(i) A first partial award on 5th June, 2009, dealing principally with liability as well as awarding Tepe the return of retention and milestone bonds which it had provided (the "Stations Securities").
(ii) A second partial award on 31st January, 2011, dealing principally with quantum and interest.
(iii) A third and final award made on 26th August, 2011, dealing with costs.
The overall outcome was that the arbitration panel awarded Tepe sums totalling US$52.5m plus compound interest on such damages, ordered the return of the Stations Securities and payment of commissions accruing until the return of the Stations Securities to Tepe and dismissed all the counterclaims of Botas.
(i) A first partial award on 18th October, 2010, dealing principally with liability.
(ii) A second partial award dated 11th October, 2012, dealing principally with quantum and interest as well as the return of the performance securities, retention bonds and milestone guarantee letters (the "Lot A Securities").
(iii) A third and final award made on 21st May, 2013, dealing principally with issues of interest and costs.
(A) The Court has no jurisdiction to make any order in respect of the shares in TPIC and BIL ("the Shares") 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 Botas.
(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 ("the Securities").
Botas therefore contends that the Representations should be dismissed and the interim arrêt lifted. Tepe, on the other hand, seeks leave to enforce the Awards and confirmation of the interim arrêt.
"1. The Respondents submit that the Representor should be refused leave to enforce the [Lot A Arbitration Award] [Stations Arbitration Award] as a judgment in Jersey and to execute it against the Shares on the basis that it would be contrary to the New York Convention and that the arrêt entre mains should be discharged for the reasons set out below." (emphasis added)
"44 Refusal of enforcement
(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 -
(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) subject to paragraph (4), 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;
(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.
..." [emphasis added]
"4. It is important to note the narrow grounds upon which the court can refuse to enforce an award made under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, known as the New York Convention.... In particular the court cannot refuse to enforce an award on the ground of error of law or fact.
Issues (2) and (3): Was Cukurova able to present its case? Public Policy
30. It is convenient to consider these issues together. Cukurova's case is that enforcement ought to have been refused because the Tribunal violated the rules of natural justice. It says that it was not able to present its case within the meaning of section 36(2)(c) and/or that it would be contrary to public policy to enforce the award under section 36(3) of the Arbitration Ordinance. It takes two points. First, the Tribunal decided the key issue in the dispute (namely, whether the parties had agreed the terms of the SPA) on a basis that had never been put to Cukurova and that Cukurova never had an opportunity to address. Secondly, the Tribunal ignored (and failed to give any reasons for rejecting) Cukurova's evidence and submissions on a key point in relation to the quantification of Sonera's alleged loss. This resulted in a massive increase in the damages awarded against Cukurova.
Section 36(2)(c) and 36(3)
31. Section 36(2)(c) is in the same terms as section 103(2)(c) of the Arbitration Act 1996 in England. They reflect Article V(1)(b) of the New York Convention. In Minmetals Germany GmbH v Ferco Steel Ltd  CLC 647, 658 Colman J said that the subsection contemplates that the enforcee has been prevented from presenting his case by matters outside his control, which will normally cover the case where the procedure adopted has been operated in a manner contrary to the rules of natural justice. In Kanoria v Guinness  EWCA Civ 222 Lord Phillips CJ held in the Court of Appeal that, on the ordinary meaning of section 103(2)(c), a party to an arbitration is unable topresent his case if he is never informed of the case he is called upon to meet. He referred to the statements in Minmetals referred to above with approval.
32. It is not in dispute that in applying these principles the enforcing court must apply its own concept of natural justice. In this case that is of course the concept of natural justice as understood and applied in the BVI. Section 36(3) reflects Article V(2)(b) of the New York Convention and provides that enforcement may be refused if it would be contrary to public policy, here the public policy of the BVI. It is contrary to public policy in England to enforce a foreign arbitral award where the foreign proceedings violated English principles of natural justice: see eg Adams v Cape Industries  Ch 333. The same is true of BVI public policy.
33. The Board accepts Cukurova’s submission that, if a particular breach of natural justice does not fall within section 36(2)(c) because it was not one which meant that the party could not present its case, it is in principle open to the court to refuse to enforce the award on the ground of public policy. However, it follows from the above that the question under section 36(2)(c) is whether Cukurova was unable to present its case for reasons which were beyond its control. On the facts here, the Board is of the view that, only if Cukurova succeeds under section 36(2)(c) should the court refuse to enforce the award. As Sir John Donaldson MR observed in Deutsche Schachtbau-und Tiefbohrgesellschaft mbH v R’As al Khaimah National Oil Co  1 AC 295, 316 considerations of public policy can never be exhaustively defined, but they should be approached with extreme caution.
34. The general approach to enforcement of an award should be pro-enforcement. See eg Parsons & Whittemore Overseas Co Inc v Société Générale 508 F 2d 969 (1974) at 973:
"The 1958 Convention’s basic thrust was to liberalize procedures for enforcing foreign arbitral awards... [it] clearly shifted the burden of proof to the party defending against enforcement and limited his defences to seven set forth in Article V."
In IPCO (Nigeria) v Nigerian National Petroleum  2 Lloyd’s Rep 326, Gross J said at para 11, when considering the equivalent provision of the English Arbitration Act 1996:
"... there can be no realistic doubt that section 103 of the Act embodies a pre-disposition to favour enforcement of New York Convention awards, reflecting the underlying purpose of the New York Convention itself..."
The Board agrees. There must therefore be good reasons for refusing to enforce a New York Convention award. The Board can see no basis upon which it should refuse to enforce the award here if Cukurova fails to show that it was unable to present its case for reasons beyond its control.
64. There may be grounds for saying that the Tribunal was wrong to accept the evidence of Professor Lind and to reject that of Mr Osborne with regard to the appropriate figure to take in respect of the illiquidity discount. However those grounds would involve saying that the Tribunal erred on the facts, or perhaps in law. As explained at the outset, the enforcing court is not concerned with such issues. The Board concludes that there is no basis upon which the decision of the judge or the Court of Appeal can or should be reversed, so far as the Tribunal's treatment of the evidence of Mr Osborne is concerned. Cukurova cannot succeed under section 36(2)(c). Nor can it succeed on the basis that enforcement would be contrary to public policy or on the basis of any infringement of the rules of natural justice. Finally, the Tribunal gave reasons for its decision. Whether those reasons were convincing or not is not a matter for the enforcing court."
(i) The dispute between the parties as to the proper construction of clause 15.2.2 of the Stations Contract (i.e. whether a 30 day cure period was required before the contract could be terminated by Botas) was not contemplated at the date of the Terms of Reference and was therefore outside the tribunal’s jurisdiction for the purposes of Article 44(2)(d). This was because Tepe had originally sought to exclude the letter of 22nd March, 2005, on the ground that it had been written without prejudice. However, following an interim decision of the tribunal that the letter was admissible, Tepe had for the first time raised the issue of the cure period.
(ii) The allegation of Tepe that it could have obtained funds from its holding company so as to enable it to continue with the work and thereby cure the alleged default contained in its letter of 22nd March was not contained in its Particulars of Claim or its submissions. It was raised for the first time in the witness statement of Professor Atalar. This was contrary to paragraph 3.1 of procedural order number 1 made by the tribunal, which required that the parties' claims would be contained in their submissions and that they should adduce evidence in support of the arguments contained in those submissions. Botas was therefore denied a proper opportunity to respond to the allegation.
(iii) The tribunal concluded that there was insufficient evidence to establish that Tepe would not have been able to secure the required funding to comply with its obligations under the Stations Contract had it been given the cure period. By requiring Botas to show that Tepe could not have obtained funding from its holding company, the tribunal inappropriately reversed the burden of proof. Botas did not have sufficient notice that this approach would be adopted such as to afford it a proper opportunity to respond.
