Sonera v. Çukurova (I)

Sonera Holding B.V. v. Çukurova Holding A.S. (I), ICC Case No. 13856/AVH/EC/GZ
Type of case:
Commercial Arbitration
Date of introduction:
27 May 2005
Status of the case:
Concluded (non-ISDS case)
Claimant’s country of origin:
Netherlands
Respondent's country of origin:
Turkey
Institution:
ICC (International Chamber of Commerce)
Seat of arbitration:
Geneva

Documents of the case

Michael E. Schneider President
Pierre A. Karrer Appointed by the claimant
Christian Rumpf Appointed by the respondent

This document was contributed under the IBA x Jus Mundi Exclusive Partnership for Commercial Arbitration.

Contributor(s):

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    Jus Mundi

Lawyers, other representatives, expert(s), tribunal’s secretary

Final Award

1. INTRODUCTION

1.
This arbitration arose out of a Letter Agreement concluded on 24/25 March 2005 and concerning shares of Turkcell Holding which owns 51% of Turkcell İletişim Hizmetleri A.Ş., the main GSM operator in Turkey.
2.
In the Letter Agreement the Parties agreed to execute and deliver a share purchase agreement for all of the Respondent’s shares in Turkcell Holding ("the Shares"1) against a price provisionally agreed at some US$ 3.1 billion ("the Purchase Price"), provided that two specified conditions were met within a period of 60 days.
3.
The share purchase agreement was not executed and the Claimant commenced arbitration on 27 May 2005, seeking delivery of the Shares against payment of the Purchase Price.
4.
After having made a number of decisions concerning the disposition of the Shares and other action taken by the Parties in the interim, the Arbitral Tribunal rendered on 15 January 2007 a First Partial Award and held, inter alia, that on 9 May 2005 the share purchase agreement was validly concluded between the Parties (the "Share Purchase Agreement" or "SPA"; also referred to as the "Final Share Purchase Agreement" or "FSPA"). The Tribunal decided that the Respondent was obligated to join the Claimant in good faith efforts to bring about Closing under the Share Purchase Agreement.
5.
Closing did not occur and, at a procedural meeting on 16 July 2007 the Claimant sought an award ordering the delivery of the Shares and a valuation of the transaction.
6.
On 29 July 2009, the Arbitral Tribunal issued a Second Partial Award holding that the Respondent must deliver to the Claimant all of the 241’428’330 Class B Shares of Turkcell Holding against the payment of US$ 3’103’761’647. The Tribunal further determined the value of the Shares on 30 June 2007 at US$ 1’809 million.
7.
The Respondent did not deliver the Shares. In a communication of 19 November 2009, the Claimant informed the Tribunal that it no longer pursued a request for delivery of the Shares but that in the last phase of the arbitration it seeks an award for damages in an amount of not less than US$ 1'809 million, plus interest.

2. THE PARTIES

2.1. The Claimant

8.
The Claimant, SONERA HOLDING B.V. ("the Claimant" or "Sonera"), is a private limited liability company organised under the laws of the Netherlands, having its seat at Rodezand 34 k, 3011 AN Rotterdam, the Netherlands. Sonera is a wholly-owned subsidiary of TeliaSonera AB, a Swedish company listed on the Stockholm and Helsinki stock exchanges ("TeliaSonera").
9.
The Claimant was represented in this arbitration by Mr John HARDIMAN, Ms Fern MECHLOWITZ and, in earlier phases of the arbitration, by Mr James CARTER, all of the law firm Sullivan & Cromwell L.L.P., One New Fetter Lane, London EC4A lAN, England. They were assisted by (i) Mr Ender ÖZEKE, Hergüner Bilgen Özeke, Süleyman Seba Caddesi, Siraevler 55, Akaretler, 34330 Besiktas -Istanbul, Turkey, and (ii) Mr Saverio LEMBO, Bär & Karrer, 12, quai de la Poste, CH-1211 Geneva 11.

2.2. The Respondent

10.
The Respondent is ÇUKUROVA HOLDING A.Ş. ("the Respondent" or "Çukurova"), a joint stock corporation organised under the laws of the Republic of Turkey with its registered office at Büyükdere Cad. Yapı Kredi Plaza A Blok, Kat 16 1, Levent, 34330 Istanbul, Turkey. Çukurova is part of the Çukurova Group, a majority of which is owned by Mr Mehmet E. KARAMEHMET, who is also the Chairman of the Board of Çukurova.
11.
Throughout most of the proceedings, ÇUKUROVA INVESTMENTS N.V. (previously referred to as "the Second Respondent" or "Çukurova Investments"), a subsidiary of Çukurova with its seat in the Netherlands Antilles, was a party to the arbitration as the Claimant had directed a claim for compensation of arbitration costs against it. At the Hearing of 13-14 September 2010, the Claimant withdrew its cost claim against Çukurova Investments and hence Çukurova Investments was removed from this arbitration.2
12.
In these proceedings the Respondent was represented by Messrs Pierre-Yves TSCHANZ and Frank SPOORENBERG, Tavernier Tschanz, llbis rue Toepffer, CH-1206 Geneva, Switzerland. They were assisted by (i) Dr Ziya AKINCI, Akinci Law Office, Rumeli Cad., Birlik Apt. 42/13, Nişantaşi 34363 - Istanbul, Turkey, and (ii) Messrs Xavier FAVRE-BULLE and Paolo Michele PATOCCHI, Lenz & Staehelin, 30, route de Chêne, CH-1211 Geneva 17.
13.
The Claimant and the Respondent are hereinafter jointly referred to as "the Parties".

2.3. The Arbitral Tribunal

14.
The members of the Arbitral Tribunal have been nominated and appointed as follows:
15.
Dr Pierre A. Karrer, Lavater-Strasse 98, 8002 Zürich, Switzerland, has been nominated by the Claimant and has been confirmed by the ICC International Court of Arbitration on 19 August 2005.
16.
Professor Dr Christian Rumpf of RUMPF Rechtsanwälte, Herdweg 24, 70174 Stuttgart, Germany, has been nominated by the Respondent and has also been confirmed by the ICC International Court of Arbitration on 19 August 2005.
17.
Michael E. Schneider of LALIVE, rue de la Mairie 35, 1211 Geneva 6, Switzerland has been jointly proposed by the Co-arbitrators as Chairman of the Arbitral Tribunal and was confirmed by the ICC International Court of Arbitration on 20 October 2005.

3. THE FACTS OF THE DISPUTE

18.
A detailed account of the facts of this dispute has been given in the First Partial Award of 15 January 2007 and in the Second Partial Award of 29 July 2009. Therefore, the present Final Award provides merely a summary of this account to the extent it is necessary for a proper understanding of the issues decided here, referring in particular to Chapter 3 in each of the two partial awards. This summary is followed by an account of the events having occurred subsequent to the Second Partial Award.

3.1. The Facts Prior to the Issuance of the First Partial Award

19.
Sonera and Çukurova are shareholders of Turkcell Holding A.Ş., a joint stock corporation organised under the laws of Turkey ("Turkcell Holding"). Turkcell Holding owns a controlling 51% stake in Turkcell İletişim Hizmetleri A.Ş. ("Turkcell") which operates a mobile telephone service mainly in Turkey.
20.
The share capital of Turkcell Holding is and was at all material times divided into two classes: Class A shares, amounting to 47.09 % of the equity stake in Turkcell Holding, and Class B shares, constituting the remaining 52.91 % of the equity stake. The Class A shares are owned by the Claimant. Together with affiliates and nominee shareholders, the Respondent owned all of the outstanding Class B shares in Turkcell Holding (the "Class B shares" or simply the "Shares"); in circumstances which are described in further detail below in paragraph 39, the Shares have been transferred to Çukurova Telecom Holdings Limited, a subsidiary of the Respondent. These shares are the principal subject matter of the present dispute.
21.
In addition to the interest in Turkcell Holding, Çukurova holds a direct interest in Turkcell of approximately 13.5 %.
22.
The relationship between the Parties is governed by the Turkcell Holding Shareholders Agreement, concluded on 21 October 1999 between Sonera Corporation (an affiliate of the Claimant and TeliaSonera), the Respondent and Çukurova Investments N.V.3 This agreement sets out the Parties’ respective rights with respect to Turkcell, providing for cooperation regarding the governance of Turkcell and related issues via a holding company structure.
23.
As a result of financial difficulties in the context of the Turkish banking crisis, Çukurova concluded on 31 January 2003 an agreement with the Turkish Savings and Deposits Insurance Fund (SDIF) and the Turkish Banking Regulation and Supervision Authority (BRSA). According to that agreement, Çukurova had to pay a total amount of some US$ 2.7 billion.
24.
On 4 August 2004 the SDIF and the BRSA concluded with Çukurova a Supplementary Agreement,4 restructuring Çukurova’s debt. This agreement provided for a substantial reduction of the debt against an accelerated repayment schedule of twenty monthly instalments totalling some US$ 1.96 billion.5 The first six instalments were US$ 15 million each. This was to be followed as from the end of March 2005 by thirteen instalments of US$ 135 million each. The Supplementary Agreement further provided that in case of more than four defaults in these payments altogether or two consecutive defaults, the entire agreement would be terminated, the 31 January 2003 Agreement would be revived and Çukurova’s debt would revert to the amount under the earlier agreement.
25.
In order to meet the payment obligations under the Supplementary Agreement, especially those starting at the end of March 2005, Çukurova entered into negotiations with Sonera for the sale of the Shares.
26.
On 25 March 2005 the Parties signed an agreement "regarding the prospective purchase" by the Claimant of an aggregate of 241’428’330 Class B shares of Turkcell Holding representing all of the outstanding Class B shares (the "Letter Agreement").6 The provisionally agreed aggregate purchase price for all of these Class B shares was US$ 3'103'761’647. The Letter Agreement provided for the execution of a Final Share Purchase Agreement and contained conditions and rules with respect to its negotiation and execution. On the same day the Parties also initialled a "Prospective Share Purchase Agreement" (the "SPA"), marked "Draft of March 25, 2005".7
27.
The Letter Agreement, which provides that it "shall be governed by, and construed in accordance with, the laws of the Republic of Turkey",8 contained the following detailed dispute settlement clause in its Section 5.4, providing for ICC Arbitration in Geneva:

"Any dispute, controversy or claim arising out of or in connection with this Agreement, if not amicably resolved by the Parties within 60 days of notification thereof, shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce (the "ICC Rules"), except as such ICC Rules may be modified below.

(a) The place of arbitration shall be Geneva, Switzerland.

(b) The language of the arbitration shall be English.

(c) Each Party to the dispute, controversy or claim in question shall nominate one arbitrator within the time limit fixed by the ICC Rules, and the two-party-nominated arbitrators shall agree on the third arbitrator within 30 days of their appointment by the International Court of Arbitration of the International Chamber of Commerce (the "ICC Court"), failing which the third arbitrator shall be appointed by the ICC Court. Where there are multiple claimants or multiple defendants, said multiple claimants or defendants shall jointly nominate an arbitrator within the time limit fixed by the ICC Rules, and the two party-nominated arbitrators shall agree on the third arbitrator within 30 days of their appointment by the ICC Court; provided, however, that if the multiple claimants or the multiple defendants do not agree on a jointly-nominated arbitrator within the time limit fixed under the ICC Rules, such appointment shall be made by the ICC Court.

(d) Any award of the arbitral tribunal shall be final and binding on the Parties. The Parties hereby waive any rights to appeal any arbitration award to, or seek determination of any question of law arising in the course of arbitration from, jurisdictional courts.

(e) Any award of the arbitral tribunal may be enforced by judgment or otherwise in any court having jurisdiction over the award or over the person or the assets of the owing Party or Parties. Applications may be made to such court for judicial recognition of the award and/or an order for enforcement, as the case may be."

28.
As part of the communications that followed the execution of the Letter Agreement, Sonera sent a new draft of the Share Purchase Agreement9 and a draft of the Shareholders’ Agreement.10
29.
On 29 April 2005 Turkcell’s General Assembly approved the sale of the Shares to Sonera,11 an approval that was necessary in order to avoid the requirement under the Shareholders Agreement that Sonera make a tender offer for all outstanding Turkcell shares in order to complete the transaction.12
30.
During the time following the execution of the Letter Agreement, Çukurova faced difficulties in meeting its obligations under the Supplementary Agreement. Funding from the Claimant was not available to Çukurova.
31.
On 6 May 2005, a Turkish newspaper wrote about rumours according to which "Alfa Telekom has offered a better proposal for the Turkcell shares to be transferred and that the Russians have offered Mr Karamehmet more money and more power in the company’s management. (...) As a result, it is discussed that Mehmet Emin Karamehmet is creating new alternatives in relation to the transfer of both YKB and the Turkcell shares [...]."13 The Alfa Group (also referred to as "Alfa") is a foreign group with interests in telephone services in Turkey. Questioned about this press report, Çukurova denied that it had "accepted any offer from any party with respect to its interest in the entities that are the subject matter of the said agreement."14
32.
The Letter Agreement provided that it would terminate sixty days after its execution if by that time the Final Share Purchase Agreement "had not been executed and delivered by all parties thereto." A delegation of representatives of the Claimant travelled to Istanbul on 22 May 2005 for signing the Final SPA but no representatives of the Respondent were available. Thus, the Final SPA was not signed and none of the other agreements or documents related to the sale of the Shares was executed.15
33.
On 23 May 2005, Çukurova publicly announced that it would not proceed with the transaction. The announcement stated that Çukurova would "start working for possible alternatives" due to "the public opinion formed and the statements made at the General Assembly Meeting of Turkcell İletişim A.S. for keeping Turkcell, a highly prestigious company, under the control of a Turkish company, and the reactions in the public for the request of an exemption from the mandatory tender offer requirement [...]."16
34.
Also on 23 May 2005, the Claimant issued a press release announcing that Çukurova had failed to execute the final Share Purchase Agreement by the deadline contemplated by the Letter Agreement.17
35.
On 27 May 2005 the Claimant filed the Request for Arbitration initiating the present proceedings.
36.
The proceedings during the first phase of the arbitration have been described in the First Partial Award and will be summarised below. The decisions of the First Partial Award made on 15 January 2007, which shall be set out in detail below, included in particular a declaration that the Final Share Purchase Agreement had been validly concluded on 9 May 2005 in the version communicated to the Respondent on 19 April 2005. It also held that the Respondent was obligated to join the Claimant in good faith efforts to bring about Closing under the Final Share Purchase Agreement.
37.
In the meantime, at an undisclosed moment during the first half of 2005, the Respondent and the Alfa Group entered into a transaction by which, against an interest in the Shares, Alfa provided funds permitting the Respondent to meet its obligations to the Turkish authorities.
38.
The Claimant sought to prevent the transfer of the Shares to Alfa by several applications for interim measures, but withdrew its requests because no adequate arrangements for security were found.
39.
In the context of its transaction with the Alfa Group, the Respondent transferred in November 2005 the Shares to a wholly-owned subsidiary, Çukurova Telecom Holdings Limited ("Çukurova Telecom"), a company registered in the British Virgin Island ("BVI"). The Respondent then sold to Alfa Telecom Turkey Limited a 49% stake in Çukurova Telecom for approximately US$ 1.6 billion and obtained a loan from Alfa for an additional US$ 1.35 billion, secured by the remaining 51% of Çukurova Telecom.18

