Turkey: ICSID Tribunal's Decision On The Claims Of Içkale Inşaat Against Turkmenistan


The ICSID tribunal, comprised of Veijo Heiskanen (president), Carolyn B. Lamm (appointed by the Claimant), and Phillippe Sands, QC (appointed by the Respondent), has dismissed the USD 570 million claim of İçkale İnşaat Limited Şirketi (a Turkish construction company, which will be referred to as "Ickale") against Turkmenistan, through the award rendered on March 8, 2016, where the claims are found to be without merit. Carolyn B. Lamm and Philippe Sands issued partially dissenting opinions on the decision.

Ickale has requested supplementary decision, and rectification of the award on April 6, 2016, and these requests were denied, with some minor exceptions, on October 4, 2016.

Summary of the Parties' Contentions

Ickale initiated the ICSID arbitration in 2010 against Turkmenistan on the allegations that Turkmenistan had violated the provisions of the Turkey-Turkmenistan BIT. The Claimant claimed that it opened a branch office in 2004, and concluded a total of thirteen contracts for various public construction projects in Turkmenistan during the period from 2004 to 2009. However, and particularly following the demise of the former President of Turkmenistan, the government and state entities of Turkmenistan expanded the scope of works without additional compensation, that there were unjustified delays in payments, that they imposed unfair penalties, and expropriated machinery and equipment that belonged to the Claimant in order to cover unfair penalties for contested delays.

On the other side, Turkmenistan based its procedural defences on the well-known provision of the Turkey-Turkmenistan BIT that requires the dispute first be referred to the local courts, which the Claimant failed to do, that the works of the Claimant do not qualify as investment, and that these claims are contractual claims, rather than treaty claims. According to Turkmenistan, this arbitration was initiated by the Claimant, only to blame Turkmenistan for its own failure to perform its own undertakings.

The Decision

The Tribunal dismissed the claims of the Claimant "in their entirety for lack of merit." The Tribunal analyzed Article VII(2) of the Turkey-Turkmenistan BIT that requires submission of the dispute first to the local courts, which the tribunal did not have the consensus to as to whether this provision should be dealt with as to jurisdiction or admissibility of the claims. Later on, the Tribunal mainly examined whether the works of the Claimant would qualify as an investment under the said BIT, and whether they are contractual or treaty claims and, finally, the availability of substantive protection standards for the claims of Ickale.

The Interpretation of Article VII(2) of the Turkey - Turkmenistan BIT

The Article VII(2) of the Turkey - Turkmenistan BIT is often discussed in the disputes between Turkish construction companies and Turkmenistan. According to this Article, the investor is required to, or may submit, the dispute first to local courts, and only if no decision is reached within a year, the investor may refer its claim to international arbitration.

Ickale claimed that this provision is a kind of fork-in-the road clause, which entitles the investor to choose either submitting the dispute to the local courts or to investment arbitration, while Turkmenistan argued that this provision is a kind of domestic litigation requirement. The arbitral tribunal examined the Russian, English, and Turkish versions of the BIT, and also heard the Turkish state employees who took roles in drafting the BIT in order to determine the exact will of the state parties.

The majority of the tribunal considered such requirement as to admissibility of the claims, ruled that the requirement to submit to local courts under Article VII(2) is mandatory, and that Içkale had not satisfied the requirement; however, the case is admissible since the Turkmen state entities for which Ickale served as contractor had initiated claims before the local courts. According to the majority of the tribunal, it is sufficient to have the dispute referred to local courts by either party. In his partial dissenting opinion, Phillippe Sands, QC, opined that the claimant's failure to comply with the requirement renders the tribunal without jurisdiction.

The Nature of the Works as "Investment" and the Claims as "Contractual Claims" or "Treaty Claims"

As to the jurisdiction of the tribunal, it is also examined whether the works performed would qualify as investments within the meaning of Article 25 of the ICSID Convention and Article I(2) of the Turkey – Turkmenistan BIT, and whether the claims are "contractual claims" or "treaty claims."

Departing from the three criteria identified by the decision on jurisdiction of the Salini Costruttori S.p.A., and the Italstrade S.p.A. v. Kingdom of Morocco case that are the contribution of capital, certain duration and assumption of risk, and considering the scale, duration, and number of the projects, and the commitment of capital by the Claimant in their performance, the Tribunal concluded that the Claimant must be considered to have made an "investment" in Turkmenistan.

However, the Tribunal did not explicitly decide whether the claims are contract claims or treaty claims. Instead, the Tribunal considered these issues with the merits of the claims of Ickale.

Availability of the Substantive Protection Standards

As to the merits, the arbitral tribunal analyzed the allegations of the Claimant based on the substantive protection standards, such as fair and equitable treatment, full protection and security, non-discrimination and umbrella clause, as well as protection against unlawful expropriation. The Claimant argues that by operation of the most favoured nation clause in Article II of the Turkey – Turkmenistan BIT, and the non-derogation clause in Article VI of the BIT, it can rely on such standards set out in other bilateral investment treaties concluded by Turkmenistan. The Respondent objects to the claims for implementation of such standards, since the said BIT does not contain them, except for the protection against unlawful expropriation.

The majority of the arbitral tribunal rejected the claims of Ickale "in their entirety for lack of merit." In her dissenting opinion, Carolyn B. Lamm disagreed with the majority regarding one specific expropriation claim of Ickale, and concluded that the directive of Supreme Court of Turkmenistan was excessive and resulted in unlawful expropriation considering the seizure of all of Claimant's machinery and equipment in Turkmenistan significantly in excess of any penalties. According to her, the Supreme Court's directive was "beyond what was necessary to recover the delay."


Consequently, the Tribunal concluded that the claims of Ickale fall within the Tribunal's jurisdiction and are admissible, and that the Claimant has made an "investment" within the meaning of Article 25 of the ICSID Convention and Article I(2) of the Turkey-Turkmenistan BIT; however, the claims are dismissed in their entirety for lack of merit. Furthermore, the Tribunal ordered the Claimant to pay 20% of the legal and expert fees and expenses of Turkmenistan, which amounts to approximately USD 1.75 million. Considering the discussions made by the arbitral tribunal, this decision will be considered as an important jurisprudence regarding the files to which Turkish investors are party.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.