Cukurova Holding as v Sonera Holding BV
| Jurisdiction | UK Non-devolved |
| Judge | Lord Clarke |
| Judgment Date | 13 May 2014 |
| Neutral Citation | [2014] UKPC 15 |
| Date | 13 May 2014 |
| Docket Number | Appeal No 0096 of 2013 |
| Court | Privy Council |
[2014] UKPC 15
Lord Neuberger
Lord Mance
Lord Clarke
Lord Sumption
Lord Hodge
Appeal No 0096 of 2013
Privy Council
From the Court of Appeal of the British Virgin Islands
Appellant
Kenneth MacLean QC
Arabella di Iorio
James Nadin
David Caplan
(Instructed by White & Case LLP)
Respondent
Bankim Thanki QC
John Carrington QC
Ben Valentin
(Instructed by Sullivan & Cromwell LLP)
Heard on 24 and 25 February 2014
On 1 September 2011 an arbitration Tribunal comprising Mr Michael Schneider as chairman, Dr Pierre Karrer and Professor Dr Christian Rumpf ("the Tribunal") made a final award ("the Final Award") in an ICC arbitration between the respondent ("Sonera") and the appellant ("Cukurova") in which it awarded Sonera damages of US$932 million against Cukurova. On 4 October 2011 Sonera applied to the High Court in the British Virgin Islands ("BVI") for permission to enforce the final award in the same manner as a judgment or order of the High Court. On 24 October 2011 Bannister J ("the judge") granted permission ex parte and judgment was entered for the sum due plus interest according to the method stated in the final award in a total amount of over US$1 billion plus further interest from 4 October 2011. Cukurova applied to set aside the judgment but the application was dismissed by the judge on 19 September 2012. Cukurova appealed to the Court of Appeal but its appeal was dismissed by Pereira CJ, Baptiste JA and Michel JA on 9 May 2013. Cukurova now appeals to the Privy Council pursuant to leave granted by the Court of Appeal.
Sonera has also sought to enforce the Final Award in a number of other jurisdictions, namely England, New York, Switzerland, the Netherlands and Curaçao. Enforcement proceedings in England raise the same or substantially the same issues as those raised in the BVI and have been stayed by agreement on the express basis that the parties will be bound by the judgment of the Board in respect of all issues determined by the judgment. In New York the United States District Court for the Southern District of New York held on 10 September 2012 that it had personal jurisdiction over Cukurova and made an order confirming the Final Award and on 21 September 2012 entered judgment against Cukurova in accordance with the terms of the Final Award. Cukurova appealed against those decisions. The United States Court of Appeals for the Second Circuit heard argument in the appeal but on 28 October 2013 decided to postpone giving judgment, pending the decision of the United States Supreme Court in Daimler Chrysler Corporation v Bauman, in which one of the issues raised in Cukurova's appeal, namely the agency theory of in personam jurisdiction, was to be considered. The Supreme Court has now handed down judgment in Bauman 134 SCt 746 (2014), and the Second Circuit, on 25 April 2014, has allowed Cukurova's appeal.
The appeal to the Board raises three questions defined in the statement of facts and issues: (1) whether the Tribunal had jurisdiction to grant the relief in the Final Award; (2) whether the Court of Appeal was correct to conclude that Cukurova had not been unable to present its case before the Tribunal within the meaning of section 36(2)(c) of the BVI Arbitration Ordinance 1976 ("the Arbitration Ordinance"); and (3) whether the Court of Appeal was correct to conclude that enforcement of the Final Award would not be contrary to the public policy of the BVI within the meaning of section 36(3) of the Arbitration Ordinance.
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. The Final Award is such an award. In particular the court cannot refuse to enforce an award on the ground of error of law or fact.
Section 36 of the Arbitration Ordinance provides, so far as relevant, as follows:
"(1) Enforcement of a Convention award shall not be refused except in the cases mentioned in this section.
(2) Enforcement of a Convention award may be refused if the person against whom it is invoked proves —
….
(c) … that he was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case;
(d) that the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration.
….
(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."
