Boru Hatlari IIe Petrol Tasima as (also known as Botas Petroleum Pipeline Corporation Ltd) v Tepe Insaat Sanayii as

JurisdictionJersey
CourtCourt of Appeal
JudgeLogan Martin JA
Judgment Date08 August 2016
Neutral Citation[2016] JCA 135
Date08 August 2016

[2016] JCA 135

COURT OF APPEAL

Before:

Sir David Calvert-Smith, President;

Robert Logan Martin Q.C.; and David Anderson Q.C.

Between
Boru Hatlari IIe Petrol Taşima Aş (also known as Botaş Petroleum Pipeline Corporation Limited)
First Appellant
Turkish Petroleum International Limited
Second Appellant
Botaş International Limited
Third Appellant
and
Tepe Inşaat Sanayii Aş
Respondent

and

Nacap BV
Party Cited

Advocate D. Evans for the Appellants.

Advocate E. Moran for the Respondent.

Authorities

Tepe v Botas [2016] JRC 012A.

Arbitration (Jersey) Law 1998.

State Immunity Act 1978.

State Immunity (Jersey) Order 1985.

Decree Law on State Economic Enterprises No. 233.

Decision of Council Ministers, Decision No 88/13180.

Council of Ministers' Decision, Decision No.95/6526.

Decision of the Council of Ministers, Decision No.2012/4152.

Decision of the Council of Ministers, Decision No 96/8293.

Decision of the Council of Ministers, Decision No 2006/11325.

Decision of Council of Ministers, Decision number 2014/6842.

Law No 4046, Adopted on 27th November 1994, Concerning Arrangements For The Implementation Of Privatization And Amending Certain Laws and Decrees With The Force of Law”.

Public Procurement Law (“Law 4734”).

United Arab Emirates v Abdel Ghafar [1995] ICR 65.

Kensington International Limited v Republic of Congo [2003] EWHC 2331.

La Generale des Carrières et des Mines v F G Hemisphere [2012] 2 CLC 709.

Societé Eram Shipping Co Ltd v Cie Internationale de Navigation and others [2004] 1 AC 260.

United Nations Convention on Immunities of States and their Property.

Report of the International Law Commission.

AIG Capital Partners Inc v Republic of Kazakhstan [2005] EWHC 2239.

O'Keefe and Tams, The United Nations Convention on Jurisdictional Immunities of States and their Property (2013).

Belhaj v Straw [2015] 2 WLR 1105.

Rahmatullah v Ministry of Defence [2014] EWHC 3846 (QB).

Fox and Webb, The Law of State Immunity (Third Ed).

Alcom Ltd v Republic of Colombia [1984] AC 580.

Masri v Consolidated Contractors International Co SAL [2009] QB 450.

Compania Naviera Vascongado v Steamship “Cristina” and others [1938] AC 485.

USA and Republic of France v Dollfus Mieg et Cie SA and the Bank of England [1952] AC 582.

France Fenwick & Co Ltd v The King [1927] 1 KB 458.

Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2001] 3 WLR 1117.

Dicey, Morris and Collins, The Conflict of Laws (Fifteenth Edn, 2012).

Yang, State Immunity in International Law (2013).

European Convention on State Immunity 1972.

Holland v Lampen-Wolfe [2000] 1 WLR 1573.

The Parlement Belge (1880) 5 PD 197.

Juan Ysmael & Co v Government of the Republic of Indonesia [1955] AC 72.

Rahimtoola v Nizam of Hyderabad [1958] AC 379.

Fawaz Al-Attiya v Hamad Bin-Jassim Bin-Jaber Al Thani [2016] EWHC 212 (QB).

AIG Capital Partners Inc v Republic of Kazakhstan [2005] EWHC 2239 (Comm).

SerVass Inc v Radifian Bank [2013] 1 AC 595.

The Broadmayne [1916] P 64.

The Jupiter [1924] P 236.

Trendtex Trading Corporation v Central Bank of Nigeria [1977] 1 QB 529.

AIC Ltd v Federal Government of Nigeria [2003] EWHC 1357 (QB).

Fraser v Oystertec Plc [2004] EWHC 1582 (Ch).

Hale v Victoria Plumbing Limited [1966] 2 QB 746.

Appeal regarding enforcement of international arbitration awards made against the First Appellant.

Logan Martin JA

This is the judgment of the Court

Introduction
1

This appeal concerns the enforcement of two international arbitration awards made against the first appellant. The respondent seeks enforcement against assets belonging to the first appellant which comprise shares held by the first appellant in the second and third appellants, and (in this appeal) debts due by the third appellant to the first appellant. That enforcement is resisted by the appellants upon a series of contentions including that the shares in question are subject to sovereign immunity.

