Nizam of Hyderabad funds: UK High Court orders Pakistan to pay millions in legal costs

A UK High Court judge, who ruled in favour of India in a decades-old legal dispute with Pakistan over funds belonging to the Nizam of Hyderabad at the time of Partition in 1947 and deposited in a London bank account, on Thursday ordered Pakistan to pay millions of pounds in legal costs. The Nizam’s descendants, Prince Mukarram Jah the titular eighth Nizam of Hyderabad and his younger brother Muffakham Jah, had joined hands with the Indian government in the legal battle against the Pakistan government over around GBP 35 million lying with NatWest Bank plc in London.

Pakistan to pay 65% of legal costs

Following years of legal wrangles, Justice Marcus Smith ruled in October 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. At the end of a follow-on, consequential hearing at the Royal Courts of Justice in London on Thursday, Justice Smith concluded that Pakistan must pay the other parties 65% of their legal costs on account, with a detailed assessment to follow if an agreement is not reached on the final amount.

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"Today's hearing brings this litigation, which started in 2013 but where the underlying dispute dates back to in 1948, to an end at long last", said Paul Hewitt, partner at Withers LLP, the law firm which acted for the eighth Nizam. "We are pleased that Pakistan has decided not to contest Justice Smith's judgment. Our client His Exalted Highness the VIII Nizam will now have access to the funds which his grandfather, HEH the VII Nizam, intended him to have", he said.

How the money will be distributed

As part of the legal costs order, GBP 367,387.90 is related to the costs of NatWest Bank, which has held the funds over 70 years. While the bank's costs have already been paid from the Fund itself, Pakistan would be reconstituting the fund in respect of those costs. And, under the 65% costs covered by the court order, India is entitled to around GBP 2,802,192.22, Prince Muffakham Jah to GBP 1,835,445.83 and the eighth Nizam of Hyderabad Prince Mukarram Jah GBP 795,064.63.

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During a trial earlier this year, the High Court had been asked to determine the central question of who exactly is the beneficial owner of the funds belonging to the late Nizam, Osman Ali Khan. The Nizam, who faced the quandary of joining Pakistan or staying with India at the time of the funds transfer back in 1948, had later reportedly sought the return of the funds. NatWest Bank has since held on to the funds deposited into the London bank account of then Pakistan High Commissioner Habib Ibrahim Rahimtoola in safekeeping until its rightful legal owner was established.

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Pakistan admits Arms for Money deal

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

"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," Harish Salve, the senior lawyer who had represented India in the case, had said back in October. "It was a wrongful claim by Pakistan which had to be fought. We fought that claim and won it," he said.

The last ruling marks a conclusion to an extremely long-drawn legal battle, which saw the Indian government, the princes and the administrator of the estate of Nizam VII compromising their differences and entering into a confidential settlement agreement last year.

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