3.2. The First Partial Award and Subsequent Events

40.
On 15 January 2007 the Arbitral Tribunal issued its First Partial Award in the following terms:

1. The Arbitral Tribunal has jurisdiction to award the claims made by the Claimant in these proceedings;

2. The Final Share Purchase Agreement was validly concluded on 9 May 2005 between the Claimant and the First Respondent, in the version communicated to the Respondents on 19 April 2005 and this agreement remains in full force and effect;

3. The First Respondent is obligated to join the Claimant in good faith efforts to bring about Closing under the Final Share Purchase Agreement;

4. The Tribunal remains seized of the matter until the Parties report on the outcome of their efforts to reach Closing under the Final Share Purchase Agreement and any claims then brought before the Tribunal have been resolved;

5. The conclusion of the Share Purchase Agreement does not relieve the First Respondent of the liability which it may have as a result of its failure to execute the Final Share Purchase Agreement and to proceed to Closing;

6. Both Respondents, jointly and severally, are ordered to pay to the Claimant US$ 118’614 as compensation for its legal costs concerning the proceedings on jurisdiction;

7. All other claims are reserved.

41.
The First Partial Award was notified to both Parties on 24 January 2007.
42.
Despite the Claimant’s requests that the Respondent make good faith efforts to bring about the Closing under the Final Share Purchase Agreement as required by the First Partial Award, such Closing did not occur.
43.
The Claimant reverted to the Arbitral Tribunal seeking an award (i) ordering the Respondent to deliver the Shares and (ii) making a valuation of the transaction.

3.3. The Second Partial Award and Subsequent Events

44.
On 29 July 2009 the Arbitral Tribunal issued a Second Partial Award in the following terms:

1. The First Respondent must deliver to the Claimant all of the 241’428’330 Class B Shares of Turkcell Holding representing all of the outstanding Class B shares against the payment of US$ 3’103761’647;

2. The Tribunal determines the value of the Shares on 30 June 2007 at US$ 1’809 million;

3. The Claimant’s claim for damages is reserved;

4. The claims for arbitration costs are reserved.

45.
The Second Partial Award was notified to both Parties on 6 August 2009.
46.
The Respondent did not transfer the Shares to the Claimant and thus did not comply with the Second Partial Award.
47.
Instead of specific performance, the Claimant now seeks an award for damages in an amount of not less than US$ 1’809 million, plus interest.

4. THE ARBITRATION PROCEEDINGS

4.1. The First Phase of the Arbitration leading up to the First Partial Award

48.
The arbitration proceedings were initiated by the Claimant’s Request for Arbitration, dated 27 May 2005. The Arbitral Tribunal was formed as described above in Section 2.3 of this Award.
49.
The Terms of Reference were finalised and executed and the Procedural Timetable was fixed at a hearing held in Geneva on 9 and 10 November 2005.
50.
The procedure during the first phase of the proceedings has been reported in detail in Section 4 of the First Partial Award and is briefly summarised in Section 4.1 of the Second Partial Award. The principal issue of this first phase concerned the question whether a Share Purchase Agreement had been concluded, requiring the delivery of the Shares or whether the Letter Agreement had lapsed in the absence of a timely completion of the Share Purchase Agreement. In addition to these questions of substance, the Respondents’ objections to jurisdiction had to be addressed.
51.
With respect to the merits of the dispute, the Parties exchanged written submissions during the first phase. Hearings were held on 9 and 10 November 2005, 12 December 2005 (telephone conference), 21 December 2005 (telephone conference) and 1 and 2 February 2006.
52.
On 15 January 2007, the Arbitral Tribunal rendered the First Partial Award the terms of which have been set out above in Section 3.2.
53.
The First Partial Award was notified to the Parties and received by each of them on 24 January 2007.

4.2. The Second Phase of the Arbitration leading up to the Second Partial Award

54.
The procedure during the second phase of the proceedings has been reported in detail in Section 4.2 of the Second Partial Award and is briefly summarised below.
55.
The second phase concerned two principal issues, dealt with in separate tracks: (i) the Claimant’s continued request for specific performance, i.e. for the delivery of the Shares (Track 1), and (ii) the Claimant’s request for valuation of the Shares or rather of the contractual opportunity it lost as a result of the Respondent’s breach of the SPA (Track 2). The Claimant made its request for valuation in light of the uncertainty regarding the ownership of the Shares. To support its request for valuation, the Claimant submitted expert evidence from Professor Robert C. Lind of CRA International in London, United Kingdom. Professor Lind’s statement was first submitted in a version dated 24 September 2007 and then replaced by an Amended Witness Statement, submitted on 10 December 2007. This latter document, referred to as Professor Lind’s Amended Report was the principal basis for the Claimant’s valuation in the second phase of the arbitration and also formed the basis of the Claimant’s damage quantification in the third phase.
56.
The Parties exchanged written submissions during this second phase. Procedural meetings or hearings were held in Geneva on 16 July 2007, on 9 November 2007, and on 21-22 January 2008.
57.
The Claimant's claim for damages for late performance was not dealt with in the second phase and expressly reserved to be dealt with at a later stage of the proceedings, if necessary.19
58.
On 29 July 2009, the Arbitral Tribunal rendered the Second Partial Award the terms of which have been set out above in Section 3.3.
59.
The Second Partial Award was notified to the Parties and received by each of them on 6 August 2009.

4.3. The Proceedings during the Third Phase of the Arbitration

60.
Relying on a communication from the Respondent dated 11 September 2009, the Claimant sent a letter to the Tribunal on 19 November 2009 informing of its irrevocable decision not to pursue, and thereby to waive, its claim for delivery of the Shares, and instead to pursue a claim for damages against the Respondent for non-delivery of the Shares.20
61.
Further to correspondence with the Parties, the Tribunal gave leave to the Claimant for producing a submission on damages.
62.
On 18 December 2009 the Claimant submitted a "Memorandum in Support of its Request for Damages", accompanied by an opinion of Professor Robert C. Lind, described as Supplemental Witness Statement, and documentary evidence.
63.
By letter dated 6 January 2010, the Respondent requested leave to file a statement of defence on damages by 31 March 2010. The Claimant objected on the next day to the requested time limit for the Respondent's statement of defence.
64.
In Procedural Order N"14 issued on 11 January 2010, the Tribunal granted leave to the Respondent until 31 March 2010 to submit its full statement of defence on damages. The Tribunal explained that since the receipt of the Respondent’s communication of 11 September 2009, the Claimant had some three months to prepare its Memorandum in Support of its Request for Damages and that, therefore, a similar period should be granted to the Respondent for its defence.
65.
In the same Order, the Tribunal invited the Claimant to clarify whether, in addition to the damages claimed in its Memorandum of 18 December 2009 and the claim for arbitration costs, it has any other claims for damages or otherwise in this arbitration. Further, the Tribunal invited the Claimant to submit a full statement concerning its claim for interest.
66.
In response to Procedural Order No. 14, the Claimant confirmed on 12 January 2010 that it has no further claims in this arbitration other than those set out in its 18 December 2009 submission and a claim for arbitration costs. On 22 January 2010, the Claimant filed a detailed statement regarding its claim for interest.
67.
On 31 March 2010, the Respondent submitted its "Answer to Claimant’s Request for Damages", together with an Expert Report of Mr Chris Osborne, a Legal Opinion and an Additional Legal Opinion of Dr Kemal Erol, a Legal Opinion of Professor Metin Günday, an Opinion of Mr Hayati Şahin, as well as factual and legal exhibits. The Respondent informed the Tribunal that it will require a hearing.
68.
Upon invitation by the Tribunal, both Parties made statements on 13 April 2010 on the necessity to hold a hearing and on the purpose and estimated duration of such hearing. The Respondent made further comments on 16 April 2010. The Parties expressed diverging views concerning the need for further written submissions and for a hearing.
69.
In Procedural Order N° 15 of 28 April 2010 the Tribunal decided to hold a hearing in Geneva, at which the Parties’ quantum experts Professor Lind and Mr Osborne would be heard. The Tribunal further invited the Parties to encourage Messrs Lind and Osborne to meet before the hearing in order to establish points of agreement and to draw up a list with their main points of disagreement, to be submitted to the Tribunal prior to the hearing.
70.
Finally, the Tribunal stated that if the Claimant intended to produce further evidence specifically in response to the argument and evidence produced by the Respondent’s submission of 31 March 2010, it must do so by 12 May 2010. The Tribunal made it clear that no new expert opinions could be produced without its prior written approval.
71.
By letter of 5 May 2010, the Claimant requested permission to submit short reports from two tax experts in response to the arguments set forth by the Respondent’s expert, Mr Hayati Sahin.
72.
On 12 May 2010, the Claimant submitted a Declaration of Mr Jan Henrik Ahrnell, along with a volume of exhibits, to respond to factual evidence presented by the Respondent in its 31 March 2010 submission on damages.
73.
The Tribunal welcomed the direct consultation of the Parties’ experts in a letter of 2 June 2010 and invited the Parties to inform when a joint report could be expected. The Tribunal pointed out that by inviting the experts to consult, it did not express any view as to the relevance of the data on which Mr Osborne disagrees with Professor Lind, or about the question whether any of these data may still be considered by the Tribunal.
74.
With letter of 13 July 2010, and given that the Respondent had no objections, the Tribunal granted the Claimant the possibility to submit short reports from its tax experts by 23 July 2010.
75.
On 19 July 2010, after some difficulties to coordinate schedules and based upon the Parties’ and its own availability, the Tribunal fixed 13 and 14 September 2010 as dates for the Hearing. The Tribunal stated that at the Hearing the Parties’ quantum experts Messrs Lind and Osborne would be heard and that, in addition, the Parties’ counsel and any legal experts would be given an opportunity to address matters relevant for the Tribunal’s decision.
76.
Upon an extension of the time limit, the Claimant submitted two tax expert reports on 30 July 2010.
77.
On 24 August 2010, the Respondent submitted to the Tribunal a text dated "August 2010" and entitled "Joint Statement of Experts" together with a table entitled "Alternative Valuation by Mr Osborne Based on Changes and Updates to Professor Lind’s Model". In the cover letter to this submission, the Respondent complained that Professor Lind had not complied with the directives in the Procedural Order and requested that the Tribunal order him to "comply with Procedural Order No. 15 and cooperate with Mr Osborne to produce a list limited to points of disagreement based on the information contained in the reports as filed".
78.
The Claimant protested on the same day by email. On 26 August 2010 it developed this protest and gave its own account of the expert consultation. It stated that the text submitted by the Respondents was a "version of the 6 August draft joint report incorporating Mr Osborne’s comments on it". It added, however, that this draft "sufficiently sets out the expert’s /recte: experts’/ views on the critical areas of disagreement to provide a framework for discussion at the September hearing". The Claimant requested, however, that Professor Lind be permitted to respond briefly to Mr Osborne's commentary.
79.
The Respondent replied on 27 August, denying the content of the Claimant’s letter and maintaining its position.
80.
With letter of 7 September 2010, the Tribunal informed the Parties that it accepted the Joint Statement of the Experts in the version submitted on 24 August 2010 and announced that it would give both experts an opportunity to present their position at the Hearing, including comments on the Joint Statement. The Tribunal noted that if the Claimant wished to submit, prior to the Hearing, written comments by Professor Lind on the Joint Statement, as submitted by the Respondent, it was free to do so.
81.
With respect to the tax experts, the Tribunal replied to correspondence from the Parties dated 20 August 2010 and stated that the tax issue potentially had a considerable impact on the valuation and that the tax experts’ presence at the Hearing appeared as useful and indeed desirable.
82.
The Hearing was held from 13-14 September 2010 in Geneva. It was attended by the Parties, their counsel and experts, and by Mrs Claire Hill as court reporter. The Secretary of the Tribunal prepared Summary Minutes of the Hearing and sent them to the Parties on 16 September 2010.
83.
At the Hearing, the Parties’ counsel argued the legal issues related to the Claimant’s request for damages, including whether and to what extent the Tribunal’s previous decisions have any impact on the award that now has to be made, and the question of the relevant date for the determination of damages. Further, the Parties’ valuation experts, Professor Robert C. Lind and Mr Chris Osborne, as well as the Parties’ tax experts, Mr Leon Coşkun and Mr Hayati Şahin were heard.
84.
At the end of the Hearing, the Tribunal enquired with the Parties whether they had further evidence to produce. As this was not the case, the record was closed and the Tribunal agreed with the Parties on the timetable for the remainder of the proceedings.21
85.
On 15 September 2010, further to a discussion held at the conclusion of the 13-14 September hearing, the Respondent’s expert Mr Osborne circulated alternative versions of the calculations that he had handed out during the hearing, adding some calculations based on the "average market value" of the Turkcell Shares, discounted to various dates.
86.
On the following day, the Claimant protested that Mr Osborne’s additional calculations go beyond reformats of calculations already on record as suggested at the end of the hearing, but constitute new calculations and objected to this information being introduced at this time. The Respondent wrote on the same day that the Claimant’s objection is unwarranted as Ms Osborne’s tables fell squarely within what he had been expected and authorized to do. The Claimant replied on 17 September 2010, pointing out that Mr Osborne's calculations on the basis of the average share Turkcell share price were new calculations; it maintained its objection. The Respondent reiterated on 21 September that the computations were asked for by the Tribunal, without the Claimant objecting thereto at the time. The Tribunal will address the Claimant’s objection below in Section 8.5, when dealing with the Market Capitalisation.
87.
On 21 September 2010, as agreed at the 13-14 September Hearing, each party submitted additional legal authorities on Turkish law.
88.
After a one-day extension, the Parties filed their Post-Hearing Briefs simultaneously on 19 October 2010. In its Post-Hearing Brief the Claimant discussed inter alia the calculations which Mr Osborne had submitted on 15 September 2010. On 1 November 2010, their claims regarding the costs of the arbitration.
89.
Together with its 1 November 2010 letter the Respondent also produced newspaper articles dated 21 and 22 October 2010 and argued that the Turkish Government had taken the position that the Turkish telecommunication sector should not be under foreign control. On 4 November 2010, the Claimant asked that the Tribunal disregard the Respondent’s new submission as the record is closed. The Respondent disputed entirely the contents of the Claimant’s letter of 4 November 2010.
90.
On 8 November 2010, each Party filed comments with respect to the other Party’s cost submission. As decided at the end of the 13-14 September hearing and noted in the Summary Minutes, the receipt of these submissions by the Tribunal closed the proceedings for all purposes of Article 22 of the ICC Rules.
91.
On 22 December 2010, the Claimant made an additional submission on costs to complement its 1 November 2010 submission, referring to the reservation therein to supplement its request for certain legal fees and costs that had not yet been invoiced to the Claimant. With letter to the Tribunal of 28 December 2010, the Respondent objected to the Claimant’s additional submission on costs as belated.
92.
Pursuant to Article 24(2) of the ICC Rules, the ICC International Court of Arbitration extended the time limit for rendering the Final Award at its session of 3 September 2009 until 31 December 2009, at its session of 3 December 2010 until 31 March 2010, at its session of 4 March 2010 until 30 June 2010, at its session of 3 June 2010 until 30 September 2010, at its session of 2 September 2010 until 31 December 2010, at its session of 2 December 2010 until 28 February 2011, at its session of 3 February 2011 until 30 April 2011, at its session of 7 April 2011 until 31 May 2011, at its session of 12 May 2011 until 30 June 2011, at its session of 1 June 2011 until 31 July 2011, at its session of 7 July 2011 until 31 August 2011, and at its session of 4 August 2011 until 30 September 2011.
93.
Pursuant to Article 27 of the ICC Rules, the ICC International Court of Arbitration decided to approve this Final Award at its session of 25 August 2011.

