Higher Regional Court of Munich
Certified Copy
[stamp:] Received
HAMBURG -
10/06/2021
EVERSHEDS
SUTHERLAND
Case No.: 34 Sch 3/20
In the case of
Etrak Insaat Taahhüt ve Ticaret Anonim Sirketi, Kasriali Cad., Kombe Apt. No. 13/1,
Istanbul, Turkey
- Petitioner -
Attorney of record:
The attorneys of Gleiss Lutz Hootz Hirsch PartmbB, Lautenschlagerstraße 21, 70173 Stuttgart, reference
no. 71681-19 WI/BjEB
versus
State of Libya, represented by the Litigation Department, Foreign Disputes Committee, Essidi Street Courts
Complex, 3rd Floor, Tripoli, Libya
- Respondent -
Attorney of record:
The attorneys of Eversheds Sutherland (Germany), Rechtsanwälte Steuerberater Solicitors
Partnerschaft mbB, Stadthausbrücke 8, 20355 Hamburg, reference no. 164064.00020
regarding the recognition and order of enforcement of a foreign arbitral award
the Higher Regional Court of Munich – 34th Civil Division – through Judge Sprickmann Kerkerinck at the
Higher Regional Court, presiding, Judge Breinl at the Higher Regional Court, and Judge Dr. Stegbauer at the
Higher Regional Court, issues on 10/04/2021, based on the oral hearing of 08/09/2021, the following
I. The petition to declare enforceable the arbitral award dated July 22, 2019, regarding a partial amount of
€11,000,000, plus interest in the amount of 3 percentage points above LIBOR since 7/31/2019, issued
in Geneva (Switzerland) by the presiding arbitrator Dr. Kaj Hobér and assessors John M. Townsend
and Jean Kalicki in the
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arbitral proceedings between the Petitioner, as the arbitration petitioner, and the Respondent, as the
arbitration respondent, is dismissed.
II. It is determined that the arbitral award is not to be recognized in this respect in Germany.
III. The Petitioner shall bear the costs of the order-of-enforcement proceedings.
IV. The value of the matter in dispute is set at €11,000,000.
I.
The Petitioner seeks the order of enforcement of an arbitral award issued in Switzerland in the Petitioner's
favor regarding a partial amount plus interest.
The Petitioner is a construction company in the legal form of a corporation with a registered office in Turkey.
The Respondent is the Libyan State. The Respondent has real estate in Munich at its disposal.
Until the beginning of the 1990s, the Petitioner carried out numerous construction projects in Libya based on
various contracts with state authorities. From 2007 to 2008, a state audit committee dealt with the Petitioner's
remuneration claims that had accrued up to that time. Since 2009, the Petitioner has tried without success to
collect the amount of LYD 1,721,389,823 calculated by the committee in this regard. Finally, the Petitioner
brought an action before the Court of First Instance in Bayda (Libya), which sentenced the Respondent on
10/29/2012 to pay LYD 1,906,360,230 plus interest and an additional LYD 1,000,000,000. On 12/9/2013, the
Parties then reached a settlement, under which the Petitioner was to receive LYD 5,420,308,707 in two
installments to satisfy all outstanding remuneration claims, and both Parties would forgo taking action against
the judgment dated 10/29/2012 at a national or international level. Nevertheless, the Petitioner filed an appeal,
on which the judgment was overturned on 1/31/2018. The payment set in the settlement had not yet been paid.
With the written pleading dated 8/29/2016, the Petitioner thus filed a request for arbitration with the
International Chamber of Commerce (ICC) in Paris (France),
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based on the Bilateral Investment Treaty between Turkey and Libya dated 11/25/2009 (BIT).
Art. 1 BIT in the certified German translation of the English version submitted by the Petitioner reads:
For the purpose of this Treaty;
1. [...]
2. The term “investment,” in conformity with the hosting Contracting Party's laws and regulations, shall
include every kind of asset, in particular but not exclusively:(a) shares, stocks, or any other form of participation in companies,
(b) reinvested returns, claims to money, or any other rights having financial value related to an
investment,(c) movable and immovable property, as well as any other rights as mortgages, liens, pledges, and any
other similar rights related to investments as defined in conformity with the laws and regulations of the
Contracting Party in whose territory the property is situated,(d) industrial and intellectual property rights related to investments, such as patents, industrial designs,
and technical processes, as well as trademarks, goodwill, know-how, and other similar rights,(e) business concessions conferred by law or by an investment contract, including concessions to
search for, cultivate, extract, or exploit natural resources in the territory of each Contracting Party;provided that such investments are not in the nature of acquisition of shares of less than 10 percent of
a company through stock exchanges, which shall not be covered by this Treaty.
