear attempt to fetter the claimants' [1MDB and MoF Inc's] exercise of their statutory right to challenge the consent award in the first arbitration under sections 67 and 68. The pursuit of the second arbitrations seeks in terrorem to impose a large financial penalty on the claimants for having sought to exercise their agreed legal rights.
Vos added: "In the circumstances of this case, however, the only appropriate exercise of discretion is to grant an injunction to restrain the pursuit of the 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' vexatious conduct to an end."
Thomas said billions of dollars of taxpayer monies have been misappropriated in the course of the 1MDB scandal in what has been described as the greatest kleptocracy in modern history.
"Bringing the perpetrators to justice is a complex and challenging task as these transactions have been carried out over several jurisdictions and involve many persons and entities. The Malaysian government is committed, in the public interest, to setting this right and will unrelentingly pursue those who are responsible for this grievous injustice," he added.