Aluminium Bahrain Must Arbitrate in Alcoa Bribery Case

Aluminium Bahrain BSC, Bahrain’s state-owned aluminum producer known as Alba, was ordered to arbitrate claims against Canadian businessman Victor Dahdaleh over his alleged role in a bribery scheme involving Alcoa Inc.

U.S. District Judge Donetta Ambrose in Pittsburgh yesterday granted Dahdaleh’s request to dismiss Alba’s 2008 lawsuit and compel arbitration. Alba had sued New York-based Alcoa claiming the company bribed senior officials in Bahrain, causing Alba to overpay $500 million for raw materials.

Contracts from 1990 and 2005 between Alba and Alcoa subsidiaries“contain clauses requiring arbitration” and, as an “agent,” Dahdaleh could enforce the arbitration agreements, Ambrose said in the ruling.

Alcoa, the largest U.S. aluminum producer, last year agreed to pay $85 million in cash and enter into a long-term alumina contract with Alba to settle the suit. Alba said in 2012 that the settlement was valued at $447 million.

Alba continued its case against Dahdaleh, who was charged by U.K. authorities with making corrupt payments, money laundering and conspiracy for bribing Alba officials to win contracts for Alcoa. The U.K. case collapsed in December.

In January, Alcoa agreed to pay $384 million to resolve U.S. criminal and civil probes related to bribery allegations in Bahrain. Its Alcoa World Alumina LLC, a majority-owned unit that supplies raw materials used by smelters to make aluminum, pleaded guilty to violating the Foreign Corrupt Practices Act, which allows the U.S. to prosecute bribery overseas.

The case is Aluminium Bahrain BSC v. Dahdaleh, 8-cv-00299, U.S. District Court, Western District of Pennsylvania (Pittsburgh).

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