For the settlement of disputes, Art. 8 BIT states the following:
1. Disputes between one of the Contracting Parties and an investor of the other Contracting Party, in
connection with his investment, shall be notified in writing, including detailed information, by the
investor to the recipient Contracting Party of the investment. As far as possible, the investor and the
concerned Contracting Party shall endeavor to settle these disputes by consultations and negotiations
in good faith.2. If these disputes cannot be settled as described in paragraph 1 within ninety (90) days following the
date of the written notification, the dispute can be submitted, as the investor may choose, to the
competent court of the Contracting Party in whose territory the investment has been made or to
international arbitration under:
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a) [...]
b) [...]
c) the Court of Arbitration of the Paris International Chamber of Commerce.
3. [...]
4. Notwithstanding the provisions of paragraph 2 of this Article:
a) only the disputes arising directly out of investment activities for which the necessary permission has
been obtained, if any, in conformity with the relevant legislation of both Contracting Parties on foreign
capital, and that have effectively started, shall be subject to the jurisdiction of the International Center
for Settlement of Investment Disputes (ICSID), provided that both Contracting Parties become
signatories of this Convention, or any other international dispute settlement mechanism as agreed upon
by the Contracting Parties;b) [...]
c) [...]
5. The arbitration awards shall be final and binding for all parties in dispute. Each Contracting Party
commits itself to execute the award according to its national law.
Art. 10 BIT reads:
The present Treaty shall apply to investments in the territory of a Contracting Party made in accordance
with its laws and regulations by investors of the other Contracting Party before or after the entry into
force of this Treaty. However, this Treaty shall not apply to disputes that have arisen before its entry
into force.
On 7/22/2019, the arbitral tribunal of the ICC in Geneva (Switzerland) issued an arbitral award in which it
upheld in part the request of the Petitioner based on the settlement dated 12/9/2013.
With the written pleading dated 1/16/2020, received by the Higher Regional Court on the same day, the
Petitioner requested that the arbitral award regarding a partial amount plus interest be declared enforceable.
With the judgment dated 11/2/2020, the Swiss Federal Supreme Court dismissed the Respondent's appeal
against the arbitral award dated 7/22/2019.
The Petitioner requests that:
1. The ICC arbitral award, issued by the arbitral tribunal consisting of arbitrators John M. Townsend,
Jean E. Kalicki, and Kaj Hobér (presiding), on 7/22/2019, case no. 22236/ZF/AYZ, with the following
content
[Page 5]
I. The objections of the arbitration respondent to the jurisdiction of the arbitral court are
dismissed;II. The arbitral tribunal has jurisdiction for all claims of the arbitration petitioner that arise from
the BIT and are entered in these arbitral proceedings;III. The arbitration respondent has violated Art. 2 (2) BIT by not giving the arbitration petitioner's
investment fair and reasonable treatment;IV. The arbitration respondent must pay the arbitration petitioner damages in the amount of
USD 21,865,554.00, including simple interest in the amount of 4% per year that has accrued in
the period up to the arbitral award;V. The claims of the arbitration petitioner regarding nonpecuniary damage are dismissed;
VI. All other requests and claims are dismissed;
VII. The arbitration respondent must pay interest in the amount of 3 percentage points above
LIBOR with annual capitalization for the adjudged amount of USD 21,865,554.00 as of the time
of notification of the arbitral award.VIII. [...]
ΙΧ. [...]
be declared provisionally enforceable in numbers IV and VII regarding a partial amount of
€11,000,000.00 plus interest of 3 percentage points above LIBOR since 7/31/2019.
Lastly, the Respondent requests that:
The petition for recognition and order of enforcement of the ICC arbitral award dated 7/22/2019,
reference no. 22236/ZF/AYZ, be dismissed in accordance with Art. V (1) letter e) of the UNC [United
Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards].