(iv) The tribunal's requirement that Botas discharge the burden of showing that Tepe could not obtain alternative funding was impossible in circumstances where it had refused Botas' request for discovery of documents relating to Tepe's ability to obtain financing from its wider corporate group.
"Further, as has been set out above, it [Tepe] had committed substantial sums of money to the project from its own resources and had the full, and continuing, support of Bilkent Holdings."
"... it nevertheless was not established, to the tribunal’s satisfaction, that, if left with no other alternative, Bilkent Holdings would not ultimately have stepped in to support Tepe financially."
(i) Whilst the parties had agreed that the issue for determination by the tribunal was whether, as required by the Lot A Contract, TPN was during the 30-day notice period "diligently pursuing the cure of such material breach" the tribunal at paragraph 336 of its first partial award applied a different and lower test when it said "although, to save the Contract, TPN would have had to have cured the failure completely within 90 days, the best which could have been expected of it, in the circumstances in which it found itself at the time, in our opinion, within the initial 30-day period, was the diligent beginning of progress towards a cure." [emphasis added]. Botas argues that the diligent beginning of progress towards a cure is a lower test than diligently pursuing a cure as required by the contract. Botas further relies on the wording of paragraphs 345 and 346 of the first partial award where, it contends, there is no or insufficient reference to the need for diligence. It submits that the speculation at paragraph 346 that the remedial measures which were in hand would have "intensified" in the following 60 day period indicated that they lacked intensity during the 30 day period and that therefore TPN was not doing all it could have done at that stage and so was not acting diligently.
(ii) Botas complains that the tribunal permitted evidence to be submitted from the founder of Tepe's wider corporate group Dr Ihsan Dugramaci in the form of an unsigned witness statement. Dr Dugramaci died before the hearing. Botas was of the view that his evidence was contentious. In the circumstances where Botas did not have an opportunity to cross-examine Dr Dugramaci on his evidence, the tribunal should not have taken his evidence into account.
(i) The Terms of Reference accurately record the claimants' (i.e. TPN) case that "... the Claimants were diligently pursuing a cure of any alleged default such that [Botas] was not entitled to give notice of termination." (at paragraph 44) and at paragraph 50 the contention of Botas that "the First Claimant was not entitled to a period in excess of 30 days to remedy its default because it was not, at the date of the Notice of Termination, diligently pursuing the cure."
(ii) The tribunal set out accurately the question which it had to determine on this topic at paragraphs 84 - 86 of its first partial award as follows:-
"84. On the assumption that the letter dated 24 November 2004 was effective in law to start the 30-day period for curing the defect, the Claimants finally argued that they were diligently pursuing a cure during that period so that they were entitled to up to 60 days more, after the expiry of the initial 30-day period, to continue with their attempts to cure the defect. It would follow, if they are right, that the notice of termination on 6 January 2005 was invalid for the purposes of Sub-Clause 15.2.2 because it was premature.
85. Botas claims that TPN was not pursuing a cure, diligently or at all. Therefore its time ran out after the expiry of 30 days and the notice of termination was valid.
86. Accordingly under this heading the question for the Tribunal is; on the assumption that TPN’s failure to pay sums which had fallen due to Sub-contractors was a material failure susceptible to cure, was TPN as a matter of fact diligently pursuing a cure in the period between 24 November 2004 and 6 January 2005?"
(iii) The tribunal again poses the correct question at paragraph 333 when it states:-
"It follows that, to avoid a termination of the Contract for default, the burden fell on TPN to take urgent steps diligently to pursue a cure of these failures and, ultimately, to cure them."
(iv) The tribunal announces its decision at paragraph 334 in the following terms:-
"The question whether TPN was or was not diligently pursing a cure of its earlier failures is a question of fact. In our opinion, at the date of Botas’ letter of 6 January 2005, TPN were diligently pursing a cure of that failure. It follows that the notice of 6 January 2005 was premature and was not effective to terminate the Contract under Sub-Clause 15.2.2(vi)."
In our judgment that could not be clearer. The tribunal asks itself the right question and holds as a finding of fact that, at the material time, TPN was diligently pursing a cure of the defects articulated by Botas in its letter of 24th November, 2004.
(v) The tribunal then goes on at paragraphs 336 - 346 to explain how it has come to this conclusion and to discuss the various actions which TPN had taken during the 30 day period. Botas criticises in particular the language in paragraph 336 and it is therefore helpful to record the whole paragraph:-
"336. First TPN’s failure to pay its Sub-contractors had been the subject of discussion between the parties for most of 2004. It was a deep-seated problem, attributable in large measure to the decline in the value of the US dollar. The size of the debt at 24 November 2004 was, we have found, considerable. It was inherently unlikely that this was a problem which could be cured within the initial 30 days contemplated by Sub-clause 15.2.2. Although, to save the Contract, TPN would have had to have cured the failure completely within 90 days, the best which could have been expected of it, in the circumstances in which it found itself at the time, in our opinion, within the initial 30-day period, was the diligent beginning of progress towards a cure."
In our judgment, when read in context, there is no question of the tribunal applying a different test in this passage. It is simply a different way of saying the same thing. The tribunal was making the point that the defect could not reasonably be expected to be cured within the 30 days and that the best that could be expected was the diligent beginning of progress towards a cure. This is, in our judgment, simply another way of saying that TPN was diligently pursuing a cure.
(vi) Similarly, we do not accept Botas' criticisms of the language in paragraphs 345 and 346 where it is suggested that the tribunal has omitted to require the appropriate degree of diligence on the part of TPN. Thus the opening sentence of paragraph 345 reads:-
"In our opinion the principal reason why the notice of termination was served on 6 January 2005 was not because Botas genuinely believed that TPN were not pursing a cure, or not pursing a cure diligently, but because it was impatient to terminate the Contract."
The tribunal is there again referring to the correct test required by the contract. It is in that context that at the end of paragraph 345 it states:-
"although a total cure was still some distance away, some remedial measures were in hand and they should have been given a proper opportunity to mature."
(vii) Similarly in relation to paragraph 346, the tribunal ends by saying:-
"We accordingly conclude that Botas allowed itself to be influenced by extraneous considerations when it served its notice on 6 January 2005. If it had properly addressed its mind to the only relevant consideration, namely whether TPN was diligently pursing a cure, the notice would not and should not, in our opinion have been served. It was invalid because it was premature."
"MR BLACKBURN It follows, doesn’t it, from what you have said, that you can’t accept the unsigned statement of the founder of the university?
MR WHITE Correct
MR BLACKBURN What about admissibility in relation to that statement?
MR WHITE We are not going to take an admissibility point. He has now died.
MR BLACKBURN I know.
MR WHITE And I suspect that - we accept this is a French arbitration taking place in London, but if English principles were applied, probably a Civil Evidence Act Notice would have been permissible and it would...
THE CHAIRMAN Almost undoubtedly.
MR WHITE Yes. And it would be then simply a question of weight.
MR BLACKBURN But in any event you don’t object to us looking at it?
MR WHITE No, not at all. We say, actually, that it is not inconsistent, on analysis, with the case that we advance, that they had taken the judgment, they had taken the decision that any further money was to come from Botas, not from TPN.
THE CHAIRMAN That would be a question of fact.
MR WHITE And that is a question of fact."
"Dr Atalar’s statement exhibited an unsigned statement from the Founder. At the subsequent main hearing on the issues, counsel for Botas stated that, while the facts and matters in the Founder’s statement were contentious, the statement was nevertheless admissible."
"Immunity from Jurisdiction
1(1) A State is immune from the jurisdiction of the courts of the United Kingdom except as provided in the following provisions of this Part 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.
