Pakistan Loses Nizam’s Fund Case In UK Court

The Eighth Nizam of erstwhile province of Hyderabad, Mukarram Jah, the titular Nizam of Hyderabad, has won a major case against Pakistan in the UK High Court. The UK Court has granted Mukarram Jah the ownership of a fund, which has been in dispute for over seven decades and now amounts to 35 million pounds.

The dispute revolves around one million pounds transferred in 1948 from the then Nizam of Hyderabad to the High Commissioner of the newly formed state of Pakistan, in Britain. The money was transferred to Habib Ibrahim Rahimtoola, for safe-keeping. Rahimtoola agreed “to keep the amount mentioned by you in my name in trust”. The Nizam, Osman Ali Khan, who later chose to stay with India had demanded that the funds be returned but NatWest Bank held onto the money till the rightful owner was established.

The case was filed by Osman Ali’s descendants, Mukarram Jah and his younger brother Muffakham Jah, who joined hands with the Indian Government in the legal battle against the Pakistan government over the money that now totals around 35 million pounds.

In his judgement handed down at the Royal Courts of Justice in London, Justice Marcus Smith ruled that the Nizam VII was beneficially entitled to the Fund and those claiming in right of Nizam VII – the Princes and India – are entitled to have the sum paid out to their order.”

“Pakistan’s contentions of non-justiciability by reason of the foreign act of state doctrine and non-enforceability on grounds of illegality both fail,” the verdict available on the Court’s website said.

“We are delighted that today’s judgement recognises His Exalted Highness, the VIII Nizam’s rights to funds which have been in dispute since 1948. Our client was still a child when the dispute first arose and now he is in his 80s. It is a great relief to see this dispute finally resolved in his lifetime,” said Paul Hewitt, partner in Withers LLP, who acted for the VII Nizam since Pakistan issued proceedings in 2013, to PTI.

“Justice Smith’s judgment covers a complex historical and legal set of issues, interpreting facts and events that occurred 70 years ago to establish that the funds, which now amount to 35 million, were always held in trust for our client’s grandfather, the VII Nizam. The judgement also makes important findings on justifiability….and whether a nation state can be a trustee,” he said.

In 2013, Pakistan had waived sovereign immunity by issuing a claim for the fund that opened the way for the current case to proceed. The Pakistan Government’s legal team had claimed the fund on two alternative bases.

One, referred to as the Arms for Money Argument, claimed that funds were transferred to compensate/reimburse/indemnify Pakistan for assistance provided in procuring/ facilitating the supply and/or transferred in order to keep them out of the hands of India, referred to by the judge as the Safeguarding Argument.

Advocate Harish Salve, who was part of the legal team on behalf of the Princes and the Indian Government, told reporters after the ruling that “historians will be interested in seeing Pakistan’s open acceptance that they were supplying arms. It is an interesting dimension which has publicly been acknowledged.”

While acknowledging that there was evidence of the supply of arms by Pakistan to Hyderabad around this period, the judge said he had not been persuaded by Pakistan’s Arms for Money argument. He notes there was no evidence linking the funds in the NatWest bank account to the supply of arms.

On the Safeguarding Argument, the judge accepted that the fund was to safeguard it by making it less accessible to India following the annexation of Hyderabad but he did not accept that this meant that the transfer was absolutely for Pakistan rather than on trust.

“Pakistan is closely examining all aspects of the detailed judgement and will take further action in light of legal advice received,” said the Foreign Office in Islamabad, commenting on the verdict.

It said the ruling failed to take into account the historical context of the transfer when “India illegally annexed Hyderabad…”