"42(1) A Convention award shall, subject to the following provisions of this Part, be enforceable in Jersey either by action or in the same manner as the award of an arbitrator is enforceable by virtue of Article 29.
"44(1) Enforcement of a Convention award shall not be refused except in the cases mentioned in this Article.
(2) Enforcement of a Convention award may be refused if the person against whom it is invoked proves—
(a) that a party to the arbitration agreement was (under the law applicable to the party) under some incapacity;
(b) that the arbitration agreement was not valid under the law to which the parties subjected it or, failing any indication thereon, under the law of the country where the award was made;
(c) that the person was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present the person's case;
(d)... that the award deals with a difference not contemplated by, or not falling within the terms of, the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration;
(e) that the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, with the law of the country where the arbitration took place; or
(f) that the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, it was made.
(3) Enforcement of a Convention award may also be refused if the award is in respect of a matter which is not capable of settlement by arbitration, or if it would be contrary to public policy to enforce the award.
Article 29, which is referred to in Article 42(1), provides that an arbitration award "may, by leave of the Court on an application made ex parte, be enforced in the same manner as a judgment or order to the same effect; and, where leave is so granted, the act of court shall specify the manner of enforcement."
"1(1) A State is immune from the jurisdiction of the courts of theUnited Kingdom except as provided in the following provisions of this Act.
(2) A court shall give effect to the immunity conferred by this section even though the State does not appear in the proceedings in question."
"3(1) A State is not immune as respects proceedings relating to—
(a) a commercial transaction entered into by the State; or
(3) In this section "commercial transaction" means—
(a) any contract for the supply of goods or services;
(b) any loan or other transaction for the provision of finance and any guarantee or indemnity in respect of any such transaction or of any other financial obligation; and
(c) any other transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a State enters or in which it engages otherwise than in the exercise of sovereign authority;
but neither paragraph of subsection (1) above applies to a contract of employment between a State and an individual."
(4) A court may entertain proceedings against a person other than a State notwithstanding that the proceedings relate to property—
(a) which is in the possession or control of a State; or
(b) in which a State claims an interest,
if the State would not have been immune had the proceedings been brought against it or, in a case within paragraph (b) above, if the claim is neither admitted nor supported by prima facie evidence."
"13(1) No penalty by way of committal or fine shall be imposed in respect of any failure or refusal by or on behalf of a State to disclose or produce any document or other information for the purposes of proceedings to which it is a party.
(2) Subject to subsections (3) and (4) below—
(a) relief shall not be given against a State by way of injunction or order for specific performance or for the recovery of land or other property; and
(b) the property of a State shall not be subject to any process for the enforcement of a judgment or arbitration award or, in an action in rem, for its arrest, detention or sale.
(3) Subsection (2) above does not prevent the giving of any relief or the issue of any process with the written consent of the State concerned...; but a provision merely submitting to the jurisdiction of the courts is not to be regarded as a consent for the purposes of this subsection.
(4) Subsection (2)(b) above does not prevent the issue of any process in respect of property which is for the time being in use or intended for use for commercial purposes...
(5) The head of a State's diplomatic mission in the United Kingdom, or the person for the time being performing his functions, shall be deemed to have authority to give on behalf of the State any such consent as is mentioned in subsection (3) above and, for the purposes of subsection (4) above, his certificate to the effect that any property is not in use or intended for use by or on behalf of the State for commercial purposes shall be accepted as sufficient evidence of that fact unless the contrary is proved.
"14(1) The immunities and privileges conferred by this Part of this Act apply to any foreign or commonwealth State other than the United Kingdom; and references to a State include references to—
(a) the sovereign or other head of that State in his public capacity;
(b) the government of that State; and
(c) any department of that government,
but not to any entity (hereafter referred to as a "separate entity") which is distinct from the executive organs of the government of the State and capable of suing or being sued.
(2) A separate entity is immune from the jurisdiction of the courts of the United Kingdom if, and only if—
(a) the proceedings relate to anything done by it in the exercise of sovereign authority; and
(b) the circumstances are such that a State... would have been so immune.
(3) If a separate entity (not being a State's central bank or other monetary authority) submits to the jurisdiction in respect of proceedings in the case of which it is entitled to immunity by virtue of subsection (2) above, subsections (1) to (4) of section 13 above shall apply to it in respect of those proceedings as if references to a State were references to that entity.
(4) Property of a State's central bank or other monetary authority shall not be regarded for the purposes of subsection (4) of section 13 above as in use or intended for use for commercial purposes; and where any such bank or authority is a separate entity subsections (1) to (3) of that section shall apply to it as if references to a State were references to the bank or authority.
"17(1) In this Part of this Act—
"commercial purposes" means purposes of such transactions or activities as are mentioned in section 3(3) above;..."
"(A) The Court has no jurisdiction to make any order in respect of the shares in TPIC and BIL... because the Republic has an interest in and/or control of the Shares such as to engage the principle of sovereign immunity.
(B) The Court has no jurisdiction - or if it has, it should not exercise it -in respect of the debts owed by TPIC and BIL to Botaş.
(C) The Court has no jurisdiction - or if it has, it should not exercise it- in respect of the Stations Securities and the Lot A Securities..."
As a result, Botaş contended before the Royal Court that the Representations should be dismissed and the interim arrêt lifted whereas Tepe contended that leave to enforce the Awards should be granted and the interim arrêt confirmed.
"Article 1 - 1. This Decree Law encompasses the state-owned entities and public economic organisations as well as their institutions, subsidiaries and affiliates.
2. The purpose of this Decree Law is to regulate:
a) the establishment of state-owned entities and public economic organisations as well as their institutions, subsidiaries and affiliates and the management thereof in an autonomous fashion and in accordance with the rules of economics
(b) the operation of state-owned entities in accordance with economic requirements, in pursuance of the principles of efficiency and profitability and in harmony with each other and with the national economy so that they can assist in building up capital accumulation and thus create more sources of investment..."
"Article 2 - the terms and abbreviations used in this Decree Law are defined below
1. State economic enterprise (Enterprise): It is the common name for state-owned enterprise and public economic organization.
2. State-owned entity (Entity): a state-owned entity is a state economic enterprise established to operate in accordance with the principles and rules of trade in the economic sphere, with its entire capital being owned by the State
3. (Amended: Article 34 of the law no. 4046, dated 24.11.1994)Public economic organization (Organization): A public economic organization is a state economic enterprise established to produce and market monopolistic goods and services in pursuance of the public interest, with its entire capital being owned by the State and its goods and services being considered concession by virtue of the public service it provides...
8. Coordination Council is the Higher Coordination Council of Economic Affairs."
"Article 3 - Enterprises shall be established by the decision of the Council of Ministers."
