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6th DIS Baltic Arbitration Days 2017
02.06.2017
The State and State-Owned Entities in
Commercial Arbitration Proceedings:
State Entities and the Validity of
Arbitration Agreements
Tolga Semiz
Formalities For The Validity Of
Arbitration Agreements
▪ Approval,
▪ Consent,
▪ Ratification, etc.
page 1/12
Yukos shareholders v.
Russian Federation
▪ Energy Charter Treaty
▪ Article 45 «to the extent that such provisional
application is not inconsistent with its constitution,
laws or regulations»
▪ Article 26 «arbitration clause»
▪ Permanent Court of Arbitration - US$50 Billion
against Russia + US$60 Million legal fees to
Yukos’ lawyers
▪ Challenge of the award in the Hague District Court
▪ Hague District Court overturned the award
▪ Enforcement problems in different jurisdictions
page 2/12
The Extension Of Arbitration
Agreements To The States
▪ Determining the parties to the arbitration proceedings arising out of arbitration
agreements which are concluded by the state entities or the state enterprises
Arbitration Agreements Commencing the Arbitration
State entities / enterprises Private companies Defendant
State?
State Entity / Enterprise?
▪ Public interest
page 3/12
Arbitration Agreements
Concluded By The
State Entities
▪ Separate legal personality
▪ Example: ICC case numbered 12815
Agreement
Ministry of Energy and Private Company
Resourcesof the Republic of Turkey
▪ The arbitral proceedings initiated directly
against the Republic of Turkey
▪ ICC award <The Republic of Turkey
acting through its Ministry of Energy and
Resources of the Republic of Turkey>
page 4/12
Arbitration Agreements
Concluded By The State
Enterprises
▪ Wholly or partially owned and controlled by the
state
▪ Liabilites of the states for the acts of state-owned
enterprises
▪ «Bilateral investment agreements»
page 5/12
Societe des Grands Travaux de Marseille
(SGTM) v. East Pakistan Industrial
Development Corporation (EPIDC)
ICC Award No: 1803
▪ Bangladeshi government:
EPIDC Bangladesh Industrial Development Corporation
▪ SGTM sued
▪ ICC arbitrator ruled in favour of SGTM,
▪ Swiss Court of Canton Geneva set aside the award.
page 6/12
BIDC(successor)
State of Bangladesh(joinder)
Westland Helicopters v. AOI
The Arab Organization for Industrialization (AOI)
UAE Saudi Arabia Qatar Egypt
Partnership contract establishing the Arab British
Helicopters (ABH)
AOI Westland Helicopters
▪ AOI’s announcement of liquidation of ABH,
▪ ICC award in favour of Westland Helicopters against
4 member states,
▪ Annulment of the award by the Court of
Justice of Geneva, (separate legal personality of AOI)
page 7/12
Pyramids Case
(Southern Pacific v. Egypt and
EGHOT)
▪ ICC clause <approved, agreed and ratified>
▪ SPP against both EGHOT and Egypt
▪ ICC accepted jurisdiction over Egyptian state
▪ <No ambiguity in the agreement>
page 8/12
ICC Case No: 8035
▪ State representative’s signature
▪ Arbitral Tribunal intention of the representative
✓
page 9/12
on behalf on the Statewith the stamp «approved»
on behalf of the oil company
To make the state a partyto the arbitration agreement
To show the approval ofthe State
ICC Case No: 9508
Joint ventures
Bridas (Argentinian company) related entities in the State of Turkmenistan
▪ ICC court arbitrations to proceed against the State
▪ «legitimate expectations»
▪ The award challenged by Turkmenistan in the US District Court
▪ «Alter ego doctrine»
▪ Arbitration clause could not be extended to the government of Turkmenistan
page 10/12
Lifting the Veil Theory
Under Turkish Law
▪ Wet signature
▪ Enforcement Problems
page 11/12
Lesson learned?
“Laws are spider webs through which the big
flies pass and the little ones get caught.”
Honore de Balzac
“The strictest law sometimes becomes the
severest injustice.”
Benjamin Franklin
page 12/12
Q&A
Thank you !
Tolga Semiz
