The Court of Appeal in London handed down a judgment on Tuesday that injuncted an international arbitration related to the 1MDB scandal and moved the process to public court.

The judgment represents a victory for Malaysia as it seeks to recover money lost as a result of the scandal. The case arises out of allegations that a US$3.5 billion fraud was carried out against the Malaysian state-owned investment fund, conducted through a settlement agreement between 1MDB and Abu Dhabi sovereign fund IPIC.

“This is a significant judgment, which addresses the nature and scope of court powers and safeguards with respect to international arbitration,” said Toby Landau, member of Essex Court Chambers, who represented 1MDB and Malaysia’s finance ministry, and was instructed by Eversheds Sutherland.

Malaysia had previously applied to set aside the consent award alleging that it was part and parcel of the fraud, which prompted a new arbitration seeking declaratory relief that the settlement was valid. In response, Malaysia sought an anti-arbitration injunction.

At first instance, the judge refused the application for an injunction and instead stayed the English court proceedings on case management grounds to allow the arbitration to proceed first.

Yesterday’s judgment reverses the judge’s findings in all respects, lifting the stay on the English court proceedings so that the matter will now be heard in court instead of a confidential process. It also injuncts the arbitration from proceeding in the meantime.

“Through this judgment the Court of Appeal has clarified the extent to which parties may contract out of or avoid court supervision of arbitral awards, and conceal international transactions from public scrutiny,” said Landau. “In the context of an alleged multi-jurisdictional and multi-billion dollar fraud, this judgment defines the essential role of the court, and the fundamental safeguards that cannot be eliminated by private arrangements between the parties involved.”

Mark Howard of Brick Court Chambers, instructed by Clifford Chance, represented IPIC as the respondents.

“Neither the English court proceedings nor the arbitration proceedings have reached a stage at which any of the issues in the underlying disputes have been decided,” Clifford Chance said in a statement.

Related Articles by Firm
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
Nominations open for In-House Community Counsels of the Year Awards 2020
The In-House Community is now canvassing nominations for our fourth Counsels of the Year Awards ...
EY poaches LOD’s John Knox
The Lawyers on Demand co-founder joins as Asia-Pacific legal managed services leader.
Singapore firms merge to create PK Wong & Nair
Boutique dispute resolution and insolvency practice Nair & Co has merged with mid-sized firm PK Wong & Associates.
Related Articles by Jurisdiction
Latest Articles
DIFC Workplace Savings Scheme (with effect from 1 February 2020)
The Amendment introduces a new mandatory workplace savings scheme, which replaces the current end-of- service gratuity regime.
New KPPU regulation on merger filings
Simplification yet some clarity is needed.