"Article 4 - 1. Enterprises shall have a legal personality.
2. Enterprises shall be subject to the provisions of private law, except for in relation to the reserved matters set forth in this Decree Law."
The Decree Law provides for the financial provision of state enterprises and under the heading of "Plan, program and budget of enterprises" states in part as follows:
"Article 29 - 1. Enterprises shall carry out their investment and operation activities [sic] based on plans, programs and budgets.
2. The mode/manner of preparation of investment and financial programs by enterprises shall be determined by the ministry to which the Undersecretariat of Treasury and Foreign Trade is subordinate after receiving the opinion of the State Planning Organization and Prime Ministry State Auditing Board, and shall be submitted to the Co-ordination Council for approval."
Provision is made for the liquidation and sale of enterprises in part as follows:
"Article 38 - Decisions concerning liquidation, assignment, sale and granting of operational rights of enterprises, institutions, subsidiaries, businesses, business units and affiliates within the scope of the present Decree Law shall be taken by the Coordination Council."
Decree Law 233 sets out a series of miscellaneous provisions including under the heading of "Exemptions" the following:
"Article 58 -1....
2. Provisions of the Articles of association of companies established by real and legal persons enjoying the provisions concerning incentives for foreign capital in accordance with laws of foreign countries or international regulations shall be reserved.
3. (Additional: Article 1 of the Decree Law No. 31, dated 27.02.1988) The Council of Ministers shall be authorized to give permission to enterprises to set up companies abroad and participate in established companies abroad without being subject to the provisions of this Decree Law and to determine principles/rules in relation with these matters for each individual organization."
Article 60 provides that the enterprises subject to Decree Law 233 are shown on an annexed list. That list includes Botaş under its former name of Petroleum Pipeline Corporation but the list does not include either TPIC or BIL as its subsidiaries.
"Article 1 - In order to ensure the fulfilment of Turkey's need for oil, procure engagement in the activities in its fields of activity in the international trade sector, and when necessary, execute the foreign oil operations and oil trade through a company, the Turkish Petroleum Corporation (TPAO) may establish a company abroad which will comply with the foreign country's laws and regulations, that will be engaged in the fields of all operations and trade... and may participate in established companies abroad with a shareholding percentage that allows to have [sic] representative/representatives in the Board of Directors."
Article 2 provided that the company's headquarters were to be in Jersey, that the nominal capital should be US$3 million and "that more than half of the company's capital shall belong to the Turkish Petroleum Corporation (TPAO)". Article 6 provided in general that the activities of TPIC should be directed by the directors of TPAO.
"Article 6 - the management, operating principles and internal supervision of the company as well as its relations with the Petroleum Pipeline Corporation shall be determined by the Ministry of Development, Under Secretariat of Treasury and Petroleum Pipeline Corporation in co-ordination with the Ministry of Energy and Natural Resources. The company's board of directors should be organized within the framework of the principles and conditions required by the foreign legislation to which the company shall be subject."
"Article 6 - The Directors excluding the general manager of the company as well as its organization, operating principles, internal supervision and relations with the Petroleum Pipeline Corporation shall be determined by the Board of Directors of the Petroleum Pipeline Corporation. The board of directors of the company to be established shall be organized within the framework of the principles and conditions required by the foreign legislation to which this company shall be subject. The board of directors shall be composed of one chairman and four members. The company's general manager shall at the same time be the chairman of the board, and shall be appointed by the relevant Minister. Two of the members of the board shall be appointed by the relevant Minister, whereas the other two members shall be appointed by the approval of the relevant Minister upon the proposal of the Board of Directors of the Petroleum Pipeline Corporation, one of which shall be among the company's vice general managers and the other of which shall be among the members of the Petroleum Pipeline Corporation."
This was reflected in the (Jersey) Articles of Association of BIL which were amended by a Written Resolution signed on behalf of Botaş and the other representative shareholder in November 2012 which replaced Article 91 with Articles which regulated the appointment of directors in accordance with Decision 2006/11325, and provided that the Chairman of the board of directors was to be the General Director of Botaş.
"Article 1 - (1) The objective of this Decision is to determine the strategies and methods that shall enable the public enterprises to carry out their operational activities in 2015 by using the country's resources in an effective and efficient manner and to escalate their values to the maximum level possible.
(2) This Decision shall apply to the state economic enterprises and their subsidiaries which were subject to Decree Law No 233 on State Economic Enterprises... given in the attached table, and to the organizations which are subject to the Law no 4046 on Privatization Application. and have a capital more than 50% owned by the public".
The enterprises and their subsidiaries listed in the table at the end of Decision 2014/6842 include TPAO and Botaş but not TPIC or BIL. The other Articles of Decision 2014/6842 include the following which are relevant:-
"Article 17 - (1) Public enterprises shall be obliged to pay all of their debts, whether to the public or to the private sector."
"Article 28 - (1) Upon request, public enterprises shall communicate any information and document concerning the subsidiaries and affiliates founded abroad and operating under the laws of their resident countries and their overseas investments to the Under Secretariat and the Ministry of Development.
(2) Any action to be taken regarding the charge of capital and subsidiaries and affiliates founded or to be founded pursuant to paragraph (3)of Article 58 of the Decree Law No 233 shall be subject to the approval of the Under Secretariat and the Ministry of Development."
"Article 1 - The purpose of this Law is to regulate the principles for the privatization, which aims to improve productivity in the economy and to reduce public expenditure of:
A. Establishments to be placed under the scope of privatization are listed in this Article and will be referred to as "Organizations" hereinafter in the implementation of this Law;
a) The State Economic Enterprises (SEEs), their enterprises, associated corporations, operations, operational units and assets, as well as in the public shares in their participation;..."
The remaining forms of establishment listed in the succeeding paragraphs of Part A are not relevant. Part B of Article 1 then summarises the provisions related to the purpose stated in Part A as including the establishment of a "Privatization High Council" and a "Privatization Administration". The duties of the Privatization High Council are set out in Article 3 which provides that under the chairmanship of the Prime Minister and with other members including the Deputy Prime Minister, the Privatization High Council is to take decisions to include organisations referred to in Article 1 within the scope of privatisation, to effect the necessary restructuring of these organisations, and to adopt a range of associated and ancillary measures including in particular "if and when required to decide to purchase and resell shares, securities and other negotiable instruments of the Organizations in the privatization programme."
"1. Botaş is a state economic enterprise within the scope of the Decree Law numbered 233 under Turkish law and the shares of Botaş are owned by the Treasury of the Republic of Turkey.
