Summary

THE BACKGROUND TO THE CLAIM

1. This case was initiated by the Request for Arbitration dated September 30, 2005, made by Sistem Muhendislik Insaat Sanayi ye Ticaret A.S. ("Sistem"), a company incorporated under the laws of the Republic of Turkey ("Turkey") and located at 1703 Sokak 67/2 Karsiyaka, Izmir, Turkey. The Claimant says that Sistem and all of its shareholders have Turkish nationality, and this has not been contested by the Respondent. The claims are brought against the Kyrgyz Republic. The claims arise from a dispute between Sistem and the Kyrgyz Republic concerning the building and operation of a hotel in Bishkek in the Kyrgyz Republic.

2. Turkey ratified the ICSID Convention on March 3, 1989, and the Convention entered into force for Turkey on April 2, 1989. The Kyrgyz Republic signed the ICSID Convention on June 9, 1995, but has not yet ratified the Convention.

3. There is in force a bilateral investment treaty between Turkey and the Kyrgyz Republic (the "BIT"). The BIT states, in one of the texts submitted by the Claimant, that it was "Done at Bishkek on the day of 28/4/1992 in two authentic copies in English."1 That is the date also given on the UNCTAD website, which records that the BIT entered into force on October 31, 1996.2 The copy submitted by the Respondent gives the date of the treaty as "29.04.92."3

4. In essence, the claim arises from a joint venture formed in 1992 by the Claimant, Sistem, and a Kyrgyz company, the Ak-Keme Joint-Stock Company ("Ak-Keme"). Sistem says that it fulfilled its obligations under the various agreements that underpinned the project, that it bought Ak-Keme's share in the project in 1999 after Ak-Keme went into bankruptcy in 1998, and that it is entitled now to operate the hotel, but was dispossessed in March 2005 by Ak-Keme (now acting with a Malaysian partner). Sistem claims that the Kyrgyz Republic failed in its duty to protect Sistem's investment. The Respondent says that Sistem was simply a contractor hired to build the hotel, that it did not fulfil its obligations, that the 1998 bankruptcy procedure and 1998 purchase by Sistem of Ak-Keme's interest were legally invalid, and that Sistem unlawfully occupied the hotel until it was recovered by Ak-Keme and its Malaysian partner in March 2005. The Kyrgyz Republic does not accept Sistem's claim.

5. It is necessary to explain the background in more detail.

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Footnotes omitted from this introduction, OCR errors may be present