CDR | 5 April 2024
Serbia to face transport investment arbitration
by Robert Li
A Turkish technology company has taken its transportation infrastructure contract dispute to ICSID.
Three related companies in the transportation and technology solutions sector have launched investment arbitration proceedings against Serbia at the International Centre for Settlement of Investment Disputes (ICSID).
The claimants are Kent Kart Anadolu Elektronik, Kent Kart Ege Elektronik and Kentkart Global Elektronik (Kent Kart), all headquartered in Istanbul, Turkey/Türkiye.
Filed on Monday (1 April), the subject of the arbitration is given as ‘transportation fare collection services’, and invokes the 2001 bilateral investment treaty (BIT) between Turkey/Türkiye and Yugoslavia as the basis for the claim. It is likely to be related to the City of Belgrade’s decision to terminate its public-private partnership contract with Kent Kart in 2023, 11 years before it was due to end.
In March 2011 Kent Kart, which was founded 26 years ago, won the contract to supply the City of Belgrade’s public transport network with its smart card-based, automated fare collection system. Following nearly a decade’s service, the contract was renewed in January 2021 for an additional term, this time lasting 13 years.
However, problems arose barely two years later when the city purported to terminate the contract and take the ticketing function in-house, against a backdrop of alleged public criticism of the services provided. Reports followed in March 2023 that Kent Kart was preparing to bring an action under investor-state dispute settlement (ISDS) provisions.
The picture was complicated further the following month when audio recordings were released implicating Nenad Milanović, chief of staff to the then mayor of Belgrade Aleksandar Šapić, in a corrupt scheme to rig a subsequent deal in Kent Kart’s favour. Milanović subsequently launched defamation proceedings later in 2023, the status of which are unclear.
In Kent Kart v Serbia, the claimants are represented by Istanbul firm Akınci Law Office, along with Belgrade-based lawyers Lidija Marković, Miroslav Paunović of AKP Paunović, Jovan Nikčević of Nikčević & Kapor and independent practitioner Dragor Hiber. The claim has been filed against three Serbian government ministers: the Minister of Foreign Affairs, Minister of Justice and the State Attorney.
Kent Kart, Akınci Law Office, all four Belgrade-based claimant lawyers and Serbia’s Ministry of Foreign Affairs were contacted for comment by CDR, but had not responded at the time of publication.
ICSID published annual case numbers in February, with 2023 constituting the third-highest caseload since the institution’s founding. In December, Libya’s sovereign wealth fund launched an ICSID claim involving a non-profit organisation headed by Prince Laurent of Belgium, while also retaining the services of high-profile Belgian criminal lawyer Sven Mary.