2. TPIC and BIL were established by Cabinet Decrees pursuant to Article 58/3 of the Decree Law numbered 233. The shares are owned by Botaş and therefore they are indirectly owned by the Treasury of the Republic of Turkey.
3. There are restrictions imposed upon the sale, transfer and use of the Shares and the operations of TPIC and BIL under Turkish Law.
4. The Shares have never been used, are not in use, and are not intended for use by or on behalf of the State of the Republic of Turkey for commercial purposes."
It may be noted that the Ambassador’s Certificate should be read in the context of section 13(5) of the Act, and that a certificate has been given by the Ambassador to the United Kingdom. That is because the reference to the United Kingdom as it is in section 13(5) is an exception to the basic position under the Act in its application to Jersey which is that a reference to the United Kingdom is to be taken to be a reference to the Bailiwick: see Article 1(1) of the 1985 Order. That is not the position in the case of section 13(5) and it means that where a certificate is given in connection with sovereign immunity claimed in Jersey, that certificate is to be given by the relevant Ambassador to the United Kingdom.
"I confirm that the Government of the Republic of Turkey considers that the shares in TPIC and BIL held by Botaş are essential state-owned assets. The Government of the Republic of Turkey exercises to a specific degree control over the ownership and operations of TPIC and BIL pursuant to Turkish law with the intention of furthering the public interest."
The Minister then sets out details of the nature and scope of the Republic’s "interest in and control over the shares and operations of TPIC and BIL". The Minister concludes his letter by stating:-
"TPIC and BIL are considered as key state-owned assets by the Government of the Republic of Turkey. TPIC and BIL were both established in order to secure the energy needs and security of the Republic of Turkey and both TPIC and BIL have been appointed to assist implementation of various international agreements to which the Republic of Turkey is a party."
"295. For the reasons given in this judgment, we would summarise our conclusions as follows:-
(i) There are no grounds under Article 44 of the Arbitration Law not to enforce the Awards (paras 21-53). The Awards may therefore be enforced as the same way as a judgment of this Court.
(ii) The Republic is not entitled to sovereign immunity in respect of the Shares. This is on the basis that:-
(a) If section 13(2)(b) of the Act is the applicable provision, the Shares are not "property of a State" (paras 91-92).
(b) If, as this Court finds, section 6(4) of the Act is the applicable provision, the Shares are not in the possession or control of the Republic and the interest claimed by the Republic, even if proved, is not an "interest" for the purposes of section 6(4)(b) such as to attract sovereign immunity (paras 54-203).
(iii) Accordingly, the Court is willing to confirm the interim arrêt in respect of the Shares (para 204).
(iv) The Court is not willing to confirm the interim arrêt in respect of the debts owed by TPIC and BIL to Botaş (paras 208-286).
(i) If, contrary to (iv), the Court were otherwise willing to confirm the arrêt in respect of the debts, it would do so in respect of TPIC but not in respect of BIL because of the greater amount owed by Botaş to BIL (paras 274-280). Any arrêt could properly cover future defined obligations (paras 281-286).
(ii) The Court agrees to order Botaş to return the Securities to Tepe (paras 287-294)."
"Botaş, TPIC and BIL (collectively "the appellants") will ask the Court of Appeal to set aside the following findings of the Royal Court:
(i) That the Republic of Turkey (the "Republic") does not have control over the Shares sufficient to engage its immunity pursuant to the State Immunity (Jersey) Order 1985 (the "1985 Order"), implementing the State Immunity Act 1978 (the "1978 Act") in the Bailiwick of Jersey.
(ii) That the Republic does not have an interest in the Shares sufficient to engage its immunity pursuant to the 1985 Order.
(iii) That, as a consequence, Tepe was entitled to an arrêt entre mains confirmée over the Shares."
Thereafter, the appellants gave further notice specifying the grounds in support of their Re-Amended appeal.
"i. The Court failed to apply Section 14 of the Act. Where enforcement is against assets owned by a separate entity, immunity only applies in the circumstances set out in Section 14. It having been conceded by Botaş that it has no immunity under Section 14, it is not open to the Republic of Turkey and/or Botaş to assert a separate immunity under Sections 6(4) or 13(2)(b) in order to circumvent the applicability of Section 14 and the attendant lack of immunity by reason of Section 14.
ii in the alternative:
a. The Court was wrong to find in paragraph 93 of the Judgment that Section 13(2) only applies where there is a judgment against the State in question. Section 13(2)(b) applies in the context of the process of enforcement of an arbitral award against the property of a State irrespective of whether there is a judgment against the State...
b. if, Section 13(2)(b) applied (and the Shares were the property of the Republic of Turkey), the commercial purposes exception in Section 13(4) would apply.
iii. in the further alternative:
a. the Court was wrong to find that Section 6(4) applies. Section 6(4) only applies to adjudicative proceedings in circumstances where proceedings are brought against a party (other than a State) and involve competing claims over property of which the State claims to be in possession or control or in which it claims an interest. The application for an arrêt entre mains is properly characterised as enforcement proceedings in relation to which Section 14, alternatively Section 13(2)(b) apply (see above), but not section 6(4); and
b. if Section 6(4) applies, the Court was entitled to entertain the proceedings by reason of the application of the commercial transaction exception in Section 3.
iv. The Court was wrong to find in paragraph 144 of the Judgment that the principle of parallelism in Turkish law has the result that the consent of the Council of Ministers is required for a change of ownership of the Shares...
Tepe will ask the court of Appeal to set aside the following findings of the Royal Court:-
(i) That an arrêt entre mains will only be imposed on a foreign situated debt where the foreign court would regard the debt as automatically discharged by the order of the Jersey court (paragraphs 216 to 220 of the Judgment).
(ii) That the right of set-off as between Botaş and BIL justified the Court’s refusal to confirm the arrêt entre mains over the BIL Debts (paragraphs 274 to 280 of the Judgment)."
The respondent does not appeal against the refusal to confirm the arrêt in respect of the debts due by TPIC to Botaş upon that basis that these debts are said to be "relatively modest". The issues before this Court in relation to the debts therefore concern only enforcement of the Awards in favour of Tepe against the debts due by BIL to Botaş.
(i) The provision contained in the Act which is applicable to the establishment of sovereign immunity in the circumstances of this case (Notice for the respondent, further grounds i, ii, a and b, and iii, a);
(ii) Whether sovereign immunity has been established in respect of the Shares (Notice for the appellants, challenged findings (i), (ii) and (iii); Notice for the respondent, further ground iv);
(iii) In the event that sovereign immunity has been established, whether the exception for commercial purposes applies (Notice for the respondent, further ground iii, b);
(iv) Whether the arrêt should be confirmed in respect of the debts due by BIL to Botaş (Notice for the respondent, challenged findings i and ii).
