Wednesday, November 5, 2014

Cukurova Holdings AS v Sonera Holding BV [2014] UKPC 15,

In the case of Cukurova Holdings AS v Sonera Holding BV [2014] UKPC 15, the Privy Council considered an appeal from the Court of Appeal of the BVI. The appellant (Cukurova) argued that permission to enforce an ICC arbitration award as a judgment should be set aside on the following grounds: (i) the tribunal lacked jurisdiction to grant the relief awarded to the claimant (Sonera); (ii) Cukurova was unable to present its case; and (iii) enforcement of the award would be contrary to public policy of the BVI.
 
In a pro-enforcement decision, the Privy Council dismissed Cukurova’s appeal on all three grounds and restated that the role of an enforcing court is not to evaluate whether or not, based on the reasons given, the arbitral tribunal got it right.

Background
 
Turkcell Iletisim Hizmetleri AS (Turkcell) is a mobile phone operator in Turkey. Prior to the events giving rise to the dispute, the Cukurova group and Sonera respectively held 52.91% and 47.09% of the shares in a holding company (Turkcell Holding),which in turn held 51% of the shares in Turkcell. In 2005, Cukurova and Sonera entered into a letter agreement (Letter Agreement) regarding the potential purchase by Sonera of Cukurova’s entire shareholding in Turkcell Holding. The Letter Agreement and the Share Purchase Agreement (SPA) provided for disputes to be resolved by ICC arbitration in Geneva. The SPA was not signed within the period prescribed in the Letter Agreement.
 
Sonera commenced arbitration proceedings under the Letter Agreement, alleging that the parties should be deemed to have agreed the terms of the SPA, that Cukurova was therefore in breach of its obligations under the Letter Agreement to sign and deliver the SPA, and that Cukurova was in breach of the agreed SPA. Cukurova challenged the jurisdiction of the tribunal on the basis that the claim was brought under the Letter Agreement yet sought relief under the SPA.
 
Following several partial awards, the tribunal issued a final award on 1 September 2011 which found that Cukurova was liable to pay damages to Sonera in the sum of US$932million. Sonera sought to enforce the award in a number of jurisdictions, including England and the BVI. The enforcement proceedings in England were stayed by agreement on the express basis that the parties would be bound by the judgment of the Privy Council.
 
The Privy Council held that there was no breach of natural justice, that Cukurova had every opportunity to present its case but failed and/or decided not to do so. The Privy Council held that the basis on which the tribunal reached its decision was clear, that it did not ignore any issues and that, as such, it was not the role of the enforcing court to consider whether the decision was correct either in law or on the facts.
 
 
Source: Herberth Smith Arbitration Notes

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