x Abu Dhabi, UAE Friday 21 July 2017

US court rejects Adia bid to overturn ruling to recover $4bn in damages from Citigroup

A Manhattan federal judge on Monday rejected a bid by the Abu Dhabi Investment Authority to overturn an arbitration panel's ruling favouring Citigroup in a dispute over a US$7.5 billion investment by the fund in the bank.

A Manhattan federal judge has rejected a bid by the Abu Dhabi Investment Authority (Adia) to overturn an arbitration panel's ruling favouring Citigroup in a dispute over a US$7.5 billion (Dh27.5bn) investment by the fund in the bank.

The US district judge George Daniels on Monday rejected arguments that the October 2011 ruling by an American Arbitration Association panel, which reviews international disputes, ignored applicable law and was "fundamentally unfair" by depriving the Abu Dhabi sovereign wealth fund of a chance to properly present its case.

Adia had sought to rescind the November 2007 investment, or recover $4bn in damages over what it called Citigroup's fraudulent representations to induce it to invest.

David Elsberg, a partner at the US law firm Quinn Emanuel Urquhart and Sullivan, representing Adia, did not immediately respond to a request for comment.

Shannon Bell, a Citigroup spokeswoman, said the bank was pleased with the decision

The $7.5bn investment had given the Abu Dhabi fund a 4.9 per cent stake in Citigroup, enabling it to surpass Prince Al Waleed bin Talal of Saudi Arabia as the largest individual shareholder.

Citigroup also accepted other investments around that time to shore up its capital base, in the wake of billions of dollars of writedowns linked to subprime mortgages.

It nonetheless ultimately required a series of federal bailouts, which it has since repaid.

Mr Daniels said the three-person arbitration panel neither was "guilty of misconduct" nor acted in "manifest disregard" of the law, citing standards of proof he said could justify throwing out an award under the Federal Arbitration Act.

He noted that the panel had listened to 24 witnesses over 16 days and accepted 5,988 exhibits in reviewing the case against the third-largest US bank.

Citigroup shares trade at a little over one-tenth of their level when Adia made its investment, after accounting for a reverse stock split.

 

* Reuters