Exceptions from Immunity
3(1) A State is not immune as respects proceedings relating to:-
(a) a commercial transaction entered into by the State; or
(b) an obligation of the State which by virtue of a contract (whether a commercial transaction or not) falls to be performed wholly or partly in the United Kingdom.
(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 sub-section (1) above applies to a contract of employment between a State and an individual.
6(1) A State is not immune as respects proceedings relating to:-
(a) any interest of the State in, or to its possession or use of, immovable property in the United Kingdom; or
(b) any obligation of the State arising out of its interest in, or its possession or use of, any such property.
(2) A State is not immune as respects proceedings relating to any interest of the State in movable or immovable property being an interest arising by way of succession, gift or bona vacantia.
(3) The fact that a State has or claims an interest in any property shall not preclude any court from exercising in respect of it any jurisdiction relating to the estates of deceased persons or persons of unsound mind or to insolvency, the winding up of companies or the administration of trusts.
(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.
10(1) This section applies to:-
(a) Admiralty proceedings; and
(b) proceedings on any claim which could be made the subject of Admiralty proceedings.
(2) A State is not immune as respects:-
(a) an action in rem against a ship belonging to that State; or
(b) an action in personam for enforcing a claim in connexion with such a ship,
if, at the time when the cause of action arose, the ship was in use or intended for use for commercial purposes.
(3) Where an action in rem is brought against a ship belonging to a State for enforcing a claim in connexion with another ship belonging to that State, subsection (2)(a) above does not apply as respects the first-mentioned ship unless, at the time when the cause of action relating to the other ship arose, both ships were in use or intended for use for commercial purposes.
(4) A State is not immune as respects:-
(a) an action in rem against a cargo belonging to that State if both the cargo and the ship carrying it were, at the time when the cause of action arose, in use or intended for use for commercial purposes; or
(b) an action in personam for enforcing a claim in connexion with such a cargo if the ship carrying it was then in use or intended for use as aforesaid.
(5) In the foregoing provisions reference to a ship or cargo belonging to a State include references to a ship or cargo in its possession or control or in which it claims an interest; and subject to subsection (4) above, subsection (2) above applies to property other than a ship as it applies to a ship.
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 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.
(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) 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 (hereinafter 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.
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;
"1. Botas is a state economic enterprise within the scope of the Decree Law numbered 233 under Turkish Law and the shares of Botas 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 Botas 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."
"I understand that enforcement proceedings have been initiated against you [Botas] by [Tepe] in the Royal Court of the Island of Jersey. Pursuant to those proceedings, I understand that the entire issued share capital in each of [TPIC] and [BIL] held by Botas has been made the subject of an interim order by the Jersey Court.
I provide this letter as the Minister of Energy and Natural Resources of the Republic of Turkey, to set out the position of the Ministry of Energy and Natural Resources of the Republic of Turkey. I am aware that this letter may be submitted in evidence before the Jersey Court.
I confirm that the Government of the Republic of Turkey considers that the shares in TPIC and BIL held by Botas 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. I set out below the nature and scope of the Turkish Government’s interest in and control over the shares and operations of TPIC and BIL.
Each of Botas, TPIC and BIL are separate legal entities from the Turkish state and aim to make a profit in carrying out their activities. However, as I explain below, the Turkish Government retains to a specific degree, its interest in and control over the shares and operations of TPIC and BIL because of their sovereign importance."
The letter then goes on to elaborate on what the Minister calls the 'nature and scope of the Turkish government's interest in and control over the shares and operations of TPIC and BIL'. As these matters are fully developed in the arguments put forward by Advocate Nicholls (and referred to later), we do not think it necessary to quote any further from the Minister's letter but we have of course carefully considered its contents.
"the overriding duty of the Court, of its own notion, is to satisfy itself that effect has been given to the immunity conferred by the State Immunity Act 1978."
"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...."
"...the independent sovereign may not be directly or indirectly impleaded in the Courts of this country without its consent..." (at 503); and
"... there is a second ground on which the writ should in my judgment be set aside, which is that it claims to interfere with the property of the foreign sovereign...." (at 506)
"The appellants, while not contesting the general principle, have denied that it applies to the facts of the present case, for various reasons. In the first place they have relied on the fact that the Spanish government had no property (in the sense of ownership) in the Cristina, whereas in the Parlement Belge the Belgian government was the owner of the mail packet. But the rule is not limited to ownership. It applies to cases where what the Government has is a lesser interest, which may be not merely not proprietary but not even possessory. Thus it has been applied to vessels requisitioned by a Government, where in consequence of the requisition, the vessel, whether or not it is in the possession of the foreign State, is subject to its direction and employed under its orders."
"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 rule according to a foreign sovereign government immunity against being sued has been considered and applied in many cases. The basis of the rule is that it is beneath the dignity of a foreign sovereign government to submit to the jurisdiction of an alien court, and that no government should be faced with the alternative of either submitting to such indignity or losing its property. The rule was stated by Lord Atkin in the case of the Cristina as involving two propositions. The first, that the courts of a country cannot implead a foreign sovereign; and the second, that they would 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. Dicey 6th Ed, p131 in a passage in his 'Conflict of Laws' approved by Lord Radcliffe in the case of Dollfus Mieg, stated the rule in these terms 'The court has... nojurisdiction to entertain an action or proceeding against (1) any foreign sovereign... Any action or proceeding against the property of [a foreign sovereign] is an action or proceeding 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 sovereign State 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 [ie 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.'"
"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."
The Privy Council went on to consider the facts in that case in some detail and concluded that the government of Indonesia’s title was manifestly defective because the individual purporting to act as agent of Juan Ysmail had no authority to sell the ship to the government.
"(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."
As Leggatt J made clear in Rahmatullah v Ministry of Defence  EWHC 3846 (QB) 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 where the state claims an interest in the property, unless the claim is either admitted or not supported by prima facie evidence).
"The [Act]... purports in Part 1 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") judgments pronounced and orders made in the exercise of their adjudicative jurisdiction....
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,... may be regarded for the purposes of this Act as hybrid...)"
"The distinction between adjudicative and enforcement jurisdiction
The SIA [the Act] treats separately immunity from adjudication and immunity from execution, but unlike UNCSI's [the UN Convention on State Immunity] 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 the adjudicative 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 aforeign 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."
(i) Certain Italian nationals had been awarded damages against the State of Germany by the Italian courts in respect of atrocities carried out by German troops during the Second World War. Germany contended that this infringed its sovereign immunity.
(ii) Certain Greek nationals had also been awarded damages against Germany in the Greek courts for atrocities committed in Greece during the war. That judgment was subsequently declared enforceable in Italy by the Italian courts and, in support of that declaration, the Italian courts had granted a legal charge over property in Italy owned by Germany which was used for governmental purposes. Germany contended that this infringed its sovereign immunity rights in respect of enforcement of any judgment.
(iii) Germany in any event challenged the decision of the Italian courts to declare enforceable a judgment of the Greek courts on the basis that this too was an infringement of its sovereign immunity.
"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 a 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."
The Court went on to refer to Article 19 of the United Nations Convention on Jurisdictional Immunities of States and Their Property ("the UN Convention") which provides that no post-judgment measures of constraint, such as attachment, arrest or execution against property of a State may be taken in connection with a proceeding before a court of another State unless and except to the extent that, inter alia, it is established that the property is specifically in use or intended for use by the State for other than government non-commercial purposes. The ICJ held that the property in this case was being used by Germany for governmental purposes which were entirely non-commercial and accordingly the registration of the charge had constituted a violation by Italy of the sovereign immunity owed to Germany.