As will be apparent, issues (i), (ii) and (iii) relate to sovereign immunity and to matters raised in the appeal by the appellants, and issue (iv) relates to matters raised in the cross appeal by the respondent.
"76. International law has long drawn a distinction between a state's immunity from enforcement and its immunity from adjudication. Thus, even where a party has obtained a judgment in a court against a state, it may not be able to enforce the judgment against assets of the state in the relevant jurisdiction. This distinction is reflected in the Act."
"The State Immunity Act 1978, whose long title states as its first purpose to make new provision with respect to proceedings in the United Kingdom by or against other states, purports in Part I to deal comprehensively with the jurisdiction of courts of law in the United Kingdom both (1) to adjudicate upon claims against foreign states ("adjudicative jurisdiction"); and (2) to enforce by legal process ("enforcement jurisdiction") judgmentspronounced and orders made in the exercise of their adjudicative jurisdiction. But, although comprehensive, the Act in its approach to these two aspects of the jurisdiction exercised by courts of law does not adopt the straightforward dichotomy between acta jure imperii and acta jure gestionis that had become familiar doctrine in public international law, except that it comes close to doing so in section 14(2) in relation to the immunity conferred upon "separate entities that are emanations of the state". Instead, as respects foreign states themselves the Act starts by restating in statutory form in section 1(1) the general principle of absolute sovereign immunity, but makes the principle subject to wide-ranging exceptions for which the subsequent sections in Part I of the Act (sections 2 to 17) provide.
In creating these exceptions, for which it has recourse to a somewhat convoluted style of draftsmanship providing for exceptions to exceptions which have the effect of restoring in part an immunity which some other subsection would appear to have removed, the Act nevertheless draws a clear distinction between the adjudicative jurisdiction and the enforcement jurisdiction of courts of law in the United Kingdom. Sections 2 to 11 deal with adjudicative jurisdiction. Sections 12 to 14 deal with procedure and of these, sections 13(2) to (6) and 14(3) and (4) deal in particular with enforcement jurisdiction. (Admiralty jurisdiction in rem, with which your Lordships in the instant case are not concerned, may be regarded for the purposes of the Act as hybrid; exceptions to immunity from such suits is dealt with in section 10; immunity of ship or cargo from arrest, detention and sale, whether before or after judgment is dealt with in section 13(2)(b) and (4).)"
"The SIA [that is the Act] treats separately immunity from adjudication and immunity from execution, but unlike UNCSI's [the UN Convention's] separate treatment in Part IV, the SIA makes no clear distinction placing both in its Part 1 under the general title 'proceedings in the United Kingdom by or against other states' with a general rule of immunity set out in section 1. Sections 2 to 11 deal with adjudicative procedure. Sections 12 to 14 deal with procedure; of these, sections 13(2) to (6) and 14(3) and (4) deal in particular with enforcement jurisdiction. This division prevents the automatic enforcement of a judgment in respect of non-immune proceedings and necessitates a further determination of immunity by reference to a separate waiver by the State to the court's enforcement jurisdiction or where there is no such submission, by more restricted different criteria than those applied at theadjudicative stage... The SIA, section 13(3) expressly provides that a provision merely submitting to the jurisdiction of the courts is not to be regarded as a 'consent' to 'the giving of any relief... or for the enforcement of a judgment or arbitration award'. The division between adjudicative and enforcement stages is, however, by no means easy to make. Lord Diplock himself noted in Alcom that some proceedings would not fit neatly into this division; he instanced Admiralty jurisdiction in rem as a hybrid. Proceedings to recognise a foreign judgment given against a foreign State, to register a foreign judgment under the Administration of Justice Act 1920 or to enforce a foreign judgment or arbitral award, relate to the exercise of the court's adjudicative jurisdiction and come within the general rule of immunity in section 1. A Mareva injunction as relief ancillary to execution falls within enforcement jurisdiction."
"113. Before considering whether the claims of the Applicant [Germany] on this point are well-founded, the Court observes that the immunity from enforcement enjoyed by States in regard to their property situated on foreign territory goes further than the jurisdictional immunity enjoyed by those same States before foreign courts. Even if a judgment has been lawfully rendered against a foreign State, in circumstances such that the latter could not claim immunity from jurisdiction, it does not follow ipso facto that the State against which judgment has been given can be the subject of measures of constraint on the territory of the forum State or on that of a third State, with a view to enforcing the judgment in question. Similarly, any waiver by the State of its jurisdictional immunity before a foreign court does not in itself mean that the State has waived its immunity from enforcement as regards property belonging to it situated in foreign territory.
The rules of customary international law governing immunity from enforcement and those governing jurisdictional immunity (understood stricto sensu as the right of a State not to be the subject of judicial proceedings in the courts of another State) are distinct, and must be applied separately."
"85. In our judgment, given the guidance to be obtained from the ICJ case and the last few lines of the extract from Fox and Webb referred to at paragraph 78 above, the application under the Arbitration Law to declare the Awards enforceable in the Island is a matter for the Courts' adjudicative jurisdiction. However, the Republic is not raising any point in relation to that aspect; and of course it was not a party to the two arbitrations. It only asserts any interest at the stage where the Court, having declared the Awards enforceable in the Island, seizes the Shares by way of arrêt in order to permit enforcement. This raises in acute form the question of which section of the Act applies to the facts of this case."
"91.... It follows, in our judgment, that the expression "property of aState" should be given its normal meaning as the legislature did not see fit to expand its normal meaning along the lines of section 10(5).
92. It follows that, in our judgment, if Advocate Moran is correct in saying that the Court is concerned with the situation falling within section 13(2)(b), her argument that the Shares are not the property of the Republic is correct. However, for the reasons set out hereafter we have on balance concluded that the facts of this case fall within section 6(4) rather than section 13."
"93.... it seems to us that the immunity in relation to enforcement
(now reflected in section 13) only arises where there is a judgment against the state in question. In a sense this is self-evident in that the assets belonging to A can only be seized and taken to satisfy a judgment against A; they cannot be seized to satisfy a judgment against B. Thus a state only needs to rely upon the immunity from enforcement conferred by section 13 if there is a judgment against it which could otherwise be enforced against its property."
"95. That is not the situation here. There has been no judgment against the Republic. It has no liability towards Tepe. The Court is concerned with the enforcement of the Awards (having the effect of a judgment) against Botaş. There is therefore no question of seeking to enforce the liability of the Republic against assets of the Republic. What is happening in effect is that, in the context of the Court seeking to enforce a liability of Botaş against what are apparently assets of Botaş, the Republic is seeking to say 'Hold it. You cannot enforce the obligation of Botaş as against these assets because they are assets in or over which we (the Republic) have an interest or control'."