The Respondent is of the view that the Respondent is not subject to German jurisdiction by virtue of state
immunity, which applies to the Respondent. In addition, the BIT never entered into force. In any event, the
arbitral tribunal misjudged the subject-matter and temporal scope of the BIT. The settlement is nevertheless
invalid.
The Petitioner believes, in accordance with the competence-competence principle, that it is for the arbitral
tribunal to determine its jurisdiction. The arbitral tribunal also rightly assumed its jurisdiction, and even
regardless of whether one views the settlement agreement dated 12/9/2013 or the construction projects as the
investment justifying the jurisdiction, the settlement is valid. The claim to money arising from the settlement is
certainly, according to the wording of Art. 1 (2) letter b) BIT an investment within the meaning of this provision;
additional demands are
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not to be made in this regard. Accordingly, other arbitral tribunals would have also viewed settlement
agreements as an investment under the BIT in dispute here. The Respondent actually regularly takes the
approach of interpreting the protective scope of its bilateral investment treaty as broadly as possible. For
example, in the treaty with Austria, investments are described as “entitlements to money and entitlements to
contractually agreed-upon payment that has an economic value,” among other things. International bilateral
investment treaties usually provide for a broad definition of the term. However, even under the criteria set by
the Respondent, an investment exists. But even if the settlement is deemed invalid, the Petitioner's activities in
Libya in the 1980s and 1990s are, in any case, investments according to the BIT. Investments that were made
before the BIT's entry into force also fall under this. Specifically, the dispute regarding the validity of the
settlement constitutes a dispute arising from or in connection with an investment. For the time of the
occurrence of the dispute, it is irrelevant whether the investment from which the dispute arises has a
connection to an earlier investment. What is decisive is that the specific dispute lies after the BIT has entered
into force. The Respondent cannot invoke state immunity. Grounds for refusal of recognition therefore do not
exist.
II.
The petition for an order of enforcement is admissible, but unfounded.
1. The jurisdiction of the Higher Regional Court of Munich for the decision follows from Section 1062 (1) no. 4,
(2) alt. 2 ZPO [Code of Civil Procedure] in conjunction with Section 7 GZVJu [Regulation on Court Jurisdictions
under the State Ministry of Justice] in the version in force from 7/1/2012 to 4/30/2020 (GVBI [State Law and
Regulation Gazette] p. 295) because assets of the Respondent are located in Bavaria and the petition for the
order of enforcement was received on 1/16/2020.
2. The petition is admissible.
a) The petition is admissible particularly in accordance with Section 1061 (1) ZPO.
b) The petition also meets the procedural requirements. In accordance with Section 1061 (1) sentence 1 ZPO,
the recognition and enforcement of foreign arbitral awards follow the UN Convention of 6/10/1958 on the
Recognition and Enforcement of Foreign Arbitral Awards (UNC). In accordance with Art. IV (1) letter a) UNC,
the properly legalized original of the arbitral award or a properly certified copy of such an original must be
submitted. This is missing here. However, the favorability principle applies in this regard in accordance with
Art. VII (1) UNC, especially since Art. IV UNC is merely to be understood as an evidentiary provision (BGH
[Federal Court of Justice
[Page 7]
of Germany] NJW [Neue Juristische Wochenschrift] 2000, 3650). However, national law requires in Section
1064 (1) and (3) ZPO only the submission of the original or a certified copy of the arbitration award, even for
foreign arbitration awards. The Petitioner submitted a certified copy of the arbitral award and thus satisfied the
national requirements favorable for recognition.
3. But the petition remains unsuccessful in the matter because the claim asserted in the arbitral proceedings
does not fall under the BIT.
In accordance with Art. V (1) letter c) UNC, the recognition of the arbitral award is refused, at the request of the
party against whom it is invoked, only if, among other things, that party furnishes to the competent authority of
the country where the recognition is sought, proof that the award deals with a dispute not falling within the
terms of the arbitration clause. This question is subject to the full review by the Higher Regional Court within
the framework of the order-of-enforcement proceedings, as the aforementioned provisions indicate. A
competence-competence of the arbitral award is not to be recognized if it also does not arise from Art. 8 (5)
BIT. Although the arbitral awards are final and binding for the parties under this provision, this applies only
within the framework of the agreed-upon arbitration clause. Contracts under international law are generally to
be interpreted so that, on one hand, the contracting parties can achieve the common goal aspired to by way of
the contract but, on the other hand, may not be viewed as bound beyond the desired extent. If an arbitral
tribunal misjudges the agreement's scope of application, this does not bind the contracting parties (BGH NJW
2013, 3184/3186; BeckOK [Beck Online-Kommentare] ZPO/Wilske/Markert, 41st ed., Section 1061, margin no.
