The case arises from a $900 million loan to finance the lease of military compounds from the Ministry of Defence. The loan was devised to provide cash flow for the Compound Lending Corporation (CLC), a special purpose vehicle created to finance the transaction in advance of the rental income streams from the compounds. It was signed in December 2001 with the four banks equally providing the amount raised.

A statement released by Barclays on 4 December said the facility had been secured by a sovereign debt obligation of the kingdom of Saudi Arabia. ‘Following several requests for the payment to be met, the banks regret that they have no other option than to start these legal proceedings,’ it concluded.