"124. It should first be noted that the claim in Germany’s third submission is entirely separate and distinct from that set out in the precedingone, which has been discussed in Section IV above (paragraphs 109 -120). The Court is no longer concerned here to determine whether a measure of constraint - such as the legal charge on Villa Vigoni - violated Germany's immunity from enforcement, but to decide whether the Italian judgments declaring enforceable in Italy the pecuniary awards pronounced in Greece did themselves, independently of any subsequent measure of enforcement -constitute a violation of the Applicant's immunity from jurisdiction. While there is a link between these two aspects - since the measure of constraint against Villa Vigoni could only have been imposed on the basis of the judgment of the Florence Court of Appeal according exequatur in respect of the judgment of the Greek Court in Livadia - the two issues nonetheless remain clearly distinct. That discussed in the preceding section related to immunity from enforcement; that which the Court will now consider addresses immunity from jurisdiction. As recalled above, these two forms of immunity are governed by different sets of rules."
(i) In SerVass Inc v Rafidain Bank  1 AC 595 Lord Clarke (with whom the other members of the Supreme Court agreed) said at paragraph 9:-
"The issues in this appeal are not concerned with a state’s immunity from suit, which is governed by section 3 of the Act, but... are solely concerned with the scope of its immunity from execution of a judgment given against it, which is governed by section 13(2)(b) and 13(4)."
(ii) In the AIG case Aikens J said at para 43:-
"The jurisdiction of the UK courts as to enforcement of a judgment against a State is dealt with by Section 13..."
(iii) At paragraph 113 of the Germany v Italy case in the ICJ (already referred to at paragraph 83 above) is to be found the following passage:-
"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 judgmenthas been given can be the subject of measures of constraint on the territory of the forum State... with a view to enforcing the judgment in question."
(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 (see paragraph 75 above).
(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.
(a) Law No.4046 concerning arrangements for the implementation of privatisation.
(b) The application of Decree Law 233 on State Economic Enterprises.
(c) The Turkish law principle of parallelism.
(d) Further legal controls over TPIC and BIL.
"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."
"A public economic organisation 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 (sic) by virtue of the public service it provides."
(i) Article 60 of Decree 233 provides that the State Enterprises which are subject to the Decree (as well as their institutions and subsidiaries) are shown in the annexed list. Schedule A of that list contains those State Enterprises which are categorised as SOEs and Schedule B lists those categorised as Public Organisations. Botas (under its previous name of Petroleum Pipeline Corporation) is listed in Schedule A under the Ministry of Energy and Natural Resources. Professor Cerrahoglu says that, as this is contained in the legislation, it is determinative of Botas’ status as an SOE.
(ii) The main charter of Botas (which is the document which established it) refers in Article 2 to the same two categories of State Enterprise (although it calls the first category a 'State Economic Organisation’). It goes on in Article 3 of its main charter to say as follows:-
"1. Botas, incorporated by virtue of this Main Charter, is a State Economic Organisation that bears the nature and character of a legal entity, which is autonomous in its operations, with liabilities limited to its capital."
It therefore states unambiguously that it is a State Enterprise which falls within the first category, i.e. using our terminology, it is an SOE.
(iii) That accords, says Professor Cerrahoglu, with its objectives which are clearly commercial. Thus at Article 4 of the main charter one finds:-
"Botas is founded in order to build oil, oil products and natural gas pipelines, have them built, take over, purchase or hire already built pipelines both in Turkey and abroad, transport oil, oil products and natural gas and purchase and sell the crude oil and natural gas to be transported via subject pipelines and carry out all oil related operations such as exploration, drilling, production, transportation, storage and refinery of oil and natural gas abroad, pertaining to the provision of oil and natural gas."
"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."
"(3) The Council of Ministers shall be authorised 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 organisation."
"The directors, organisation, operating principles and internal supervision of the company as well as its relations with [Botas] shall be determined by the board of directors of [Botas]. The board of directors of the company to be established shall be organised within the framework of the principles and conditions required by the foreign legislation to which this company shall be subject. The members of the board of the company shall be elected among the members of [Botas], taking into account the relevant legislation and the company’s articles of incorporation."
(i) Article 58(2) of Decree 233 was not, in his opinion, accurately translated in the version before us. He said that, when correctly translated and understood, Article 58(2) provides that a company is exempt from Decree 233 if either it is an entity benefitting from the provisions to encourage foreign capital investment in Turkey or it was incorporated under the laws of some other jurisdiction. We have to say that, on the evidence before us, we are unable to express any view on the accuracy of the translation. The version before us would appear to require both aspects to be satisfied. In the circumstances we cannot place any weight on this particular argument concerning Article 58(2) and do not consider Article 58(2) to be relevant.
(ii) The correct interpretation of Article 58(3) was that, where the Council of Ministers authorised a State Enterprise to set up a company abroad, that company was not subject to Decree 233. Such company was expressly to be governed by the laws of the jurisdiction of its incorporation, not Turkish law of which Decree 233 formed part.
(iii) That this was the correct position was supported by Article 60 which, as already stated, annexes a list of State Enterprises subject to the Decree and also of their 'institutions and subsidiaries’. TPIC and BIL do not appear on the list of subsidiaries of Botas (or indeed TPAO). That was strong evidence, said Professor Cerrahoglu, that they were not covered by Decree 233.
(iv) That was also the view of the Court of Accounts which, according to Dr Cal is a High Court responsible for inspecting the accounts of State Enterprises in general. In its report on Botas for 2013 it says at page 54 (in translation):-
"In accordance with the Council of Ministers decision No. 88/13180 published in the official gazette dated 21/08/1988 and numbered 19906, TPIC was established on 07.12.1988 under the legislation of Jersey, with its headquarters located abroad, as a fully owned subsidiary of [TPAO] and was recorded in the Jersey Trade Register with the registration number 42633.
The company is not one of the domestic state-capital companies and is not subject to Decree No.233 governing public economic enterprises ("PEEs") and Decree No.399 governing the personnel regime for PEE employees." [emphasis added]
(v) Professor Cerrahoglu also referred to the answer of the Minister of Energy and Natural Resources to a question in the Turkish Parliament concerning whether TPIC was regulated by the provisions of Decree 233 in relation to matters of personnel. The written response of the Minister dated 13th August contained the following:-
"Pursuant to sub-paragraph 3 inserted into the Decree No.233... The Council of Ministers is authorised to give permission to public economic enterprises to establish companies abroad or join companies established without being subject to the provisions of this Decree, and to determine the principles regarding this issue in respect of institutions.
Pursuant to the authority granted by Article 58 sub-paragraph 3 of Decree No.233, the Council of Ministers has given permission to [TPAO] to establish a company abroad as per the laws of a foreign state...
In this respect, [TPIC] has been established in accordance with the laws of Jersey on 07.12.1988 and registered in the Jersey Trade Registry with the number 42633. TPIC, established in accordance with the laws of Jersey and pursuant to the decision of the Council of Ministers dated 28.08.1988 and numbered 88/13196... is not among the domestic companies with a public capital; it is not subject to Decree No.233, to which Public Economic Enterprises are subject and to the Decree No.399 regulating the employment regime of their personnel, and hence to the legislation which [TPAO] is subject to." [emphasis added]
(i) Article 1(1) of the Decree states "This Decree law encompasses the state-owned entities and public economic organisations as well as their institutions, subsidiaries and affiliates." There was no disputing that TPIC and BIL were both subsidiaries of Botas as falling within the definition of 'subsidiaries' contained in Article 2(5) of the Decree. On the face of it therefore, the provisions of Decree 233 applicable to subsidiaries applied to TPIC and BIL.
(ii) He agreed that Article 58(3) enabled the Council of Ministers to say that Decree 233 should not apply to a particular subsidiary set up abroad but the wording of Article 58(3) was permissive and the Council was not obliged to authorise an exemption from the Decree for an overseas subsidiary. The Council had a discretion to determine whether a foreign-incorporated company should be exempt from the Decree or not. If it intended to authorise the establishment of a foreign company which was not subject to Decree 233, Dr Cal considered that this should be stated explicitly in the Council of Ministers' Decision. Neither of the Decisions establishing TPIC and BIL stated specifically that the companies were to be exempt from Decree 233. He considered therefore that they were not exempt.
