In a significant setback for global efforts to recover billions of dollars lost in the 1MDB scandal, Singapore’s High Court has ruled against allowing foreign liquidators to sue Standard Chartered and BSI Bank for transactions allegedly tied to the controversy.
The decision, reported by The Straits Times, hinges on Singapore’s cross-border insolvency framework, which cannot be applied retroactively to deals predating the 2018 Insolvency, Restructuring and Dissolution Act.
Liquidators from Blackstone Asia Real Estate Partners and Brazen Sky—two entities implicated in the multi-billion-dollar affair—had aimed to invoke “avoidance claims” to unwind questionable transactions and reclaim assets.
However, Justice Aidan Xu rejected their applications, pointing to Article 23(9) of the 2018 law. This provision, distinctive to Singapore, expressly bars foreign liquidators from contesting transactions that occurred before the Act’s implementation, regardless of their suspicious nature.
“That is the law here in Singapore. The court must give effect to what that law lays down,” Justice Xu stated in his ruling.
He recognized that the outcome limits the liquidators’ avenues for recourse, potentially demanding more time and resources for alternative approaches. Justice Xu also noted that the decision might seem at odds with Singapore’s overall dedication to international insolvency cooperation, yet emphasized that Parliament had intentionally set the 2018 threshold when incorporating the Model Law.
The liquidators contended that Article 21 of the Act should permit them to pursue past dealings to ensure accountability for those linked to the 1MDB scandal. Nonetheless, the court upheld the banks’ position on Article 23(9).
Justice Xu underlined that any amendments to the legislation must originate from Parliament, not the judiciary.
While the liquidators retain the option to initiate conventional legal actions in Singapore, these routes lack the efficiencies of the cross-border system.
Meanwhile, parallel cases continue against BSI and specific bankers for alleged dishonest assistance related to the same dealings.
