Malaysia is applying to set aside an agreement to pay US$5.78 billion to an Abu Dhabi sovereign wealth fund as part of a payment dispute over 1MDB bonds.

The original consent award was a result of arbitration conducted under the rules of the London Court of International Arbitration between International Petroleum Investment Company (IPIC) and Aabar Investments PJS as claimants, and 1MDB and Malaysia’s finance minister as respondents.

Malaysia says that it has already paid US$1.46 billion under the agreement, leaving a balance of US$4.32 billion, but the country’s new administration wants to scrap the deal and recoup its initial payment, claiming that the agreement was made after allegations of fraud had been lodged in relation to the 1MDB scandal.

“The court application relates to the knowledge of IPIC and Aabar of the serious allegations made by the United States Department of Justice against former prime minister and finance minister Najib Razak, who was also the moving spirit and ultimate decision maker in 1MDB,” said Tommy Thomas, Malaysia’s attorney general, in a statement.

“Malaysia takes the position that IPIC and Aabar were aware of the fraud of Najib Razak. He was principally responsible for 1MDB and Minister of Finance Inc. consenting to the Award. Every system of law would hold that he could not possibly have acted in the best interests of his country and his company. Indeed, he did not. Fraud is an established ground to challenge the consent award for public policy reasons.”

IPIC parent Mubadala told Reuters it was not aware of the legal action. “There remains in place a legally-binding settlement agreement that was agreed to by the arbitrating parties,” it told the news agency. “The 1MDB group issued US$3.5 billion of notes to various noteholders for which IPIC has given guarantees to those noteholders. As issuer, the 1MDB group has the primary liability to pay the noteholders regular interest coupons and to repay the principal amount at maturity.”

Related Articles by Firm
Clasis Law (India) Newsletter August 2015
Analysis of the revocation of a company's drug patent and other key court rulings and updates on corporate and commercial matters
Foreign Banks Allowed to Operate in Myanmar
After more than 50 years of banning, the Central Bank of Myanmar has issued the first final licenses allowing four foreign banks to operate in Myanmar.
Tanzanian Draft National Energy Policy of 2015
Highlights on the ongoing and upcoming industry developments with focus on the transition of the energy sector since the introduction of the Big Results Now! campaign
Mineral Rights Available in Tanzania
Overview of the mineral rights available in Tanzania, with specific focus on the various categories of mineral rights
The Legal Framework of the Aviation Sector in Tanzania
As attention turns to Tanzania’s trade and energy opportunities, the spotlight has fallen upon the nation’s infrastructure. This update focuses on the capabilities and issues of the Tanzanian aviation sector.
Oil price volatility - Offshore oil storage
Are there any legal concerns with tankers being used for floating storage?
Oil price volatility - risks and opportunities in 2015
While many companies can weather the oil price slide and volatility, some industry players face a real risk of insolvency.
India: Union Budget 2015
A bullet-point overview of changes in Direct Tax, Indirect Tax and Goods and Service Tax in India in light of Finance Minister Arun Jaitley’s first full-year Budget…
Prohibition against transfer of personal data outside Hong Kong
Section 33 of the Personal Data (Privacy) Ordinance (PDPO) prohibits the transfer of personal data to places outside Hong Kong, except in circumstances specified in the PDPO.
Security of payment under FIDIC contracts: more secure, for now
The High Court of Singapore recently handed down an important judgment in relation to the enforceability of Dispute Adjudication Board (DAB) decisions under the FIDIC forms of contract.
Insurance Laws (Amendment) Bill passed as Ordinance in India
The long-awaited Insurance Laws (Amendment) Bill has become a provisional law in India. The Bill amends the Insurance Act (1938), the General Insurance Business (Naturalisation) Act (1972), and the Insurance Regulatory and Development Act (1999).
SICC: now open for business
On Monday 5 January 2015, the Singapore International Commercial Court ("SICC") was officially opened...
Myanmar insurance update
Clyde & Co partner Michael Horn recently visited Myanmar's commercial capital Yangon and reports on the current state of the insurance market...
Launch of the online mining cadastre transactional portal
Plus, a summary of the key mineral rights available in Tanzania; and, a look at the manner in which mineral rights can be transferred.
Restrictions imposed on holders of mineral rights
This briefing looks at some of the restrictions imposed on holders of mineral rights in Tanzania by the Mining Act 2010
Draft local content policy for the oil & gas industry in Tanzania
The first draft of the long-awaited local content policy for the oil & gas industry in Tanzania has now been published by the Ministry of Energy and Minerals ...
Tanzania: Revocation of mining licences
The Tanzanian government recently announced the cancellation of a total of 174 mining licences. This mining update examines the key continuing obligations imposed by the Mining Act upon mining licence holders.
Mining Development Agreements
In this month’s mining briefing we look at Mining Development Agreements (MDAs) and the role that they play in the mining sector in Tanzania.
The Tanzanian railway system: current legal framework
The railway system of mainland Tanzania has a total track length of 3,676 kilometers (km) with two separate networks, run by two separate organisations ...
Related Articles
Hong Kong targets foreign lawyers
The Law Society wants to crack down on non-local lawyers advising on Hong Kong matters “through the back door”.
IMF Bentham wins Singapore third-party funding agreement
Litigation funding has taken a step forward after a court ruled to allow a commercial funding arrangement to proceed.
CLOC holds its first gathering in Australia
The role of legal operations manager is an emerging one in Australia...
Related Articles by Jurisdiction
Latest Articles
Print Edition Subscription Form – Asian-mena Counsel
Asian-mena Counsel Print Edition Subscription Form
Creating an effective fintech IP strategy
Revised guidelines could provide opportunities to protect technology in this rapidly developing sector.
Significant precedents from the DIFC courts
Afridi & Angell successfully defended an anti-suit injunction, an application to exclude evidence and obtained a document production order.