(iii) In any event, he considered that Article 58(3) could be read so as to confine the qualification "without being subject to the provisions of this Decree law" to the act of establishing companies abroad i.e. exemption did not apply to the operation of the company thereafter.
(iv) He conceded that TPIC and BIL were not included in the Schedule to Decree 233 as subsidiaries of Botas but pointed out that there was a company which had been privatised but was still erroneously included as a subsidiary of another State Enterprise in the Schedule. There had therefore to be a question mark over the accuracy of the Schedule.
(i) We agree that, pursuant to Article 1(1) of Decree 233, subsidiaries of State Enterprises are generally encompassed within the Decree. It is then a question of looking at each Article of Decree 233 to see whether that particular provision extends to subsidiaries. Some of them do, others do not. We accept that TPIC and BIL are subsidiaries of Botas.
(ii) However, it is clear that Article 58(3) contains an exemption provision and indeed it is so headed. We consider that the more natural construction of Article 58(3) is that put forward by Professor Cerrahoglu. In other words, the Council of Ministers may authorise the establishment of a company abroad which is exempt from Decree 223. The two aspects go together. The provision entitles the Council to authorise the establishment of a company abroad in which event it is not subject to Decree 233. That accords with the practicalities. If a company is incorporated abroad, it is governed by the law of the place of incorporation. It would be a recipe for confusion and uncertainty if such a company were also to be subject to the provisions of Turkish law in so far as they were contained in Decree 233.
(iii) We are comforted in our interpretation by the fact that this is clearly the view of the Court of Accounts and also the view of those advising the relevant Minister in 2012 when he gave his parliamentary answer. We accept of course that the opinion of a Minister or his advisers as to the correct interpretation of a piece of legislation is not binding on the Court but, in our judgment, it gives some indication of how Article 58(3) is generally understood in Turkey. Even accepting that there may be errors in the Schedule, it is also of note that the Schedule to Decree 233 does not include TPIC or BIL as subsidiaries of Botas. This would tend to indicate that they are not subject to Decree 233.
(iv) We further note that Decision 2014/6842 (which is a Decision of the Council of Ministers taken pursuant to Article 29 of Decree 233 in relation to the financial strategies etc for State Enterprises and their subsidiaries for 2015) states at Article 1(2) that it applies to State Enterprises and their subsidiaries which are subject to Decree 233, and then goes on in Article 2 to exclude subsidiaries established under Article 58(3) of Decree 233 from the definition of subsidiary for the purposes of the Decision. That again is more consistent with it being generally understood that Decree 233 does not apply to overseas subsidiaries.
(v) Dr Cal was unable to point to any support for his construction of Article 58(3) and simply asserted that the Court of Accounts and the Minister were wrong.
(vi) We do not accept his suggestion that it is possible to construe Article 58(3) so that the exemption applies only to the establishment of an overseas subsidiary, not to its subsequent operation.
"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." [emphasis added]
Dr Cal accepts that, if TPIC and BIL are not within the scope of Decree 233, Article 38 has no application and, so far as Decree 233 is concerned, Botas is at liberty to sell or otherwise transfer the Shares without the need for the consent of the Republic. It does not of course affect the requirement for such consent under any other legislation.
"The provisions of the Decree Law and the Founding Articles shall apply for the foundation of affiliates, setting up their executive committees, appointment or elections of executive members, general manager and his or her deputies and the qualifications and conditions of eligibility as well as acquittal of the Executive Committee, while the relevant provisions of Turkish Commercial Code shall apply on any other matters not specifically addressed in any of the forgoing documents."
"36. As explained above, Botas, TPIC and BIL were all established by Decree or Decision in accordance with the requirements of Decree Law 233.
37. As a consequence, changes to the ownership structure of Botas, TPIC or BIL can only be effected in the same way, unless otherwise stipulated by Turkish law. This is pursuant to the Turkish administrative law principle of 'parallelism in power and procedure’. That is, the same administrative powers and procedures must be used to transfer or dissolve these companies as were used to establish them.
38. This means that it would not be possible for a [State Enterprise] to dispose of the shares of its subsidiaries without first being empowered by a Council of Ministers Decree/Decision that would permit that transfer. A clear example of this was the transfer of the shares in TPIC from TPAO... to Botas through a Council of Ministers Decree as I have explained above. It would have been impossible for TPAO to decide to dispose of its shares in TPIC to Botas without this Decree."
"Principle of parallelism of powers
As can be seen above, an administrative authority can only have a power if that power was granted to it individually and expressly. Powers of administrative authorities are exceptional and are therefore interpreted within a narrow scope. This means that the powers of an administrative authority only consist of what were granted to it. However, this rule is softened by the principle of parallelism of powers... This principle means as follows: Unless otherwise specified in the law, the authority authorised to carry out an action (édiction) has also the power to modify (modification), abroage (abrogation) and revoke (retrait) the same action. Laws determine the authority authorised to carry out an action and often remain silent about who will have the power to modify or eliminate that action. In such cases, it is accepted that the authority authorised to carry out an action has the power to modify or revoke that action. For instance, if the law authorises an authority to appoint a civil servant but has remained silent about the discharge of that civil servant, then the power to discharge that civil servant..."
We were not given any more of the translation but neither of the parties disputed that it went on to say that the power to discharge rested with the authority.
"(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 residence countries and their overseas investments to the Under Secretariat and the Ministry of Development.
(2) Any action to be taken regarding the change of capital of 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."
Thus, under Article 28(2), any change in the capital of TPIC or BIL (or indeed of any overseas subsidiary of any State Enterprise) requires the approval of the Under Secretariat and the Ministry of Development. Under Article 28(1) the Under Secretariat and the Ministry of Development may request Botas to communicate information and documents about TPIC or BIL.
"The management, operating principles and internal supervision of the company as well as its relations with [Botas] shall be determined by the Ministry of Development, Under Secretariat of Treasury and [Botas] in coordination with the Ministry of Energy and Natural Resources...."
"The directors excluding the general manager of the company as well as its organisation, operating principles, internal supervision and relations with [Botas] shall be determined by the Board of Directors of [Botas]. The Board of Directors of the company to be established shall be organised 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 [Botas], one of which shall be among the company’s vice-general managers and the other of which shall be among the members of [Botas]."
Thus the Minister appoints the chairman and two of the directors of BIL. The other two directors are appointed on nomination by Botas but with the approval of the Minister. The articles of association of BIL have been amended to incorporate these provisions.
(i) Under Decree 233 the relevant Ministry has a power of inspection in pursuance of its responsibility for supervision of Botas (Article 40), the Council of Ministers can (upon the proposal of the Minister) determine the price of goods produced and services provided by and the fields of activity of Botas and its subsidiaries (Article 35(2)), the Higher Planning Council can determine Botas’ headquarters (Article 3(4)), approve its strategic plans (Article 29(2)), make decisions regarding its liquidation or sale (Article 38) and control the constitution of its board of directors (Article 6).
(ii) Under Decree 2014/6842, Botas is required to send financial and non-financial information to the Under Secretariat and the Ministry in order to enable them to monitor Botas’ progress regarding targets set out in the general investment and finance programme for 2015 (Article 20(2)), the Under Secretariat may carry out audits and inspections of Botas (Articles 22(3) and (4)), and the appointment processes for personnel of State Enterprises is subject to approval of the Under Secretariat (Article 4).
(iii) Law 2477 on the Procedure for Appointment of Public Bodies applies to general managers and deputy general managers of Botas. Permanent employees of Botas are deemed to be civil servants.