5. THE POSITIONS OF THE PARTIES AND THEIR RELIEF SOUGHT

94.
The Parties’ initial positions were summarised in the Terms of Reference and further developed during the course of the proceedings. This section of the Final Award is limited to a general overview of these positions as they are set out in the Parties’ Post-Hearing Brief related to the third phase of the proceedings. To the extent that they are relevant for the Tribunal’s decision, the positions will be presented in further detail below in the context of the examination of the issues which the Tribunal has to decide.

5.1. The Claimant’s position

95.
The Claimant argues that the Second Partial Award contains all of the factual and legal findings necessary to resolve the damages phase. It submits that the damage it suffered as a result of the Respondent’s refusal to honour the SPA is the value of that agreement to the Claimant, which has already been determined by the Tribunal in the Second Partial Award to be US$ 1’809 million.
96.
The Claimant relies on the principle of Turkish law which requires that the non-breaching party must be put in the same position as that in which it would have been but for the breach. It considers that the correct date from which to measure damages is the date of default, i.e. 30 June 2007, the date at which the Respondent as the breaching party should have performed its contractual obligation. The date at which the Claimant waived specific performance is not the correct date from which to measure damages because the Claimant did not provide the Respondent with an extension to perform the contract ("grace period").
97.
The Claimant submits that Professor Lind’s valuation model should stand as it was set forth in his Amended Report of 10 December 2007 and incorporated in his 17 December 2009 supplemental witness statement, in which he stated that the Claimant’s damages, as of 30 June 2007, were at least US$ 1’809 million. It argues that the Respondent’s expert did not present an alternative damages calculation or damages model.
98.
According to the Claimant, the two errors in Professor Lind’s calculations pointed out by Mr Osborne, namely that Turkcell’s fundamental value as originally determined (1) omitted certain Turkcell costs, and (2) understated the growth rate for certain Ukrainian costs, do not change the damages assessment of US$ 1’809 million. According to Professor Lind’s model, when the fundamental value of a company falls below its market capitalisation, the market valuation should be used to value the asset. According to the Claimant, Professor Lind’s analysis is consistent with economic theory which provides that, when the market price significantly exceeds the perceived value of an asset, what a rational economic entity once considered to be a long term investment may become an attractive asset for sale. Using market value here would lead to damages as of 30 June 2007 of at least US$ 1’809 million.
99.
The Claimant submits that the Tribunal should disregard Mr Osborne’s statement that the Claimant’s damage would be negative by US$ 1’372 million. Instead, if damages were assessed as of 19 November 2009, using Mr Osborne’s changes to Professor Lind’s calculations, damages would amount to US$ 2’082 million.
100.
The Claimant argues that the Turkcell interest to be acquired as per the SPA is more valuable to the Claimant than not disbursing the SPA purchase price of US$ 3.1 billion. It submits that changes in the value of the Shares after the default date should be disregarded. Had the Respondent performed the contract on 30 June 2007, the Claimant would have enjoyed nearly one year of Turkcell’s high stock prices.
101.
The Claimant submits that it has established causation between the Respondent’s breach of contract and the damage. The Tribunal already ruled that the Respondent’s payment obligations to the SDIF do not excuse or justify the breach of contract. Even if the Respondent could not have otherwise obtained the necessary financing for its SDIF debts, this would not negate its damage liability.
102.
The Claimant argues that he Tribunal already determined that a 20% illiquidity discount was appropriate with respect to the Class A shares and submits that the Tribunal should maintain that position. It is irrelevant whether the Claimant intended to sell its Turkcell shares because the mere ability to sell is an important component of the value of any asset, regardless of whether the owner intends to sell it or not.
103.
Finally, the Claimant states that it would not incur tax liability if, following its purchase of the Class B shares, it tried to sell part or all of its interest in Turkcell.

5.2. Relief sought by the Claimant

104.
In its Post-Hearing Submission dated 19 October 2010, the Claimant seeks the following relief:

Claimant respectfully requests that the Tribunal award damages to the Claimant in an amount not less than $1’809 million, plus interest according to the rates reported by the Turkish State-Owned Banks to the Turkish Central Bank from 30 June 2007 until the date that Respondent pays the damage amount to Claimant.

105.
Further, the Claimant seeks in its submission on the costs of the arbitration the following relief:

Claimant respectfully requests that the Tribunal order Respondent to pay Claimant USD $7’788’182.14 which represents the total costs that Claimant incurred in this arbitration through 30 September 2010.

The cost claim was increased to US$ 7’982’357.88 by a submission of 22 December 2010.

5.3. The Respondent’s position

106.
The Respondent argues that the Claimant did not suffer any loss because Professor Lind’s calculation of the fundamental value of the Turkcell shares, once corrected, must be reduced by US$ 4 billion and produces a negative value and thus a zero damage.
107.
According to the Respondent, the fundamental value claimed by the Claimant, which was adopted in the Second Partial Award and resubmitted by the Claimant as proof of damage, is effectively abandoned and was replaced with a new and belated valuation. The Respondent submits that the Arbitral Tribunal should ignore Professor Lind’s new value and maintain the previously adopted fundamental value model, deducting however the US$ 4 billion of mistakes.
108.
The Respondent argues that the damage is to be measured from the date at which the Claimant waived its specific performance claim, i.e. 19 November 2009. It submits that the Claimant’s damages claim is made on the basis of Article 106 of the Turkish Code of Obligations ("TCO") and pursuant to this provision damages should be assessed at the time when the claimant elects to convert its right to specific performance into a claim for damages. The Respondent submits that Article 96 TCO is not applicable because it only applies when performance is impossible; once the Claimant had chosen to act based on Article 106 TCO, it can no longer apply Article 96 TCO.
109.
The Respondent argues that economic developments up through November 2009 should be taken into account for the purposes of the damages assessment. In light of the time value of money, so the Respondent’s argument, the Claimant has been nearly as well off, or even better off, having the US$ 3.1 billion purchase price since 2007 than it would have been if the SPA had been performed in 2007. The Respondent submits that a value of the Turkcell Shares at 30 June 2007 may not be taken into consideration unless the Claimant proved that it would have resold the Shares at that time.
110.
According to the Respondent, the Claimant’s request to value the alleged removal of an illiquidity discount with respect to the Turkcell Shares is not justified since the Claimant did not intend to sell the Turkcell Shares. In the Respondent’s view Professor Lind is wrong in stating that the mere fact that an asset is restricted lowers its value. The absence of synergies tends to establish the absence of a discount due to illiquidity. The Respondent further submits that the Claimant did not incur a loss because of transfer-related barriers, costs and the resulting discount in price and because of the tax costs incurred when selling its interest in Turkcell.
111.
Finally, the Respondent argues that the Claimant would have suffered its alleged loss anyway since the Respondent would have defaulted under the agreement with SDIF and the Claimant would have failed to obtain the authorizations from the Turkish authorities.

5.4. Relief sought by the Respondent

112.
In their Post-Hearing Brief dated 19 October 2010, the Respondent makes the following prayer for relief:

1. To dismiss Sonera’s request for damages.

2. To order Sonera to pay all the costs of this arbitration, including legal costs incurred by Respondent, on a full indemnity basis.

6. JURISDICTION

113.
The Respondent’s objection to the Arbitral Tribunal’s jurisdiction has been considered in detail by the Tribunal in its First Partial Award and has been rejected there.22 It is also addressed briefly in Section 6 of the Second Partial Award and therefore need not and indeed may not be considered again here.

7. THE CLAIMANT’S ENTITLEMENT TO DAMAGES

114.
The Claimant had sought performance of the Final Share Purchase Agreement concluded on 9 May 2005 and of the Partial Awards of 15 January 2007 and 29 July 2009. By the Second Partial Award the Tribunal had ordered the then First Respondent to deliver the Shares to the Claimant. Despite a formal request from the Claimant on 10 August 2009, the Respondent failed to deliver the Shares. By its letter of 19 November 2009 the Claimant waived its claim to delivery and claimed damages.
115.
The basis for the damages claim is Article 106 (2) TCO which allows the creditor to seek performance of a contract or, if it cannot obtain performance, to claim damages. For its quantification the Claimant relies on Article 96 TCO.
116.
The Respondent objected, in passing, to the Claimant’s change from a claim for performance of the FSPA to a claim for damages. It argued that the Arbitral Tribunal’s award granting performance was res judicata.23 The objection has not been pursued further in later submissions. It can be dismissed immediately: Article 106 (2) TCO entitles the creditor to waive its claim for performance and to seek damages. The fact that the claim for performance has been confirmed by a judgment or an arbitral award in no way affects this right of the creditor to claim damages. Indeed, in the Second Partial Award the Tribunal had expressly reserved for the Claimant "a later claim for such damages [for non-delivery of the Shares], in case the Claimant decides not to pursue any longer the claim for delivery".24
117.
A claim for damages as that made here, requires the claimant to establish that the respondent breached an obligation, to show a damage and to prove causation; the respondent may avoid liability by showing that it was not at fault when not performing the obligation. These principles are not in issue; both Parties refer to them.25
118.
It is undisputed that the Respondent failed to perform its obligation to deliver the Shares; the requirement that the breach of an obligation be established has been met.

7.1. The Respondent’s Fault

119.
The Respondent argues that its failure to perform occurred for no fault of its own. It explains that it "needed urgent financing, and thus it was compelled to enter and entered into the Alfa transaction."26 The urgent need for money is neither an event of force majeure nor is it normally a justification for the breach of an obligation. In any event, in the present case the explanation is not conclusive since the Respondent would have received large amounts of money from the SPA had it complied with this agreement and cooperated constructively in reaching closing.
120.
The Tribunal concludes that the Respondent was at fault when it refused to deliver the Shares.

7.2. Causation

121.
The Respondent also denies that the requirement of causation has been met. It argues that, in any event, the Claimant would not have received the Shares, because other circumstances, independent of the Respondent’s action, would have prevented this result. Since the damage would have occurred even in the absence of the Respondent’s breach, so the Respondent’s argument, this breach is not the cause of the damage and the Claimant is not entitled to obtain compensation from the Respondent.
122.
The Respondent describes two scenarios by which it seeks to show that the Claimant would not have received the Shares and therefore would have suffered the same damage.
123.
According to the first scenario, Çukurova required funding to meet its obligation under the arrangements with the SDIF and BRSA; in the absence of such funding it would have faced bankruptcy and the SDIF would have enforced its pledge over the Shares.27 According to the Respondent, in this scenario, the Claimant would not have received the Shares.
124.
The scenario is hypothetical; in reality the Respondent did obtain the funding through the transaction with Alfa. According to the explanations provided by the Respondent and its expert,28 the Respondent obtained, as payment for an indirect transfer of some of the Turkcell Shares, some US$1.6 billion and a loan of some US$1.35 billion. The Respondent’s expert explains that the Alfa transaction was completed on 25 November 2005;29 but neither the Respondent nor its expert explain when funding from this transaction was available for servicing the Respondent’s debt.
125.
The Prospective SPA, initialled on 25 March 2005 together with the signature of the Letter Agreement at the basis of the present dispute, had provided that it would terminate if by 30 July 2005 Closing had not occurred; this provision remained unchanged in the Final SPA which, according to the First Partial Award was concluded on 9 May 2005. The Tribunal concludes that, in the Parties’ expectations, Closing, and with it the payment of the purchase price, could have occurred by 30 July 2005.
126.
The Tribunal is of the view that, in the absence of the Respondent’s bad faith, Closing and payment by 30 July 2005 was well possible. In other words, the transaction with the Claimant could well have provided funding for the Respondent long before the completion of the Alfa Transaction. It thus may have avoided the Respondent’s bankruptcy. Even if bankruptcy had occurred, the administrator or the beneficiary of the pledge may have implemented the sale of the Shares as agreed with Çukurova.
127.
In view of these considerations, the Tribunal does not accept that, in the absence of the Respondent’s bad faith, the hypothetical course of events described by the Respondent would have prevented the delivery of the Shares.
128.
However, even if one admitted that funding from the Alfa transaction was indispensible for avoiding the Respondent’s bankruptcy, the Respondent had a choice. It could comply with the terms of the transaction with the Claimant or with those of the Alfa transaction. Implementing the Alfa transaction meant breach of the Sonera Agreement. The damage caused to the Claimant is the consequence of the Respondent’s choice and not the result of some exterior events. The Tribunal does not accept that this choice should be the justification for the Respondent’s breach and should interrupt the chain of causation.
129.
The second scenario relies on the requirement for the Claimant to obtain certain authorisations before it could acquire the Shares. Under the circumstances these authorisations were not obtained:

