Squire Patton Boggs has successfully defended the State of Turkmenistan in two separate arbitrations before the International Centre for Settlement of Investment Disputes (ICSID), Lotus Holding Anonim Sirketi v. Turkmenistan and Unionmatex v. Turkmenistan.
In an award announced last week in the Lotus case, the tribunal dismissed all claims against Turkmenistan brought by a Turkish investor, Lotus Holding Anonim Sirketi, under the Energy Charter Treaty and the Turkey-Turkmenistan bilateral investment treaty. The claimant sought damages of approximately €80 million, in a dispute concerning the construction of two electric power plants and a refinery in Turkmenistan worth a total of US$1.5 billion.
The tribunal granted Turkmenistan’s application under Rule 41(5) of the ICSID Arbitration Rules, which provides an expedited procedure for dismissal where the claims are shown to be “manifestly without legal merit.” The tribunal unanimously dismissed all of the claims and awarded Turkmenistan costs of nearly US$1 million.
The Lotus award follows the recent win for Turkmenistan in another pending ICSID arbitration, Unionmatex v. Turkmenistan. In a rare decision, issued on January 27, 2020, the tribunal granted Turkmenistan’s application for security for costs, ordering the claimant to post US$3 million in security as a condition to the continuation of the arbitration. The case involves disputes regarding various projects for the construction of grain mill complexes and bakeries in Turkmenistan, in which the claimant seeks damages in the amount of €45 million.
Both the Lotus and Unionmatex decisions are noteworthy victories, as summary dismissals and orders requiring security for costs are rarely granted in ICSID arbitrations. Unionmatex is only the third known case in which an investment treaty tribunal has ordered security for costs.
The Squire Patton Boggs team representing Turkmenistan in both cases was led by partners Miriam Harwood, Ali Gursel and Zeynep Gunday Sakarya, assisted by counsel Bahar Charyyeva and associate Carlos Guzman.
Co-head of the firm’s Investment Arbitration Practice, Ms. Harwood, said, “We are delighted to have obtained two precedent-setting victories in quick succession for our long-standing client, Turkmenistan. In Lotus, the tribunal recognized the lack of merit in the claims, adhering to fundamental legal principles regarding shareholder claims and claims involving insolvent entities.”
“Unionmatex sought to address the recurring phenomenon of ‘arbitral hit and run,’ where respondent states who prevail against meritless claims are nevertheless left with significant costs that cannot be recovered, particularly where claimants are backed by third-party funders outside the jurisdiction of the Tribunal.”
The Squire Patton Boggs International Dispute Resolution Practice is ranked in Global Arbitration Review’s 2019 ranking of the top 30 international arbitration firms in the world. The team is experienced in practicing before virtually every major international dispute body in the world.