(i) Taking into account that subsidiaries are established by government decision and that the principle of parallelism and the Privatisation Law mean that shares in a subsidiary cannot be disposed of by a State Enterprise without the consent of the Republic, such shares would be considered as indirectly owned by the state such that they constituted 'state property'.
(ii) A second argument was that, when repealing Article 57(2) of Decree 233, the legislature did not intend to exclude all property of State Enterprises from the scope of the immunity; rather it just intended to remove the blanket immunity of the property of State Enterprises. In the absence of clarity as to whether all State Enterprise property was outside the scope of Article 82, the Turkish courts would determine the matter. In his opinion a Turkish court would be unlikely to permit the attachment of State Enterprise property which was in use for the provision of public services. For example, in case 2010/39 the Court of Cassation held that certain movable properties of municipalities (such as ambulances, firefighting or garbage trucks) were immune from execution because they were in use for public service. Energy sector activities had consistently been viewed as a public service by the courts. BIL operated the Turkish section of the BTC pipeline which would be likely to be considered as a public service. TPIC held exploration licences and had on occasion been used to carry out Turkish foreign policy. Because its activities were in the energy sector, he considered that its activities were likely also to be considered as a public service. His view was supported by the fact that, in his opinion, Botas was a Public Organisation rather than an SOE (i.e. an entity providing a public service).
(i) Article 57(2) of Decree 233 had originally conferred an immunity on all the property of State Enterprises. That provision having been repealed, the natural construction was that there was no longer immunity for the assets of such Enterprises. Article 57(2) in its original form had drawn a distinction between state property and the property of State Enterprises (because they were covered by a special law) and that position remained.
(ii) In support he referred to a decision of the Twelfth Civil Chamber of the Court of Appeals dated 27th February, 2004, numbered E2003/27475, K.2004/4358 which concerned a company known as TEDAS, which is a State Enterprise providing electricity. The Court held that its assets could be attached and in passing said as follows (in the limited extracts with which we have been provided):-
"The concept of state property stipulated in Article 82(1) of the Enforcement and Bankruptcy Law comprises only the properties, which are held by the agencies with general and private budgets that are within the legal entity of the state and whose management and accounting are subject to Law No.1050 on General Accounting. Certain public organisations have been given the status of an independent legal entity and turned into entities which are distinct from the state, and going even further, those which have an economic character have been made subject to private law. In order for the property of public organisations which are subject to private law provisions to be considered state property, the above mentioned conditions must be present.
In addition, since Article 57(2) of the Decree Law 233 concerning the non-attachability of the movable and immovable properties of enterprises has been abolished by Article 1 of the Law No.4011..., there is no legal obstacle to the attachment of property owned by such organisations...."
(iii) Law 1050 had been repealed and replaced by Law 5018 on Public Fiscal Administration and Control. In Professor Cerrahoglu's opinion, consistent with the principle described in the case just mentioned, in order to be considered state property, the property must be held by an agency which comes within Law 5018. That Law contained a schedule which set out a list of public administrations which were subject to the Law. Botas was not on that list.
(iv) In support of his opinion, Professor Cerrahoglu referred to a text book Yuar Talih, Yuar Alper Yuar Cuneyt, Treaties on Enforcement and Bankruptcy Law at page 1546 where it is stated (in translation):-
"In order for a property to be considered as 'state property' and excluded (sic) from immunity from attachment, such property should belong to a public administration with general or private budget....
In the Law No.5018 on Public Fiscal Administration and Control the concept of 'public administrations with general budget' has been preserved, whereas the concept of 'annexed budget administrations' has been abandoned and instead the concept of 'administrations with private budget' is used. Under this new form of legislation 'administrations with general budget' whose assets may not be attached is listed in the schedule."
As already mentioned, Botas is not in that schedule. We would add that there appears to be a translation error in the second line of the passage referred to above. We think that it should read either 'excluded from attachment' or 'immune from attachment'. This is because, on any view, 'state property' is immune from attachment.
"The word 'state' in the expression 'state property' in Article 82(1) of the Execution and Bankruptcy Law means only the legal entity of the state, not all public entities.
In practice, the 'state property' that are said to be non-seizeable in Article 82/1 of the Execution and Bankruptcy Law means the property only possessed by general-budget and annexed-budget administrations, theadministration of which is subject to the General Accounting Law No.1050. The previous decisions of the Court of Appeal are in accordance with this. However, the General Accounting Law No.1050 was abolished on January 1 2006 and was superseded by the Public Finance Management and Control Law No.5018. The Law No.5018 does not contain 'annexed-budget’. In the new system (the Law No.5018), some of the annexed-budget administrations were included in the general-budget administrations, whereas some of them were included in the public administrations with private budget. Therefore, it may be said that the property of public institutions and agencies named as 'private-budget administrations’ and included in the sheet No.2 attached to the Law No.5018 is 'state property’ for the purposes of Article 82 of the Execution and Bankruptcy Law, and that the property of such institutions may not be attached. Similarly, we can say that the property of regulatory and supervisory Institutions listed in sheet No.3 attached to the Law No.5018 may not be attached. Therefore, we can reach the conclusion that the property of all administrations and institutions that are subject to the 'central administration budget’ may not be attached without making any distinction between public property and private property." [original emphasis]
As already mentioned, Botas does not appear to be subject to 'central administration budget'. Furthermore, Gozler goes on to say on the next page:-
"As paragraph 2 of Article 57 of the Decree No. 233 on State Economic Enterprises, stating that 'Any movable and immovable asset of the enterprise may not be attached’ was abolished by the Law No.4011 of September 14 1994, it is now possible to attach the property of State Economic Enterprises."
(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.
(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.
(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.
"... Where a separate juridical entity was formed by the State for commercial or industrial purposes, with its own management and budget, the strong presumption was that its separate corporate status should be respected, and that it and the State should not have to bear each other's liabilities. The presumption would be displaced exceptionally if in fact the entity had, despite its juridical personality, no effective separate existence...."
"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."
"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 (hereinafter 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... submits to the jurisdiction in respect of proceedings in the case of which it is entitled to immunity by virtue of sub-section (2) above, sub-sections (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." [emphasis added]
"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."
Lord Radcliffe, having referred to the fact that in the Parlement Belge [5 PD 197] the Belgian Government had undoubtedly been the owner of the ship in question, went on to say at 617:-
"But the principle recognised 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. It has been regarded as sufficient to stay the proceedings (1) that he had de facto possession of the property (the Gagara, the Jupiter, the Cristina) or such rights of direction and control, without possession, as arise from requisitioning (the Broadmayne) and (ii) that the nature of theproceedings is such that, if successful, they would result in an order of the Court affecting that possession or those other rights."
Similarly, in the Cristina itself, Lord Wright at 507 said:-
"... but the rule is not limited to ownership. It applies to cases where what the Government has is a lesser interest, which may be merely not proprietary but not even possessory. Thus it has been applied to vessels requisitioned by a government, where in consequence of the requisition, the vessel, whether or not it is in the possession of the foreign State, is subject to its direction and employed under its orders."
"A proceeding before a court of a state shall be considered to have been instituted against another state if that other state
(a) is named as a party to that proceeding; or
(b) is not named as a party to the proceedings but the proceedings in effect seek to affect the property, rights, interests or activities of that other state."
"’interests’ should therefore be limited to a claim for which there is some legal foundation and not merely to some political or moral concern of the state in the proceedings."
Lord Dyson went on in the same paragraph to conclude:-
"Nevertheless, these passages support the view that it is necessary to confine the reference in Article 6(2)(b) to the 'interests' of states to legal interests as opposed to interests in some more general sense."
The Court of Appeal rejected the argument based on sovereign immunity. It confirmed that the concept of sovereign immunity based on indirect impleader was limited to where the proceedings were brought in relation to property in the ownership, possession or control of a state (paras 35 and 50). It specifically rejected the suggestion (at para 50) that the appropriate test of indirect impleader was whether the rights of the state concerned would be obviously affected.
