Citigroup arbitration win over ADIA upheld
Last month, A US appeals court rejected the Abu Dhabi Investment Authority’s effort to void Citigroup Inc’s arbitration win in a dispute over USD7.5 bliion investment in the bank less than a year before the 2008 financial crisis, according to online reports. The 2nd US Circuit Court of Appeals in New York said the sovereign wealth fund did not meet the “high hurdle” of showing that an American Arbitration Association Panel demonstrated a “manifest disregard of the law” or exceeded its powers in ruling for Citigroup. The ADIA’s November 2007 investment was designed to shore up Citigroup as it struggled with mounting losses linked to subprime mortgages, and gave the fund a 4.9 per cent stake in what was at the time the largest US bank by assets. But after ADIS later claimed that the New York-based Citigroup fraudulently induced its investment, in part by issuing preferred shares to other investors that diluted its stake. The decision is separate from the ADIA’s effort to pursue a second arbitration again Citigroup, in which it sought USD2 billion of damages or to rescind its investment.
