Citi v Abu Dhabi – Will it Ever End?

The dogfight over the mid-crisis bailout has entered its sixth year.

(January 13, 2014) -- Two of the largest financial institutions in the world may again be heading back to court as one of the most toughly fought battles since the financial crisis began looks set for another round.

On December 23 last year, Citigroup lodged an appeal against a decision that had been handed down on November 26. This decision had gone against the bank, which had appealed against a previous decision to dismiss an earlier claim and compelled arbitration between it and the Abu Dhabi Investment Authority (ADIA).

Citi had lodged the appeal to the United States Courts of Appeals for the Second Circuit, according to publically available documents. There has been no published indication as to whether this appeal has been granted.

The case has now entered its sixth year, and for the last two years has seen the two parties locked in an appeal and counter-appeal dogfight.

ADIA initially claimed in late 2009 that its November 2007 investment of $7.5 billion into Citigroup was based on fraudulent statements by the US bank. At the time, Citigroup battled record losses tied to subprime mortgages. If the investment was unable to be canceled, the Abu Dhabi fund said it would seek $4 billion in damages. Meanwhile, the bank had asserted that the suit lacked merit, promising to "vigorously" defend itself.

Several attempts at arbitration since 2009 have seen independent specialists brought on board to try and settle the argument between the two parties. However, much of these events have seen more information coming to light and led to even more financial damage being claimed by the sovereign wealth fund.

At different points, each side had thought to be been successful in its claims, only to be thwarted by the other side with an appeal.

In 2013 alone, some 46 separate incidents—with swathes of legal documentation attached—were lodged with the US courts by the two parties, with no apparent closure possible.

The case continues.

Spokespeople from Citi and ADIA declined to comment.

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