Özer and Dirlik v. Libya

By its letter of 9 February 2021, Libya appointed J. Christopher Thomas QC as "arbitrator in respect of the arbitration purportedly commenced by [the Claimants] under Article 8 of [the] Turkey-Libya BIT". However, on the basis that the OIC Treaty was improperly invoked and was therefore not applicable, Libya "made no appointment in respect of the matters that [the Claimants] ha[d] purported to refer to arbitration under Article 17 of the OIC Agreement by their notice of arbitration dated 2 November 2020".¹ On the same day, Libya informed the Claimants that it had Mr. Thomas QC in respect of the arbitration commenced under the BIT but "ha[d] made no appointment in respect of the matters that [the Claimants] have purported to refer to arbitration under Article 17 of the OIC Agreement".²

"(i) first, the scope of the appointments made in this case – as to which Libya submits there can be no doubt – and whether / how, in light of the appointments that have been made, an arbitration can proceed; (ii) second, whether in international law in general a claimant can bring arbitration pursuant to multiple instruments in one arbitration and, if so, in what circumstances, and whether this is a case in which that is possible."⁶

a. First, contrary to the Claimants' reading of the 9 February 2021 letter, Libya asserts that it did not appoint Mr. Thomas QC as co-arbitrator "in respect of this arbitration", thereby referring to the arbitration as a whole. On the contrary, Libya clearly stated that it had "appointed an arbitrator in respect of the arbitration purportedly commenced by [the Claimants] under Article 8 of [the] Turkey-Libya BIT" and further that it had made no appointment in respect of the matter referred to arbitration under the OIC Treaty.⁹ According to Libya, there is no proper basis to interpret this letter as making a broader appointment.

b. Second, Libya's subsequent correspondence does not indicate that it consented to Mr. Thomas QC being given a broader mandate. Libya argues that its letter of 26 April 2021 expressly stated that it was agreeing to the co-arbitrators appointing a presiding arbitrator "without prejudice to its clear position that Mr. Thomas QC has been appointed only in respect of the arbitration […] purportedly commenced under the BIT."¹⁰

For example, first, the BIT provides for the application of either the ICSID, UNCITRAL or ICC Rules at the Claimants' choice. The OIC Treaty contains no such provision and permits the Tribunal to decide all aspects of the procedure. The fact that the Tribunal may choose to adopt the UNCITRAL Rules does not overcome this inconsistency. Second and importantly, the provisions for the constitution of the Tribunal are different. In light of the Claimants' choice of the UNCITRAL Rules, the BIT provides the host State a period of 30 days to appoint a co-arbitrator, whereas the OIC Treaty provides a period of 60 days. Moreover, if the host State fails to appoint a co-arbitrator, the default appointment process under the BIT and the OIC Treaty are different. Third, the temporal scope of the OIC Treaty, which entered into force in 1988, is larger than that of the BIT, which only applies to disputes arising after 22 April 2011. Finally, the OIC Treaty contains a bespoke enforcement provision whereby a contracting party is obliged to implement arbitral awards in its territory "as if it were a final and enforceable decision of its national courts". By contrast, the BIT provides that each Contracting Party "commits itself to execute the award according to its national law". Thus, "[o]ne is a provision to execute the award under national law […]; the other is a provision requiring the decision to be executed as if [it were] a final and enforceable court decision".¹⁴

First, the dispute resolution clauses in the BIT and the OIC Treaty are not incompatible. In order to demonstrate incompatibility, clauses must be irreconcilable, which in turn depends on the extent to which the terms of each clause make the conduct of one proceeding impossible.³² The Claimants submit that the Respondent has not shown that the arbitration clauses in the BIT and the OIC Treaty meet this standard. Libya's argument that the two clauses provide for different default appointment mechanisms is unavailing because it is not established that these mechanisms would obstruct the practical possibility of a single proceeding. The fact that the two clauses provide for different arbitration rules is equally unavailing since a tribunal constituted under the OIC Treaty could adopt the UNCITRAL Rules.³³

"a. Declare that it was properly constituted under both the BIT and the OIC Treaty;

b. Order Libya to pay the costs incurred by Claimants in connection with this phase of the proceedings; and

c. Order any other relief that the Tribunal deems appropriate."³⁶

The starting point for determining the scope of Libya's appointment is the Claimants' Notice of 2 November 2020. Through that Notice, the Claimants initiated a single arbitration against Libya under the BIT and the OIC Treaty. Pursuant to their selection of the UNCITRAL Rules under the BIT, they proposed the constitution of a three-member tribunal and appointed an arbitrator in respect of the claims under the BIT as well as the OIC Treaty. The Claimants further noted that "[p]ursuant to Article 17 of the OIC Treaty, Libya ha[d] sixty days to inform Claimants of the name and contact details of the arbitrator it wishes to appoint, failing which Claimants [would] move for a default appointment".³⁸

(i) Mr. Thomas QC was appointed under the BIT only;

(ii) Prof. Kaufmann-Kohler was appointed under the BIT only;

(iii) The Tribunal is constituted under the BIT only;

(iv) The draft Terms of Appointment will be finalized on this basis; and

(v) The costs related to the present decision will be addressed at a later stage.

Date: 6 April 2022