An international arbitration panel that considered a legal dispute between Malaysia’s government-run Pilgrims Fund and Al Rawdah Investment for Real Estate Development, a Jeddah-based company linked to the Public Investment Fund, concluded that the Saudi company must pay SAR 900 million in compensation to the Malaysian Pilgrims Fund.

The dispute began after Malaysia’s Minister of Religious Affairs, acting on behalf of the Pilgrims Fund, entered into long-term agreements (10 years) with the Saudi company Al Rawdah to lease four hotels in Makkah and Madinah to accommodate Malaysian pilgrims, with Malaysia paying the rental costs upfront.

The fund also entered into another agreement under which Al Rawdah was tasked with managing and operating the leased hotels during periods when Malaysia did not require them, with the profits to be paid to the Malaysian fund. However, Al Rawdah allegedly appropriated most of the profits through fraudulent means.

The Malaysian fund filed a complaint before an international arbitration panel that had been agreed upon in advance by both parties in their contracts. The fund won the case and requested that the Saudi company pay the compensation.

The Malaysian fund told parliament that the Saudi company has so far refused to comply with the arbitration panel’s ruling, which will prolong the dispute between the two parties.