The UK’s Privy Council has dismissed Cukurova Group’s appeal against a court order to pay US$932m in damages to Sweden’s TeliaSonera for failing to execute a 2005 agreement to sell a controlling stake in Turkcell.
The development marks the latest…
The UK’s Privy Council has dismissed Cukurova Group’s appeal against a court order to pay US$932m in damages to Sweden’s TeliaSonera for failing to execute a 2005 agreement to sell a controlling stake in Turkcell.
The development marks the latest blow to Cukurova, controlled by Turkish businessman Mehmet Emin Karamehmet, in its attempts to invalidate the award.
The case relates to a letter agreement entered into in March 2005 concerning TeliaSonera’s potential purchase of Cukurova’s entire 52.91% stake in Turkcell Holding, which owns 51% of Turkcell shares. In May that year, Cukurova, registered in the British Virgin Islands, declared it would not sell the shares to TeliaSonera, prompting the Swedish telco to launch arbitration proceedings in a Swiss tribunal in accord with the letter agreement. The tribunal awarded TeliaSonera the US$932m in damages in 2011, which the high court in the British Virgin Islands later granted permission to enforce. The high court entered judgement for the sum plus interest, bringing the amount owed to more than US$1bn.
Cukurova applied to the Court of Appeal to set aside the judgement, claiming the tribunal did not have the jurisdiction to make the award and that its evidence was not properly considered. The court rejected Cukurvova’s claim, prompting the appeal to the Privy Council.
The Privy Council’s reasons for dismissing Cukurova’s claim include its decision that the Court of Appeal was right to conclude that the tribunal had the jurisdiction to make the award and that Cukurova had ample opportunity to present its case.
Meanwhile, in a separate case, the Privy Council has ordered Cukurova to pay about US$1.6bn to recover a 13.8% stake in Turkcell from Russian investment firm Altimo, another of the mobile operator’s feuding main shareholders. The court has given Cukurova 60 days from the judgement date of a related US court case, decided in late April, to make the payment.
The ongoing dispute between Turkcell’s three major shareholders has prevented the mobile operator from convening an AGM and paying dividends since 2010. The 2014 AGM is set for 29 May.
