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US court overturns Algosiabi dispute ruling

Manama, September 27, 2012

A ruling that a dispute involving Ahmad Hamad Algosaibi and Brothers Company (AHAB), Maan Al Sanea and Mashreq Bank could not be heard in a New York court has been overturned by the state's appeal court, a report said.

Mashreq sued AHAB in 2009 over a $150 million uncompleted foreign exchange transaction, said the report in Gulf Daily News, our sister newspaper.

AHAB brought a third party claim against Maan Al Sanea, asserting the funds to complete the transaction had been stolen by him from AHAB's New York bank account, and counterclaimed against Mashreq for knowingly assisting Al Sanea's Ponzi scheme.

The Algosaibi family claims Mr Al Sanea defrauded them of billions of dollars after he was put in charge of their financial affairs.

The 2009 collapse of Al Sanea's Awal Bank and Algosaibi's International Banking Corporation, both based in Bahrain, left more than 100 banks owed an estimated $22 billion.

The previous ruling dismissed the case on grounds of "forum non conveniens," suggesting that the dispute should be tried in Saudi Arabia or elsewhere in the Middle East.

"New York has a compelling interest in adjudicating controversies that implicate its pre-eminent position in the international banking system, and in any event, (Maan Al Sanea) failed to demonstrate New York is an inconvenient forum," appeal court justice James M Catterson said in a majority ruling yesterday (September 26).

"We are pleased that the appellate court has recognised the critical role of New York courts in massive international frauds that use the US banking system," said AHAB chief legal co-ordinator Eric Lewis.

"In today's world, frauds can involve numerous countries, none of which may have the resources or critical involvement to investigate.

"The US financial system must be a backstop against fraud," he said.

"Foreign parties should not be allowed to use New York banks to perpetuate massive financial frauds, and escape scrutiny simply by engineering the wrongdoing from outside the country," he added.

Although Al Sanea has repeatedly issued public statements rejecting AHAB's charges, to date he has declined to submit any defence to AHAB's claims in court.

On June 13, the Grand Court of the Cayman Islands issued an interim payment order in favour of AHAB against Mr Al Sanea for $2.5 billion.

The interim payment order reflects the Cayman Court's prediction that AHAB will be entitled to recover at least $2.5 billion from Al Sanea, and AHAB has indicated that they will undertake final quantification at the end of the case on the full $9.2 billion claim. – TradeArabia News Service




Tags: Mashreq | New York | dispute | Algosaibi | court case | Al Sanea |

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