"96.... Nevertheless, it seems to us that it is more properlycategorised as an exercise of the Courts adjudicative jurisdiction, because the Court will need to consider whether the Republic has the control or prima facie has the interest claimed in assets which appear on the face of it to be those of Botaş, and, if so, whether the control or interest is sufficient to attract sovereign immunity. It is not a question of enforcement proceedings against the Republic in respect of a liability of the Republic. The Court is being asked to adjudicate on the existence of the control or interest of the Republic rather than ruling on whether a liability of the Republic can be enforced against assets of the Republic (which is the situation envisaged in the enforcement jurisdiction as reflected in section 13)."
"98. It follows, we think, that section 6(4) is the applicable provision.In our judgment that requires us to proceed as follows:-
(i) As to control, we need to ascertain what level of control by the Republic over the shares is established and whether such level is sufficient to attract immunity. The burden on this aspect rests on the Republic...
(ii) We need to consider whether, if established, the interest asserted by the Republic would be sufficient to engage immunity. On this aspect, the burden rests on the Republic. If the answer to this first question is yes, we must then consider whether the Republic has made out a prima facie case in support of the existence of such interest."
"The foundation for the application to set aside the writ and arrest of the ship is to be found in two propositions of international law engrafted into our domestic law which seem to me to be well established and to be beyond dispute. The first is that the courts of a country will not implead a foreign sovereign, that is, they will not by their process make him against his will a party to legal proceedings whether the proceedings involve process against his person or seek to recover from him specific property or damages.
The second is that they will not by their process, whether the sovereign is a party to the proceedings or not, seize or detain property which is his or of which he is in possession or control. There has been some difference in thepractice of nations as to possible limitations of this second principle as to whether it extends to property only used for the commercial purposes of the sovereign or to personal private property. In this country it is in my opinion well settled that it applies to both.
I draw attention to the fact that there are two distinct immunities appertaining to foreign sovereigns: for at times they tend to become confused: and it is not always clear from the decisions whether the judges are dealing with one or the other or both. It seems to me clear that, in a simple case of a writ in rem issued by our Admiralty Court in a claim for collision damage against the owners of a public ship of a sovereign State in which the ship is arrested, both principles are broken. The sovereign is impleaded and his property is seized."
The two principles described by Lord Atkin were affirmed by Lord Wright (at pp 503 and 506) as noted by the Royal Court (at para 66). In relation to the circumstances, the Royal Court referred to what Lord Wright said (at p 513):-
"I may add that in the present case it is in my opinion sufficiently shown by the evidence before the Court that the Spanish Government had actually requisitioned, and taken possession and control of, the Cristina. That is all that is needed to justify the claim to immunity on the ground of 'property'. The question how far a mere claim or assertion by that Government would be conclusive on the Court, does not arise here."
The proposition that a foreign state may not be impleaded even where it is not a party to the particular proceedings is not in issue in the present case and is embodied in section 1(2) of the Act. What was critical in The Cristina was why it was that sovereign immunity had been established where a ship had been requisitioned.
"It was urged by counsel for the plaintiffs that the effect of requisitioning a ship is not to change the ownership, and the shiprequisitioned remains the property of the owners notwithstanding the requisitioning, and that when the use of the ship by the Crown ceases the ship is restored to her owners. That is so, but it does not prevent a ship so long as she remains under requisition being in the service of the Crown, and as such exempt from process of arrest."
"My Lords, I think it probable that Lord Atkin inserted the words 'or control' in his second proposition so as to make it wide enough to cover those cases which had been cited to him in argument in which the foreign government had requisitioned or directed a ship without depriving the owners of their possession. This is, I think, merely an illustration of one of those interests 'lesser than a proprietary interest or even than a possessory interest' to which Lord Wright referred; there is, I think, no special doctrine applying to ships which does not equally apply to gold bars."
Earl Jowitt continued (at p 605):-
"Under the circumstances I think we should consider whether the foreign governments had such a possessory right in relation to the gold bars as to entitle them to ask that this action should be stayed. Under English law, where there is a simple contract of bailment at will the possession of the goods bailed passes to the bailee. The bailor has in such a case the right to immediate possession, and by reason of this right can exercise those possessory remedies which are available to the possessor. The person having the right to immediate possession is, however, frequently referred to in English law as being the 'possessor' - in truth the English law has never worked out a completely logical and exhaustive definition of 'possession.' We are bound to decide this case in accordance with English law and we have no evidence of any other system of law; yet it is germane to remember that the English law has incorporated the doctrine of State immunity from international law. It would be an unsatisfactory position if the extent and ambit of this doctrinewere to depend on the special and peculiar doctrines of each jurisdiction in relation to 'possession,' with the result that differing results might be arrived at according to whether the case was governed by English law or, for example, by Scottish law. The basis of the rule was explained by Lord Atkin in the case of Government of the Republic of Spain v The Arantzazu Mendi [ AC 256] as being intended either to secure reciprocal rights of immunity or to avoid the risk of injured pride if jurisdiction is sought to be exercised, or to avoid the risk of belligerent action if government property is seized or injured; and the distinction between 'possession' and the 'immediate right to possession' would have no bearing upon these considerations."
Advocate Evans referred before us to the speech of Lord Radcliffe where he said (at p 617) that "the principle recognized in The Parlement Belge has been carried much further since then. It has been applied even when the sovereign had not claimed, let alone proved, that he was the owner of the property that was the subject of the action", and his Lordship then referred to examples of this including The Cristina. Lord Radcliffe also said (at pp 616-617):-
"For myself I think that the range and purpose of our rule is expressed as well as may be in Dicey's Conflict of Laws, 6th Ed, p 131: 'The court has. no jurisdiction to entertain any action or proceeding against (i) any foreign sovereign. Any action or proceeding against the property of [a foreign sovereign] is an action or proceedings against such person.'"
"In whichever way the rule is stated it is apparent that difficulty may arise in the application of the second branch of it. Where the foreign sovereignState is directly impleaded the writ will be set aside, but where the foreign sovereign State is not a party to the proceedings, but claims that it is interested in the property to which the action relates and is therefore indirectly impleaded, a difficult question arises as to how far the foreign sovereign government must go in establishing its right to the interest claimed. Plainly if the foreign government is required as a condition of obtaining immunity to prove its title to the property in question the immunity ceases to be of any practical effect. The difficulty was cogently expressed by Lord Radcliffe in the case of the Dollfus Mieg, where he said: 'a stay of proceedings on the ground of immunity has normally to be granted or refused at a stage in the action when interests are claimed but not established, and indeed to require him [i.e., the foreign sovereign] to establish his interest before the court (which may involve the court's denial of his claim) is to do the very thing which the general principle requires that our courts should not do.'"
