High Court rules Malaysia has jurisdiction over 1MDB’s US$1.86b suit against UK law firm, bins challenge
“The world has changed much due to globalisation. Fraudsters nowadays operate from multiple jurisdictions. Funds can now move easily across jurisdictions with a single click or tap via digital platforms. The courts too must move with the times. This is particularly so if the elements of the cause of action took place in multiple jurisdictions as is the case before me.” — Judge Leong Wai Hong
KUALA LUMPUR (Feb 16): The High Court has decided it can hear the lawsuit filed by 1Malaysia Development Bhd (1MDB) against UK law firm White & Case, dismissing the latter’s jurisdiction challenge.
The 1MDB suit filed in 2024 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.
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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 also rejected White & Case’s request for a stay in the case.
Judge Leong Wai Hong, who last month wrote the judgment sighted by The Edge in dismissing White & Case challenge, likened it to a football match.
“This (challenge) is 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.
“The courts too must move with the times. This is particularly so if the elements of the cause of action allegedly took place in multiple jurisdictions, as is alleged here by 1MDB. The trend now is to move to a pragmatic interpretation of the ‘gateways to jurisdiction’.
‘Gateways to jurisdiction’ is now the preferred terminology replacing the earlier term “Heads of jurisdiction”, he said in citing the book Civil Jurisdictions and Judgments by Adrian Briggs.
Leong said that calling service outside the country “exorbitant jurisdiction” represents a traditional characterisation. In the past, serving legal papers abroad was seen as a country trying to assert power over a foreign party and interfering with another country’s sovereignty.
“This is no longer a realistic view. The decision now should be based on a pragmatic one in the interests of the efficient conduct of litigation in an appropriate forum.”
“The world has changed much due to globalisation. Fraudsters nowadays operate from multiple jurisdictions. Funds can now move easily across jurisdictions with a single click or tap via digital platforms. The courts too must move with the times. This is particularly so if the elements of the cause of action took place in multiple jurisdictions as is the case before me.”
Why does Malaysia have jurisdiction?
Leong said the High Court, under Section 23 of the Courts of Judicature Act (CJA), may exercise jurisdiction over a non-resident defendant under either of three categories namely; personal service within the jurisdiction; where any of the conditions set out in the section are satisfied; and where a plaintiff is able to obtain leave of court to serve a defendant who is outside the jurisdiction of the court under Order 11 Rules of Court (ROC).
He said the court had already given 1MDB permission to serve the lawsuit outside Malaysia.
Once the court has jurisdiction under Section 23(1) of the CJA, Order 11 of the Rules of Court is no longer about deciding jurisdiction — it is simply a procedure to allow 1MDB to serve the documents abroad.
“I am of the view 1MDB’s cause of action for dishonest assistance and conspiracy to injure against White & Case falls within Section 23(1)(a) of the CJA [where the cause of action arose] for the following reasons namely 1MDB, is a company incorporated in Malaysia.
“The key players in the fraud committed against 1MDB are alleged to be (Datuk Seri) Najib Razak, Casey Tang and other rogue officers of 1MDB who are all Malaysians. White & Case is alleged to have dishonestly assisted Najib and Tang in each of their breaches of fiduciary duty and/ or breaches of trust owed to 1MDB in Malaysia by providing the legal documentation to be used in Malaysia; and the fraud’s centre of gravity is Malaysia,” he reasoned.
Conspiracy in three jurisdictions
Leong said the alleged conspiracy happened in three countries: Malaysia, the UK and Switzerland, where the money was transferred.
He said 1MDB’s claim for the tort of conspiracy to injure by White & Case is that the law firm had conspired with various other wrongdoers such as Najib, Jho Low, Tang, Kelvin Tan, Vincent Goh, Tarek Obaid and the PetroSaudi entities in Malaysia.
1MDB, as the victim company, is incorporated in Malaysia and the key players in the purported fraud committed are all Malaysians who have entered appearances in another suit 337.
Suit 337 refers to 1MDB and its four subsidiaries’ US$8 billion lawsuit against Najib and other former executives of the strategic development company. The lawsuit claims the defendants, with Najib as chairman of the advisory board, used sham agreements to create complex money trails to misappropriate 1MDB funds.
“The co-conspirators Tarek Obaid, PetroSaudi International and PetroSaudi Holdings (Cayman) Ltd have submitted to the jurisdiction of the Malaysian courts and have entered appearances in suit 337 and the loss is suffered by 1MDB in Malaysia and the fraud’s centre of gravity in Malaysia.”
The judge noted that the issue of whether 1MDB’s suit against White & Case is time-barred is to be decided during trial. He also said if White & Case believe it were wrongly included or that there’s no valid claim, the firm can apply to have the case thrown out under Order 18 Rule 19 of the Rules of Court.
“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. The main players in the alleged fraud such as Najib, Tang, Kelvin and Vincent are Malaysians and the alleged conspiratorial acts took place in Malaysia.”
For these reasons, Leong dismissed White & Case challenge with RM75,000 costs.
White & Case was represented by Christopher Leong of Messrs Chooi & Co while Datuk Lim Chee Wee of Messrs Lim Chee Wee and partners appeared for 1MDB.
Leong confirmed that it is appealing the ruling.