32; diff. Raeschke-Kessler SchiedsVZ [Zeitschrift für Schiedsverfahren] 2018, 1/3 et seq.). This even applies if,
as in this case, the unsuccessful party instituted cancellation proceedings to no avail in the country where the
arbitral tribunal has its seat in accordance with that country's rules, and the court there affirmed the jurisdiction
of the arbitral tribunal (cf. Raeschke-Kessler SchiedsVZ 2018, 1/3).
a) Provided that the arbitral proceedings are linked to the settlement itself, with the payment obligation set forth
therein, there is no dispute in connection with an investment in accordance with Art. 8 (1) and (2) BIT. This is
because neither the settlement as such nor the claim resulting therefrom constitute an investment within the
meaning of this provision.
As a bilateral agreement, the BIT is generally to be interpreted autonomously. Art 1 (2) of the treaty designates
as an investment any type of asset and follows that up with a list of examples that in part explicitly names
corresponding rights and in part includes claims and means of security associated with investments. It
emerges from this that
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not every claim to money falls under the subject-matter scope of the BIT, but only those associated with an
investment, cf. particularly Art. 1 (2) letter b) of the treaty. Insofar as the Petitioner argues that claims to money
as such are named right in this provision, without having to satisfy additional criteria, this is not convincing. The
claims to money between the reinvested returns and the other rights with a financial value related to an
investment are in the list in Art. 1 (2) letter b) BIT. The fact that the parties to the treaty place under its
protection any claim to money but, in contrast to this, always sought to require for other assets a connection
with another investment seems inconsistent and thus unlikely, given the context. Arbitral tribunals as well as
the Swiss Federal Supreme Court may have assessed this question differently in the past, but the Division is
not bound to corresponding decisions. The reference to bilateral investment treaties of the Respondent with
other states is also fruitless. If an additional scope of protection arises due to the respective wording selected,
this just has no relevance to the understanding of the term “investment” assumed by the parties of the BIT in
dispute here. Nothing else arises from the use of otherwise common definitions in the area of international
bilateral investment treaties. In part, an investment is understood as the transborder capital outlay for the
purpose of purchasing assets (Hofmann/Donath in Ehlers/Fehling/Pünder Special Administrative Law I 4th ed.
Section 8, margin no. 28). Another perspective takes into account the investment or contribution of money or
other economic assets such as title, copyright, or goodwill for the acquisition, production, or distribution of
goods in the investment country, whereby the investment must be made on a permanent basis or over a
considerable period and without direct consideration in the sense of an exchange relationship (Schwab/Walter
Schiedsgerichtsbarkeit [Arbitral Jurisdiction], 7th ed., chapter 41, margin no. 5). Occasionally, by referring to
the so-called Salini formula, a capital outlay of a certain duration, an expectation of yield with simultaneous
entrepreneurial risk, and a contribution of a capital investment for the economic development of the host
country are viewed as representative of the term “investment” (Balthasar/Wehland International Commercial
Arbitration, 2nd ed., C., margin no. 18; Herdegen Internationales WirtschaftsR [International Economic Law],
12th ed., Section 23, margin no. 4). Under none of these definitions does the settlement or the claim resulting
therefrom meet the criteria for the assumption of an investment. They would even result in an outflow of capital
from the investment country. The installment payment agreement in the settlement also does not turn the
settlement into an investment of a certain duration, but instead only extends the capital outflow period. The risk
of argument about the claim is a specifically entrepreneurial risk to an equally small extent. The waiver of a
partial amount from an alleged claim does not
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constitute a contribution to the economic development of the host country, but only relieves its budget for the
time being.
