Tulip Real Estate and Development Netherlands B.V. v. Republic of Turkey
ICSID · Investment (ICSID and treaty) · Turkey · 10 Mar 2014
Why it matters
This case is notable for its detailed analysis of the distinction between treaty and contract claims in investment arbitration. The tribunal rejected the claimant's attempt to elevate a contractual dispute to a treaty violation, emphasizing that state involvement in a contractual relationship must be specific and attributable. It also addressed the scope of the umbrella clause and the requirement for clear evidence of state assurances. The award illustrates the high threshold for establishing expropriation and fair and equitable treatment claims where the state is not a direct party to the contract.
Summary
Tulip Real Estate, a Dutch company, invested in a Turkish real estate development project through a joint venture with Emlak, a Turkish state-owned entity. The project involved developing land in Ispartakule, Istanbul. After delays and disputes over zoning and performance, Emlak terminated the contract. Tulip initiated ICSID arbitration under the Netherlands-Turkey BIT, claiming that Turkey breached fair and equitable treatment, expropriated its investment, failed to provide full protection and security, and violated the umbrella clause. The tribunal first upheld jurisdiction, finding compliance with the BIT's negotiation period. On the merits, the tribunal held that the claims were essentially contractual and not attributable to the state. It found no evidence that Turkey directed or influenced Emlak's termination decision. The tribunal rejected the expropriation claim because Tulip retained its shares and contractual rights. The full protection and security claim failed because police actions during a site repossession were proportionate and not discriminatory. The umbrella clause claim was dismissed as no specific state obligations were breached. The tribunal ordered Tulip to pay USD 750,000 of Turkey's costs.
The detail
Parties: Tulip Real Estate and Development Netherlands B.V. v. Republic of Turkey
Case number: ICSID Case No. ARB/11/28
Outcome: All claims dismissed. Claimant ordered to pay Respondent USD 750,000 in costs.
Applicable law: Netherlands-Turkey BIT (1986); ICSID Convention; Turkish law
Issues in play: The case involved the interaction between treaty protections (fair and equitable treatment, expropriation, full protection and security, umbrella clause) and contractual rights under a Turkish law-governed development contract. The tribunal distinguished treaty claims from contract claims, finding no state interference in the contractual termination.
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