"48.... Many state-controlled corporations are 'constituted in such a way 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 government policies.
49. The Board therefore considers that Pleming JA was correct in his dissenting judgment in the Court of Appeal to take issue (para 259) with any suggestion that it was 'sufficient... for the entity to be involved in 'the exploitation of the nation’s oil [or mineral] reserves’ and therefore discharging a governmental function’. As Pleming JA went on to say:-
'... if that were the correct analysis, it is difficult to see how a State owned oil or mining company could fail to be held to be discharging a governmental function and (thereby) entitled at common law to sovereign immunity... A modern democratic State may choose (and is likely only tochoose) for nationalisation areas of activity which are important, probably vital, to the economic and social well-being of the nation - energy, food production or transport for goods and people (or any other similar area). But, in my view, allowing a State owned company (or companies) to exploit reserves of coal, oil or minerals, does not convert that company into an organ of the State....’"
"The assets which are (subject to waiver and to the commercial use exception in S13(4) of the 1978 Act) protected by state immunity should be the same as those against which the State's liabilities can be enforced."
"Even where a State is not immune because one of the exceptions applies, its property (except that used for commercial purposes) is immune from process of execution, but the property (of whatever kind) of a separate entity (other than a central bank) would be subject in such circumstances to execution if the proceedings did not relate to something done by it in the exercise of soverign authority."
"Public enterprises shall be obliged to pay all of their debts, whether to the public or to the private sector, and to carry out the necessary transactions for the collection of their receivables, including the dividends." [emphasis added]
"In English law, the effect of a final third party debt order or garnishee order absolute is not only to direct the third party or garnishee to pay the garnishor instead of his original creditor but, upon such payment, also to discharge, pro tanto, the third party garnishee from liability to his former creditor; the second element is regarded not just as a consequence of the first but as an integral part and necessary concomitant of the first. As authority for this it is unnecessary to look further than the decision of the House of Lords in Eram in which the history of this process and its treatment in decided cases were reviewed at length... The reasoning and conclusions expressed there are entirely consistent with those underlying the Jersey process of arrêt entre mains."
Lord Bingham at para 26:-
"26. It is not in my opinion open to the court to make an order in a case, such as the present, [i.e. where the debt is situated in and governed by the law of the foreign jurisdiction], 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 that debt.... I find myself in close agreement with the opinion of Hill J in Richardson -v- Richardson  P 228, subject only to the qualification (of little or no practical importance) that an order may be made relating to a chose in action sited abroad if it appears that by the law applicable in that situs the English order would be recognised as discharging pro tanto the liability of the third party to the judgment debtor...." [emphasis added]
Lord Millett said as follows:-
"107.... The judgments were directed to the territorial reach of the court’s jurisdiction, and were founded on the rule of international law that a debt can be discharged only by the law of the place where it is recoverable. There was no attempt to evaluate the risk that the third party might be compelled to pay twice. It was enough that the English court could not itselfprotect the third party and discharge the debt by the force of its own order. In Martin -v- Nadel Vaughan Williams LJ placed reliance on the statement of Channell B giving the judgment of the Exchequer Chamber in Wood -v- Dunn (1886) LR 2 QB 73, 80 that "the law will never compel a person to pay a sum of money a second time which he had paid once under the sanction of a court having competent jurisdiction." (original emphasis).
108. This is an important qualification. Just as the English court would not regard a foreign court as being a court of competent jurisdiction to discharge a debt recoverable here, so a foreign court would not regard our court as competent to discharge a debt recoverable there; and that was sufficient in itself to preclude the making of the order in respect of a foreign debt. Although in places this was described as a matter of discretion and in other places as a matter of principle, I think that the rationale was based on principle.
109. However that may be, I have no doubt that the issue should be regarded as one of principle. Our courts ought not to exercise an exorbitant jurisdiction contrary to generally accepted norms of international law and expect a foreign court to sort out the consequences. I do not share the Court of Appeal’s confidence that the bank would have a restitutionary remedy under the law of Hong Kong. The cases indicate that it would not have such a remedy under English law in the converse case; compulsion of law connotes compliance with the order of a court of competent jurisdiction. It cannot safely be assumed that a foreign court would regard compliance with an order of a court whose jurisdiction it did not recognise as a sufficient basis for a restitutionary claim. Nor do I understand how a bank can properly debit a customer’s account if it is not authorised to do so by the law which governs the account.
110. But it goes further than this. A restitutionary claim normally yields a personal remedy and not a proprietary one. If the third party debt order does not have extraterritorial effect in the place where the account is kept, then the account itself is not affected by the order. Such an order cannot give priority in the judgment debtor’s bankruptcy or over other execution creditors in the foreign jurisdiction. Indeed, having regard to the terms of section 103 of the Insolvency Act 1986, I do not see how it would prevail even against an English bankruptcy. The order must, as the Court of Appeal appreciated, operate in personam and compel the third party to make payment out of its own money with only such rights of recourse against the judgment debtor as the foreign court or the English law of bankruptcy may allow.
111. But this would not be to execute the judgment against the assets of the judgment debtor. It would not be a process of execution at all. As I have explained, 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." [ emphasis added]
"Until recently it was accepted that the presence of the debtor within the jurisdiction was the crucial factor which gave the court jurisdiction to make the order, and that neither the location of the debt, nor the lex contractus under which the debt had arisen, was required to be English. The House of Lords has now explained that this understanding was based on an erroneous interpretation of the authorities under legislation, and that the court will only make such an order if the debt is situated in England."
Dicey does not refer to the possible exception mentioned by Lord Bingham and Lord Millett in the emphasised passages in the preceding paragraph (i.e. 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 party debtor). Although Lord Hoffmann did not advert to any such exception, both Lord Nicholls and Lord Hobhouse specifically agreed with the speech of Lord Bingham (although they also agreed with that of Lord Hoffmann). In the circumstances we think that the majority of the House of Lords are to be taken as having agreed with the existence of the exception. However, both Lord Bingham (where at para 26 of his speech he refers to the exception being of 'little or no practical importance') and Lord Millett (who at paragraph 111 speaks of the circumstances in which the exception would exist as being 'most unusual') clearly envisaged that it would be very rare for the requirements of the exception to be met. Lord Hoffmann also thought that this would be very unlikely because he said at para 66:-
"... The bank owes the judgment creditor nothing. The third party debt jurisdiction is, as I have said, execution in rem against the chose of action. If the English court has no jurisdiction over the debt, I do not understand why aforeign court should recognise the third party's obligation to pay as having been under compulsion of law. Under generally accepted conflict of law rules, it is simply an unlawful seizure. The notion that one can justify the attachment of a foreign debt by imputing to the foreign law recognition of an exorbitant order for the purpose of founding a claim of payment under compulsion of law is in my opinion quite unreal."
"... Where a debt is situated (has its situs) abroad, an English court will not make a final third party debt order unless it is clearly shown that the foreign court would regard the debt as automatically discharged by the order of the English court; it is for the judgment creditor to establish this; this is the only relevant question; the court is not called upon, in such circumstances, to try to evaluate the risk of the third party being compelled to pay twice (see, in particular, Lord Millett at Eram... at para 111). But where the debt is situated in the country where the third party debt order is sought, the court has, nonetheless, a discretion to refuse to make a final order where it is satisfied by evidence that there is a real risk that a third party could be compelled to pay the debt again by its original creditor, even if this is the result of the foreign court purporting to exercise an extravagant extraterritorial jurisdiction."
As the Court of Appeal made clear in Hemisphere, the position concerning a third party debt order under English law is to be regarded as being equally applicable to the imposition of an arrêt under Jersey law.
