* Fund asks U.S. judge to vacate award
* Fund had sought $4 billion in damages
* Stems from $7.5 billion 2007 investment in Citi
By Nate Raymond
NEW YORK, Nov 8 A lawyer for Abu Dhabi
Investment Authority urged a U.S. judge on Thursday to overturn
an arbitration panel's ruling favoring Citigroup Inc in a
dispute over a $7.5 billion investment in Citi during the
The Abu Dhabi sovereign wealth fund last year lost the
arbitration case, which sought $4 billion in damages from what
it said were the fraudulent representations by Citi leading up
to the deal. At a hearing in U.S. District Court in Manhattan, a
lawyer for the fund said the arbitrators applied the wrong law
to come to its decision.
"They manifestly disregarded the principles," David Elsberg,
a lawyer for the ADIA, said Thursday.
U.S. District Judge George Daniels repeatedly pressed
Elsberg on how the arbitrators used the wrong legal analysis or
whether it would have made any difference.
"You can't simply say they gave them credit for 10 things
and us for eight, and so that's a manifest disregard of the
law," he said.
The ADIA bought into Citigroup in November 2007, as the bank
moved to boost its balance sheet following billions of dollars
in writedowns from subprime mortgage investments.
Under the deal, Citi bonds bought by ADIA would convert to
common stock in 2010 and 2011 at prices between $31.83 to $37.24
between March 2010 and September 2011.
But in December 2009, ADIA began arbitration, accusing Citi
of "grossly misstating" the bank's financial condition,
according to court papers. ADIA sought to rescind the investment
or receive $4 billion in damages.
Shares in Citi the day it disclosed the arbitration in 2009
had closed at $3.56. They closed on Thursday much higher, at $36
a share, down 0.14 percent on the day.
In October 2011, a three-arbitrator panel of the
International Centre for Dispute Resolution of the American
Arbitration Association issued an award finding ADIA had failed
to establish its claim.
ADIA went to court in January 2012 seeking to vacate the
award. The fund argues that the arbitration tribunal incorrectly
applied New York law to its claims of fraud rather than those of
Abu Dhabi, which doesn't require as much proof.
Elsberg said applying the wrong law to the case was
equivalent to a baseball umpire using the wrong rule book.
"Because of the choice of law, it was judged against the
wrong standard," Elsberg said.
But Citigroup counsel Leslie Fagen said the panel had laid
out all the factors for why it would follow New York law
"They went through everything," he said. "They didn't
Citigroup in court papers has also argued the court should
confirm the award.
The case is Abu Dhabi Investment Authority v. Citigroup,
Inc., U.S. District Court for the Southern District of New York,