KUALA LUMPUR: Putrajaya’s quest to recover US$3.5 billion (RM14.6 billion) paid out of 1MDB funds to International Petroleum Investment Company (IPIC) subsidiaries has received a fillip at the Court of Appeal in London.
The Court of Appeal has allowed the government’s bid to challenge the settlement between the previous Barisan Nasional government and UAE-owed IPIC and Aabar Investments PJS (Aabar PJS) to be heard in open court.
It made the ruling in overturning a decision of the High Court of England stopping a court application by 1MDB and the Minister of Finance Incorporated (MOFI) to set aside a consent award entered into by the Najib Razak administration with IPIC and Aabar PJS pending arbitration proceedings initiated by IPIC and Aabar PJS in London.
Attorney-General Tommy Thomas said in a statement tonight that as a result of the Court of Appeal’s decision, 1MDB and MOFI’s application to set aside the consent award will now proceed to a hearing in the High Court in London.
The Court of Appeal, comprising Chancellor Geoffrey Vos, Lord Justice Newey and Lord Justice Males, also ordered that the parallel arbitration proceedings commenced by IPIC and Aabar PJS be restrained.
Thomas said 1MDB and MOFI filed court proceedings in October 2018 on the ground that the consent award and underlying settlement deeds were “engineered by Najib Razak 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 MOFI”.
“If Malaysia succeeds, Malaysia will, in addition to other rights, be able to proceed to seek recovery of US$3.5 billion that was paid out of 1MDB funds to IPIC subsidiaries.
“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 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,” he said.
Under the settlement deeds, Thomas noted, the penalty for breach included the payment of a substantial sum of money.
Vos, in delivering the unanimous judgment of the Court of Appeal, said that among other observations, “the terms of the settlement deeds represent a clear attempt to fetter the claimants’ exercise of their statutory right to challenge the consent award in the first arbitration under Sections 67 and 68”.
“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 the second arbitration.
“The court applications will proceed to determine the validity of the consent award, and it is just and convenient that the second arbitration 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 money had been misappropriated in the course of the 1MDB scandal.
“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.”