(i) The situs of a debt owed by a company is the place where the company resides (CA 184).
(ii) A company is resident in the place where it is incorporated and has its registered office (CA 190).
(iii) A company is also resident where it carries on business. In order to be carrying on business in a place, a company must have a physical presence within the jurisdiction in question in the form of an identifiable place with a degree of permanence about it from which it carries on business; a branch or office (RC 171; CA 192).
(iv) A company may carry on business in a number of jurisdictions in which event it is resident in each of those jurisdictions (CA 184).
(v) Where a company is resident in more than one jurisdiction and it is expressly provided that payment of the debt is to be made in one of those jurisdictions, then that will be regarded as the situs of the debt (RC 153; CA 187).
(vi) Similarly, if one of the places where the company is resident is impliedly selected as the place where the debt is payable, that will be regarded as its situs (RC 153; Dicey, Morris and Collins, para 22-029).
(vii) Where the debtor company has more than one place of residence but there is no express or implied promise to pay at any one of them, then the debt is situated at that place of residence where it would be paid in the ordinary course of business; Dicey, Morris and Collins para 22-029.
"29. In other words under Turkish law, if there exists a valid legal basis that necessitates BIL and/or TPIC to pay TEPE instead of BOTAS, they would be released from their debts pro tanto. In this case such valid reason would be the Third Party Debt Order to be given by the Jersey Court in respect of companies established in and subject to the Jersey jurisdiction. Consequently if the suggested Third Party Debt Order is amenable to recognition in Turkey, it is possible to conclude that the Order would constitute "a good discharge of debt" under Turkish law.
30. Now turning to the admissibility in a Turkish court of a BOTAS action against BIL and TPIC, I would like to explain as follows. If and when BIL and TPIC comply with a Third Party Debt Order, BOTAS would be relieved of its judgment debt vis-à-vis TEPE immediately and at the same amount paid. Therefore, any such third party payment creates a positive impact on BOTAS’s balance sheet by decreasing its debts burden. In other words, BIL or TPIC payments to Tepe profits BOTAS. That being the case (as well as due, in any case, to the fact that BIL and TPIC would simply be complying with a foreign court with proper jurisdiction on them), BOTAS cannot pretend to have suffered any losses due to BIL or TPIC payments to Tepe. A Turkish court would not allow such a bad faith, almost disingenuous, application by BOTAS."
"Q. So is it the order or is it the payment? I’m slightly confused. Is it the order or is it the actual payment which discharges the debt?
The point is then explored further and the Professor says that he does not consider that the Jersey order has the effect under Turkish law of discharging the debt obligation of TPIC and BIL. He subsequently goes on to say that, if Botas were to sue TPIC or BIL for the debts after they had paid Tepe, there would be a defence of an unjust enrichment. This was because Botas would have suffered no loss because its debt to Tepe would have been reduced by the same amount as the amount paid by TPIC/BIL to Tepe pursuant to the arrêt.
"62... The essence of [a third party debt order] is that it is execution in rem against the property of the judgment debtor, against a res or chose in action which belongs to him and which is within the jurisdiction of the court making the order. As the Royal Commissioners said in 1853, it is an attachment of "monies of [the] debtor in the hands of third persons". It is true that once the judgment debtor's chose in action has been captured or attached, the court will realise it or turn it to account by ordering the third party to pay the debt to the judgment creditor. But that is a process of realisation in the same way as the sale of a chattel belonging to the debtor which has been taken in execution. It is not a personal claim against the third party. The third party pays with his own money only in the same sense as a bank upon which a cheque has been drawn by a customer in credit pays with its own money. But the substance of the matter is that the judgment creditor is paid with the debtor's money, as the drawee of the cheque is paid with the customer's money.
63. The discharge of the third party's indebtedness effected by Rule 72.9(2) (formerly RSC Ord. 49, r8) is therefore an essential part of the execution. As Lord Blackburn said in London Corpn. -v- London Joint Stock Bank (1881) C App Cas 393, 416 the garnishee, "If he is to be obliged to pay the money, must be discharged from paying it to his creditor." It is this whichensures that the creditor is paid with the debtor's money and not the third party's.
64. It is not in my opinion an adequate substitute for this protection to argue that if the third party has to pay out of his own money, he will acquire a restitutionary claim in personam which he can set off against the debt."
"54. My Lords, so far I have been considering the matter, as almost all the authorities have done, as one of fairness and equity between the parties. But there is another dimension. The execution of a judgment is an exercise of sovereign authority. It is a seizure by the state of an asset of the judgment debtor to satisfy the creditor's claim. And it is a general principle of international law that one sovereign state should not trespass upon the authority of another, by attempting to seize assets situated within the jurisdiction of the foreign state or compelling its citizens to do acts within its boundaries."
(i) payments in accordance with the Protocol for gas supplied by Botas to pumping stations operated by BIL along the Turkish section of the BTC pipeline;
(ii) repayments under loan agreements with Botas and other debt repayments;
(iii) payment of day to day expenses incurred in relation to the use of Botas facilities.
"Thus both as a matter of principle and on authority it seems to me that a freezing order granted in aid of enforcement of an arbitration award ought ordinarily to contain an ordinary course of business exception. There is no basis upon which one contractual claimant should be able to prevent the satisfaction of the claims of others in a similar position...."
"In this case the parties have chosen to arbitrate their differences. There is an award of the arbitration panel. The plaintiff seeks to enforce the arbitration award. Subject only to any appeal to the Moscow courts, this court is obliged to enforce the award unless the defendant satisfies the court that one of the exceptions in art. 45 of the 1998 Law applies. We consider that Mr Thompson was correct in submitting that the injunctions in this case are in aid of the enforcement of an arbitration award and that the applicable principles are those for post-judgment injunctions rather than pre-trial relief. Thethreshold is therefore considerably lower, as was made clear by Donaldson, MR in Deutsche Schachtbau."
Later at paragraph 32(a) the Court said:-
"The general policy of the court is to assist in the enforcement of arbitration awards by seeking to ensure that funds are available to meet such awards. As mentioned earlier, the threshold for obtaining injunctive relief post-award is considerably lower than when seeking pre-trial relief."
(i) A freezing injunction generally imposes a greater restriction on the person injuncted than does an arrêt. The freezing injunction normally prohibits any dealing with the defendant's assets. All such assets are in truth 'frozen' by the order. The restriction on the person injuncted is therefore very great and a business could be brought to its knees if there were no ordinary course of business exception. By contrast, an interim arrêt is normally limited to specific assets. The person remains free to deal with all his assets other than those which are the subject of the arrêt. The need for an ordinary course of business exception is therefore correspondingly less. We accept of course that the more extensive the arrêt, the less weight this point may have.
(ii) A freezing injunction does not give a plaintiff security or preference in respect of a particular asset of a defendant. It is merely intended to ensure the continued availability of assets to meet the claim and any other claims which may exist. By contrast, as discussed earlier, an arrêt, once confirmed, confers an interest in rem in the asset arrested. The Court must of course bear in mind that an interim arrêt may not ultimately be confirmed and that it may therefore be discharged if it is not confirmed; but nevertheless there is a fundamental distinction in this respect between an arrêt and a freezing injunction.
"The execution of a judgment is an exercise of sovereign authority. It is a seizure by the state of an asset of the judgment debtor to satisfy the creditor’s claim. And it is a general principle of international law that one sovereign state should not trespass upon the authority of another, by attempting to seize assets situated within the jurisdiction of the foreign state or compelling its citizens to do acts within its boundaries."
(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 in 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 Botas (paras 208-286).
(v) 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 Botas to BIL (paras 274-280). Any arrêt could properly cover future defined obligations (paras 281-286).
(vi) The Court agrees to order Botas to return the Securities to Tepe (paras 287-294).
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