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You are here: Home / Arbitration Jurisdiction / ALAPLI ELEKTRIK B.V. V. REPUBLIC OF TURKEY (ICSID CASE NO: ARB/08/13) – DECISION ON ANNULMENT OF 10 JULY 2014

ALAPLI ELEKTRIK B.V. V. REPUBLIC OF TURKEY (ICSID CASE NO: ARB/08/13) – DECISION ON ANNULMENT OF 10 JULY 2014

28/04/2017 by International Arbitration

The ICSID case Alapli Elektrik B.V. v. Republic of Turkey concerned a concession to develop, finance, own and operate a power plant in Turkey.

The dispute was governed by the ICSID Convention, the Energy Charter Treaty (the “ECT”) and the Agreement of Reciprocal Encouragement and Protection of Investments between the Kingdom of the Netherlands and the Republic of Turkey of March 27, 1986 (the “BIT”).

During the bidding process, the Claimant had allegedly relied on a national law that experienced significant changes resulting in a loss of its investment and a violation of the ECT and BIT.

The Tribunal ruled that it lacked jurisdiction under both the ECT and the BIT, however, without examining the merits of the case.

As a result, the Claimant filed for annulment of the award on the grounds of a serious departure from a fundamental rule of procedure (Article 52 (1) (d) of the ICSID Convention), a failure to state reasons (Article 52 (1) (e) of the ICSID Convention) and a manifest excess of powers (Article 52 (1) (b) of the ICSID Convention). An ad hoc Committee was then constituted to consider the award’s annulment.

First, regarding the alleged serious departure from a fundamental rule of procedure, the committee ruled in the negative. In order for a challenge to be upheld, there must be (i) a deprivation of a party’s benefit or protection and (ii) it must have a material effect on the outcome of the dispute. The Committee ruled that the arbitral tribunal’s award did not violate Article 48(1) of the ICSID Convention, which only requires the majority of the votes of the members of the arbitral tribunal, as was the case (paras. 157-185).

Second, relying on both MINE v. Guinea and Vivendi I, the Committee ruled that there was no violation of Article 52(1)(e) of the ICSID Convention because the award allows readers to comprehend and follow its reasoning (paras. 197-199) and, even if the arbitrators’ reasoning were different, which is allowed by the ICSID Convention, the reasoning was in any event complementary (paras. 212-214).

Third, in order for a violation of Article 52(1)(b) of the ICSID Convention to be upheld, there must be a manifest excess of powers that is obvious, plain or evident. Here, the Committee found that the arbitral tribunal applied the correct law to the dispute and thus dismissed the challenge (paras. 234-257).

Therefore, the Committee dismissed the claim for annulment of the award under

Articles 52(1)(b), 52(1)(d) and 52(1)(e) of the ICSID Convention (paras. 258‐265).

Such an outcome is unsurprising from a statistical perspective: between 1971 and 2000, 13% of awards were annulled, which fell to 8% of awards being annulled between 2001 and 2010, which has fallen even further since this date.

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Filed Under: Arbitration Jurisdiction, ICSID Arbitration, International Arbitration Law, Turkey Arbitration

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  • Arbitration Institute of the Stockholm Chamber of Commerce
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