Summary

Source: icsid.worldbank.org

I. INTRODUCTION

1. This case concerns a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Energy Charter Treaty, which entered into force on April 16, 1998 (the "ECT"), and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on October 14, 1966 (the "ICSID Convention").

2. The Claimant is Lotus Proje Akaryakit Enerji Madencilik Telekominikasyon naat Sanayi Taah. Ve Tic. A.. ("Lotus" or the "Claimant"), a company organized under the laws of the Republic of Türkiye.

3. The Respondent is Turkmenistan (the "Respondent").

4. Together, the Claimant and the Respondent are referred to as the "Parties".

5. The arbitration concerns what Lotus describes as its investment in the construction of energy facilities in Turkmenistan.

6. The Tribunal confirms that it has reviewed and duly considered all of the submissions and arguments presented by the Parties. The Tribunal recites only those points which it considers most relevant for its decision, and an absence of express reference to specific facts or arguments should not be taken as an indication that such facts or arguments have not been considered.

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46. The Tribunal recognizes that the Claimant and its counsel have worked tirelessly to obtain a commercially viable security so that the case may be pursued on its merits. However, the fact remains that, after over 11 months, the Claimant does not appear any closer to being able to post SFC. Indeed, the Claimant is now faced both with finding a new litigation funder and obtaining a source of SFC.

47. Likewise, the Tribunal understands that the Claimant is optimistic about the settlement discussions it is pursuing. However, given the few details available on the status of such discussions, the very informal status of such conversations and the position articulated by the Respondent on settlement, it is difficult to assume that a settlement is likely, much less imminent.

48. The Tribunal recognizes that a discontinuance of this arbitration will constrain, and perhaps prevent, the Claimant, its trustee in bankruptcy, and its creditors from recouping any of its losses allegedly arising out of its investment in Turkmenistan. It will leave the ongoing bankruptcy process to address such losses, apparently with minimal financial resources available to it. However, as a discontinuance pursuant to AR 53(6) does not have res judicata effect, the Claimant could recommence proceedings if it obtains funding and the ability to meet SFC.

49. Mindful of the consequences of discontinuance for the Claimant, the Tribunal has allowed the Claimant numerous opportunities to obtain the necessary security and has acceded to the Claimant's numerous requests for extensions of time to address the matter.

50. However, the situation of the Claimant must be balanced against the interests of the Respondent. Like all parties, the Respondent is entitled to a proceeding that is conducted in "an expeditious and cost-effective manner."19 To date, the Respondent has participated constructively in several remote hearings and filed various submissions in the last year concerning posting of SFC. Nonetheless, this arbitration is on the cusp of a more cost- intensive phase where disclosure, submissions and a hearing will be scheduled. Were the arbitration to continue, the Respondent (and the Claimant) would incur significant costs in defending their interests.

51. Unfortunately, it does not appear likely that the Claimant will be able to post security in this arbitration soon, if at all. The Claimant is in the very difficult position of having lost its funder and not having a source of funding for SFC, and hence unable to take necessary steps to advance its case.

52. In light of these circumstances, the Tribunal believes that the time has come to discontinue this proceeding pursuant to AR 53(6) for failure to comply with the order to post SFC. As a result, it orders the matter to be discontinued effective on the date of this Order.

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IV. DECISION

55. For the foregoing reasons, the Tribunal orders as follows:

a. This proceeding is discontinued pursuant to AR 53(6) as of the date of this order;

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b. The Parties shall bear their own costs and shall be equally responsible for the costs of the Tribunal and the administration of the arbitration to date.

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Footnotes omitted