LONDON- A lawyer representing Kuwait Investment Authority's London office has told an employment tribunal that the fund should be covered by diplomatic immunity in a legal wrangle involving former staff accused of inflating bonuses.

Former fixed income head Simon Hard and another former staff member are pursuing an employment tribunal case against the Kuwait office, part of one of the world's largest sovereign wealth funds, for alleged victimisation, discrimination and so-called whistleblowing detriment.

The former employees are being sued by the fund over an alleged conspiracy to award unlawful pay rises, but the High Court in July granted them a stay of application in that case in order to allow them to go ahead with their employment tribunal.

The former staff deny the allegations of inflated bonuses.

"HMG's (British government) recognition, we say, that the KIO is part of Kuwait's mission is an irrebuttable fact of state," Dan Sarooshi, leading counsel for the Kuwait Investment Office, told the Employment Appeal Tribunal in London on Wednesday.

"Once HMG has granted such recognition, then UK courts and tribunals are bound by such facts of state and they cannot take a different approach."

If it succeeds with its assertion of state immunity, it would confirm that the KIO is outside the jurisdiction of the employment tribunal.

Given that KIO was part of Kuwait's diplomatic mission, it followed that it enjoyed diplomatic inviolability for its archives and documents under Article 24 of the Vienna Convention, said Sarooshi.

The sovereign wealth fund has assets of $534 billion, according to the Sovereign Wealth Fund Institute.

Kuwait's government in 1953 established an investment office headquartered in London, with a mandate to invest surplus oil revenue. The office was later named Kuwait Investment Office.

(Editing by William Maclean) ((Tom.Arnold@thomsonreuters.com; +442075428510; Reuters Messaging: tom.arnold.thomsonreuters.com@reuters.net))