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Mağdenli Yer Hizmetleri ve Taşıma Anonim Şirketi v. Kazakhstan, ICC

ICC · Investment (ICSID and treaty) · Kazakhstan · 12 Nov 2018

Why it matters

This case reaffirms that host states are not liable for expropriation when they establish state-owned enterprises that compete with foreign investors, provided they do not actively prevent the investor from operating. It also underscores that the mere existence of additional investments does not create an obligation to compensate, and that domestic judicial systems are presumed compliant with international standards unless proven otherwise.

Summary

In March 2015, Turkish company Mağdenli Yer Hizmetleri ve Taşıma Anonim Şirketi initiated ICC arbitration against Kazakhstan, claiming that Kazakhstan expropriated its services for fuel supply, cargo, and helicopter services by establishing JSC Atyrau International Airport. The claimant also sought compensation for alleged additional investments in ATMA - Atyrau Airport and Transportation. The total claim was around USD 16 million plus interest and costs. After a main hearing in Paris on June 4, 2018, the Tribunal issued its decision on November 8, 2018, dismissing all claims. The Tribunal found that Kazakhstan did not expropriate any services and did not prevent the claimant from collecting its investments. It also held that Kazakhstan's judicial system respected foreign investors' rights and complied with legality and justice. The Tribunal ordered the claimant to bear all arbitration expenses, approximately USD 500,000. The decision was published by Kazakhstan's Ministry of Justice, highlighting the state's commitment to protecting foreign investment.

The detail

Parties: Mağdenli Yer Hizmetleri ve Taşıma Anonim Şirketi v. Kazakhstan, ICC

Case number: italaw/cases/6958

Outcome: Tribunal rejected all claims; Claimant to bear all arbitration expenses (approx. USD 500,000).

Applicable law: ICC Arbitration Rules; Kazakhstan's international investment obligations

Issues in play: The dispute involved alleged expropriation of services and breach of fair and equitable treatment under investment treaties. The tribunal found no expropriation and that Kazakhstan's judicial system complied with legality and justice.

Read the full decision at italaw

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