Akıncı Arbitration

Paris Court of Cassation Reinstated an Investment Treaty Arbitration Award Against Russia in relation to the Crimean War

Paris Court of Cassation upheld the investment-treaty award rendered by the Permanent Court of Arbitration, which requires Russia to compensate for the losses incurred by a Ukrainian bank, Oschadbank, as a result of Russia’s annexation of Crimea in 2014. According to the award, the Ukrainian investor is to recover USD 1.1 billion plus interest from Russia.

Oschadbank is a state-owned bank which had investments in Crimea. Similar to the other investors which were adversely affected by Crimea’s annexation, Oschadbank initiated investment-treaty arbitration against Russia in 2016. Amongst other BIT claims, Oschadbank claimed that its assets were unlawfully expropriated by Russia. In 2018, the tribunal decided in favour of the investor.

Subsequently Russia applied to Paris Court of Appeal to set aside the award. Russia argued that Oschadbank’s investments were made in 1991 whereas the Ukraine-Russia BIT protects the investments made as of 1 January 1992. The Court of Appeal accepted Russia’s application and held that the tribunal lacked jurisdiction. Accordingly, the Court of Appeal set aside the award.

In its recent ruling, on 7 December 2022, Court of Cassation overturned the Court of Appeal’s decision and sided with the Ukrainian investor. The Court of Cassation held that it was not within the court’s power to review this issue as it concerned the merits of the case.With this decision, Ukrainian investors are compensated in all publicly available investment-treaty cases regarding their Crimean war-related claims.

The Court of Cassation Decided that Arbitration Awards Granting Compound Interest Were Not Against Public Policy

With its decision dated 16 June 2022 and numbered 2020/7985, the 11th Civil Chamber of the Court of Cassation upheld the first instance and Court of Appeal’s decisions which granted the enforcement of an arbitral award.

The first instance court granted leave for the enforcement of an arbitral award, holding that (a) an arbitration agreement executed by referring to the arbitration clause in a charter party is valid, (b) objections to the constitution of the tribunal which were not raised during the arbitration proceedings could not constitute a bar to the recognition of the arbitral award at the enforcement stage, and (c) awards granting compound interest do not constitute a breach of public policy.

Following this, the Regional Court of Appeal rejected the respondent’s appeal. Finally, the Court of Cassation confirmed both of these judgments and reinforced its precedent that arbitration agreements incorporated by reference were valid. In addition, the Court of Cassation held that objections as to tribunal’s constitution should be raised during the arbitration proceedings, and that awards which grant compound interest claims could not be denied recognition on the basis that they were against public policy.

What Happened in Turkish Arbitration in December 2022?

On 22 December 2022, the Eskişehir Mediation and Arbitration Panel was organized in cooperation with the Eskişehir Bar Association and the Istanbul Arbitration Centre. In the first session chaired by Assoc. Prof. Dr. Mesut Aygün, Dr. Onur Yüksel gave a presentation on “Resolution of Disputes through Mediation” and Yasin Ekmen gave a presentation on “Why Arbitration: Advantages of Arbitration”. In addition, Dr. Burcu İrge Erdoğan discussed “Drafting Arbitration Agreements and Their Significance”.

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