Earl Jowitt then referred (at pp 89-90) to The Jupiter  P 236, in which Scrutton LJ had relied upon the rule, and continued:-
"In their Lordships' opinion the view of Scrutton LJ that a mere assertion of a claim by a foreign government to property the subject of an action compels the court to stay the action and decline jurisdiction is against the weight of authority, and cannot be supported in principle. In their Lordships' opinion a foreign government claiming that its interest in property will be affected by the judgment in an action to which it is not a party, is not bound as a condition of obtaining immunity to prove its title to the interest claimed, but it must produce evidence to satisfy the court that its claim is not merely illusory, nor founded on a title manifestly defective. The court must be satisfied that conflicting rights have to be decided in relation to the foreign government's claim. When the court reaches that point it must decline to decide the rights and must stay the action, but it ought not to stay the action before that point is reached. It remains to apply this principle to the facts of the present case."
"The argument for the respondent, the Nizam, involves the proposition that, if a sovereign deposits with a bank both money and gold bars, in neither of which he claims a beneficial interest, and a third party sues the bank claiming to be owner of both, then, although the sovereign can found on the principle of immunity to prevent the action from proceeding with regard to the gold bars, he cannot prevent the action from proceeding with regard to the money. The principle of sovereign immunity is not founded on any technical rules of law: it is founded on broad considerations of public policy, international law and comity. While the differences between the rights of a bailor and the rights of a lender of money are of great importance in many respects those differences do not appear to me to require or justify such a result..."
Lord Cohen said (at pp 405-406):-
"My Lords, in the Court of Appeal Romer LJ accepted that the appellant did not take the transfer in his individual capacity, and then proceeded to consider whether, taking the transfer on behalf of the State of Pakistan, he did so as the alter ego of the State or merely as its servant or agent. Like Upjohn J, I do not think that in considering the application of the doctrine of sovereign immunity I ought to draw narrow distinctions. To make a distinction between a title to a debt in the name of the State and title to a debt in the name of the appellant as High Commissioner of the State would, in my opinion, be drawing a very narrow distinction. However, I am content, for the moment, to say that, having regard to the title of this account in the books of the bank, and to the circumstances in which the account was opened, the appellant was plainly the agent for the State of Pakistan and the State could have enforced the transfer to the State of the balance to the credit of the account, though the appellant might have been a necessary party to the proceedings.
Prima facie, therefore, a suit against the appellant in respect of this account affects the right or interest of the State of Pakistan...".
Finally, Lord Denning said (at p 417):-
"And why, I ask, should sovereign immunity depend on the finer points of our domestic law? It is a strange proposition of international law which depends for its application on whether a satisfied judgment in trover changes the property in the goods (the point which apparently turned the scale in the Dollfus Mieg case), or on whether the principal of a transferee can sue in his own name for cash at bank (a point which looms large in the present case). The comity of nations is not offended more or less according to the way such points are resolved."
It may be noted that an absence of agreement with certain of the views of Lord Denning was expressed (see the conclusions of the speeches of Viscount Simonds (at p 398) and Lord Reid (at p 404)) but it does not appear to us that such qualification applies to the passage just quoted.
"74. The general principles decided by these cases are reflected in section 6(4) of the Act... As Leggatt J made clear in Rahmatullah v Ministry of Defence... at para 54, it is implicit in this provision that a court may not entertain against a third party proceedings relating to property (a) which is in the possession or control of the state or (b) in which the state claims an interest, if the state would have been immune had the proceedings been brought against it (and, in a case whether the state claims an interest in the property, unless the claim is either admitted or not supported by prima facie evidence)."
75. As can be seen, there is one significant difference from the pre-existing common law. Whereas under common law the foreign government had simply to show that its claim was not merely illusory or manifestly defective whether such claim was based on possession, control or an interest, the statute now expressly provides that that it is only in relation to proving an interest that a prima facie claim will suffice. It must follow that if the claim to immunity is based on possession or control, the foreign government must satisfy the Court that it has such possession or control."
We observe that these comments were made by the Royal Court by reference to section 6(4) which it had found to apply.
"166. Taking first measures which apply to Botas, we conclude as follows:-
(i) Botas is a State Enterprise. It is accordingly a separate legal entity which can sue and be sued in its own name but it is wholly owned by the Republic. Although it was created by charter rather than by issue of shares, the effect is the same as if the Republic was a 100% shareholder in Botas.
(ii) The business of any State Enterprise is managed by its board of directors and the same is true of Botas (see Article 6(2) of its Main Charter). However, the Republic has a considerable measure of control over all State Enterprises (and therefore Botas). This derives not only from its ownership but also from legislation which applies to State Enterprises. For example:-
(a) Decree 233, which contains, inter alia, the powers listed at paras 119 and 152(i) above.
(b) Decision 2014/6842, which contains the measures summarised at paragraphs 146 and 152(ii) above.
(c) Law 4734 on Public Procurement which contains the measures summarised at para 151 above.
(d) Law 2477 on the Procedure for Appointment of Public Bodies, as summarised at para 152(iii) above.
167. Turning to matters which have effect in relation to the Shares, we conclude as follows:-
(i) Under Law 4046 on Privatisation, a State Enterprise may not sell a subsidiary out of public ownership into private hands without the consent of the Privatisation High Council (see para 109 above).
(ii) Under the principle of parallelism, where a subsidiary of a State Enterprise comes into existence with the authority of the Council of Ministers, the State Enterprise may not dispose of the subsidiary without the like authority of the Council of Ministers (see para 144 above).
(iii) Any change to the share capital of an overseas subsidiary of a State Enterprise established pursuant to an authority under Article 58(3) of Decree 233 requires the consent of the Minister and the Under Secretariat under Decision 2014/4842 (see para 146 above).
All of these measures apply to the Shares and Botas' interest in TPIC and BIL.
168. As to measures having direct effect on TPIC and BIL we conclude as follows:-
(i) Appointment of the directors of TPIC and BIL is subject to a measure of control by the Republic as stated at paras 148-150 above.
(ii) Law 4734 on Public Procurement applies to TPIC and BIL (see para 151 above).
(iii) For the reasons set out at paras 112-137, Decree 233 does not apply directly to any overseas subsidiary established pursuant to Article 58(3) of Decree 233 and therefore does not apply directly to TPIC or BIL."
In relation to the references within these conclusions to particular paragraphs in the Royal Court judgment, we have sought to summarise their contents in our own paragraphs above.
