Emrail loses RM59m LRT3 bond suit, ordered to pay Kuwait Finance House RM39m

A High Court in Kuala Lumpur has dismissed a lawsuit filed by rail contractor Emrail Sdn Bhd against Kuwait Finance House (KFH) for a disputed performance bond of RM59.1 million. The court also ordered Emrail and three personal guarantors, Zaki Azmi, Hari Narayanan Govindasamy, and Amrish, to pay KFH RM39.09 million. The judge, Quay Chew Soon, deemed KFH's counterclaim in full and found Emrail and its guarantors jointly and severally liable for the outstanding debt.

The central issue was whether KFH was contractually obligated to issue a performance bond conforming to a template prescribed by the project delivery partner, MRCB George Kent Sdn Bhd. The court ruled that the financing agreement specified the bond must be in a form acceptable to KFH, and Emrail could not enforce its independent contract with MRCBGK against KFH.

The court rejected Emrail's claim that KFH's failure to issue a compliant bond caused RM59.1 million in withheld project payments, stating that negligence claims cannot be used to negotiate a more favorable commercial deal. The financing facility reportedly expired on October 31, 2021, leaving KFH with an outstanding debt of RM39,089,705.42 as of May 16, 2025.

Emrail and the guarantors have been given one month to settle the debt, including post-judgment interest at 5% per annum from the judgment date until full payment, with KFH also awarded RM100,000 in legal costs.