Citigroup arbitration win in $4 billion Abu Dhabi case upheld

Mon Mar 4, 2013 7:26pm EST
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By Jonathan Stempel and Nate Raymond

(Reuters) - A Manhattan federal judge on Monday rejected a bid by the Abu Dhabi Investment Authority to overturn an arbitration panel's ruling favoring Citigroup Inc (C.N: Quote) in a dispute over a $7.5 billion investment by the fund in the bank.

U.S. District Judge George Daniels 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 fund of a chance to properly present its case.

The sovereign wealth fund had sought to rescind the November 2007 investment, or recover $4 billion in damages over what it called Citigroup's fraudulent representations to induce it to invest.

David Elsberg, a partner at Quinn Emanuel Urquhart and Sullivan representing the Abu Dhabi fund, did not immediately respond to a request for comment.

Citigroup spokeswoman Shannon Bell said the bank is pleased with the decision

The $7.5 billion investment had given the Abu Dhabi fund a 4.9 percent stake in Citigroup, enabling it to surpass Saudi Prince Alwaleed bin Talal 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.   Continued...

A Citi sign is seen at the Citigroup stall on the floor of the New York Stock Exchange, October 16, 2012. REUTERS/Brendan McDermid