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Squire Patton Boggs Successful for Turkmenistan in ICSID Arbitration Against Turkish Claimants

Squire Patton Boggs Successful for Turkmenistan in ICSID Arbitration Against Turkish Claimants

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Squire Patton Boggs, acting on behalf of the State of Turkmenistan, has persuaded the International Centre for Settlement of Investment Disputes to dismiss in full a claim of nearly USD 500 million brought against the country by Turkish construction company Sehil Insaat Endustri ve Ticaret Ltd. Sti. and its majority shareholder Muhammet Cap.

The case, Muhammet Cap and Sehil v. Turkmenistan, was registered in 2012 under the Turkey-Turkmenistan bilateral investment treaty. The dispute concerned 32 construction projects in Turkmenistan, including water and waste treatment plants, an iron and steel plant, schools and government buildings. The claimants alleged that they had been impeded by delays and defaults by their contractual counter-parties and by regulatory procedures, that they were entitled to additional compensation for work outside the scope of the contracts, and that they were unfairly subject to delay penalties, tax audits, and court orders terminating the contracts. Their contractual counter-parties argued that terminations and penalties were justified due to Sehil’s failure to perform its contractual obligations, defective work, and non-completion.

According to Squire Patton Boggs, "the tribunal rejected all claims against Turkmenistan and held that Sehil’s contractual counter-parties acted in the legitimate exercise of their contractual rights and in a commercial capacity, and that the Turkmenistan courts, tax authorities, and prosecutors acted in accordance with Turkmenistan law and procedures and did not violate due process. 

The Squire Patton Boggs team representing Turkmenistan was led by New York Partners Ali Gursel, Miriam Harwood, and Zeynep Gunday Sakarya, and included Counsel Bahar Charyyeva, Associate Carlos Guzman, and Paralegal Hesel Toyjanova.

According to Gursel, “this case was complex not only due to the fact that it involved 32 different construction projects – each of which could have been a free-standing arbitration in its own right – but also due to the intervening bankruptcy of the claimant company in Turkey while the arbitration was in progress.”

The claimants were represented by, among others, the Derains & Gharavi, Offit Kurman, and Egemenoglu Law Firms.