EkoTürk News Agency / Ankara
16 March 2007
New $19B arbitration case threat to Turkish government from Dutch company on Telsim sale
Dutch investment company Saba Fakes, who claim to hold the biggest part of shares of Turkey’s second big GSM operator Telsim, is preparing to file an arbitration case at International Arbitration amounting to 19 billion dollars in reparations.
Dutch investment company Saba Fakes stated that after letters are sent to the President Ahmet Necdet Sezer, Prime Minister Recep Tayyip Erdoğan, Finance Minister Kemal Unakıtan, Minister of Justice Cemil Çiçek, Minister of Transportation Binali Yıldırım and Savings Deposit Insurance Fund (TMSF) President Ahmet Ertürk on March 14, the case will be initiated at The International Centre for Settlement of Investment Disputes (ICSID),
ICSID is an institution of the World Bank group based in Washington, D.C., was founded in 1966 pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention or Washington Convention). As of May 2005, 155 countries had signed the ICSID Convention.
ICSID has an Administrative Council, chaired by the World Bank’s President, and a Secretariat. It provides facilities for the conciliation and arbitration of investment disputes between member countries and individual investors.
Dutch investment company Saba Fakes takes to court the damages inflicted by the Turkish Government with the claim that Holland-Turkey Protection of the Bilateral Investments Agreement is infringed. The “Holland-Turkey Protection of the Bilateral Investments Agreement”, which became effective as of November 1, 1986, protects the rights of Dutch investors making investments in Turkey.
The letter that the Dutch investor of Telsim sent to Turkish Government and the TMSF pointed out that the specific rules of the international law and the rules of the bilateral agreement signed between Turkey and Holland was infringed.
The letter underlining that “TMSF illegally confiscated the assets of Telsim” showed the fact that “The administrators which were assigned by the TMSF made great operational losses after the confiscation and led to the value of Telsim to decrease” as the basis for the arbitration case.
The letter also argued “Telsim is sold to British Vodafone Company through an illegal tender for 4.5 billion dollars, which is an amount much lower than the real value of Telsim”.
Moreover, Saba Fakes declared that the companies participated in the tender agreed on the issue of setting the price and thus rigged the bidding process.
On the other hand, in order the arbitration case not to be initiated, Turkish Government should first try to compromise with the Dutch investor Saba Fakes. In case the negotiations following the effort to compromise fail, Dutch investor will appeal to the ICSID and prosecute Turkey for international arbitration.
The Arbitration Committee, which will be come together after the case is adopted, will determine the amount of the damage fee, which Turkey will pay due to the infringement of the agreement. Due to the international law bodies, amount of the given damage fee may reach 19 billion dollars. This case will be the highest amount of da