A Malaysian state-owned energy company, Petronas Azerbaijan, has taken legal action against UK-based funder Therium Capital Management over alleged misconduct in an ongoing leasing dispute. On Tuesday, Petronas asked a federal court in Manhattan to compel Therium to produce subpoenaed financial documents and communications. Petronas intends to sue Therium and its lawyers in Spain, seeking redress for asset seizures in Luxembourg.
The core dispute traces back to descendants of a sultan from the region now known as Sabah. The descendants claim Malaysia breached a decades-old contract related to annual lease payments. After Malaysia ceased these payments in 2013, the claimants filed for arbitration in Spain, eventually obtaining a $14.9 billion award from Spanish arbitrator Gonzalo Stampa. Stampa was later found guilty of related criminal charges, complicating the enforcement of his award.
Therium has financially backed the claimants, investing $20 million since 2017 across nine rounds of funding, as reported by Reuters. Controversy surrounding the arbitration intensified when the Malaysian state energy company, Petronas, faced asset seizures in Luxembourg initiated by the claimants. Although the first enforcement was set aside, subsequent enforcement actions remain pending.
Petronas contends that Therium, along with the claimants and their lawyers, acted with “willful negligence” by disregarding the Madrid High Court’s revocation of Stampa’s authority. The ongoing dispute underscores significant challenges in cross-border arbitration enforcement, especially when the arbitrator’s conduct is under scrutiny.
For further details, the full story is available on Bloomberg Law.