2

The first appellant is Boru Hatlari Ile Petrol Taşima AŞ, also known as Botaş Petroleum Pipeline Corporation Limited (“Botaş”) which is a company registered in Turkey and wholly owned by the Republic of Turkey (“the Republic”). The second appellant is Turkish Petroleum International Limited (“TPIC”) which is a company registered in Jersey. The third appellant is Botaş International Limited (“BIL”) which is also a company registered in Jersey. TPIC and BIL are both wholly-owned subsidiaries of Botaş. The respondent is Tepe Inşaat Sanayii AŞ (“Tepe”) which is a company registered in Turkey. The party cited is Nacap BV (“Nacap”) which is a company registered in the Netherlands.

3

The matters in issue were the subject of a hearing before the Royal Court (Sir Michael Birt, Commissioner, and Jurats Nicolle and Kerley) and judgment was given on 19 January 2016 (“the Royal Court judgment”) ( Tepe v Botaş [2016] JRC 012A). Both the appellants and the respondent appeal against aspects of the Royal Court judgment.

The background circumstances
4

Botaş is a company incorporated by charter engaged in aspects of the oil and gas industry. It was involved in the construction of the Baku-Tbilisi-Ceyhan pipeline which transports oil from oilfields in Azerbaijan through Georgia to the Ceyhan oil terminal on the Turkish coast. The pipeline was constructed by a consortium of companies known as the “Main Export Pipeline participants” who appointed Botaş as the main contractor for the construction of the Turkish section of the pipeline. In 2002, Botaş engaged Tepe as construction and engineering sub-contractors for a part of the pipeline works under a contract referred to as “the Stations Contract”. At the same time, Botaş engaged an unincorporated joint venture known as “TPN” as construction and engineering sub-contractors for a part of the works under a contract referred to as “the Lot A Contract”. The parties in TPN were Tepe and Nacap. Each of these contracts contained an arbitration clause which provided that any arbitration was to be under the rules of the International Chamber of Commerce, that English law was to be applied and that the place of the arbitration was to be Paris.

5

On dates in 2005, Botaş terminated the Stations Contract and the Lot A Contract. Each termination was disputed and the entitlement of Botaş to terminate and other issues were referred to two arbitrations, referred to respectively as “the Stations Arbitration” and “the Lot A Arbitration”. The two arbitrations were conducted by separate arbitration panels and in each case two partial awards and one final award were made against Botaş (hereafter “the Awards”). Botaş appealed against certain of the Awards to the Cour d'Appel in Paris and in one case to the Cour de Cassation. All of these appeals were unsuccessful or were withdrawn. The result is that in the case of each arbitration, the Awards are enforceable against Botaş. The amounts of the Awards are detailed in paragraphs 13 and 17 of the Royal Court judgment and amounted as at December 2014 to approximately US$64.7 million in the case of the Stations Arbitration and to approximately US$27.8 million in the case of the Lot A Arbitration. In each case, Botaş was also obliged to return certain securities, bonds and guarantee letters which had been provided by Tepe in respect of each contract (and referred to in the Royal Court judgment respectively as “the Stations Securities” and “the Lot A Securities”, and collectively as “the Securities”). These had values respectively of approximately US$5.6 million and US$15.9 million. In July 2014, Nacap and TPN had assigned their whole rights under the Lot A Contract to Tepe and the proceedings have since been pursued by Tepe alone in respect of matters arising from both the Stations Contract and the Lot A Contract. The Royal Court allowed Nacap to be joined as a party cited but Nacap did not play any part in the proceedings before the Royal Court nor did it before this Court.

The enforcement of an international arbitration award
6

The enforcement of international arbitration awards is provided for in Part 4 of the Arbitration (Jersey) Law 1998 (“the Arbitration Law”) which states in part:-

42(1) A Convention award shall, subject to the following provisions of this Part, be enforceable in Jersey either by action or in the same manner as the award of an arbitrator is enforceable by virtue of Article 29.

(2) …”

44(1) Enforcement of a Convention award shall not be refused except in the cases mentioned in this Article.

(2) Enforcement of a Convention award may be refused if the person against whom it is invoked proves—

(a) that a party to the arbitration agreement was (under the law applicable to the party) under some incapacity;

(b) that the arbitration agreement was not valid under the law to which the parties subjected it or, failing any indication thereon, under the law of the country where the award was made;

(c) that the person was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present the person's case;

(d) … that the award deals with a difference not contemplated by, or not falling within the terms of, the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration;

(e) that the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, with the law of the country where the arbitration took place; or

(f) that the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, it was made .

(3) Enforcement of a Convention award may also be refused if the award is in respect of a matter which is not capable of settlement by arbitration, or if it would be contrary to public policy to enforce the...

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  • Enforcement Of Foreign Arbitral Awards In Jersey
    • Jersey
    • Mondaq Jersey
    • 26 January 2017
    ...evidence and exhibiting a certified copy of the ICSID award. Footnotes Article 42 of the Arbitration Law. See for example, Botas v Tepe [2016] JCA 135. Article In Representation of Fitzpatrick International Limited [2013] JRC 253, the Jersey court accepted that where neither an original nor......

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