b) As long as one considers as the link to the arbitral proceedings not the settlement, which would place the
legal relationships on a new foundation, or the claim resulting therefrom, but rather the construction projects
carried out until the beginning of the 1990s, it seems doubtful whether these are the subject matter of the
arbitral award anyway and thus also of the order-of-enforcement proceedings. But this can also remain
unanswered, like the question of whether, according to the above statements, investments within the meaning
of Art. 1 no. 2, 8 no. 1 BIT are involved. In any case, the temporal scope of the BIT does not cover the
construction projects. This is because, in accordance with Art. 10 sentence 2 BIT, the treaty does not apply to
disputes that arose before the treaty entered into force. According to the Respondent's submission, the BIT,
now as before, did not enter into force, according to the Petitioner's submission on 4/22/2011. However, the
disputes over the payment obligations of the Respondent arising from the construction projects have existed
since 2009 at the latest. It cannot be said in reply to this that, as a result of the settlement of 12/9/2013, the
relationships of the Parties were placed on a new foundation and the disputes resulting therefrom did not arise
until after the BIT entered into force. This is because, in this case, the link to the arbitral proceedings would not
be the construction projects carried out until the beginning of the 1990s, but rather the settlement.
c) The dilemma also cannot be resolved because one takes into account the conclusion of the settlement to
circumvent the temporal limit of the BIT and, to substantiate an investment, simultaneously uses the fact that
the disputes, despite the settlement, are ultimately rooted in the construction projects. This is because, as
explained above, these two versions are linked to different points with respect to the arbitral proceedings and
are thus mutually exclusive. Each argument that attempts to combine them is thus inherently contradictory. In
addition, this cannot be consistent with Art. 8 (4) letter a) BIT, under which disputes only directly, that is, not
only indirectly, resulting from investments fall under the treaty.
d) If the petition for order of enforcement was thus to be dismissed for the aforementioned reasons, it then
does not come down to justifying the additionally presented objections by the Respondent.
4. Because the petition was to be dismissed, it was also to be determined in accordance with Section 1061 (2)
ZPO that the
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arbitral award is not to be recognized in this regard here in this country.
III.
1. The order for the payment of costs follows from Section 91 (1) ZPO.
2. The setting of the value of the matter in dispute is based on Section 3 ZPO. The value of the matter in
dispute for a petition for order of enforcement is generally assessed according to the main claim asserted
(Division dated 9/30/2020, 34 Sch 13/18 = IBRRS 2020, 2986; OLG [Higher Regional Court] Frankfurt am Main
NJOZ 2018, 1988; BeckOK ZPO/Wendtland Section 3, margin no. 31).
An appeal on the points of law can be filed against this decision. The appeal is only admissible if the case is of fundamental importance
or the development of the law or the assurance of uniform case law requires a decision of the Federal Court of Justice.
The appeal must be filed within a strict statutory period of one month with
Federal Court of Justice
Herrenstr. 45 A
76133 Karlsruhe
The period starts upon notification of the decision.
The appeal must be filed by submitting a petition for appeal.
The petition for appeal must specify the contested decision and include the statement that the petition for appeal is being submitted.
The parties must be represented by an attorney admitted to practice at the Federal Court of Justice.
The reasons for the appeal must also be provided within a period of one month. The period also starts upon notification of the
contested decision.
Appeals may also be submitted as an electronic document. A simple email does not fulfill the legal requirements.
The electronic document must
- possess a qualified electronic signature of the responsible person or
- be signed by the responsible person and submitted via a secure transmission channel.
An electronic document that possesses a qualified electronic signature of the responsible person may be transmitted as follows:
- via a secure transmission channel or
- to the court's Electronic Court and Administration Mailbox set up for the receipt of electronic documents.
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Please refer to Section 130a (4) of the Code of Civil Procedure with respect to secure transmission channels. Please refer to the
Regulation on the Technical Framework for Electronic Legal Communication and the Special Official Electronic Mailbox, as amended,
and the website www.justiz.de for additional requirements regarding electronic communication with the courts.
Signed,
| Sprickmann Kerkerinck Presiding Judge at the Higher Regional Court |
Breinl Judge at the Higher Regional Court |
Dr. Stegbauer Judge at the Higher Regional Court |
pronounced on 10/04/2021
signed
v. Kobylinski, Senior Legal Manager
Registrar of the Court Office
[stamp: BAVARIA HIGHER REGIONAL COURT]
Certified true copy
Munich, 10/06/2021
Capalbo-Bachfisch, Judicial Employee
Document signed
by: Capalbo-Bachfisch, Rosamaria
on: 10/06/2021 12:57 p.m.
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10/14/22
Date