PUTRAJAYA (June 10): 1Malaysia Development Bhd (1MDB) urged the Court of Appeal on Wednesday to uphold the High Court ruling that Malaysia is the right venue to hear the company's lawsuit against UK law firm White & Case LLP as the dispute concerns a Malaysian-centred fraud involving the misappropriation of US$1.83 billion (RM7.4 billion).

1MDB's lawyer Datuk Lim Chee Wee submitted to the appellate court that its case against the law firm for conspiracy to injure by unlawful means and dishonest assistance, should be tried by Malaysian judges applying Malaysian law.

“White and Case drafted 11 documents connected to the Good Star phase of the 1MDB fraud, which allegedly facilitated and concealed the diversion of US$1.83 billion from the sovereign investment company,” Lim said.

He said that while some of the documents involving the diversion had been executed in London, the instructions, negotiations, execution of documents, payment of funds and resulting losses were closely connected to Malaysia.

“The majority of material witnesses are located in Malaysia. So, too, are some related proceedings arising from the same fraudulent scheme,” the lawyer said.

Lim further submitted that White and Case's alleged role extended beyond drafting ordinary legal documents.

According to 1MDB, White and Case prepared transaction documents relating to the 2009 PetroSaudi joint venture and the subsequent 2010 restructuring, which the Malaysian investment company claims enabled the diversion of funds to Good Star and concealed the true nature of the transactions.

1MDB has alleged that US$700 million of its US$1 billion investment in the 2009 joint venture was diverted to Good Star, leaving only US$300 million within the joint venture vehicle.

It also claimed that subsequent restructuring documents facilitated further drawdowns and transfers involving hundreds of millions of US dollars.

Lim submitted that the High Court had correctly held that the Malaysian courts possessed extra-territorial jurisdiction under Section 23(1) of the Courts of Judicature Act 1964 (CJA), while Order 11 of the Rules of Court 2012 (ROC) merely governed the procedural mechanism for service out of jurisdiction.

“We are not shutting down the plaintiff (1MDB). We only want the matter to be heard in London,” he submitted in the firm’s appeal to set aside a High Court ruling that Malaysia is the proper forum for the case.

White & Case's lawyer Datuk Cyrus Das, in his submission at the Court of Appel, stressed that 1MDB's case should be tried in London as the cause of action arose in the UK.

Insisting that the law firm was not trying to avoid the suit, he submitted that Malaysia was not the suited venue for the trial because it was grossly unfair for the trial to proceed against a foreign defendant without a proper basis.

In rebutting Lim’s submissions on White & Case's involvement in the matter, Das said the law firm merely drafted share sale and loan agreements for two companies belonging to its client in London between 2009 and 2010.

He questioned why White & Case should be liable for the conduct of its client.

Das further submitted that the claim was time barred under the six-year limitation period. He said 1MDB has had knowledge of the fraud since 2015.

“The directors in 1MDB are the controlling mind, they knew about the US$700 million being transferred to GoodStar as early as 2009,” he said.

The lawyer said news reports and the US Department of Justice investigations into 1MDB in 2015 would also mean that 1MDB had known about this since 2015.

Lawyer Elizabeth Lau, submitting as Lim’s co- counsel for 1MDB, submitted that the limitation issue should be determined at trial.

Lau argued that 1MDB, being an artificial legal entity, did not have a mind of its own and that knowledge of the wrongdoing could not be attributed to it.

In the suit filed in 2024, 1MDB is claiming US$1.83 billion and US$33 million in losses from White & Case and PetroSaudi International director Patrick Mahony.

1MDB is claiming that White & Case helped PetroSaudi commit fraud and conspired to harm 1MDB while acting as its lawyers.

The alleged fraud involved two corporate deals during the 2009 joint venture with PetroSaudi International — the Good Star phase — and the restructuring of 1MDB’s stake in the 2010 joint venture, which 1MDB says caused it financial losses.

The writ for the suit was served out of jurisdiction to White & Case in the UK, and the firm challenged whether 1MDB has the jurisdiction to hear the suit in Malaysia.

The Court of Appeal bench comprises judges Datuk Alwi Abdul Wahab, Datuk Aliza Sulaiman and K Muniandy.

The bench reserved judgment after hearing submissions from both sides and set June 15 for case management.

The High Court had earlier this year denied White and Case's jurisdictional challenge, saying Malaysia is the proper forum to hear the suit.

Judge Leong Wai Hong in his ruling noted that the challenge was akin to a football match between Liverpool and Manchester United in which Liverpool insists on playing only at Anfield, while Manchester United insists on playing only at Old Trafford.

Leong, in his 50-odd page judgment, noted that much had changed due to globalisation where funds can now move easily across jurisdictions, but Malaysia is the forum for the case.

“This is the correct approach. In my view, Malaysia is the forum that has real and substantial connections with the suit. 1MDB is incorporated in Malaysia and is a state-owned entity of the federal government of Malaysia.”

“1MDB’s monies in Malaysia were misappropriated and siphoned out from 1MDB’s accounts in Malaysia. 1MDB suffered the loss in Malaysia," he noted, adding that the main players in the alleged fraud were also Malaysians.