The public still can’t read a sealed 84-page arbitration decision from last October rejecting claims that Citigroup Inc. should pay for the Abu Dhabi Investment Authority’s disastrous $7.5 billion investment in the bank at the height of the subprime meltdown. But a heavily redacted motion filed Wednesday provides some new insight into how ADIA’s lawyers at Quinn Emanuel Urqhart & Sullivan hope to revive their client’s claims.
In a 30-page brief filed in Manhattan federal district court, ADIA’s lawyers argued that the arbitration panel was wrong to use New York law rather than the law of Abu Dhabi in deciding to toss ADIA’s claims. The International Center for Dispute Resolution tribunal also denied ADIA’s bid to compel discovery of a Citigroup whistleblower who had testified before Congress, and rejected a motion to compel production of bank examiner reports, according to ADIA’s lawyers.
“Here, the tribunal’s pre-hearing rulings violated ‘fundamental fairness’ by forcing ADIA to satisfy legal standards which the tribunal knew were not properly applicable to its tort claims and by denying ADIA the right to discover certain highly relevant evidence,” Wednesday’s brief asserts.
ADIA counsel Peter Calamari of Quinn Emanuel did not respond to an e-mail seeking comment on the motion. Citi counsel Brad Karp of Paul, Weiss, Rifkind, Wharton & Garrison did not respond to a request for comment, while a Citi spokeswoman said the bank continues “to find the claims without merit and expect that the panel’s decision will be upheld on appeal.” In an answer filed with the court Feb. 9, Citigroup said “there is no basis” for Manhattan federal district court judge George Daniels to determine that the panel manifestly disregarded the law or denied ADIA a fair hearing.
Judge Daniels ordered much of the case unsealed last month in response to arguments by The American Lawyer that the public has an interest in the proceedings. But after receiving undocketed letters from ADIA and Citigroup regarding the confidentiality of the arbitration award, Judge Daniels allowed the parties to file the award under seal and redact any references to it. (Here’s the judge’s brief Feb. 9 order.) The American Lawyer renewed its request that the award be unsealed in a letter to the court on Thursday.
Among the records that are now filed publicly in the case is a redacted version of ADIA’s December 2009 statement of claim in the arbitration. ADIA sought recision of its $7.5 billion investment based on Citi’s alleged fraudulent misrepresentations and breaches of the fund’s November 2007 investment agreement. ADIA claimed that Citi’s representations that the bank would not seek more capital were “critical” to agreeing to convert an investment into common stock at a given rate.
Also made public Wednesday is a Dec. 31, 2010 pre-hearing order by the arbitration tribunal determining that panel would follow New York law. “While ADIA’s contention that Abu Dhabi’s interests are significant is a reasonable one, when we view all relevant facts in the context of what we see as New York’s significant interest in regulating New-York-based conduct of financial institutions in transactions of this kind, we conclude that New York’s interests are, on balance, more significant than Abu Dhabi’s,” wrote arbitrator Jonathan Marks.
The order added that given the way ADIA structured its fraud claims, “no basis” existed to conclude that the claims were governed by Abu Dhabi law. Among other factors, Marks wrote that ADIA alleged “common law and securities fraud” and “negligent misrepresentation,” yet Abu Dhabi “is a civil law jurisdiction that neither recognizes ‘common-law’ claims nor the tort of negligent misrepresentation.”