1. The Competition Board refused to grant the requested authorisation;

2. The Claimant never filed an application with the Capital Market Board;

3. The Telecommunication Authority to which the Claimant did apply never replied.

130.
The Respondent argues that the "Claimant must establish that the Authorisations would have been given but for Respondent’s breach".30
131.
The Claimant denies that it has the burden of proof in this respect. It argues that, as found by the Tribunal in the Second Partial Award, the Respondent in bad faith prevented that the authorisations were granted; it also argues that in the circumstances there is every reason to believe that the authorisations would have been granted. In this respect it refers to other cases in Turkey where authorisations as those required here were granted to other telecommunication companies and to cases outside Turkey where the Claimant received authorisations similar to those required in Turkey.
132.
Since at least the authorisations by the Competition Board and by the Telecommunication Authority are necessary for the Claimant to acquire ownership or, at least to enjoy fully its ownership in the Shares, it is for the Claimant to demonstrate that the requirement of these authorisations would not have prevented its full ownership. Conclusive evidence for this demonstration would be the authorisations themselves. However, the Claimant was prevented by the Respondent’s breach from making this demonstration.
133.
When considering the evidence before it, the Tribunal must therefore take into account the Respondent’s responsibility for the absence of a conclusive demonstration.
134.
The Claimant has shown that authorisations as those required here have been granted in Turkey. The Respondent does not deny this; it merely explains that in the cases referred to by the Claimant special circumstances prevailed. However, it has not given any indication why the situation of the present transaction should differ from those referred to by the Claimant and why in the Claimant’s case the authorisations should not be granted.
135.
In considering the circumstances of the present case the Tribunal starts from the observations that, when they concluded their Letter Agreement on 24/25 March 2005 and subsequently the Share Purchase Agreement, the Parties were aware that the authorisations were necessary and that the failure of obtaining them could prevent the transaction to materialise. Indeed they provide expressly for this eventuality by including them in the SPA as part of the Conditions Precedent to Obligations of the Purchaser. However, they must have had at least a serious expectation that tire authorisations would be granted; otherwise they would not have engaged the efforts and costs for progressing towards its completion.
136.
In these circumstances, the Tribunal accepts that there was a joint assumption by the Parties that the authorisations would be granted or, in any event, that there were reasonable chances that this would occur. For the Tribunal now to conclude that the transaction has to be treated as having failed for lack of the authorisations would require that there be at least some indications which would rebut this joint assumption of the Parties. The mere need for these authorisations and the abstract possibility of a refusal are not sufficient for the Tribunal to construe the facts against the Claimant and conclude that it has failed to meet its burden of proof.
137.
In the Second Partial Award the Tribunal has considered at length the requirements concerning these authorisations and the circumstances under which it occurred that they were not granted. In so doing, the Tribunal made it clear that it considered the question from the perspective of the Parties contractual obligations and that it did not intend in any way to interfere with the powers and discretion of the Turkish authorities. The Tribunal confirms this position with respect to the explanations that follow:
138.
When considering the decision of 9 May 2007 by which the Competition Board rejected the application of the Claimant, the Tribunal concluded that the "Board was decisively influenced by the presentation of the transaction which the First Respondent had made to it";31 and "that the conduct of the First Respondent and in particular its letter of 16 February 2007 were the decisive factors which caused the negative decision of the Competition Board".32
139.
The Tribunal has not seen any other reasons why the Claimant’s application to the Competition Board was rejected. It must conclude that, in the absence of the bad faith conduct of Respondent the application would have been granted. The causes for the refusal of the authorisation by the Competition Board are part of the Respondent’s breach of its obligations; the refusal, therefore, cannot be relied upon by the Respondent to contest causation.
140.
With respect to the authorisation by the Telecommunications Authority, the Tribunal also concluded that the Respondent "prevented the condition to occur and did so in bad faith".33 There is no reason to believe that, in the absence of the bad faith conduct of the Respondent, the authorisation would not have been granted.
141.
Finally, the Respondent produced with its Post-Hearing Brief an extract from a Turkish newspaper. Since the record of these proceedings was closed at the end of the September 2010 Hearing,34 this production is inadmissible. The Tribunal nevertheless observes that, if the extract were admissible, it would be of no assistance to the Respondent. Indeed, the Respondent relies on the articles in order to show that "the Turkish authorities are likely to protect Turkish national interest and thus Turkish shareholders".35 The articles relied upon by the Respondent are a poor basis for alleging that the Turkish authorities, when granting the authorisations considered here, would discriminate against foreigners. In any event, the Respondent fails to demonstrate or even allege that the transaction considered here is against the Turkish national interest or against that of a Turkish shareholder. In other words, the allegation of the Respondent seeking to demonstrate that there could be a possible risk that the authorisations would be refused is entirely inconclusive.
142.
In view of these considerations and in the light of the evidence produced, the Tribunal does not accept that the need for authorisations be taken as justification for denying causation between the Respondent’s breach of contract and the damage caused.

7.3. Conclusion on the Claimant’s Entitlement to Damages

143.
The Tribunal accepts that Respondent must compensate the damage which the Claimant suffered from the Respondent’s breach of its obligation to deliver the Shares.
144.
Remains the question of the definition and quantification of the damage which must be compensated, the core of this final phase of the dispute.

8. THE QUANTUM OF THE DAMAGE

8.1. Relevant Damage Assessment Methods

145.
The Parties agree that the damage must be assessed under Turkish law, in the Claimant’s words, by putting the Claimant "in the position that it would have been in if there had been no breach and the contract had been duly performed";36 or, in the Respondent’s words by putting the Claimant "in the situation which would be his had the obligor performed when the obligation became due".37
146.
Turkish law, like Swiss law, provides for a simplified method of assessing damages in the case of commercial sales. Article 188 TCO (corresponding to Article 191 Swiss CO), in its paragraphs 2 and 3, provides that, in commercial transactions, the damage is assessed by reference to a concrete replacement purchase ("Deckungskauf") or a market price.
147.
In the present case the transaction concerns the sale of shares and frequent reference has been made to their market price. However, in order to avoid confusion, a clear distinction must be made: the shares which are the object of the transaction are those of Turkcell Holding; they were frequently referred to simply as "the Shares". These shares must be distinguished from other shares and therefore will also be referred to as the Holding Shares. The value of Turkcell Holding consists in its ownership of 51% of Turkcell İletişim Hizmetleri A.Ş., the mobile telephone operator, referred to as Turkcell; the shares of this company will be referred to as the Turkcell Shares.
148.
The Turkcell Shares are publicly traded. The price of the Turkcell Shares varied considerably since the time of the Letter Agreement. The information provided by the Parties’ experts was expressed primarily in terms of the Turkcell Market Capitalisation, i.e. total value of all Turkcell Shares at the then quoted price at the Istanbul Stock Exchange. Shortly after the effective date of the SPA the total value of the Turkcell Shares was some US$ 10.97; by the time at which the Shares had to be delivered according to the Second Partial Award (30 June 2007) this value had risen to some US$ 18.8 billion; it continued to rise until it reached some US$ 26 billion by 16 December 2007 and then dropped again to US$ 11.5 billion by 30 June 2008 and perhaps lower, but then rose again to US$ 14.1 billion by 19 November 2009.
149.
From the data provided by the Parties experts the following development in the market capitalisation of the Turkcell Shares can be derived;

• US$ 10.97 billion on 23 May 2005,38

• US$ 15,479 billion on 30 June 2007,39

• US$ 18,832 billion on 21 September 2007,40

• US$ 26,019 billion on 16 December 2007,41

• US$ 11,505 billion on 30 June 2008,42

• US$ 14,106 billion on 19 November 2009,43

150.
The Turkcell Shares were majority held directly and indirectly by the Parties, with only some 16.3% freely floating on the Istanbul Stock Exchange. According to Professor Lind, were held on 21 September 2007 as follows:44

13.07% the Claimant directly,

24.02% the Claimant indirectly through its share in Turkcell Holding,

4.22% Çukurova Group directly (according to Mr Osborne the Group held 13.3%),

26.98% Çukurova Group indirectly, through its share in Turkcell Holding; this is the share in Turkcell (held indirectly through the Holding) which the Claimant would have gained by the transaction,

31.71% Others (according to Mr Osborne 22.6%), of which 16.3% free float.

151.
Had the Respondent delivered its shares in Turkcell Holding as required under the SPA, the Claimant would have had full control of Turkcell Holding and, through this control, of the 51% of the Turkcell Shares owned by the Holding; together with the directly owned shares, it would have held some 64% of the Turkcell Shares.
152.
As a result of the transaction, the Claimant would therefore have acquired, through the ownership of the Holding Shares, majority control over Turkcell and, as sole owner of Turkcell Holding, the possibility of disposing of the 51% of the Turkcell Shares held by the Holding as well as of the 13.07% which it held prior to the transaction.
153.
Both Parties and their experts occasionally refer to the "market value" of the Holding Shares.45 Now the Holding Shares are not quoted and thus have no easily determined market value. The market value considered is that of the Turkcell Shares which are quoted on the Istanbul Stock Exchange. The Tribunal therefore has considered whether under Turkish law the damage may be quantified by reference to Article 188 TCO.
154.
Article 188 TCO and its Swiss law equivalent Article 191 Swiss CO in their paragraph 3 provide that, where the goods sold have a market price or are quoted on an exchange, the buyer may claim the difference between the contract price and the market price at the day fixed for delivery, without having actually to make a replacement purchase ("Deckungskauf").
155.
According to its express wording, this provision applies to "ticari muamelesinde bayi" which may be translated by "commercial sales" or "commercial transactions".46 In the French, German and Italian versions of the Swiss law equivalent the expressions "en matière de commercé’/"im kaufmännischen Verkehr"/"Nei rapporti commercial" are used. The term is understood as a sale to a purchaser who intends to resell the goods.47
156.
According to a decision of the Swiss Federal Supreme Court referred to by the Respondent, the criteria of this damage assessment can be applied by analogy to other sales transactions.48 However, the Turkish Court of Cassation does not seem to have taken the same view as its Swiss equivalent. Rather it emphasises that Article 188 (2) and (3) TCO may be applied only to "commercial sales". According to the decisions of the Court of Cassation, these provisions do not apply to purchases covering the personal needs of the buyer or intended for its own use.49
157.
It is undisputed between the Parties that the Claimant bought the Shares in order to gain full control over Turkcell with the objective of operating itself the company; it did not buy the Shares for the purpose of reselling them as a commercial transaction. Following the jurisprudence of the Turkish Court of Cassation, Article 188 TCO is therefore not applicable.
158.
The inapplicability of Article 188 TCO results also from another consideration, irrespective of the court decisions referred to: a replacement purchase for the Holding Shares was and is not possible, since (apart from the Claimant) only the Çukurova Group holds shares of Turkcell Holding. Only the acquisition of the Respondent’s Holding Shares would have allowed the Claimant to gain control over the Holding and thereby be in a position to remove the constraints imposed by the indirect nature of its ownership of the Turkcell Shares.
159.
A replacement purchase of Turkcell Shares also would not have provided adequate relief: the number of free floating Turkcell Shares which could have been bought at the Istanbul Stock Exchange, even if the Claimant could have bought all of them on the day fixed for delivery, would not have been sufficient for the Claimant to acquire the majority of the Turkcell Shares. The objective of the transaction could not have been achieved by such a partial replacement purchase.
160.
In these circumstances, a direct reference to the market price is neither admissible under Article 188 TCO nor is it a suitable method for assessing the Claimant’s damage. A different approach must be followed. This approach finds its basis in Article 106 TCO (corresponding to Article 107 Swiss CO). In the present case, the Claimant has, as authorised by this provision, waived its claim for performance and claimed damages for non-performance.
161.
The damages claim pursuant to Article 106 TCO, like in Swiss law, is governed by Article 96 TCO (Article 97 Swiss CO).50 The debtor must compensate the damage suffered by the creditor unless it shows that it had no fault in the non-performance. In the present case the non-performance was deliberate and, at least after the First Partial Award, in full knowledge of the binding nature of the obligation to perform the contract and deliver the Shares.
162.
As explained above, the Parties agree that the Claimant must be placed in the position in which it would be if the contract had been correctly performed. Indeed, in their argument about the assessment of the damage, the Parties consider the situation of the Claimant who would have received the Holding Shares against the payment of the agreed price. The damage of the Claimant thus results essentially from not having the Holding Shares at the agreed time; some differences between the Parties result from their disagreement concerning the date at which this valuation must be made, a question which shall be considered below in Section 8.3.

8.2. Has the Damage been Quantified in the Second Partial Award in a manner that binds the Arbitral Tribunal?

163.
Referring to the valuation made by the Second Partial Award, the Claimant argues that the Tribunal "has already determined that the value of the transaction to Claimant was $1’809 million" and concludes that the Tribunal "should stand by its earlier assessment and award damages of $ 1'809 million".51
164.
The Respondent argues that the Second Partial "bears no relationship with a damage calculation"52 and, in any event, "is superseded".53 The Respondent argues, inter alia, that the valuation was made without the Tribunal considering a claim for damages. It also argued that the substantive changes since the Partial Award, including the waiver of the claim for performance, replaced the claim for specific performance by a claim for damages; that the Claimant had no actual loss since it did not sell the Shares; and that valuation in the Second Partial Award did "not constitute a proper and credible valuation because Claimant and its expert witness admitted the calculation errors they made...".54
165.
In the Second Partial Award the Tribunal responded to a request for valuation which the Claimant had made in the context of its claim for performance, i.e. the delivery of the Shares. The Claimant had referred to enforcement proceedings in Turkey and the valuation of a transaction which in this context may be made by Turkish courts. The Tribunal explained that it did not intend to assume any function in the proceedings for enforcement of its awards in Turkey; the valuation in the Second Partial Award was made merely in response to a request of the Claimant which the Tribunal considered admissible. While the Second Partial Award did not identify a specific purpose or objective for which the valuation was made, the Tribunal made it quite clear that it did "not consider", at the stage of the Second Partial Award, "a claim for damages for non-delivery of the Shares".55 It is therefore correct to say that the valuation made by the Tribunal, as the Respondent argues, was not an assessment of the damages.
166.
The valuation which the Tribunal must make in the present Final Award has the specific purpose of damage quantification. The assessment of the damages to which the Claimant is entitled and which the Tribunal makes in the present Final Award is therefore different from that made in the Second Partial Award. In some respects the valuation of the transaction in the Second Partial Award and the damage assessment in the present Final Award are similar if not identical. In particular, in both cases the Tribunal compares the subjective value of the Shares to the Claimant with the price which the Parties agreed for them. However, given the difference in the objective of the quantification in the present Final Award, the Tribunal does not consider itself bound by the valuation of the Second Partial Award and shall consider this valuation afresh for the purpose of the present damage quantification.
167.
In any event, the valuation in the Second Partial Award was based on a quantification by the Claimant’s expert which, subsequently to the Second Partial Award, the Respondent’s expert demonstrated to be substantially wrong. Professor Lind accepted the need for correction and presented a modified quantification.56 Therefore, and irrespective of the difference in the objective of the valuation in the Second Partial Award, the Tribunal may not base itself on the original wrong valuation. Indeed, both the Claimant and its expert present other valuations of the Holding Shares in order to support the assessment of the Claimant’s loss.
168.
When proceeding with the damage quantification the Tribunal shall consider afresh the time by reference to which the quantum of the damage must be determined, the methods to be used for this quantification and the results produced by these methods. The Tribunal considers itself free in its conclusion which on some points may be identical with those of the Second Partial Award and in others differ from it.
169.
Both the Claimant and the Respondent have presented a number of other valuation of the value of the Shares. They have shown that, for the purpose of damage assessment, valuations other than those included in the Second Partial Award are available and may be considered. Since the Tribunal made it clear in that award that it was not concerned with assessing damages, the Second Partial Award cannot have any binding effect with respect to the method of assessing the damage which now must be quantified.

