x Abu Dhabi, UAESaturday 22 July 2017

Abu Dhabi Investment Authority in New York court defeat

It was the latest setback in Adia's legal claim against Citigroup.

Abu Dhabi Investment Authority (Adia) has suffered another setback in its legal battle over its investment in Citigroup.

An appeals court in New York on Wednesday dismissed Adia’s attempt to nullify an arbitration award in Citigroup’s favour from October 2011.

Adia had appealed the court’s decision in March not to dismiss the arbitration award.

The court’s summary order said that Adia had failed to meet the “high hurdle” of showing that the arbitration panel either exceeded their powers or had showed a “manifest disregard for the law” in ruling in Citigroup’s favour in the arbitration proceedings.

The dispute was centred on Adia’s US$7.5 billion investment in Citigroup in 2007. Under the terms of the agreement, the investment was to be converted into Citigroup common stock on four dates between March 2010 and September 2011.

Adia launched arbitration proceedings against Citigroup in December 2009, claiming that its investment was diluted when the bank issued preferred shares – later converted to common stock – to other investors on more favourable terms than those given to Adia.

Adia asserted claims of common law fraud, securities fraud, negligent misrepresentation, breach of fiduciary duty, breach of contract, breach of the implied covenant of good faith and fair dealing, and sought damages.

The authority’s claims were rejected completely by the arbitration panel in October 2011.

Adia subsequently launched a second round of arbitration proceedings against Citigroup in August, seeking $2bn in damages.

A New York judge in November refused Citigroup’s attempt to halt the new arbitration proceedings, stating that was up to arbitrators, rather than the courts, to rule on the validity of the new proceedings.

An Adia spokesman declined to comment. Citigroup did not respond to requests for comment.

jeverington@thenational.ae