Saudi Prince Faces U.K. Jail Sentence Amid Loan Fight

(Bloomberg) -- A Saudi prince faces jail in the U.K. for flouting English contempt laws in the latest stage of a long-running dispute over a loan agreement with hundreds of millions of dollars at stake.

Prince Hussam Bin Saud Bin Abdulaziz Al Saud, a former chairman of Zain Saudi Arabia, should be imprisoned for a year, a London judge said Friday. The prince, who didn’t attend the court hearing in the U.K., said the loan case should only be heard in Saudi Arabia.

The sentence for contempt of court in England stems from a dispute between the prince and the Kuwaiti-listed mobile operator Zain over a 2010 loan. After losing a private arbitration hearing in London where he was ordered to pay more than $500 million, the prince pursued separate legal proceedings in Riyadh, effectively ignoring British court orders to halt the Saudi case.

"Prince Hussam has simply decided that he does not wish to engage with the English court in any way, shape or form," Judge Richard Jacobs said at the hearing. The prince would only face jail if he was in the U.K.

Addressing the arbitration dispute, Yasser Almesned, a lawyer for Prince Hussam in Riyadh, said that the dispute doesn’t belong in Britain.

“With regard to the arbitration decision issued against the prince from London, this judgment, while violating the jurisdictional rules, is inoperable in Saudi Arabia, where it requires the recognition of the Saudi courts,” he said. In the separate Saudi proceedings, a Riyadh court “issued its judgment in favor of Prince Hussam,” Almesned said.

Almesned didn’t immediately respond to a separate request for comment on the jail sentence.

Lawyers for Mobile Telecommunications Co., known as Zain, applied for the prince to be sent to jail, arguing that for private arbitration hearings in London to have any substance, a court should impose a proper sanction.

"Prince Hussam continuously adopted a strategy of non-response," Thomas Raphael, a lawyer for Zain, said in court documents. “But he was always well aware of what was going on.“

It was never possible to issue notices of the U.K. orders to the prince personally, he said, “because as a senior Saudi royal he is protected in a way that means that to attempt physical service is just not practical and would indeed be potentially dangerous.”

Zain said in a disclosure to the Kuwait stock exchange on Wednesday that it believes the court’s decision will strengthen the company’s position in the dispute before courts, “particularly in the enforcement of the arbitration award.”

The loan agreement was signed in the name of Prince Hussam’s Saudi Plastic Factory, but the arbitration tribunal found the prince was contracting individually in his own right, Raphael said. The prince has not paid the amount due, he said.

Dissatisfied with the arbitration award, Prince Hussam deliberately breached court orders, the judge said. "It’s only imprisonment which may possibly have any impact."

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