Ustay Yapi Taahhut ve Ticaret AS v. Libya

Case summary

At a glance

Parties: Üstay Yapi Taahüt ve Ticaret Anonim Şirketi (Turkey) v. State of Libya
Case no.: ICC Case No. 22673/ZF/AYZ; Paris Court of Appeal RG 21/01507
Forum and rules: ICC Rules arbitration seated in Paris; set-aside proceedings before the Paris Court of Appeal (International Commercial Chamber, Pôle 5 – Chambre 16)
Treaty: Turkey–Libya BIT of 25 November 2009 (Article 8); umbrella clause of the Austria–Libya BIT relied on through the MFN clause
Court: Paris Court of Appeal: Daniel Barlow (Presiding), Fabienne Schaller, Laure Aldebert
Underlying award(s): Partial award on jurisdiction of 30 November 2020
Sector: Construction; roads and infrastructure
Outcome: Libya's application to set aside in part the award on jurisdiction was rejected (23 January 2024).
Amount: Libya ordered to pay Üstay EUR 150,000 under Article 700 of the Code of Civil Procedure, plus court costs. Libya had sought EUR 250,000 and Üstay EUR 350,000.

The dispute

Üstay, a Turkish construction company, worked on three projects in Libya. The first was an intercity roads contract, started in 1990 and withdrawn in 1994. It led to a 2011 Darnah court judgment in Üstay's favour and then to a Settlement Agreement of 25 December 2013. Under that agreement the Libyan Ministry of Finance undertook to pay USD 977,344 plus LYD 2,146,162; a Tripoli court later annulled the agreement. The other two were a bridge-and-road project and an infrastructure project, started in 2006 and 2010 with Libyan public entities (RBD and HIB) and suspended by the civil wars of 2011 and 2014. On 16 March 2017 Üstay brought ICC arbitration under Article 8 of the Turkey–Libya BIT. The tribunal's award of 30 November 2020 upheld jurisdiction over the treaty, umbrella-clause and contractual claims. Libya asked the Paris Court of Appeal to set aside that part of the award. It argued that the BIT never entered into force and that none of the projects was a protected investment, ratione temporis, materiae or voluntatis. It also argued that the umbrella clause could not be imported through the MFN clause and that the contracts gave exclusive jurisdiction to the Libyan courts.

Key holdings

The BIT entered into force on 22 April 2011. Article 12(1) requires only written notice to the other Contracting Party. Turkey's notice to the Foreign Committee of the Qadhafi-era government was valid: the National Transitional Council had not yet been recognised, and Libya itself acknowledged the BIT in the joint declaration of 3 January 2014 and in other cases. ¶¶ 30–42
Whether the Settlement Agreement is valid is a question of merits, not of jurisdiction. The set-aside judge may not decide it, because that would mean reviewing the award on the merits. ¶¶ 47–51
Jurisdiction ratione temporis: the Settlement Agreement extinguished the earlier dispute over the 1994 withdrawal of the contract. Libya's failure to perform the agreement created a new, autonomous dispute that arose after the BIT entered into force, so Article 10 does not exclude it. ¶¶ 60–71
Jurisdiction ratione materiae: Article 1(2) covers "every kind of asset", including claims to money. The reference to host-State law sets a legality condition; it does not require the investment to meet Libyan law's definition of investment. The Salini criteria (contribution, duration, risk) do not apply because the BIT does not contain them and the arbitration was not under ICSID. ¶¶ 80–100
Jurisdiction ratione voluntatis: the "effectively started" requirement in Article 8(4)(a) applies only to the disputes that paragraph describes. In any event the investments had started. ¶¶ 104–108, 138
The words "in its territory" in the MFN clause (Article 3(2)) do not prevent importing the umbrella clause of the Austria–Libya BIT, and the clause is not limited to obligations arising from sovereign acts. The tribunal had in any case based its jurisdiction over contractual claims on Article 8 itself. The forum-selection clauses in the contracts do not exclude treaty jurisdiction. ¶¶ 115–125
For the two other projects, it does not matter that the contracts were signed by separate public entities (HIB) or through a joint venture. Libya's arguments that the investments were illegal or fictitious go to the merits. The application was rejected in full, and Libya was ordered to pay EUR 150,000 and the costs. ¶¶ 131–148, dispositif

Procedural history

25 November 2009Turkey–Libya BIT signed. Libya notified its ratification on 23 August 2010 and Turkey on 22 April 2011.
25 December 2013Settlement Agreement on the intercity roads project signed. A Tripoli court annulled it on 25 October 2018, and the Tripoli Court of Appeal confirmed this in 2022.
16 March 2017Üstay commenced ICC arbitration under Article 8 of the BIT.
30 November 2020Partial award: jurisdiction upheld over the treaty, umbrella-clause and contractual claims; by majority, no jurisdiction over the OIC Agreement and customary international law claims.
19 January 2021Libya filed its application to set aside the award in part.
23 October 2023Hearing before the Paris Court of Appeal.
23 January 2024Paris Court of Appeal rejected the set-aside application.
24 April 2024Order of the Judicial Court of Paris. Its text is not among the documents summarised here.