Etrak Insaat Taahut ve Ticaret Anonim Sirketi v Libya
ICC · Investment (ICSID and treaty) · Switzerland · 22 Jul 2019
Why it matters
This case illustrates the application of the fair and equitable treatment standard to a state's failure to honor a settlement agreement arising from a domestic court decision. It confirms that a settlement agreement can constitute an investment and that persistent non-payment, combined with arbitrary conduct, breaches the FET standard. The award also clarifies the high threshold for moral damages in investment arbitration.
Summary
Etrak, a Turkish construction company, invested in Libya through a contract with the Libyan government. After a dispute, a Libyan court ordered Libya to pay Etrak approximately LD 1.9 million. The parties then signed a Settlement Agreement in December 2013, under which Libya agreed to pay LD 5.4 million in installments. Libya made only the first two payments and then stopped. Etrak initiated ICC arbitration under the Turkey-Libya BIT, claiming breach of fair and equitable treatment, expropriation, and violation of the umbrella clause. The tribunal, seated in Geneva, rejected Libya's jurisdictional objections, including arguments that the BIT was invalid and that the claims were contractual. On the merits, the tribunal found that Libya's failure to pay the settlement amounts, combined with arbitrary conduct (including initiating proceedings in Libya to invalidate the settlement), violated the FET standard. The tribunal awarded Etrak USD 21,865,554, representing the unpaid settlement amount plus pre-award interest at 4% simple interest. It rejected claims for moral damages, finding no exceptional circumstances. Post-award interest was set at LIBOR + 3% compounded annually. Each party bore its own costs, and Libya was ordered to reimburse Etrak's share of the ICC costs.
The detail
Parties: Etrak Insaat Taahut ve Ticaret Anonim Sirketi v Libya
Case number: ICC Case No. 22236/ZF/AYZ
Outcome: Respondent breached fair and equitable treatment; ordered to pay USD 21,865,554 plus post-award interest; moral damages rejected.
Quantum: USD 21,865,554
Applicable law: Turkey-Libya BIT (2009), ICC Rules (2012), Libyan law, international law
Issues in play: Fair and equitable treatment standard under the BIT versus Libya's non-performance of a settlement agreement and alleged expropriation.
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