KUALA LUMPUR (AFP) - Troubled Malaysian state investment vehicle 1Malaysia Development Berhad (1MDB) said on Friday (June 17) it plans a "robust response" to an Abu Dhabi sovereign wealth fund's move to seek US$6.5 billion (S$8.8 billion) via international arbitration of a debt dispute.

The Abu Dhabi fund, International Petroleum Investment Co (IPIC), said on Tuesday that it had submitted a request to the London Court of International Arbitration to intervene in the row.

"1MDB will file a robust response to the RFA (request for arbitration)", 1MDB, or 1Malaysia Development Berhad, said in a brief statement.

In April, 1MDB defaulted on US$1.75 billion in company bonds that were co-guaranteed by IPIC after the Malaysian fund missed an interest payment of US$50 million.

The debt dispute centres on IPIC's accusation that 1MDB failed to pay back a US$1 billion loan from the Abu Dhabi fund.

1MDB and Malaysian Prime Minister Najib Razak, who launched the state-owned company in 2009, are battling allegations that billions of dollars were looted from it in complex overseas deals that are being investigated by the authorities in several countries.

1MDB insists it repaid the IPIC loan, but the Abu Dhabi fund denies that.

IPIC is refusing to guarantee the 1MDB bonds until the loan is repaid. Its arbitration request did not specify why it was seeking US$6.5 billion.

Both 1MDB and Datuk Seri Najib vehemently deny wrongdoing.

In April, a Malaysian parliamentary committee said at least US$4.2 billion in questionable overseas money transfers were made by 1MDB.

Mr Najib was plunged into the crisis last year when it was revealed that US$681 million in transfers were made to his personal bank accounts in 2013. He says they were "personal donations" from the Saudi royal family.

In May, Swiss financial regulators approved the dissolution of Switzerland-based BSI Bank over "serious breaches" of money-laundering regulations in its dealings with 1MDB.