Citigroup Arbitration Win Over Abu Dhabi Investment Uphel

Abu Dhabi Investment Authority failed to persuade a U.S. appeals court to overturn an arbitration decision in favor of Citigroup Inc. in a dispute over a $7.5 billion investment in the bank in 2007.

The sovereign investment authority couldn’t meet a “high hurdle” needed to vacate the arbitration award, even though it alleged the wrong law was applied to its case, the U.S. Court of Appeals in New York said today in its ruling.

The investment by the Abu Dhabi government-owned authority allowed Citigroup to replenish capital after record mortgage losses wiped out almost half its market value in 2007. The investment authority suffered losses as the financial crisis eroded the value of its holdings.

The underlying decision by the arbitrators isn’t public.

The appeals court panel “looked to two relevant bodies of law, and applied those legal standards to the facts, to decide the question,” the court said.

“We’re pleased with the Court of Appeals’ decision,” said Mark Costiglio, a spokesman for the New York-based bank.

Sanford Weisburst, a lawyer for the investment authority, declined to comment on the ruling.

Abu Dhabi sought to bring Citigroup into a another, separate arbitration over the investment. A Manhattan federal judge in November rejected Citigroup’s request to stop that proceeding and said the matter of whether it can be brought should be left up to a panel of arbitrators, not the court. Citigroup appealed that decision.

The case is Abu Dhabi Investment Authority v. Citigroup Inc., 13-1068, U.S. Court of Appeals for the Second Circuit (Manhattan).

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