Turkcell Iletisim Hizmetleri AS ("Turkcell") is the largest mobile phone operator in Turkey. 51% of the shares in Turkcell are held by a Turkish company called Turkcell Holding AS ("Turkcell Holding"). Prior to the events which gave rise to this dispute, 52.91% of the shares in Turkcell Holding were held by the Cukurova group in Turkey. The remaining 47.09% of the shares were held by Sonera.
On 25 March 2005, Cukurova, Cukurova Investments NV and Sonera entered into a letter agreement dated 24 March 2005, regarding the potential purchase by Sonera of the Cukurova group's entire 52.91% shareholding in Turkcell Holding ("the Letter Agreement"), which provided, so far as relevant, as follows:
" Article 1. Definitions
1.1 The term 'Final Share Purchase Agreement' shall mean a share purchase agreement substantially in the same form and with substantially the same terms as the Prospective Share Purchase Agreement … with such modifications, supplements or additions as the Parties may agree pursuant to this Agreement. …
Article 2. Covenants; Representations
2.1 The Parties have provisionally agreed on the pricing terms for the Transaction (the 'Pricing Terms') as an aggregate purchase price of US$3, 103, 761, 647 for all of the Class B Shares.
2.2 The Parties agree that they shall cause the Final Share Purchase Agreement to be executed and delivered promptly after the conditions precedent set forth in Article 3 hereof have been satisfied or waived.
…
2.4 Each Party shall conduct its negotiations with respect to the Transaction in good faith and shall use its reasonable best efforts to seek satisfaction of the conditions precedent set forth in Article 3 hereof.
…
Article 3. Conditions
3.1 The obligations of the Parties to cause the execution and delivery of the Final Share Purchase Agreement shall be subject to the following conditions:
3.1.1 Each of the Parties shall have reached agreement with the other Parties regarding the terms of the Final Share Purchase Agreement.
3.1.2 The Purchaser and its representatives shall have completed their due diligence review of the Company, Turkcell and certain Turkcell subsidiaries and the results of such due diligence review shall be satisfactory to the Purchaser.
…
Article 5. Effective Time; Termination; Miscellaneous
5.1 This Agreement shall take effect on the date hereof upon the due execution and delivery of this Agreement and shall terminate on the earliest of:
(a) at any time by mutual written agreement of all Parties;
(b) upon execution and delivery of the Final Share Purchase Agreement; or
( c) 12.01 am (Istanbul time) on 60 days from the date hereof … if the Final Share Purchase Agreement has not been executed and delivered by all the parties thereto.
5.2 If this Agreement is validly terminated pursuant to Section 5.1(a) or Section 5.1(c) hereof, the Transaction contemplated hereby shall be abandoned and this Agreement will forthwith become null and void, and there will be no liability or obligation on the part of the Parties (or any of their respective officers, directors, employees, agents or other representatives or affiliates), except as otherwise expressly provided herein and except for such liabilities as exist at the time of such termination.
5.3 This Agreement shall be governed by, and construed in accordance with, the laws of the Republic of Turkey…
5.4 Any dispute, controversy or claim arising out of or in connection with this Agreement, if not amicably resolved by the Parties within 60 days of notification thereof, shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce (the 'ICC Rules'), except as such ICC Rules may be modified below.
(a) The place of arbitration shall be Geneva, Switzerland.
(b) The language of the arbitration shall be English.
(c) Each Party to the dispute, controversy or claim in question shall nominate one arbitrator within the time limit fixed by the ICC Rules, and the two-party-nominated arbitrators shall agree on the third arbitrator within 30 days of their appointment by the International Court of Arbitration of the International Chamber of Commerce (the "ICC Court"), failing which the third arbitrator shall be appointed by the ICC Court. Where there are multiple claimants or multiple defendants, said multiple claimants or defendants shall jointly nominate an arbitrator within the time limit fixed by the ICC Rules, and the two party-nominated arbitrators shall agree on the third arbitrator within 30 days of their appointment by the ICC Court; provided, however, that if the multiple claimants or the multiple defendants do not agree on a jointly-nominated arbitrator within the time limit fixed under the ICC Rules, such appointment shall be made by the ICC Court.
(d) Any award of the arbitral Tribunal shall be final and binding on the Parties. The Parties hereby waive any rights to appeal any arbitration award to, or seek determination of any question of law arising in the course...
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