Saudi may be proper forum for Al Sanea suit

Saudi Arabia may be a more appropriate location for claims in a lawsuit filed in the Cayman Islands against Saudi billionaire Maan Al Sanea by members of the kingdom’s Algosaibi family, according to a court decision.

“Saudi Arabia may be an available forum and if so, would be the more appropriate forum for the trial of the underlying allegations,” Chief Justice of the Cayman Islands Grand Court Anthony Smellie said in a copy of a June 25 decision obtained by Bloomberg News.

In the lawsuit, the Algosaibi group alleged Al Sanea misappropriated $9.2 billion from the group’s units in part to fund his Saad Group of Companies. Al-Sanea has denied any wrongdoing, saying Algosaibi was aware of the borrowing. Smellie stayed the litigation until a committee appointed by the Saudi government rules on related petitions made there by the Algosaibi family. Smellie’s decision couldn’t be immediately confirmed in Cayman Islands electronic records or by a clerk contacted at the courthouse.

Units of the two Saudi family groups have borrowed at least $15.7bn from more than 80 regional and international banks, including Paris-based BNP Paribas SA, New York-based Citigroup Inc. and Arab Bank Plc in Amman, Jordan, according to documents provided by lenders.

Defaults by units of Ahmad Hamad Algosaibi & Brothers Co and Saad Group led to a tightening of loans inside Saudi Arabia based on name-lending, or the extension of credit based primarily on reputation.

Algosaibi faces claims for “unauthorised” borrowings from 118 banks, according to the Cayman Islands ruling. Five cases are to be brought in the London Commercial Court in June 2011, according to the court filing.

Algosaibi said on Tuesday in an e-mailed statement that it was “considering the scope” of Smellie’s decision, which directed it to explore whether some of the issues in the case could be tried in Saudi Arabia.

Saad Group applauded the decision, saying in an e-mailed statement that “Saudi Arabia is the correct forum for the principal issues in this dispute to be resolved.”

A freeze on Al Sanea’s assets previously ordered by the Cayman Islands court remains in effect, Smellie wrote.