18 Aug 2016 | 04:54 pm | 1 min. read
International law firm Pinsent Masons has advised Turkish construction company, Tepe on its landmark US$100 million state immunity case on appeal from the Royal Court of Jersey.
This case relates to the termination by Botas, a crude oil transportation company and Turkish state owned entity, of two contracts with Tepe to assist in the construction of the Baku-Tbilisi-Ceyhan transportation pipeline. Following referral to arbitration in Paris, Botas’ terminations were found to be unlawful leading to several ICC arbitral awards in favour of Tepe.
Despite having exhausted all avenues of appeal, Botaş failed to make any payments under the arbitration awards. Tepe, the claimant in the Jersey proceedings, sought to enforce those arbitral awards against Botas' assets in Jersey, namely shares in two subsidiary companies registered in Jersey, Turkish Petroleum International Company Limited and Botaş International Limited. Tepe obtained interim arrests over the shares. Botaş objected to confirmation of the arrests on the ground that The Republic of Turkey was entitled to claim state immunity in relation to the shares.
Earlier this year, the Royal Court of Jersey rejected the claim of state immunity and ordered that the arrest of the shares be confirmed. Botaş appealed the decision of the Royal Court and the case went before the Court of Appeal in Jersey.
The Court of Appeal had to consider a number of issues, with the central question being whether the shares were immune from enforcement. The Court of Appeal refused the appeal and whilst it differed from the Royal Court of Justice as the applicable section of the State Immunity Act, it upheld the Royal Court of Justice’s finding that there was no basis for engaging sovereign immunity in relation to the shares. It therefore dismissed Botas’ appeal and upheld the decision of the Royal Court that the arrest of the shares be confirmed.
The Pinsent Masons team was led by International Construction partners Mark Roe and Adrian Elliott and senior associate Cecile Tangy and Göksu Law’s partner, Noyan Göksu. Pinsent Masons acted alongside Collas Crill’s partner Elena Moran who represented Tepe before the Jersey Courts.
Mark Roe said at the time the Royal Court judgment was issued that allowing an indirectly-owned state entity to claim that its shares were covered by state immunity laws "would be entirely at odds with the underlying rationale of the restrictive immunity reflected in the State Immunity Act".
Commenting on the decision of the Court of Appeal Adrian Elliott said: "The equally unsatisfactory flipside of Botas’ claim for such a wide ranging immunity would be that a judgment against a state would be enforceable against any asset in which the State had such an indirect or general interest – and create huge commercial uncertainty for a party intent upon having any commercial dealings with a state. The Court of Appeal’s decision will come as a relief to companies doing business with states and state-owned companies”.
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