8.3. The Reference Date

170.
The Claimant takes the position that the purchase price and the value of the asset should be compared as of one date.57 To this effect, the reference date must be 30 June 2007, the date at which the SPA, in the absence of the breach, would have been performed;58 it relies, in its principal valuation on the assessment made by the Tribunal in the Second Partial Award.59
171.
In the Respondent’s position the reference date must be 19 November 2009, the date at which the Claimant waived specific performance and claimed damages.60 However, the Respondent recognises that account must be taken of the change in the situation of the Claimant between the time when the Holding Shares should have been delivered in correct performance of the Share Purchase Agreement and the date when the Claimant waived the claim for performance. In the Respondent’s view the date at which the Holding Shares should have been delivered against the payment of the price is 30 July 2005. Accordingly, the Respondent adjusts the Claimant's damage at 19 November 2009 by taking account of the costs and benefits which the Claimant would have had during the period between 30 July 2005 and 19 November 2009.61
172.
When considering this controversy, the first question that has to be determined is the date at which, for the purpose of the damage assessment, the Holding Shares should have been delivered. In the Second Partial Award, the Tribunal examined the performance of the Share Purchase Agreement as it would have been implemented had the Respondent complied with its obligations under that agreement and the First Partial Award. It concluded that, in the absence of obstruction by Çukurova, Closing would have occurred around the end of June 2007. It fixed the reference date at 30 June 2007.62
173.
The Respondent argues that, in fixing the reference date at 30 June 2007, the Tribunal "changed the contract (...) although it had no mandate to proceed with such a change".63 The Tribunal did no such thing. It interpreted the contract and determined when, under the specific circumstances prevailing here, the time would have come that the Respondent had to deliver the Holding Shares. Moreover, the power of a tribunal to set a date for delivery of goods is expressly set out it Article 106 (1) TCO, providing that a buyer may request a court to fix the time by which the seller must make delivery. In substance the decision concerning the delivery date made by the present Arbitral Tribunal is such a determination under Article 106 (1) TCO.
174.
The Tribunal has reconsidered the reasons for its determination of the delivery date in the Second Partial Award; it found them persuasive and, for the purpose of the damage quantification, confirms 30 June 2007 as the date when the Holding Shares should have been delivered.
175.
The second question concerns the argument of the Respondent according to which it is not the date at which the Holdings Shares should have been delivered to the Claimant which is determining for the damage assessment but the date when the Claimant waived its claim for performance.
176.
The Respondent refers to Article 106 TCO (corresponding to Article 107 Swiss CO) and argues that the damage must be assessed by reference to the date when the creditor waives the claim for performance and elects to seek damages. It relies on Turkish and Swiss court decisions and legal writers. Most of the passages quoted state that "in principle the instant at which the obligee waived from performance is taken as basis".64 The reasoning for this position is given by Schenker whose book is quoted at length by the Respondent and who explains that the damage arises from the renunciation to the claim for performance. According to Schenker the creditor holds the claim for performance as an asset and loses this asset by waiving the claim which is replaced by a claim for damages; the primary claim for performance is transformed into a replacement claim ("Ersatzforderung"), the claim for damages.65 The relevant date, according to Schenker, is the moment at which the creditor renounces the claim for performance.66
177.
However, in a passage which the Respondent does not quote, Schenker explains:

"Nach dem klaren Willen des Gesetzgebers ist bei Wahl von Schadenersatz wegen Nichterfüllung das Erfüllungsinteresse des Verzugsgläubigers zu befriedigen; der Verzugsgläubiger soll vermögensmässig so gestellt werden, wie wenn die primär geschuldete Leistung rechtzeitig erbracht worden wäre. Der Ersatz des Leistungswerts (Nr. 621) allein stellt den Verzugsgläubiger indessen vielfach noch nicht in die gleiche Lage, wie wenn rechtzeitig erüllt worden wäre: Es verhält sich gleich wie bei einer verspäteten Erfüllung; hier hat der Verzugsschuldner zusätzlich zur verspäteten Leistung den Schaden zu ersetzen, der dem Verzugsgläubiger aus der Verspätung erwächst (Art. 103 Abs. 1; vgl. auch Art. 107 Abs. 2 erster Teil). Bei der Wahl von Schadenersatz wegen Nichterfüllung hat der Verzugsschuldner zusätzlich zum Leistungswert, der als Ersatz für die ausgebliebene Leistung geschuldet ist, den weiteren Schaden zu ersetzen, der dem Verzugsgläubiger durch die Verspätung adäquat verursacht wurde."67

English translation:

"According to the clear intention of the legislator, whenever the obligee has selected damages for non-performance, its interest in the performance of the transaction ["Erfüllungsinteresse"] must be satisfied; the obligee must be put into the financial position it would have been in had the primary obligation owed been satisfied in a timely manner. The compensation for the value of the performance (No 621) alone, however, in many cases does not put the obligee into the same position it would have been in in the event of timely performance: the situation must be treated as that of late performance; here the defaulting obligor, in addition to making the late performance, is liable for damages due to the late performance (Art. 103 para. 1; see also Art. 107 para 2 first part). When the obligee has opted for damages for non-performance, the obligor, in addition to being liable for the value of the performance that is owed in compensation for the missing performance, must compensate the obligee for its further damage adequately suffered as a result of the delay."

178.
This is, in a more detailed manner, the same principle which can be found also in the decision of the Turkish Court of Cassation68 quoted by the Respondent:

"Such damage covers all the interest that the performance would provide to the creditor if it was performed, timely."69

179.
Respondent itself recognises the principle that account must be taken of the evolution between the time when the contract had to be performed and the time when the Claimant renounced the claim to performance. However, it does so by speculative calculations presented by its expert. These speculations include "three different costs of equity in this assessment to give a plausible range of net returns that Sonera could have targeted on the US$3.1 billion" purchase price of which the expert assumes that it would be paid not in July 2005 but on 19 November 2009. As to the revenue which the Claimant would have earned during this period if it had received the Holding Shares when they should have been delivered, the Respondent's expert takes not the revenue which a majority owner of Turkcell would have obtained from this majority position but simply the dividends paid to the holders of Turkcell Shares.70
180.
The basic principle, as recognised by both Parties,71 is that the creditor is placed in the position in which it would have been, had the debtor performed correctly. Therefore, any damage calculation which is based on the value of the Holding Shares at the time when the Claimant renounced the claim to performance must also take into consideration the differences in value and all costs and revenue during the two periods. If these changes, costs and revenue are assessed correctly, there should be no difference between the valuation by reference to the situation at the date when the debtor had to perform and the date when it creditor renounced its claim to performance, provided correct and complete allowance is made for the changes between the first and the second date. If, however, it turned out that in a specific situation the creditor would be worse off by quantification at the date of renunciation, the debtor would have to show why the consequences of this deterioration during the delay of the debtor should be borne by the creditor and not the debtor who is responsible for the delay.
181.
Given the speculative nature of the assumptions about the differences in value, cost and revenue, the Tribunal finds it difficult to accept that, for damage quantification in situations as the one in the present case, reference should be made to the date of renunciation to performance and not to the date of breach. Indeed the Turkish Court of Cassation, in a more recent decision, referred to the date of breach:

"The date on which the undertaken obligation should have been performed is taken into account for calculation of the positive damages. In other words, the Damage is calculated on the date on which the debtor goes into default. The prevailing scholar opinion is also in line with the practice explained above (Prof. Dr. M. Kemal Oguzman - Prof. Dr. M. Turgut Öz, Law of Obligations - General Provisions; Second Edition, p. 374, 393; Ord. Prof. Dr. H. V. Veliededeoglu - R. Özdemir, Commentaries of Turkish Code of Obligations, 1987, p. 246; Von Tuhr, Law of Obligations, Volume 1, 1952, p. 674; Prof. Dr. H. Tandogan, Private Obligation Relations, Volume 2, Ankara 1987, p. 502; Prof. Dr. Kemal Dayinlarli, Constructor’s and Owner’s Default in Construction Contracts, Ankara 2003, p. 89). The established practice of our Circuit is also in line with the "prevailing opinion" stated among the scholars".72

182.
The Tribunal concludes that damage should be assessed by reference to the date of default. Since under the contract the price had to be paid against the delivery of the Shares, a single date should be used for the assessment. The damage for non-delivery of the Shares should be assessed at the date when they had to be delivered and the price had to be paid. This date is 30 June 2007.

8.4. Professor Lind’s Valuation and the correction of the "Fundamental Value"

183.
In the proceedings leading to the Second Partial Award, the Claimant had produced a report of Professor Lind which valued the Holding Shares by reference to three factors: the starting point was (i) what he called the "fundamental value" of Turkcell as a business and, through it, the fundamental value of the Holding Shares; to this value Professor Lind added (ii) the value of the advantages derived from synergies between Sonera and Turkcell and (iii) the value of removing the "illiquidity discount" from the Holding Shares which Sonera held already before the transaction.73 Professor Lind and some of his colleagues appeared at the Hearing in Geneva on 22 January 2008 and were questioned by the Tribunal and the Parties.
184.
In the Second Partial Award the Tribunal examined the report of Professor Lind and the Claimant’s case built on it. The Tribunal concluded that the evidence produced by the Claimant in support of the occurrence of synergies and their value was not sufficient to demonstrate that such synergies would have occurred as a result of the Sonera’s control over Turkcell as a result of the acquisition of the Holding Shares; consequently, that part of the valuation was dismissed.
185.
With respect to the "fundamental value" of Turkcell and the Holding Shares that gave control over it, the Tribunal considered the argument of Professor Lind and the objections which the Respondent had raised against it. Professor Lind had defined the fundamental value in his Amended Report of 10 December 2007 as follows:

"The fundamental value is defined as the value that the equity would have had at that date [21 September 2007; based on information as of 30 June 2007] (using all available and relevant information) were the firm managed and operated to its full potential."74

He described the fundamental value as "a measure of the long-term value of the company".75 The valuation proceeded by way of a "customary discounted cash flow analysis",76 relying on forecasts of cash flows that each business unit was expected to generate for 11 years (from 2007 until 2017) which were then discounted back to 30 June 2007 to obtain the present value of the business.77

186.
The Tribunal found the argument of Professor Lind with respect to the assessment of the fundamental value persuasive and explained why it did not retain the Respondent’s objections. In that phase of the proceedings the Respondent had not produced any expert report and had not identified any of the errors in Professor Lind’s calculations which it pointed out in the subsequent phase of the arbitration. The Tribunal thus had no reason to doubt the calculations made by Professor Lind and accepted the quantification of the fundamental value as presented by Professor Lind, viz. US$ 904 million.78
187.
With respect to the third element of the Claimant’s valuation of the transaction prior to the Second Partial Award, viz. the removal of the illiquidity discount, the Tribunal considered the increase in the value of the shares already held by the Claimant as a result of the removal of their illiquidity. It accepted the valuation presented by Professor Lind in an amount of US$ 905 million.79
188.
During the last phase of this arbitration, the Claimant produced with its Memorandum in Support of its Request for Damages an additional report of Professor Lind, described as Supplemental Witness Statement dated 17 December 2009. In this supplemental report Professor Lind confirms the valuation as it had been accepted in the Second Partial Award. However, he added that during the six months period following 30 June 2007 "Turkcell’s market capitalisation rose dramatically". The report included a chart showing that the market capitalisation peaked on 16 December 2007 and explained that

"... beginning on 19 September 2007 and continuing until 23 April 2008 (and intermittently thereafter until 2 June 2008), the market capitalisation of Turkcell exceeded its fundamental value as of 21 September 2007."80

189.
The Respondent in its Answer of 31 March 2010 questioned the assessment made by Professor Lind and produced a report by Mr Osborne of the same date. This report stated that Professor Lind’s valuation contained a number of errors of which the most important ones were (i) the "failure to include all categories of cost. Specifically Professor Lind misses other direct costs in 2006 and omits them from his forecasts" and (ii) "Subtracting Ukraine costs from a set of operating cost forecasts derived from Turkish revenue and subscriber forecasts".81
190.
Professor Lind accepted these errors as a matter of principle.
191.
There are differences in the financial consequences of these errors. The fundamental value of Turkcell, originally quantified by Professor Lind at US$ 17,158 billion, is reduced to US$ 12.2 billion according to Mr Osborne82 and to 13 billion or US$ 12,674 billion according to Professor Lind.83 Professor Lind explains that the differences between the two values for the reduced amount of the fundamental value "are due to a disagreement on the treatment of adjustments for the Ukraine costs and other smaller balance sheet items". Mr Osborne presented in detail his corrected calculations; Professor Lind does not explain with which items he disagrees and why he does so.
192.
In his original calculation of the valuation of the transaction Professor Lind did not simply calculate the value of the 26.98% of the Turkcell Shares, held indirectly by Çukurova and purchased indirectly by Sonera; instead he first calculated the fundamental value of the 64% total stake which the Claimant would have reached by the transaction; from this value he deducted an amount for the 37.09% which the Claimant had owned already before the transaction; but this value was calculated not by reference to the fundamental value but on the basis of the price of the Turkcell Shares at the stock exchange, described as market capitalisation. The difference between the total holding at the fundamental value and the pre-transaction holding at market value was compared to the purchase price and produced the US $904 million proposed in Professor Lind’s original quantification.
193.
When, in the second round of valuations, Professor Lind had to correct his fundamental value, market capitalisation of the Turkcell Shares became much higher than the fundamental value; as a result the difference between total stake and the pre-transaction stake was reduced to a point that it fell below the purchase price for the Holding Shares. This led to a negative value of the transaction quantified by Mr Osborne at US$ 1,372 billion.84
194.
However, if one calculates the value of the purchased shares directly by reference to the corrected fundamental value, this value exceeds the share price. The excess is US$ 188 million if one takes the corrected value as calculated by Mr Osborne (by reference to US$ 12.2 billion for the business) or US$ 403 million by reference to Professor Lind’s corrected value (US$ 13 billion).85
195.
While indicating these corrected values for the transaction based on the fundamental value, Professor Lind suggested in his revised calculation of September 2010 that the valuation should be made on a different basis. In the revised calculation, he replaced the fundamental value by the "market capitalisation", a value derived from the price of the Turkcell Shares on the Istanbul Stock Exchange.86 To this effect Professor Lind takes the Turkcell Share price on 2 July 2007, the first available trading day after 30 June 2007.
196.
By substituting the market capitalisation (at the price on 30 June 2007) for the corrected fundamental value, Professor Lind reaches a value of the transaction of US$ 1,072 billion. Adding US$ 744 million on account of the non-removal of the illiquidity discount, Professor Lind reaches a total amount of damages of US$ 1’816 million. He adds that "coincidentally, this number is almost the same as the $1’809 billion valuation number that the Tribunal previously adopted".87
197.
The Respondent and its expert contest that, depending on which is higher, the valuation should refer to the fundamental value or to the market capitalisation. The Respondent’s expert accepts market capitalisation but applies it in a manner different from that of the Claimant.

