Investment arbitration against Turkmenistan: Gleiss Lutz achieves success for German investor in annulment proceedings
On 15 January 2016, an international annulment committee acting under the auspices of the International Centre for Settlement of Investment Disputes (ICSID) of the World Bank in Washington D.C. confirmed an investment arbitral award Gleiss Lutz had won for its client in 2014.
In the confirmed ICSID award, Turkmenistan was ordered to pay the German investor Adem Dogan compensation and damages for its expropriation and destruction of Mr. Dogan’s poultry farm in Turkmenistan, as well as costs and attorneys’ fees. The case represents a precedent for advancing treatment of foreign investors in Turkmenistan in accordance with the rule of law, and underlines the general importance of the investor-state dispute resolution mechanism for smaller and mid-sized businesses.
In 1999, the German investor Adem Dogan established a poultry farm built to the most modern Western standards on land leased by the Turkmen government. Beginning in 2002, the Turkmen government undertook numerous steps to expropriate the profitable farm. Despite intensive diplomatic and political efforts on the part of Germany as well as the then High Representative of the EU for Foreign Affairs and Security Policy, Javier Solana, the poultry farm was expropriated and ultimately almost completely destroyed by the Turkmen military.
In the underlying arbitration commenced in 2009, the arbitral tribunal decided that Mr. Dogan had made an investment protected by the German-Turkmen Bilateral Investment Treaty and that Turkmenistan was liable for damages for violating that treaty. Only days after the arbitral award dated 12 August 2014 was issued, Turkmenistan filed an application for annulment and requested a provisional stay of enforcement of the award.
In the subsequent annulment proceedings, Gleiss Lutz achieved a first success in convincing the annulment committee to stay enforcement of the award only on the condition that Turkmenistan provide security in the amount of the awarded sums. The security – which states are ordered to provide only in exceptional circumstances – was posted by Turkmenistan in December 2014. After an oral hearing in Paris in July 2015, the annulment committee on 15 January 2016 fully confirmed the arbitral award in favor of Adem Dogan and awarded full legal costs and expenses. It is thereby definitively established that the expropriation without compensation of Adem Dogan’s investment in 2007 was contrary to international law and that Turkmenistan is liable for damages.
Adem Dogan was represented in the arbitration as well as in the subsequent annulment proceedings by the following Gleiss Lutz lawyers: Dr. Stephan Wilske (Partner, lead), Dr. Lars Markert (both Stuttgart), Dr. Martin Raible (Partner, Düsseldorf), Todd J. Fox, Dr. Laura Bräuninger (both Stuttgart) and Dr. Melanie Eckardt (Frankfurt).
Gleiss Lutz regularly advises German and foreign investors on questions of international investment law, with regard to the structure of foreign investments as well as with regard to the protection of investments against illegal measures by host states.