LONDON: The Aljomaih Group of Saudi Arabia, an investor in the Infrastructure Growth Capital Fund (IGCF Fund), has filed legal proceedings in Pakistan against Infrastructure Growth Capital Fund General Partner (IGCF GP) to enforce an arbitration award issued by the London Court of International Arbitration (LCIA).
This action is initiated under the New York Convention, which deals with the recognition and execution of foreign arbitral rulings and is signed by over 150 nations, including Pakistan.
Aljomaih Group is seeking redress in the High Court of Sindh under Section 6 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act of 2011.
As reported in The News and Geo News last week, the arbitration award that prompted the Enforcement Order stemmed from LCIA and the Grand Court of Cayman Islands findings that the IGCF GP breached its statutory and contractual duties to a Limited Partner (investor) in the IGCF Fund, White Crystals Ltd (WCL), a subsidiary of the Kingdom of Saudi Arabia’s Aljomaih Group. Concerns were raised about Mr Shaheryar Chishty allegedly gaining control of IGCF GP and the Fund subsidiaries to serve his own interests rather than those of WCL and a pool of over eighty other Limited Partners (investors) from all over the world, raising serious concerns about breach of fiduciary duties.
The LCIA panel determined that White Crystals’ worries regarding these things were genuine, and ordered that the books and documents be turned over within five days of the award. It dismissed IGCF GP’s argument that White Crystals was being used as a “cypher” to acquire information for use by third parties in separate litigation.
According to a copy of the LCIA Award received by this reporter, the arbitral tribunal ruled that WCL’s objections are valid.
According to the ruling from the LCIA, “It was disclosed by the GP in its annual report to the Limited Partners that in July 2022 just before the takeover by Sage the GP had entered into a loan facility for up to $4 millions.” Furthermore, it added:”The interest rate was mentioned in the report to be 15% payable and compounded monthly. This rate of interest was later corrected to 15% per year compounded monthly by its defence in this arbitration, but an examination of the actual agreement in this arbitration reveals that the actual rate was 20% per year if the loan was paid up before the end of the first year, but increasing by steps each year to reach an alarming 60% per year (all compounded monthly) if not paid off until the end of the fourth year. AsiaPak was given a charge over all of the Fund’s remaining assets as security for the loan.
The LCIA Award states: “The transaction is potentially a loan facility prohibited by the terms of the LP Deed and is described in the Fund’s accounts as a related party transaction that, under the terms of the LP Deed, requires the consent of the “Advisory Board,” which appears not to have been obtained.
“In 2021, the Fund sold a significant holding in this company for a sum in Pakistani rupees equivalent to $66 million.” It further added: “However, it appears that since the takeover by Chishty, the money has been moved from bank to bank and has ended up in a bank account in the name of one of Chishty’s companies pursuant to some sort of “escrow” arrangement.