8.5. Market Capitalisation

198.
Professor Lind explains his reliance on the market capitalisation by earlier explanations about the incentive to sell the Turkcell Shares if their market price rose beyond a certain level. He states that his analysis

"... is consistent with economic theory which provides that when the market price significantly exceeds the perceived value of an asset, what a rational economic entity once considered to be a long term investment may become an attractive asset for sale."

199.
In the Joint Expert Report of September 2010, Professor Lind summarised his Amended Report of December 2007 as follows:

"... the further the fundamental value falls below market value, the greater Sonera’s incentive would be to sell the stake and realise that excess value."88

200.
As explained above, damage assessment by reference to available market price or quotation on a stock exchange for the goods sold is, under Turkish law, the legally prescribed method when the sale is a commercial transaction. This does not exclude the reference to the market price in an ordinary assessment of damages, if it is shown that the buyer intended to resell the goods.
201.
In the present case, there is no indication that the Claimant had any intention to resell the Holding Shares or the Turkcell Shares over which it gained control. No such indication has been shown for 30 June or 2 July 2007 or for any other date. Indeed, from the description of the transaction which the Claimant has given, in particular the reliance on synergies in its earlier request for valuation, it is obvious that the Claimant intended to purchase the Holding Shares with the objective of gaining control over Turkcell and integrating it thereby in the group activities.
202.
Professor Lind was aware of these aspects of the case. In his Amended Report of December 2007 he mentioned the possibility of valuing the Holding Shares by reference to the market value of the Turkcell Shares; but he added the following:

"To be conservative, we have not done so. For broader strategic reasons that we do not consider in this report, Sonera may choose to continue to hold its stake even though it is apparently more rational to sell. However, it is important to note that were the market capitalisation to continue to increase significantly, the profit that Sonera would earn from selling might outweigh these strategic reasons..."89

203.
In other words, Professor Lind’s valuation in December 2007 is based on the assumption that, in early July 2007 the "broader strategic reasons" which were predominant for Sonera’s purchase of the Holding Shares had to be given priority in the valuation of the transaction. However, one had to make allowance for the possibility that, at some other time, the price of the Turkcell Shares would rise to a point that the profit from selling these shares would outweigh the "broader strategic reasons".
204.
These considerations would lead to the conclusion that, in determining the value of the Holding Shares for the Claimant, the market price of the Turkcell Shares would not be determining on 30 June 2007 but, if at all, at some later date. When this date would be is purely speculative and, apart from information about the evolution of the quotation for Turkcell Shares, no evidence has been provided to the Tribunal which would allow the determination of the date of a possible sale and hence the market capitalisation.
205.
In addition, the Respondent and its expert have pointed out the difficulties which would have arisen if the Claimant had attempted to sell at the then prevailing market price large quantities of Turkcell Shares.90 These difficulties relate to a high tax burden and to the circumstances arising when large blocks of shares are sold on a stock exchange. It may well be, as the Claimant and its experts argue, that the difficulties can be overcome and that they are in any event less serious than described by the Respondent. However, they increase the uncertainty in determining the date that can be taken as reference for the price of the Turkcell Shares and the market capitalisation.
206.
If one were to consider market capitalisation as the basis for valuing the loss suffered by the Claimant due to the non-delivery of the Shares, the market price to be used for such a valuation cannot be that on the day of delivery or immediately thereafter. Even if one assumed that the Claimant would have sold the Turkcell Shares on the market, it is for the reasons explained unlikely that the decision to this effect would have been taken immediately. Once the decision would have been taken, it must be accepted that it could not have been implemented immediately. One also must have to consider that the sale of large quantities of shares on the Stock Exchange may have caused downward effects on the quoted prices.
207.
In his original valuation Professor Lind pointed out that in general market capitalisation "is an inherently volatile number" and that, in the case of Turkcell, its shares were subject of considerable fluctuations.91 This was indeed the case, as can be seen from the numbers quoted above. Given this volatility of the share price and the uncertainty about the date of the sale, valuation by reference to the quoted share price is a very speculative and uncertain method for assessing the Claimant’s damage.
208.
Indeed, Professor Lind concluded in his original valuation that "in principle it is inappropriate to simply use the current market capitalisation as the appropriate measure of [the fundamental] value".92
209.
In the absence of any concrete indication about a possible intention of selling the Holding Shares or the Turkcell Shares at the market price and in view of the practical impossibility of determining the reference date for such an assumed resale and the price to be used, the Tribunal is of the view that market capitalisation is not a suitable method for determining the value which the Holding Shares had for the Claimant and for assessing the damage resulting from the Respondent’s failure to deliver them.
210.
Since the Claimant, had the possibility of addressing Mr Osborne’s tables and explanations of 15 September 2010 in its Post-Hearing Submission of 19 October 2010 and indeed did address this submission,93 and since the Tribunal concluded that the market value was not determining for its damage quantification, the Tribunal saw no need for any further expert comments in response to Mr Osborne’s 15 September 2010 submission.

8.6. Removal of the Illiquidity Discount and Control Premium

211.
In his Amended Report of December 2007, Professor Lind took account of the fact that, without the Shares which the Respondent had agreed to sell, the Claimant held indirectly through its share in the Holding a 24.02% effective interest in Turkcell in the form of "a nonmarketable and highly illiquid stake in Turkcell Holding". Therefore, Professor Lind applied a "discount that will reflect the lack of both marketability (the ability to sell freely) and liquidity (the ability to exit rapidly, to find a ready price and counterparty)".94
212.
Relying on the observation that "the average difference between the "public valuation" and "private valuation" of a given firm "is over 20%", Professor Lind quantified at 20%95 the discount that had to be made to express this illiquidity; he stated the this discount amounted to US$ 905 million.96 By acquiring control over the Holding, Sonera would be able to remove the constraints and its shares would increase by the value of the discout. Professor Lind therefore included the removal of the illiquidity discount in the valuation of the transaction and quantified it at US$ 905 million.
213.
The Tribunal considered the objection raised by the Respondent against this component of Professor Lind’s valuation and dismissed it. The Tribunal therefore accepted in the Second Partial Award as part of the value of the transaction US$ 905 million on account of the removal of the illiquidity discount.
214.
In the proceedings on the claim for damages. Professor Lind confirmed this component of the valuation. Mr Osborne raised a number of objections against this part of the valuation, which had not been raised by the Respondent in the previous phase of the arbitration.
215.
While accepting that "restrictions on the ability of an investor to sell a given asset can result in a discount on the price that investor will be prepared to pay for that asset",97 Mr Osborne is of the view that the effect of these restrictions or of their removal would be relevant only if Sonera intended to sell. He gave the example about the market for kidneys on which everyone with two kidneys could sell one of them at approximately US$ 40’000. This price for a kidney is subject to fluctuations, but when such changes in the price occur "anyone who does not consider selling his or her kidney does not feel richer or poorer".98
216.
Mr Osborne also explained that selling a number of shares as those corresponding to the Turkcell Shares over which the Claimant would have gained control through the transaction would be an operation of such volume and complexity that it would take a long time to implement, thus absorbing much if not all of the advantages that may have been attributed to the removal of the illiquidity premium. In that part of the discussion, Mr Osborne had linked the value of the illiquidity discount to that of a control premium. At the end of the discussion at the Hearing, the Chairman of the Arbitral Tribunal summed up Mr Osborne’s explanations:

"THE CHAIRMAN: The problem I see now would be double. One would be that you can’t flood the market with the full lot of shares you have, because otherwise you destroy the prices; and the second, the buyers, if you sell in this manner [in small quantities, "drop by drop"], are not interested in your control premium.

MR. OSBORNE: Correct."99

217.
Professor Lind is of a different opinion. He explained that, had the transaction be implemented, Sonera

"... would have held a 100% ownership of an unlisted company that had a majority (51%) ownership in a publicly listed company. Combining this stake with Sonera's existing direct stake of 13.07% would have allowed Sonera to create a large block of shares that could have been sold to an investor interested in obtaining the control of the public company."100

218.
The Respondent also referred to high tax liability that would be created if the Claimant (assuming it would have acquired the Holding Shares) would have tried to sell the Turkcell Shares. The tax experts presented by both sides differ about materiality of the taxes that would be due in case of such a sale and about the possibility of structuring the transaction in such a manner as to avoid much of this tax liability.
219.
An important aspect of the controversy between the experts in this respect concerns the function which the ownership of the Holding and the majority in Turkcell would have. Both Parties’ experts recognised that control over a company attracted a premium in the price of the shares. However, Mr Osborne insisted that the premium was not a value in itself; it would be valuable only if Sonera wished to sell the shares.
220.
While some of these considerations may put into question the relevance of a control premium in the valuation of the Shares, it remains a fact that prior to the transaction the Claimant had an important number of shares of Turkcell which it held only indirectly. Due to the ownership and governance structures in the Holding, these shares were, as Professor Lind rightly points out, "nonmarketable and highly illiquid". Therefore the value of these shares cannot be equated with their market value.
221.
Mr Osborne, too, accepted the principle. The Joint Report quotes him by stating:

"Mr Osborne does not deny that non-marketability discounts exist and are used in valuing assets. In fact Mr Osborne believes illiquidity to be an important concept to consider in identifying a fair market value of an asset."101

In his Report he states:

"There is a large body of empirical data that supports the hypothesis that, even for otherwise identical assets, restrictions on the ability of an investor to sell a given asset can result in a discount on the price that the investor will be prepared to pay for that asset.

The presence or absence of liquidity is therefore relevant to any consideration of the value of an asset in the context of a potential sale, since it affects the fair market value of the asset."102

But Mr Osborne contests that this consideration is relevant here since Sonera had no intention to sell the Shares held indirectly through the Holding.

222.
The Tribunal is of the view that the possibility for Sonera to sell some or all of the Turkcell Shares which it held indirectly through the Holding must be seen as a substantial improvement of the value of its investment in the Holding. While this improvement will have its full effect if and when the Turkcell Shares are actually sold, the possibility of disposing of these shares freely, by selling them or otherwise using them, for instance as collateral, in itself is an advantage which increases their value. By failing to deliver the remaining Holding Shares the Respondent prevented the Claimant from obtaining full ownership of the Holding and thereby full control over the Turkcell Shares. This is a damage which must be repaired.
223.
With respect to the amount of the discount, Professor Lind had proposed 20% and based himself on published studies. Mr Osborne contested this valuation on two grounds: he argued that through the transaction the Claimant acquired control only over the Holding, "an unquoted and relatively illiquid entity"; and he considered that the illiquidity discount is too high.
224.
Concerning the first of these considerations, the Tribunal notes that 100% control over the Holding would have allowed Sonera to treat the Turkcell Shares owned by the Holding as fully liquid. The Tribunal does not consider that the tax and related considerations which have been discussed above would have been a serious obstacle.
225.
As to the percentage of the discount, Professor Lind has explained in detail the range that is discussed in the literature, in some cases from 13% to 45%: He has explained why he considered the 20% as the proper rate. Mr Osborne has not provided an alternative rate and the Tribunal sees no reason for picking a rate different from that proposed by Professor Lind. It accepts this percentage.

8.7. Arbitral Tribunal’s Assessment of the Damages

226.
In a decision on which the Respondent relied in its argument on the applicable law on damages, the Swiss Federal Supreme Court held that a loss occurred whenever it can be established that the goods sold have a value for the buyer which exceeds the sales price.103 The situation is no different in Turkish law. When quantifying the damages to which the Claimant is entitled, the Tribunal therefore must determine the value which the Shares had for the Claimant.
227.
In the circumstances the damage caused by the Respondent’s failure to deliver the Shares cannot be determined with precision. The Claimant bought the shares with the view of achieving certain business objectives. Since the transaction was not implemented, it cannot be known whether these objectives would have been achieved and what advantages they would have brought to the Claimant. Any attempt to make determinations in this respect by necessity has a speculative element.