"28. What then is the correct approach to distinguishing between an organ of the State and a separate legal entity? And is this distinction relevant not only to questions of immunity, but also to questions of substantive liability and enforcement? Pleming JA (dissenting) in the Court of Appeal recognised (correctly) at para. 235 that the distinction drawn in s. 14 of the 1978 Act is not necessarily to precisely the same in effect as that implied by the test in Trendtex. But, although Trendtex was (like the 1978 Act) dealing with immunity, he applied the simple test in Trendtex to the present questions of liability and enforcement. In the Board's opinion, it is now appropriate in both contexts to have regard to the formulation of the more nuanced principles governing immunity in current international and national law. These, as explained... above, express the need for full and appropriate recognition of the existence of separate juridical entities established by states, particularly fortrading purposes. They do this, even where such entities exercise certain sovereign authority jure imperii, providing them in return (as already noted) with a special functional immunity if and so far as they do exercise such sovereign authority. A similar recognition of their existence and separateness would be expected for purposes of liability and enforcement.
29. Separate juridical status is not however conclusive. An entity's constitution, control and functions remain relevant... But constitutional and factual control and the exercise of sovereign functions do not without more convert a separate entity into an organ of the State. Especially where a separate juridical entity is formed by the State for what are on the face of it commercial or industrial purposes, with its own management and budget, the strong presumption is that its separate corporate status should be respected, and that it and the State forming it should not have to bear each other's liabilities. It will in the Board's view take quite extreme circumstances to displace this presumption. The presumption will be displaced if in fact the entity has, despite its juridical personality, no effective separate existence. But for the two to be assimilated generally, an examination of the relevant constitutional arrangements, as applied in practice, as well as of the State's control exercised over the entity and of the entity's activities and functions would have to justify the conclusion that the affairs of the entity and the State were so closely intertwined and confused that the entity could not properly be regarded for any significant purpose as distinct from the State and vice versa. The assets which are (subject to waiver and to the commercial use exception in s. 13(4) of the 1978 Act) protected by State immunity should be the same as those against which the State's liabilities can be enforced. This was, rightly, recognised by Pleming JA in the Court of Appeal (para. 255)."
"179. In our judgment, the level of control of the Republic over the Shares is of a very different nature and order from the sort of control envisaged in these cases. Where a government has requisitioned a ship, it has complete control of that ship. It can decide what is to be done with it, where it should go, what cargo it should carry, etc. In substance, if not in legal theory, it has a form of temporary ownership in that it is likely to possess many of the powers of an owner except powers of disposal etc.
180. That is very different from the present case. Here, day to day control of the Shares rests with Botaş, which is the legal and beneficial owner of the Shares. In support of the claim to sovereign immunity, reliance is placed first on the level of control (as summarised at para 166 above) which the Republic can exercise over Botaş. We are content to accept that, if the Republic (through its relevant organ) directed the board of Botaş to dispose of a particular asset (including the Shares), the board would no doubt be obliged to do so. However, that seems to us to be beside the point. First, if that were sufficient, the Republic would have 'control’ for these purposes over all the assets of Botaş. There could be no distinction between the Shares and all the other assets; yet it is accepted that the Republic has no claim to immunity in respect of any other assets of Botaş.
181. Secondly, we do not see that the level of control which the Republic can exert over Botaş (whether by means of its ownership or by means of the various legislative measures referred to above such as Decree 233) is of a different order to that commonly exercised by states over their wholly owned subsidiaries; see for example the high level of control exercised by the DRC over Gecamines in the Hemisphere case. If the level of state control which exists in this case over Botaş were sufficient to attract immunity on the part of the Republic in the assets of Botaş, it would drive a coach and horses through the provisions of section 14 and the clear intention of the Act that wholly owned entities should not in general have immunity.
182. One is therefore looking for some specific additional level of control over the Shares which is different from the Republic’s general level of control over Botaş and takes it into the degree of control envisaged in the Cristina and Dollfus Mieg."
"186. In summary, we do not consider that the Republic is in control of the Shares in the sense of having absolute control on a day to day basis as in the requisition cases. We do not consider that the nature and level of control which it has is sufficient to attract sovereign immunity."
"193. In our judgment, even on this basis, the matters relied upon do not amount to an interest of the Republic in the Shares sufficient to attract immunity. The Republic has no legal, equitable or contractual interest in the Shares. It may be said to have an indirect interest in the Shares in that it is the owner of Botaş and Botaş owns the Shares. However, that is equally true of every other asset of Botaş and indeed every asset of every other Turkish State Enterprise. If that was held to be sufficient interest, the intention behind section 14 of the Act would be set at nought because every state would be able to claim an interest in the assets (including the shares in any subsidiary) of any wholly owned state entity. That is clearly contrary to the intention of section 14. Accordingly, we have no hesitation in concluding that an indirect interest which a state may be said to have in the assets of a state owned entity does not amount to an 'interest’ for the purposes of section 6(4)(b)."
That was a conclusion expressed in the context of section 6(4), but we regard it as relevant in a situation where section 13(2)(b) is engaged. This is particularly so given that the Royal Court considered the evidence in this case against the background of the common law cases which we consider to be equally applicable to adjudicative and enforcement proceedings.
"197. In our judgment, to hold that the Republic has an 'interest' in the Shares for the purposes of state immunity would be to go beyond anything that has been found to be an interest so far and we do not think it would be right or permissible to do so. Regardless of the views of the Republic, it must be for this Court to determine whether the control or interest relied upon is sufficient to fall within the principle of sovereign immunity. We accept that the Minister has emphasised the importance to the Republic of maintaining indirect ownership of TPIC and BIL. Thus in relation to TPIC the Minister says on page 1 of his letter 'It is important for the energy security of the Republic of Turkey that it continues to control TPIC' and in relation to BIL, which operates the Turkish stretch of the BTC pipeline, the Minister says 'it is critical that the Turkish State continues to retain ownership of BIL'. He goes on to say 'TPIC and BIL are considered as key state-owned assets by the Government of the Republic of Turkey.' We accept what the Minister says as to the view of the Republic. However, the desire of the Republic to maintain the current ownership of TPIC and BIL as indirectly owned by the State is an example of the sort of 'more general' interest envisaged in Belhaj as opposed to a legal interest."
"48.... Many state-controlled corporations are 'constituted in such away that [their] purpose is to assist, promote, and advance the industrial development, prosperity and economic welfare of the area in which [they] operate' and in that sense carry out government policy. But that does not make their activities sovereign activity or make them part of the State... None of the above cases should therefore be taken as supporting a conclusion that a broad concept should be taken of government or that activities which would otherwise be viewed as ordinary trading activities should be treated as governmental merely because ancillary to a principal function of carrying out governmental policies."
