Lender loses $250m court appeal

A Dubai court has ordered the National Bank of Umm Al Qaiwain to return US$250 million (Dh918.2m), plus interest, to Kuwait's Global Investment House in a dispute over a cancelled investment.

The decision yesterday was the second by Dubai's Commercial Court in favour of Global, which restructured $1.7 billion of debt in December 2009.

The case stems from a 2008 deal where Global agreed to buy bonds from NBQ that converted into shares in the bank, which is listed on the Abu Dhabi Securities Exchange. Global placed a deposit of $250m with NBQ in August that year, according to a statement from the Kuwaiti investment bank.

But the onset of the financial crisis forced a cancellation and Global asked for its money back. NBQ refused, and Global sued in Dubai to recover the funds.

Global won an initial judgment last July. Bader al Sumait, the chief executive of Global, said then the money would be used to "strengthen the company's liquidity position" and "repay the company's restructured debt".

NBQ and Global appealed that decision, but the Dubai courts ruled again in Global's favour yesterday, ordering the return of the deposit plus interest, which a Global official said would be about $54.6m.

"The honourable court ordered NBQ to repay to Global Investment House $250m towards the refund of a deposit placed by the company with the Dubai branch of this bank in August 2008, plus interest at the rate of 9 per cent with effect from December 3, 2008 till the date of repayment plus expenses," Global said.

"Till the date of this verdict, the due and unpaid interest amounts to approximately $54.6m."

The court also "rejected all the counter-claims made by NBQ", Global said. NBQ could not be reached for comment.

"We are grateful for the justice granted by the honourable court and are pleased to state that recovery of this long overdue deposit along with interests will strengthen the company's financial position," said Maha al Ghunaim, the chairwoman and managing director of Global.

Global had asked on Sunday for its shares to be suspended on the Kuwait Stock Exchange and other regional stock markets where its shares are listed - in Dubai and Bahrain - pending the outcome of the case.

The company said it had asked for the suspension in the interest of transparency and "to avoid any misuse of such sensitive information prior to the official disclosure by the company". The shares are expected to resume trading today, Global said.

The ruling comes as Global chips away at debts amassed during the boom in financial markets. The company made its first scheduled payments on its restructured debt last year and narrowed its full-year losses to 73.2m dinars (Dh974.1m), compared with a 148.8m dinar loss in 2009.

Global's shareholders are set to vote this week on a proposal to cancel a previously announced capital rise originally meant to solidify its financial position following recent losses. Global's shares last traded at 41.5 dinars in Kuwait on Sunday before the suspension, a rise of 3.75 per cent from the previous close.

NBQ shares are thinly traded. They last changed hands at Dh1.92 on Thursday.

afitch@thenational.ae