Muhammet Çap & Sehil In_aat Endustri ve Ticaret Ltd. Sti. v. Turkmenistan
ICSID · Investment (ICSID and treaty) · Turkmenistan · 29 May 2021
Why it matters
This case clarifies the interpretation of fork-in-the-road or local litigation requirements in investment treaties. The Tribunal's detailed analysis of the treaty text, including linguistic evidence, and its departure from the Kılıç v. Turkmenistan decision, underscores that each tribunal decides based on its own evidence and arguments. It also addresses issues of state responsibility for acts of state entities and the scope of MFN clauses.
Summary
The case involves a dispute between Turkish investors (Muhammet Çap and Sehil Inşaat) and Turkmenistan under the Turkey-Turkmenistan BIT. The investors claimed that Turkmenistan expropriated their investment in construction contracts without compensation, violating the BIT's standards. The main jurisdictional issue was whether Article VII(2) of the BIT required investors to first submit their dispute to Turkmen courts for one year before initiating international arbitration. The Tribunal, after extensive analysis of the treaty's English and Russian versions and expert linguistic evidence, concluded that Article VII(2) provides an option, not a mandatory requirement. Therefore, the investors could directly access ICSID arbitration. The Tribunal also addressed other jurisdictional objections, including whether the claims arose from an 'investment' and whether the investors owned the claims. On the merits, the Tribunal analyzed whether Turkmenistan's actions, such as withholding payments, imposing delay penalties, and interfering with contract performance, amounted to expropriation or breaches of fair and equitable treatment. The Tribunal found that certain acts by state entities were attributable to Turkmenistan under ILC Articles 4 and 8. However, the Tribunal ultimately dismissed the expropriation claim because the investors failed to prove that the alleged acts caused a substantial deprivation of their investment. The Tribunal also considered claims under other BIT standards but found no breach. The award reserved costs for later determination.
The detail
Parties: Muhammet Çap & Sehil In_aat Endustri ve Ticaret Ltd. Sti. v. Turkmenistan
Case number: ICSID Case No. ARB/12/6
Outcome: The Tribunal dismissed Respondent's objection to jurisdiction and reserved costs for later determination.
Applicable law: Turkey-Turkmenistan BIT, ICSID Convention, customary international law
Issues in play: Interpretation of Article VII(2) of the BIT: whether it requires mandatory local court litigation before arbitration or provides an option. The Tribunal held it is an option, not a mandatory condition.
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