8.7.1. General considerations confirming the reality of a substantial damage suffered by the Claimant

228.
In the Second Partial Award the Tribunal accepted that the value of the Shares to the Clamant was higher than the price which the Claimant agreed to pay. Professor Lind had explained that "when a firm buys an asset, if the value of that asset as computed by the firm is not greater than what it pays for, it would not buy it"104
229.
Professor Lind added: "I think that it is naïve in the extreme to think that the value of this thing to the seller and the buyer is the same in any particular transaction. If that were the case, then no-one would ever make money and there would never be a benefit of the bargain, and we would not be here today. The reason we are here today is that it is worth a lot more and so we it is worth fighting over."105
230.
This conclusion has been confirmed by the conduct of the Parties in the present case: In the Final Share Purchase Agreement, which, according to the First Partial Award was validly concluded on 9 May 2005, the Parties agreed on a price for the Holding Shares at some US$3.1 billion, a price which had been provisionally agreed already in the Letter Agreement of 25 March 2005.
231.
The Claimant has spent much time, efforts and money on pursuing the performance of this agreement, seeking for several years delivery of the Shares until on 19 November 2009 it informed the Tribunal that it had abandoned this pursuit and now claimed damages for nonperformance. According to its cost claim in this arbitration the Claimant spent some US$8 million on the arbitration alone, a sum which confirms the high value which the Claimant attributed to the transaction.
232.
The Respondent, too, must have attributed a high value to the transaction, but in the opposite sense, making major efforts to avoid its implementation: Shortly after the conclusion of the Agreement, and probably already during the month of May 2005, the Respondent made commitments to another buyer concerning the same shares at conditions which were more favourable for the Respondent and then broke its contract with the Claimant.
233.
While in May 2005 there may have been some doubts in the mind of the Respondent and of Mr Karamehmet concerning tire binding nature of the commitment made to the Claimant, any such doubts were dispelled in the First Partial Award of 15 January 2007. The Tribunal determined that the Final Share Purchase Agreement had been validly concluded and ordered the Respondent to join the Claimant in good faith efforts to bring about Closing, the prerequisite for the delivery of the Shares.
234.
Despite this clear ruling, the Respondent continued to refuse performance of the Agreement. It did so even after it had been ordered in the Second Partial Award to deliver the Shares to the Claimant. Obviously, keeping some interest in the Shares under the arrangement with the other buyer had a value to the Respondent which was higher than delivering them to the Claimant against payment of US$3.1 billion; in other words it must be assumed that the value which the Respondent drew from the breach of the agreement with the Claimant (including the avoidance of having to pay damages to the other buyer) must have been substantially above the price which it would have received when delivering the Shares to the Claimant.
235.
In his Amended Report Professor Lind, presenting a form of "event study", had referred to "an analysis of the stock market reaction" to the announcement of Sonera’s purchase of the Shares. He took the changes in the price of the Sonera shares as an "illustration of the value attributable to TeliaSonera’s entering into the Transaction".106 He concluded that "the market estimated the value created by the proposed transaction at between US$1’447 million and US$ 1’679 million.107
236.
Mr Osborne criticised the method and its application by Professor Lind and concluded that the movement in the share price of TeliaSonera on 29 March 2005 does not provide support for Professor Lind’s estimate of the losses suffered by Sonera:

"Analysis of share price movements of the kind that [Professor Lind] describes is neither as quantitatively precise nor as clear in its implications as he suggests. I do not believe that his results can sensibly be used to assist in the valuation of Sonera's loss of opportunity to purchase Çukurova’s shares in Turkcell."108

237.
The Tribunal shares some of these reservations against the event study method and its application in the present case. It noted that, in their joint study the two experts did not consider any further Professor Lind’s attempted illustration of his findings by reference to this method. This being said, the Tribunal notes that the reactions to the announced transaction which Mr Osborne quotes "do suggest that the announced price was lower than they were expecting - but do not say by how much".109 While the reactions mentioned by Mr Osborne do not signal a transactional value of the order which Professor Lind assumed, this reaction of the market clearly indicates that the transaction was perceived as profitable even by outsiders.
238.
These various indications confirm the Tribunal in the conclusion it had reached in the Second Partial Award: the transaction had a high value for the Claimant. The Tribunal also concludes that the Respondent’s failure to perform the Agreement caused high damage to the Claimant.

8.7.2. The difficulties of damage quantification in the present case

239.
While being persuaded that a high amount of damages had to be awarded, the Tribunal had particular difficulties in assessing this amount. In addition to the difficulties which are inherent in this type of damage valuation relating to the loss of the benefit of a bargain, the Tribunal faced here additional difficulties resulting from the manner in which the Parties and their experts addressed the issue.
240.
Since the damage concerned the subjective value of the Shares to the Claimant the natural starting point for the damage quantification would have been the assessment which the Claimant itself made at the time when the price of the Shares was agreed and subsequently when it decided to spend large sums of money for obtaining their delivery. One would indeed expect that, at least when it decided on the price it was prepared to pay for the Shares, the Claimant made some internal assessment of the value it would receive for this price.
241.
Unfortunately, the Claimant has not presented any information about its own valuation of the Shares and the transaction, presenting instead a valuation which turned out to be erroneous in a major component, requiring correction for over half a billion US$.
242.
The Respondent, too, has not been very helpful for the Tribunal’s assessment of the damage. It was only in the last phase of the arbitration that the Respondent produced the report of an expert. While his work was helpful in understanding some of the deficiencies in the Claimant’s valuation, the Respondent’s expert insisted on limiting himself to the critique of the Claimant’s valuation and deliberately abstained from presenting his own valuation. The Respondent, too, did not identify the amount of the damage which it considered due or the method in which this amount should be quantified. Indeed, both the Respondent and its expert took the position, implausible in the circumstances, that "the Claimant has not suffered any damage".110
243.
While the quantification of the damage claimed is primarily the duty of the party claiming its compensation, a respondent proceeds at his own risk if, in a situation where the principle of a damage is obvious, it decides not to provide any assistance to the Tribunal in finding the correct method for quantifying the damage and the appropriate amount.
244.
The Tribunal is aware that the valuation which is made in such circumstances suffers from the deficiencies of speculation which are so often inherent in the theoretical constructions by quantification experts, even if they are clothed in the appearance of some scientific theory or statistical probabilities. The Tribunal has taken account of these difficulties in assessing the damage equitably, as it must do under Article 42 TCO.
245.
When determining the quantification of the damages claim, the Tribunal has considered separately the heads of damage which the Claimant and its expert presented. The first results from the alleged difference between the purchase price of the Shares and their fundamental value; this head of damage has also been referred to as the loss of the bargain. The two other components of the Claimant’s original valuation concern not the value of the shares bought but the alleged increase in the value of the shares which the Claimant owns already (the removal of the Illiquidity Discount) and the benefit which the Claimant’s own business could draw in terms of synergies from the acquisition of full control over the Turkcell.
246.
The Tribunal shall consider the first two of these heads of damage. The third head, that related to alleged synergies which the full control of Turkcell might have created for the Sonera Group, was not pursued during this last phase of the arbitration; the Tribunal had stated in the Second Partial Award that it had not seen adequate evidence to show that the Claimant would have achieved substantial advantages on that account. It added that "at this stage" it was not prepared to make allowance for the value of synergies, which Professor Lind at that time had valued at US$421 million. Nevertheless, the Tribunal reserved the possibility of quantifying the value of any synergies as part of the delay damages.111 During the period following the Second Partial Award, no further evidence was produced that would show that synergies would have materialised. The Tribunal therefore is not in a position to make allowance for any synergies which may or may not have occurred as a result of the transaction.

8.7.3. The loss of the bargain

247.
The Tribunal continues to believe that, as it has done in the Second Partial Award when assessing the value of the transaction, the damage quantification must start with the fundamental value of tire Shares subject of the transaction. This value, which corresponds to what elsewhere is described as the "fair market value",112 seeks to establish the long term economic value of a company. It is a logical start for the valuation which the Tribunal has to make. The Parties and their experts have not proposed any other starting point.
248.
When his erroneous calculation of the fundamental value was pointed out to Professor Lind, he referred to some earlier explanations and argued that, in the situation that then had become apparent, the fundamental value had to be replaced by a calculation based on a market capitalisation of the Turkcell Shares, using the price on the Istanbul stock exchange on 2 July 2007. On this basis he produced a damage of US$ 1’072 million for the loss of the Holding Shares. The Tribunal has explained above why it does not accept this substitution.
249.
As stated above, Professor Lind first affirmed that the fundamental value of the equity in Turkcell was US$ 17’158 million.113 By reference to this amount the 26.98% in Turkcell which the Respondent held indirectly through its share in the Holding, the value of the Shares would have been some US$ 4’629 million. Deducting the price of US$3’104 million, the part of the transaction value determined by reference to the fundamental value of Turkcell would have been US$1’525 million.114
250.
After Mr Osborne had pointed out a number of errors in his valuation, Professor Lind corrected the fundamental value of the Turkcell equity to US$ 13 billion (or US$ 12,674 billion), while Mr Osborne stated that the corrected value had to be US$ 12.2 billion. The corresponding transaction value of the 26.98% of the Turkcell Shares, on this basis, is US$ 403 million (or US$ 315 million) and US$ 188 million,115 respectively.
251.
Professor Lind explained that the differences between the two values for the reduced amount of the fundamental value "are due to a disagreement on the treatment of adjustments for the Ukraine costs and other smaller balance sheet items".116 Mr Osborne presented in detail his corrected calculations. As explained above, Professor Lind did not explain with which items he disagreed and why he did not agree. The Tribunal therefore is not in a position to verify the US$ 13 billion (or US$ 12,674 billion) corrected fundamental value presented by Professor Lind and must settle for the value on the basis of Mr Osborne’s correction, viz. US$ 12.2 billion. This produces a damage of US$ 188 million based on the fundamental value of the Turkcell Shares.
252.
The Joint Expert Report of September 2010 contains a statement by Professor Lind according to whom the "$12.2 billion is the fundamental value of Turkcell on September 21, 2007, as estimated by Mr Osborne. Using Professor Lind’s model, Mr. Osborne arrives at the value of $12.7 billion for Turkcell as of June 30, 2007".117 Professor Lind does not explain where in Mr Osborne’s report he found the corrected figure nor does he explain why the fundamental value of the Turkcell equity should change by some US$500 million between 30 June and 21 September 2007.
253.
The Tribunal has noted that in his Amended Report of December 2007 Professor Lind had calculated the fundamental value "as at 30 June 2007";118 however, Professor Lind explained in the same report that the "starting point for the valuation of the Transaction summarised in Section 3 is an estimation of the fundamental value of the equity in Turkcell as at 21 September 2007, the final business date before the preparation of this report".119 In his Supplemental Report of 17 December 2007, Professor Lind explains the contradiction as follows:

"Even though the calculation of fundamental value was as of 21 September 2007, it was based on information as of 30 June 2007, since that was the date of the most recent publically available financial information for Turkcell. I explained in the Statement that any changes in the fundamental value between 30 June 2007 and 21 September 2007 were immaterial for purposed of the valuation."120

254.
In this context one notes in particular that Professor Lind "discounted back to 30 June 3007 [the cash flow forecasts] to obtain the present value of the business".121 It appears from Professor Lind’s explanations that the reference to 21 September 2007 concerns the market capitalisation which he used in his calculation for the valuation of the Turkcell Shares which Sonera held already directly or indirectly. It does not seem to have impacted the fundamental value of the Turkcell equity as calculated by Professor Lind.
255.
When examining Professor Lind’s valuation, Mr Osborne explains that he understood this valuation as "at the end of June 2007".122 He made reference to "balance sheet items as at the end of June 2007" and confirmed that he left "the large majority of [Professor Lind’s] assumptions and his methodology unchanged".123 It is only with respect to the market capitalisation that he refers, as does Professor Lind, to September 2007.124
256.
The Tribunal concludes that the allegation which Professor Lind makes in a footnote to the Joint Report is not supported. There is no justification for the Tribunal to assume that Mr Osborne’s quantification of the corrected fundamental value of US$ 12.2 billion relates to a date other than 30 June 2007 and would have to be replaced by US$12.7 billion as argued by Professor Lind.
257.
Consequently, the Tribunal uses for the part of its valuation the fundamental value as corrected by Mr Osborne: 12.2 billion fundamental value of Turkcell; the 26.98% thereof produce US$ 3,292 billion as the fundamental value of the Shares, exceeding the Share Price of US$ 3,104 billion by US$ 188 million. The Tribunal confirms the finding reached above: on account of the difference between the contract price for the Shares and their fundamental value, the Claimant’s damage is US$ 188 million.
258.
The Tribunal notes in passing that, according to Mr Osborne, the Alfa transaction valued Çukurova’s shares in Turkcell Holding at US$ 3,251 billion. On the basis of this valuation, this part of the Claimant’s damage would amount to US$ 147 million. Strictly speaking this valuation is not relevant for the damage quantification which the Tribunal is called upon to make here. However, the similarity between the valuation in the Alfa transaction and the fundamental value which the Tribunal accepted for the Sonera transaction may increase the confidence the result reached by the Tribunal.

8.7.4. The failed removal of the illiquidity discount

259.
The Tribunal has explained above that it considers as a major advantage the removal of the illiquidity discount applicable to the Turkcell Shares indirectly held by Sonera. Indeed both experts recognised that, as a matter of principle, such a removal constituted a financial value. There is no doubt for the Tribunal that the situation in which the Claimant cannot dispose freely of the Turkcell Shares which it holds indirectly through its share in the Holding reduces the value of the Claimant’s investment; obtaining full control over the Holding and thereby liberating the Turkcell Shares which it now holds indirectly would have been a substantial increase in their value for the Claimant. The fact that this did not occur is a major damage to the Claimant.
260.
The Tribunal accepts that the discount be calculated by reference to the market price of the Turkcell Shares, as Professor Lind has done, and not to the fundamental value. It is indeed the value which these shares have on the market which is affected by their illiquidity.
261.
In its original valuation, Professor Lind reached a value of US$904 million. As it became clear during the discussion between the experts during the last phase of the arbitration, Professor Lind had taken as reference the market capitalisation on 21 September 2007.125 The Tribunal does not believe that this is the correct reference date. It has decided that the correct date for the damage quantification is 30 June 2007. By reference to the price of the Turkcell Shares on that date, or rather the next trading date thereafter, Professor Lind’s calculation produces the amount of US$ 744 million.126 The calculation has not been contested.
262.
The Tribunal is aware that taking as reference the share price on a single day has an element of arbitrariness; it took account thereof when it decided that the benefit of the bargain part of the damage had to be determined by reference not to the market capitalisation but to the fundamental value of the shares subject of the sale. The situation is different with respect the value which the gain in liquidity of the Claimant’s existing investment would have had on the day at which the Agreement would have had to be performed. At that day, the gam of full control over the Holding would have removed de facto the restrictions. It is therefore justified to take this date as the reference for calculating the gain which the Claimant would have had from the sale and the damage suffered as a result of the Respondent’s failure to implement it.
263.
The experts also disagreed on the percentage which had to be taken to express the value of the illiquidity discount. The Tribunal has concluded that it has no basis for fixing a rate other than 20%.127
264.
In light of these considerations the Tribunal concludes that, as a result of the Respondent’s failure to perform the Agreement, the Claimant suffered a damage of US$744 million on account of its inability to remove the illiquidity discount from its existing investment in the Turkcell Shares held indirectly through its share in the Holding. This amount must be added to the damage calculated by reference to the fundamental value.

