Procedural Background

This Final Award, rendered in ICC Case No. 22236/ZF/AYZ, resolves a dispute between Etrak İnşaat Taahhüt ve Ticaret Anonim Şirketi, a Turkish construction company (Claimant), and the State of Libya (Respondent). The dispute arose from Libya's failure to honor a Settlement Agreement concluded on 9 December 2013. This agreement was intended to resolve the Claimant's long-standing claims for unpaid receivables from public works projects performed in the 1980s and 1990s, which had previously been validated by a 2012 decision of the Beida Court of First Instance in Libya.

Tribunal's Analysis of Jurisdiction

The Tribunal systematically dismissed all of Respondent's jurisdictional objections. It first affirmed that the Turkey-Libya Bilateral Investment Treaty (BIT) had validly entered into force on 22 April 2011, finding that Turkey's notification was properly delivered to the internationally recognized Libyan government at the time. The Tribunal then found it had jurisdiction ratione materiae, holding that the Settlement Agreement constituted a protected "investment" under the BIT as a "claim to money related to an investment." Crucially, the Tribunal determined that the Settlement Agreement was valid under Libyan law based on the apparent authority of the Deputy Minister of Finance who executed it.

Addressing the ratione temporis and fork-in-the-road objections, the Tribunal's central finding was that the 2013 Settlement Agreement, as a valid compromise under Libyan law, legally extinguished all prior disputes between the parties. Consequently, the dispute before the Tribunal was not the historical debt but the subsequent breach of the Settlement Agreement itself. This breach constituted a new and distinct dispute that arose after the BIT's entry into force and had not been previously submitted to any other forum, thereby rendering the fork-in-the-road clause inapplicable.

Findings on the Merits

On the merits, the Tribunal held that Libya breached the Fair and Equitable Treatment (FET) standard under Article 2(2) of the BIT. The Tribunal's reasoning was twofold. First, it found that Libya's conduct frustrated the Claimant's legitimate expectations, which were specifically created by the representations made during negotiations and formally enshrined in the Settlement Agreement. Second, the Tribunal characterized Libya's actions as arbitrary and inconsistent. Libya had induced the Claimant to accept a discounted settlement sum with promises of payment and the withdrawal of a pending domestic appeal, only to subsequently fail to pay, actively pursue that same appeal, and later initiate new domestic proceedings to nullify the agreement. Applying the principle of judicial economy, the Tribunal declined to rule on the Claimant's alternative claims of expropriation and breach of the umbrella clause.

Decision on Quantum and Costs

The Tribunal awarded the Claimant damages in the amount of USD 21,865,554. This figure represents the principal amount owed under the Settlement Agreement plus pre-award simple interest calculated at the contractually stipulated rate of 4% per annum from the dates the instalments were due. The Claimant's request for moral damages was rejected, as the Tribunal found the circumstances did not meet the "exceptional" threshold required for such an award. Post-award interest was granted at a rate of LIBOR + 3% per annum, compounded annually. Regarding costs, the Tribunal ordered each party to bear its own legal fees and expenses, but directed the Respondent to pay the Claimant compensation for the full costs of the arbitration as fixed by the ICC Court.