UAE-based firm files lawsuit against State Bank of Pakistan for 'unlawful actions': Report

A trade and investment corporation based in the United Arab Emirates has filed a lawsuit worth around Rs 74 billion against the State Bank of Pakistan (SBP) and a private bank. Energy Global International FZE initiated the damages suit against the central bank for "unlawful actions" such as suspending bank accounts and unlawfully changing foreign currency accounts to rupee accounts in December 2012, reported the Express Tribune. According to the court filing, a private commercial bank, BankIslami, has also been named in the suit reportedly for failing to release the funds. The lawsuit has been filed in the Sindh High Court (SHC), reported the outlet. 

According to court records, the SHC has summoned officials of the SBP and BankIslami to appear before the additional registrar of the court on February 15, 2022, to respond to the damages claim. The accounts were previously managed by the now-defunct KASB Bank, but following its merger with BankIslami in May 2015, all of its assets, liabilities, and accounts were transferred to it. Energy Global is a company formed under the laws of Sharjah, United Arab Emirates, but its investors are of Iranian origin, reported the outlet. 

'SBP froze company's accounts without notifying it'

The central bank froze the company's accounts in December 2012, six months before the US imposed sanctions on the company, despite the fact that Pakistani regulations do not acknowledge US sanctions. According to the court filing, the SBP's actions were in violation of the Bilateral Investment Treaty and the circulars issued to protect foreign investors. The firm was never notified before the bank accounts were frozen, it added. Meanwhile, Energy Global has urged the court to declare the central bank's action of freezing its bank accounts and converting them to rupee accounts as unconstitutional. It has also requested that the bank accounts be unfrozen and the withheld funds be released as soon as possible. 

Over the last five years, the company has made an estimated Rs 33.4 billion profit on its Rs 19.6 billion investment. It has also asked for Rs 10.8 billion in compensation for lost business opportunities over the past nine years. Another Rs 1.2 billion is sought for losses resulting from the freezing of funds in Turkey as a result of unfinished transactions between a Pakistani bank and a Turkish bank. This has resulted in the overall losses and damages of Rs 52.9 billion, the UAE-based company claimed as reported by the Express Tribune. 

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