Idris Yamantürk, Tevfik Yamantürk, Musfik Hamdi Yamantürk, and Güriş İnşaat ve Mühendislik A.Ş. (Guris Construction and Engineering Inc.) v. Syrian Arab Republic

Case summary

At a glance

Parties: Idris Yamantürk, Tevfik Yamantürk, Musfik Hamdi Yamantürk (Turkey) and Güriş İnşaat ve Mühendislik A.Ş. v. Syrian Arab Republic
Case no.: ICC Case No. 21845/ZF/AYZ; Swiss Federal Supreme Court 4A_516/2020
Forum and rules: ICC arbitration under the 2012 ICC Rules, seated in Geneva; set-aside appeal under Article 190(2) of the Swiss Private International Law Act (PILA)
Treaty: Turkey–Syria BIT (in force 3 January 2006), with Article 4 of the Italy–Syria BIT imported through the most-favoured-nation clause
Court: Swiss Federal Supreme Court, First Civil Law Court: Judges Kiss (presiding), Niquille and May Canellas
Underlying award(s): Final Award of 31 August 2020 (arbitrators not named in the published decision)
Sector: Cement production
Outcome: The investors' appeal against the award was dismissed to the extent it was admissible (8 April 2021). The award of compensation in Syrian pounds stands.
Amount: Claimed: at least USD 88,381,126.75 (DCF method), or in the alternative at least USD 54,690,066.96 (sunk costs). Awarded: SYP 4,565,469,288.64 (principal of SYP 2,044,139,279 plus compound interest of SYP 2,521,330,009.64), with 10% annual compound interest from 31 August 2020. Arbitration costs were EUR 744,700. Court costs of CHF 170,000 were charged to the appellants.

The dispute

Three Turkish nationals and their Turkish construction company held 91% and 87% of two Syrian companies that ran cement plants in north-eastern Syria. In April 2012, armed conflict reached the area and Syrian forces withdrew. Kurdish organisations took control, and the investors lost all access to and control of the plants. The investors brought ICC arbitration under Article VII of the Turkey–Syria BIT. Through the BIT's most-favoured-nation clause, they relied on Article 4 of the Italy–Syria BIT, which gives investors "adequate compensation" for losses caused by war or civil strife. Syria objected to jurisdiction and to the claimants' standing, and disputed the facts and the damages calculation. After the Tribunal awarded compensation in Syrian pounds, the investors asked the Swiss Federal Supreme Court to set the award aside. They argued that it breached substantive public policy because the pound's collapse left them with a fraction of their loss, and that the Tribunal had ruled extra petita by awarding a currency they had not claimed.

Key holdings

The arbitral majority held that, through the MFN clause in Article III(2) of the Turkey–Syria BIT, Syria owed adequate compensation under Article 4 of the Italy–Syria BIT. Syria had paid none. The investors had been permanently deprived of their investment on 1 April 2012. The loss was valued at net book value, SYP 2,044,139,279, and compound interest at 10% was added. On full payment, Syria may demand transfer of the shares. Facts, B
The award does not breach substantive public policy (Article 190(2)(e) PILA). Compensation offends public policy only if it is in extreme disproportion to the value of the lost investment. Failure to grant full reparation, or compensation reasonably related to market value, is not enough. Neither the ECHR nor customary international law is a ground of review in itself. consid. 4.4
The Court calculated, for illustration, that the award was worth about USD 8,948,320 at the award date. That was about 21.1% of the roughly USD 42,498,773 a dollar award with real interest would have produced. Even so, there was no breach of public policy, taking all the circumstances together: the investors had accepted the risks of investing in Syria and earned their revenue in pounds; Syria's liability was purely economic, without attribution of wrongful conduct; and the country was in a severely weakened state after a decade of conflict. consid. 4.5–4.6
Awarding Syrian pounds when the claims were in US dollars is technically an aliud. The Court left open whether arbitrators may depart from the currency of the prayers for relief. It declared the extra petita complaint inadmissible because the appellants had no interest worthy of protection: annulment would only lead to the dollar claim being dismissed, and a new claim was not shown to offer a better result. consid. 5.5
Syria was validly served through its Permanent Mission to the UN in Geneva but did not file an answer. Its letter of 21 January 2021 was not treated as a request to restore the time limit. consid. 3
The appeal was dismissed to the extent admissible. Court costs of CHF 170,000 were charged to the appellants jointly and severally. Syria received no costs award because it had not taken part in the appeal. consid. 6; operative part

Procedural history

3 January 2006The Turkey–Syria BIT enters into force.
5 April 2016The investors file a Request for Arbitration with the ICC under Article VII of the Turkey–Syria BIT.
26 June 2019The Tribunal closes the proceedings.
31 August 2020Final Award: Syria is ordered to pay SYP 4,565,469,288.64 plus 10% compound interest.
26 January 2021Order of the instructing judge: Syria's letter of 21 January 2021 is not treated as a request to restore the time limit.
8 April 2021The Swiss Federal Supreme Court dismisses the investors' appeal to the extent it is admissible.