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|19 January, 2019

Abraaj to 'vigorously' fight Air Arabia suit

Lawsuit surprising as negotiations were underway between two parties for amicable settlement

Abraaj's founder Arif Naqvi is a board director of the Middle East low-cost carrier, according to Air Arabia's website.

Abraaj's founder Arif Naqvi is a board director of the Middle East low-cost carrier, according to Air Arabia's website.

Air Arabia

Abraaj Holdings will "vigorously" fight the case filed by Sharjah-based carrier Air Arabia last week against the private equity firm and its founder Arif Naqvi, said Habib Al Mulla, executive chairman and managing partner of Baker McKenzie Habib Al Mulla, who is representing the equity group and its founder.

The low-cost carrier last week announced that it had filed a misdemeanor case against Naqvi.

In July 2018, Air Arabia had announced a Dh1.23 billion exposure to Abraaj and funds managed by the company. However, it stressed that this issue "has no significant impact on the carrier's business or on its operations."

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Al Mulla said Air Arabia's lawsuit against his client was surprising as negotiations were underway between the two parties for an amicable settlement. He also stated that the move "is an abuse of the legal system and shows bad faith on the part of Air Arabia".

"We are surprised by the timing of this action given that negotiations between the parties have been regularly taking place in order to reach an amicable settlement. Furthermore, the liability in question is Abraaj's and not Naqvi's. He was merely a guarantor. His actions in this matter were for the benefit of Abraaj," Al Mulla said in a statement to Khaleej Times.

He said the claim in question is part of the provisional liquidation proceedings taking place in Cayman. The claim is also governed by an international arbitration clause and Air Arabia has already filed a request for arbitration.

Naqvi, who is living outside the UAE since the crisis began at Abraaj, is the largest shareholder in the Abraaj Group. The company is currently undergoing a court-supervised restructuring after it was accused of fund mismanagement of $1 billion.

In 2018, Naqvi faced criminal cases from Hamid Jafar, founder of Crescent Group, for bounced cheques. This was settled in an out-of-court settlement. In addition, Abraaj also faced a regulatory probe in Dubai.

"Therefore, we are surprised by Air Arabia's action to revert to criminal proceedings. This is obviously an attempt to exercise pressure in order to achieve gains that it is not entitled to under the provisional liquidation proceedings or the international arbitration," Al Mulla said.

"This is an abuse of the legal system and shows bad faith on the part of Air Arabia. We will vigorously defend Naqvi and plan to submit a full defence to the prosecution to prove that this criminal complaint has no substance," he added.

 

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