Further international litigation takes aim at #Kuwait over repeated abuses of Marsha Lazareva business investments

The case against Marsha Lazareva, one of Russia’s most successful woman business investors in the Gulf, being prosecuted by the authorities in Kuwait took a new turn this week. Her international lawyers filed a financial damages arbitration claim against the State of Kuwait citing repeated violations of international law, potentially raising further questions about how safe a destination Kuwait remains for foreign investors.

Increasing litigation challenges for Kuwait alleging economic damage and targeting foreigners spending time and money in the country come at a delicate moment when it is undergoing an international process of consultation in order to evaluate MSCI World index market standards and fitness for potential nomination in 2020. Working from Kuwait for more than 13 years, and having been responsible for investing hundreds of millions of dollars in local infrastructure and economic development projects, Ms Lazareva has been imprisoned since May, denied bail and basic rights like family visits and health treatment, she faces the prospect of prolonged incarceration in what her lawyers say is the continued absence of due process.

The notice states that the charges against Ms. Lazareva, a Russian citizen, are part of a coordinated campaign to damage her reputation as a successful business woman and diminish the value of her investments.

It also cites Kuwait for violating a longstanding bilateral investment treaty with Russia: “The Agreement between the Russian Federation and the State of Kuwait on the Encouragement and Mutual Protection of Investments.”

An earlier trial last spring conducted by Kuwait’s Prosecutor General against her prompted an international outcry by news outlets in the East and West, human rights activists, MEPs and Russian officials in Kuwait and Moscow. They denounced the abuse of process and unfair treatment, including the failure to allow Ms Lazareva to call witnesses or challenge testimony that independent analysts said was biased. ‘This case is one of the most outrageous denials of justice committed by a state actor in recent memory,’ said Ian A. Laird of Crowell & Moring. ‘Fabricated charges, a refusal to consider evidence, and reliance by the Court on the testimony of a single, highly suspect witness have led to Marsha’s continued imprisonment under inhumane conditions.’

In her capacity at KGLI, Ms. Lazareva managed the creation of an investment property called The Port Fund, whose investors included the Kuwait Ports Authority (KPA) and the Kuwait Public Institution for Social Security (PIFSS). Over its 10-year investment period, in 2017, KGLI was in the process of distributing significant returns from the growth of its Port Fund investments to the limited partners, including the KPA and PIFSS, when $496 million in funds were frozen in a Dubai bank.

In November 2017, Lazareva was arrested and detained for questioning on the orders of the Kuwaiti General Prosecutor’s office. After being held in poor conditions for more than two months, she was temporarily released as part of a $30 million bail agreement, only to be imprisoned again three months later. With minimal access to medical assistance, her imprisonment has resulted in a significant deterioration of her health as well as separation from her son.

“We demand that the Kuwaiti government release Marsha and end its efforts to expropriate the $496 million currently being held in Dubai,” said Mr. Laird. “If Kuwait retaliates against Marsha for exercising her right, under the treaty to bring this arbitration, it will further support her claims and damages.”

The claim seeks the immediate release of Ms. Lazareva, as well as the compensation in the amount of $100 million for damages and losses suffered as a result of Kuwait’s breach of the bilateral investment agreement.

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