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International Arbitration Forum

Lotus Proje Akaryakıt Enerji Madencilik Telekominikasyon İnşaat Sanayi Taah. Ve Tic. A.Ş. v. Turkmenistan (III), ICSID Case No. ARB/24/13

Case summary

At a glance

Parties
Lotus Proje Akaryakıt Enerji Madencilik Telekominikasyon İnşaat Sanayi Taah. Ve Tic. A.Ş. (Türkiye) v. Turkmenistan
Case no.
ICSID Case No. ARB/24/13
Forum and rules
ICSID Convention arbitration; ICSID Arbitration Rules in force as of 1 July 2022; place of proceeding Paris, France
Treaty
Energy Charter Treaty
Tribunal
Ms. Meg Kinnear (President), Ms. Lucy Greenwood, Mr. John M. Townsend
Sector
Construction of power systems
Outcome
Security for costs ordered; the claimant did not put it in place, and the proceeding was suspended on 18 December 2025. An Order of Discontinuance dated 14 April 2026 is listed, but its text is not included.
Amount
Claimed: no less than EUR 100,000,000.00. Security for costs requested: USD 3 million. Security ordered: USD 2 million.

The dispute

Lotus is a Turkish company that was involved in the construction of power systems in Turkmenistan. It is wholly owned by Lotus Holding Anonim Şirketi, which is in turn wholly owned by Mr. Erdal Çelik. Lotus was declared bankrupt on 24 November 2016 and remains under bankruptcy administration in Türkiye. In its Request for Arbitration, Lotus alleged that Turkmenistan breached the Energy Charter Treaty and caused it loss of no less than EUR 100,000,000.00. The published documents are procedural orders only. They deal mainly with Turkmenistan's request for security for costs, which relied on Lotus's bankruptcy, the weakness of its third-party funder (SSL Danışmanlık Hizmetleri Ltd Şti), and Lotus Holding's failure to pay a USD 983,100.98 costs award in an earlier ICSID case on, Turkmenistan said, identical facts.

Key holdings

  1. Rule 53 of the 2022 ICSID Arbitration Rules is a complete code for security for costs. It displaces the 'exceptional circumstances' test for provisional measures, so cases decided under the earlier rules are largely irrelevant. Third-party funding is a fact to be weighed under Rule 53(3); it is not a criterion in itself and does not on its own compel an order. PO3 ¶¶ 55–65
  2. Lotus cannot pay adverse costs. It is bankrupt and has no assets other than its claim. The funding agreement's cover for 'any unforeseen expenses' and SSL's letter of 3 April 2025 are not undertakings to pay adverse costs. In any event, SSL has minimal capital, with a planned increase of less than USD 300,000 over two years. PO3 ¶¶ 66–72
  3. Lotus is not shown to be unwilling to pay. Lotus Holding's non-compliance with the earlier costs award was by a separate legal entity in a separate case. The balance of harm still favours security, because Lotus has funding to pursue its claim while Turkmenistan could recover little if it won. Both Parties had behaved cooperatively. At that early stage the Tribunal could not make even a prima facie finding that Turkmenistan contributed to the bankruptcy. PO3 ¶¶ 73–79
  4. The Tribunal unanimously granted security for costs, but in the amount of USD 2 million rather than the USD 3 million requested. The security could take the form of a bank guarantee, an escrow deposit or ATE insurance, and must be maintained until the end of the arbitration and payment of any adverse costs award. The Tribunal reserved its decision on the costs of the application. PO3 ¶¶ 80–86
  5. The Tribunal approved an after-the-event insurance policy issued by Neova Katilim Sigorta A.S. and ordered Lotus to put it into effect by 26 November 2025. The Respondent's further drafting changes were helpful but not required. The Tribunal declined, as premature, to rule in advance on whether Lotus could rely in its Reply on documents that were not true rebuttal evidence. PO8 ¶¶ 7–13, 16
  6. The Tribunal refused Lotus's request for a suspension under Rule 54, because the Parties had not agreed to one. Because the security had not been put in place by 26 November 2025, the Tribunal suspended the proceeding under Rule 53(6) from 18 December 2025 and released the hearing dates. If the security was not posted by 20 March 2026, the Tribunal could order discontinuance after consulting the Parties. PO9 ¶¶ 17–24

Procedural history

  1. 13 April 2024Request for Arbitration filed.
  2. 20 May 2024ICSID registers the Request for Arbitration.
  3. 23 January 2025Tribunal constituted; the first session is held by video conference on 19 February 2025.
  4. 27 February 2025Procedural Order No. 1 (procedural rules and timetable) and Procedural Order No. 2 (transparency and confidentiality) issued.
  5. 28 April 2025Procedural Order No. 3: the Respondent's request for security for costs is granted; the Claimant must post USD 2 million.
  6. 2 June – 2 July 2025Procedural Orders Nos. 4 to 6 extend the deadlines for details of the security and for the Memorial, and revise the schedule.
  7. 28 July 2025Claimant files its Memorial on the Merits.
  8. 27 October 2025Procedural Order No. 8: the Neova-Lotus ATE insurance policy is approved and must be in effect by 26 November 2025.
  9. 18 December 2025Procedural Order No. 9: the proceeding is suspended under Rule 53(6) because the security was not posted.
  10. 14 April 2026Order of Discontinuance; its text is not included in the published documents provided.

Tribunal, counsel and experts

Decided by
For the claimant
Alp Arbitration · Juris Avukatlik Ortakligi · Polat & Polat Avukatlık Ortaklığı · Türk Alman Üniversitesi – Türkisch Deutsche Universität
For the respondent
Squire Patton Boggs (US) LLP

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Keywords

Summary generated with AI from the published documents — refer to the award for the authoritative text.

Case ID
(III) ICSID Case No. ARB/24/13
Country
Economic sector
Documents
Section