Air Arabia Lawsuit Against Abraaj Founder Is 'abuse Of Legal System', Says Lawyer

The misdemeanour case filed by Sharjah-based carrier Air Arabia against Abraaj Group founder Arif Naqvi is an 'abuse' of the UAE’s legal system, according to his lawyer Dr. Habib Al Mulla.

Abraaj at one point owned 17 percent of Air Arabia, which is publicly listed on the DFM. The carrier is believed to have loaned Abraaj over $100 million, according to previous media reports.

The airline said last week it has “commenced with legal proceedings against Abraaj founder Mr. Arif Naqvi through the filing of a misdemeanour case in Sharjah court”.

However, in a statement to Arabian Business, Al Mulla said the lawsuit regarding the airline’s outstanding investments with the private equity firm came as a surprise given the parties had been negotiating an “amicable settlement.”

“This is an abuse of the legal system and shows bad faith on Air Arabia’s part…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 [the airline] is not entitled to under the provisional liquidation proceedings or the international arbitration.”

“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," Al Mulla added. "Furthermore, the liability in question is Abraaj’s and not Mr. Naqvi’s. Mr. Naqvi was merely a guarantor. His actions in this matter were for the benefit of Abraaj." 

The claim in question, which is part of Abraaj’s provisional liquidation proceedings taking place in the Cayman Islands, is also governed by an international arbitration clause, and Air Arabia has already filed a request for arbitration, Al Mulla said. 

“We will vigorously defend Mr. Naqvi and plan to submit a full defense to the prosecution to prove that this criminal complaint has no substance whatsoever,” he said.

Abraaj was once among the Middle East’s most high-profile private equity companies until its collapse last year. It is currently being restructured by liquidators in the Cayman Islands in a bid to settle over $1 billion of its debts through asset sales.

In January, it was reported that Abraaj will get a 70 percent stake in C&I Leasing Plc by converting a $10 million loan into equity in the Nigerian company.