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Dispute settlement: Int’l court orders release of Turkish power ship

International Centre for Settlement of Investment Disputes (ICSID) has ordered immediate release of Karadeniz Power ship Kaya Bey detained in Pakistani waters since April, 2012.

In a statement issued here, the leading Turkish energy company, Karkey Karadeniz ElektrikUretim A.S. (Karkey), welcomed the decision on its Request for Provisional Measures by the tribunal established under the World Bank-affiliated International Centre for Settlement of Investment Disputes (ICSID) on October 16, 2013.

In this decision, the tribunal ruled that it is satisfied pursuant to Article 25(1) of the ICSID Convention that it has prima facie jurisdiction, and has ordered the immediate release of Karadeniz Power ship Kaya Bey (Karkey’s largest Powership and one of four Karkey vessels that has been detained in Pakistani waters since April, 2012).

Following a hearing on October 8, 2013, the ICSID tribunal ruled that Karkey’s Karadeniz Powership Kaya Bey registered under the Turkish flag should be immediately released from detention and allowed to sail to Dubai for repairs.

In the decision, the tribunal stated that the State of Pakistan shall grant all authorizations and clearance required for the vessel’s departure, and shall take any other action necessary or required to allow the vessel to depart lawfully into international waters.

A Karkey spokesperson said: “The decision by the ICSID tribunal to order the release of one of our powerships vindicates the position taken by Karkey that the tribunal clearly has jurisdiction under the Turkey-Pakistan Bilateral Investment Treaty (“BIT”), and that recourse to Pakistani courts is not mandatory under the BIT. This is especially important since Karkey has opted to enforce its rights and remedies at ICSID due to lack of fair and equitable treatment and due to denial of justice in Pakistan.”

The spokesperson also stated: “In light of the decision, a new opportunity has arisen for Pakistan to amicably settle the dispute, especially considering the findings therein regarding the jurisdiction of the tribunal and ICSID.”

Karkey is seeking compensation from Pakistan for breach of Pakistan’s obligations under the BIT in connection with Karkey’s investment in a rental power project (RPP) in Karachi, as well as for loss of earnings and costs associated with Pakistan’s detention of its ship. The dispute has reached the highest levels of government and was discussed during the recent visit to Turkey of Nawaz Sharif, Pakistan’s prime minister.

The company spokesperson said: “Increased economic cooperation between Turkey and Pakistan is in both countries’ best interest. This unnecessary dispute has clouded the climate for bilateral cooperation and damaged investor and business confidence. We hope it can be settled quickly and fairly, preventing it from becoming an obstacle to successful future Turkish collaboration with the Government of Pakistan in the energy and other sectors.”

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