"I think it is clear from Lord Diplock's statement in Alcom, which I have quoted above, that the word should be given a broad scope. So, in my view, 'property' will include all real and personal property, and will embrace any right or interest, legal, equitable, or contractual in assets that might be held by a State or any "emanation of the State" [the phrase used by Lord Diplock in Alcom] or central bank or other monetary authority that comes within sections 13 or 14 of the Act."
"26. It is not in my opinion open to the court to make an order in a case, such as the present, where it is clear or appears that the making of the order will not discharge the debt of the third party or garnishee to the judgment debtor according to the law which governs the debt..."
Secondly, Lord Millett said:-
"111.... the discharge of the debt owed by the third party to the judgment debtor is not merely a normal consequence of the order but the critical feature which makes the process one of execution. If the court cannot discharge the debt by force of its own order, it cannot make the order. If the debt is situated abroad, the court should not seek to evaluate the risk of the third party being compelled to pay twice. The only relevant question is whether the foreign court would regard the debt as automatically discharged by the order of the English court. Since this would be most unusual, it would be for the judgment creditor to establish."
The Royal Court then noted that although Dicey Morris and Collins, Volume 2, at para 24-084, appeared to suggest that Eram had laid down "an absolute rule that a third party debt order may not be made in respect of a debt situated abroad", but that did not take account of the possible exception referred to by Lords Bingham and Millett which is "that such an order may be made if the court is satisfied that the order will be recognised as discharging the liability of the third part debtor". The Royal Court observed by reference to all of the speeches in Eram that it was thought that satisfaction of the requirements for such an exception would be unusual or rare. The Royal Court then referred to the position in Hemisphere, which was that the debt had been found to be situated in Jersey, and which was therefore to be distinguished from the present situation.
"234.... The key point in Eram was that the court was being asked to arrest an asset situated abroad which on its face was an exorbitant jurisdiction. The court should only therefore make such an order, if at all, where it was clear that the debt owed to the judgment debtor would be extinguished so that there was no risk of the third party having to pay twice. It seems to us that that principle is equally applicable whether the third party is incorporated in the Island or is incorporated elsewhere but with the branch in the Island..."
The Royal Court then confirmed that the principles established in Eram were applicable to the facts of the present case and it concluded that "The Court should therefore not confirm the arrêt unless Tepe establishes that the arrêt would be recognised by a Turkish court as discharging pro tanto the liability of TPIC/BIL to Botaş."
"243. As stated very clearly by the House of Lords in Eram, whilst evaluation of the risk of the third party debtor being compelled to pay twice is the correct issue to be considered when the debt is situated in England (or Jersey in our context), it is not the issue where the debt is situated abroad. There, the question is whether the order would be recognised by the foreign court as extinguishing the liability of the third party debtor. Thus in our context, the issue is whether the arrêt would be recognised by the Turkish court as extinguishing pro tanto the liability of TPIC and BIL to Botaş."
The Royal Court then acknowledged that "the importance of the order being recognised as extinguishing the liability of the third party debtor to the judgment debtor" is recognised in the passages from the speeches of Lord Bingham and Lord Millett which had been quoted earlier, and the Royal Court also referred to passages in the speech of Lord Hoffmann which was to like effect. The Royal Court then said (at para 244) that "It is clear from the speeches in Eram that the underlying principle is that it is not in general open to a court to make an order permitting enforcement against assets situated overseas."
"245. That is no doubt why their Lordships held that, where the debt is situated abroad, it is not a question of evaluating the risk of double payment, it is a question of whether the order itself would be recognised as having discharged the liability of the third party to the judgment debtor. Furthermore the burden of establishing this clearly rests upon the judgment creditor.
246. In our judgment, Tepe has failed to discharge that burden in this case. The evidence from Prof Cerrahoğlu is that it would be payment by TPIC and BIL which would be recognised by the Turkish court as discharging their obligation to pay Botaş. Furthermore, one of the reasons which he gave for thinking that a Turkish court would not allow Botaş successfully to sue TPIC and BIL was that, if successful, it would thereby be unjustly enriched. That seems to us very similar to the point so resoundingly rejected by their Lordships in Eram. We conclude that we cannot bring the facts of this case within the narrow compass of the exception in Eram, which decision was held to be equally applicable to arrêts by the Royal Court and the Court of Appeal in Hemisphere."
"240.... Before enforcing a foreign judgment, the Turkish court would need to be satisfied that the foreign judgment did not conflict with Turkish public order. He raised the possibility that the court might find that the order of a foreign court in respect of sums owed by TPIC and BIL to Botaş would be contrary to public order if to enforce it would be detrimental to the services run by Botaş, TPI or BIL.
241. We have to say that, on the facts of this case, we do not see that enforcement of the order could be detrimental to the services run by any of the companies. Payment by TPIC and BIL would put them in no worse position than if they had paid to Botaş and Botaş' position would also be neutral because, to the extent that it did not receive payment of the debts from TPIC or BIL, it would be relieved of its liability to Tepe."
"278. In our judgment, this makes good sense and is equally applicable when considering an arrêt. In the present case, if a dispute arose, BIL would be able to resist payment of its obligations to Botaş on the ground that Botaş owes more to it than it owes to Botaş. This is so even though no set-off had actually been claimed prior to the imposition of the interim arrêt. If the Court were to confirm the interim arrêt, Tepe would be placed in a better position than Botaş itself. BIL would effectively be forced to discharge debts to Botaş (via payment to Tepe) in circumstances where it could have resisted payment to Botaş. An arrêt (or third party debt order) is not intended to prejudice a third party. To grant an arrêt in such circumstances would constitute such prejudice."
In the following paragraph, the Royal Court noted that it had not ignored the fact that BIL is a subsidiary of Botaş but nevertheless BIL is a separate legal entity and as a matter of principle it would not be right to confirm an interim arrêt over a debt where the effect of such confirmation would be to put the third party debtor in a worse position than it would have been were no such order to be made.
(i) In respect of the Re-Amended Notice of Appeal for the appellants, the appeal is refused and the findings of the Royal Court which are referred to are not set aside;
(ii) In respect of the Notice & Cross Appeal for the respondent:-
(a) The appeal that the Royal Court failed to apply section 14 of the Act is refused;
(b) The appeal that the Royal Court was wrong to find that section 13(2)(b) only applies where there is a judgment against the State in question is allowed;
(c) The appeal in respect of the commercial exception in section 13(4) is not determined;
(d) The appeal that the Royal Court was wrong to find that section 6(4) applies, is allowed;
(e) The appeal that the Royal Court was wrong in relation to the application of parallelism in Turkish law is refused;
(f) The appeal that the Royal Court was wrong to find that the arrêt should not apply to the debts owed by BIL to Botaş is refused.
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