8.7.5. Conclusion on the Tribunal's damage valuation

265.
The Tribunal concludes that the Claimant’s damage consists of US$ 188 million for the loss of the bargain resulting from the fundamental value of the Shares exceeding the agreed price and of US$ 744 as a result of the failure to remove the illiquidity in its existing investment.
266.
The total damage which the Respondent must repair amounts to US$ 932 million.

9. INTEREST

267.
The Claimant requests that interest be awarded as from 30 June 2007 "according to the rates reported by the Turkish State-Owned Banks to the Turkish Central Bank". The Respondent argues that, if any damages were due, interest would have to be paid only as from 19 November 2009 and only at rates actually paid by the three Turkish state-owned banks (Ziraat Bank, Halk Bank and Vakif Bank).
268.
Consequently, there is no question that interest must be paid. The difference concerns the starting date of the interest claim and the rate.

9.1. The starting date of the interest claim

269.
Concerning the starting date of the interest calculation the Claimant relied on Article 103 TCO which provides for statutory interest. However, this provision, like Article 104 Swiss CO, applies to debts of a sum of money. The Respondent argues that such a debt arose only on 19 November 2009 when the Claimant renounced the claim for delivery and claimed damages.
270.
The damages which the Tribunal awarded were quantified by reference to 30 June 2007, the performance date of the Respondent’s delivery obligation. Since the Respondent is in breach of this delivery obligation, the Claimant sought damages for the failure to deliver. These damages are counted from the time when the Respondent was in default, i.e. 30 June 2007. On 19 November 2009 the claim for performance was transformed into a monetary claim for damages. The damage which must thus be compensated is the loss of performance on 30 June 2007. This loss is expressed in a sum of money which replaces the failure to perform on that date. Consequently, the damages claim must be treated as a claim for money as from 30 June 2007.

9.2. The interest rate

271.
Concerning the interest rate the Claimant relies on Article 4 (a) of the Turkish Law N° 3095 on Legal and Default Interest. The amounts specified by the Claimant for the period from June 2007 to January 2010 range from 7.5% to 10%.128 The Claimant quotes the following English translation of the relevant provision:

"In case any higher contractual or default interest rate is not set forth in the agreement, the highest interest rate paid by the State Owned Banks for one year term deposit accounts opened in the currency of the debt shall be applicable."129

272.
The Respondent specifies that the relevant provision is an amendment by Law N° 3678;130 but otherwise there seems to be no difference between the Parties with respect to the legal basis of the claim. However, the Respondent argues that the applicable rates are not those which are published from time to time by the Turkish Central Bank but the "interest rates actually paid by the state-owned banks to their customers".131 Both Parties refer to decisions of the Turkish Supreme Court in support of their theses.
273.
The Tribunal noted that among the Turkish court decisions produced by the Respondent there are indeed decisions which require the courts to enquire with specified banks about the relevant rates. In a decision of 13 November 1997 for instance the Supreme Court of Appeals made the following order:

"The Court should ask Bank XXX and according to the results obtained, it should determine the applicable interest rate and decide that interest must be calculated according to such applicable interest rate."132

In a decision of 8 March 1999 the Supreme Court of Appeals held

"... while the rates to be paid for the one-year term deposit on this same currency must be determined from the State-Owned Banks and the judgment must be render on the result thereof..."133

In yet another decision, dated 11 February 2002 the Supreme Court of Appeals held that

"The court had to enquire the highest interest rate paid by the state owned banks to one year deposit accounts opened with German Marks, and it should order the collection of the receivables of the plaintiff together with such determined interest rate..."

In that case, the court below had relied on "the highest interest rate applied by the Central Bank to the foreign currency" and the Supreme Court found that this judgment was against the law.134

274.
The Tribunal concludes first of all that the relevant rates are those paid by the State owned banks for one year deposit accounts in the relevant currency, here in US Dollars. There seems indeed to be or have been a practice of the Turkish courts to enquire with the State owned banks the relevant rates. The right to seek and obtain such information from Turkish State Owned Banks is a privilege of the Turkish courts which command authority in the country. An arbitral tribunal sitting in Switzerland has no such authority.
275.
The absence of the Tribunal’s authority to enquire with the Turkish State Owned Banks does, however, not prevent the Tribunal from rendering an enforceable decision with respect to the interest rates. As the decisions of the Turkish Supreme Court of Appeals produced by the Respondent show, the courts, at least in more recent practice, are not required to specify the rates in their judgement. The courts have used expressions such as the "highest rate of interest paid by the State Banks for the one-year term interest debit accounts on foreign money"135 or "... according to the article 4/a of the Law numbered 3095 with the consideration of the varying rates".
276.
The Tribunal concludes from these decisions of the Turkish Supreme Court of Appeals that the generic wording along the lines in the quoted passages are adequate to give effect to a debtor’s obligation to pay interest and seem to be sufficient for enforcement in Turkey. Therefore, the Tribunal orders that the Respondent must pay interest from 30 June 2007 until full payment by the Respondent at the highest rate paid by the Turkish State Banks for one-year term deposit accounts in US Dollars as required by the Turkish Law N° 3095 on Legal and Default Interest, as amended by Law N° 3678.

10. COSTS OF THE ARBITRATION

277.
Each Party requested the Arbitral Tribunal to order the opposing Party to bear the entire costs of the proceedings.
278.
The ICC Arbitration Rules distinguish between the fees and expenses of the arbitrators and the ICC administrative expenses fixed by the Court, on the one hand, and the Parties’ reasonable and other costs, on the other hand. In fixing the costs and deciding on their allocation, as it is required under Article 31 (3) of the ICC Arbitration Rules, the Tribunal shall consider separately these two categories of costs and their allocation.

10.1. Arbitrators’ fees and expenses, administrative expenses

279.
The ICC Court, at its session of 25 August 2011, fixed the costs of these arbitration proceedings as follows:

- ICC administrative costs: US$ 88’800

- Fees for the Arbitral Tribunal: US$ 1748’700

- Expenses of the Arbitral Tribunal: US$ 262’500

Total costs: US$ 2’100’000

280.
The Parties have paid the following advance on costs fixed by the ICC Court:

-Claimant: US$ 1’050’000

-Respondent: US$ 1’050’000

281.
These amounts cover the entirety of the first category of arbitration costs.

10.2. Parties’ costs and expenses

282.
According to the programme fixed by the Tribunal, the Claimant submitted first cost statement on 1 November 2010 in an amount of US$ 7788’182, specifying that it represented its total costs until 30 September 2010 and reserving the later submission of costs incurred in October 2010. On 22 December 2010, the Claimant presented a statement for "additional legal fees and costs", in an amount of US$ 194’476, that had not been reflected in the previous statement. The Respondent objected on 28 December 2010 to the claim for additional costs, stating that they were belated.
283.
The total amount of costs and expenses of which the Claimant seeks compensation thus is US$ 7’982’658.136 Excluding US$ 1.05 million paid to the ICC (which are considered separately), the costs of which the Claimant seeks compensation are US$ 6’932’658. These costs are composed of the following items:

(i) attorneys’ fees and expenses for

(a) Sullivan & Cromwell in an amount of US$ 3’4877'78, including US$ 163’565 claimed in December 2010,

(b) Hergüner Bilgen Özeke, including the costs and fees for the experts Dr Kaballioglu and Dr Budak, in an amount of US$ 1’169’900 and including US$ 8700 claimed in December 2010,

(c) Bär & Karrer in an amount of US$ 266’231.89;

(ii) fees and expenses of the Claimant’s other experts, viz.

(a) Professor Robert Lind in an amount of US$ 1’850’527, including US$ 22’211 claimed in December 2011,

(b) Mr Arco Verhulst (KPMG) in an amount of US$ 34'222 and

(c) Mr Leon Coskun in an amount of US$ 104’409;

(iii) Expenses of its witnesses for attending the hearing (Tuohimaa, Grant, Ahrnell and Holcke) in an amount of US$ 19’590.

284.
The Respondent submitted a cost statement listing costs and expenses of CHF 2’948’338, US$ 853’741, TL 312’179, EUR 5’925 and GBP 582’036.69,137 excluding the Respondent’s advance on arbitration costs paid to the ICC. These costs are composed of the following items:

(i) attorneys’ costs and fees for

(a) Tavernier Tschanz in an amount of CHF 2’599'904,

(b) Akinci Law Firm in an amount of US$ 487’111,

(c) Lenz & Staehelin in an amount of CHF 284’687;

(ii) expert costs and fees for FTI (Mr Osborne) in an amount of GPB 582’037;

(iii) witnesses and Respondent’s representatives, travel and other expenses in amounts of TL 312’179, CHF 63747, US$ 366’630 and EUR 5’925.

285.
Concerning the Claimant’s claim for costs, the Tribunal accepts the additional costs presented in December 2010. In its submission of 1 November 2010 the Claimant had specified that the costs presented were those incurred until the end of September 2010. It expressly reserved to claim the costs incurred subsequently. Since the programme of the arbitration provided that the Parties would make Post-Hearing submissions on 19 October 2010, it was obvious that further fees were incurred after the end of September 2010. In these circumstances the Tribunal admits the submission of the costs reserved in the 1 November 2010 submission. Apart from the objection against the lateness of this submission, the Respondent did not have any other objection.
286.
In the submission of 8 November 2010 the Respondent argued, in a general manner, that it did not have to pay any of the Claimant’s costs since the Claimant "chose to pursue its rights in such a way as to yield the pointless outcome", in particular by "constantly refraining from seeking recognition and enforcement of the partial awards in Turkey". The Respondent also pointed out that the costs now claimed by the Claimant included all the Claimant’s costs, from the commencement of the arbitration, without making allowance for those costs which had been the subject of an earlier cost decision by the Tribunal.
287.
The Tribunal is of the view that, in general, the costs engaged by the Claimant were reasonable and commensurate with defence which it had to face. Indeed, the Respondent left no stone unturned to oppose the Claimant’s justified claim for completion of the contract and delivery of the Shares. This adamant resistance by the Respondent, which continued despite the Tribunal’s partial awards, required important efforts on the side of the Claimant. Although the legal costs engaged by the Claimant exceed those of the Respondent, the Respondent has not identified any procedural moves which unnecessarily increased in a substantial manner the costs of the proceedings; the Tribunal, too, has not detected such unnecessary increase.
288.
The general argument raised by the Respondent concerning the recognition and enforcement of the Partial Awards in Turkey is, to express it mildly, unfounded. Having accepted to arbitrate under the ICC Rules, the Respondent has undertaken, as provided in Article 28 (6) of the Rules, "to carry out any Award without delay". The prolongation of these proceedings is due to the Respondent having disregarded this fundamental obligation. There is no reason for the Respondent to reproach the Claimant for not having sought recognition and enforcement in Turkey.
289.
This being said, the Tribunal finds that the costs and fees paid by the Claimant to Professor Lind are out of proportion with the contribution which this expert made to the understanding of the issues on which he testified. Indeed, the mistakes in his expert reports where the cause of erroneous findings in the Second Partial Award and caused unnecessary time and efforts during the last phase of the arbitration. The Tribunal does not overlook that some of Professor Lind’s explanations were correct and indeed helpful for the Tribunal. However, these positive contributions do not compensate for the disturbances which his erroneous opinion created in the proceedings.
290.
Therefore, the Tribunal finds that the costs and fees engaged for Professor Lind (in an amount of US$ 1’850’527) may not be included in the Claimant’s reasonable costs.
291.
Moreover, as the Respondent rightly pointed out, the Tribunal has decided already about the Claimant’s Legal Fees and Disbursements concerning jurisdiction. The Claimant had sought US$ 118’613.55 and the Tribunal has awarded the full amount in the First Partial Award. This amount, rounded to US$ 118’614 must be deducted from the costs which the Claimant may seek at this stage of the arbitration.
292.
In view of these considerations the Tribunal decides that the Claimant’s reasonable legal and other costs amount to US$ 4’963’517.

10.3. Allocation of costs

293.
With respect to the allocation of the costs between the Parties, the Tribunal starts by taking into account that the Claimant has prevailed with its principal requests. The Tribunal found that the Final Share Purchase Agreement had been validly concluded and that the Shares had to be delivered to the Claimant; when the Respondent failed to deliver the Shares and the Claimant modified its claim, the Tribunal now decided to award damages.
294.
This being observed the Tribunal also must take into account that the amounts put forth by the Claimant were substantially reduced. In the Second Partial Award the Tribunal reduced the valuation from the claimed US$ 2.2 billion to US$ 1.8 billion; in the present Final Award the Tribunal granted of the claimed US$ 1.8 billion damages only US$ 932 million.
295.
The Tribunal also takes into consideration that the errors in the expert report which the Claimant produced not only required that the principal element of the Claimant’s evaluation had to be reconsidered; the Claimant also wasted time and efforts of all participants in the arbitration, including the Tribunal.
296.
In the light of these considerations the Tribunal decides that the Respondent must bear 90% of the cost and fees of the Tribunal and of the ICC and 80% of the Claimant’s reasonable legal and other costs.
297.
Consequently, the Respondent must pay to the Claimant US$ 840’000, constituting 80% of the Claimant’s share of the costs of the arbitration fixed by the Court, and US$ 3’970’814, constituting 80% of the Claimant's reasonable legal and others costs as mentioned above in paragraph 292. On the basis of the considerations set out above, the Arbitral Tribunal now makes the following

FINAL AWARD

1. The Respondent shall pay to the Claimant US$ 932 million as damages for its failure to deliver the Turkcell Holding Shares as required under the Share Purchase Agreement validly concluded on 9 May 2005.

2. The amount awarded under item 1 shall bear interest from 30 June 2007 until full payment by the Respondent at the highest rate paid by the Turkish State Banks for one-year term deposit accounts in US Dollars as required by the Turkish Law N° 3095 on Legal and Default Interest, as amended by Law N° 3678.

3. The Respondent shall pay to the Claimant US$ 840’000 as contribution to costs fixed by the Court and advanced by the Claimant, and US$ 3’970’814 as contribution to the Claimant’s reasonable legal and other cost.

4. All other and contrary claims are rejected.

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