A London court ruled that the Kuwait Investment Authority, which manages a sovereign wealth fund in excess of $800 billion, can be sued in the U.K., opening the door for employees to launch legal action against the unit that has previously asserted diplomatic immunity.
A London employment judge ruled that the Kuwait Investment Authority, was “distinct from the executive organs of the government of the State of Kuwait,” and could be sued or bring suits itself, according to a court ruling published this week.
The finding was part of a case brought by Saleh Al-Ateeqi, the former chief executive officer of the KIA’s London outpost, who sued for unfair dismissal after he claimed he was let go for blowing the whistle on the fund’s allegedly unlawful practices. Al-Ateeqi’s 2022 ouster put a spotlight on internal divisions within the Kuwaiti fund that rarely play out in the public domain.
However, despite the findings that KIA is separate from the state and formed for commercial purposes, the judge said that Al-Ateeqi himself, as CEO of the Kuwait Investment Office, was considered a diplomat and dismissed the case. The judge cited the former executive’s various diplomatic privileges including a tax free salary.
“When the KIO appointed the Claimant as CEO, it did so to a position to which diplomatic status attached, as recognized by both Kuwaiti and the U.K. governments,” the judge said in the ruling.
It’s a partial blow to the usually secretive fund which has protected itself from litigation on the assumption that sovereign immunity shielded it. Kuwaiti officials had sought to argue that the KIO was part of the state’s diplomatic mission.
A spokesperson for Al-Ateeqi declined to comment. Lawyers for the KIA in London didn’t respond to requests for comment.
In a separate legal battle involving the KIO’s former head of fixed income, the fund and Al-Ateeqi had asserted diplomatic immunity as a reason the case should be dismissed. That case was later settled before the full claim could be heard.
The KIO, which last year had more than $250 billion of assets under management, mainly invests directly, predominantly in public equities and fixed income but also in alternatives like real estate and private equity.
Middle East sovereign funds — key tools for oil-rich states to diversify their economies — operate in secrecy at the highest ranks of society. While the KIO was embroiled in personnel and administrative issues between 2021 and 2022, at home, its parent organization faced its own challenges, as deep political turmoil in Kuwait impacted decision-making.
