Turkcell ownership row may inch towards resolution with UK ruling
ISTANBUL - Reuters
The ruling could bring forward a resolution of the row, which has hobbled Turkcell’s development for years because it has been unable to agree the make-up of its board or pay dividends, but it is only one part of a web of related legal disputes affecting Turkey’s biggest cell phone operator.
Çukurova had reached an initial agreement in 2005 to sell its 52.91 percent stake in Turkcell Holding, which has a controlling stake in Turkcell, to TeliaSonera.
But the deal was never executed and the shares were not transferred, prompting TeliaSonera to turn to the International Chamber of Commerce in Geneva, which ordered Çukurova to pay $932 million in damages.
Pursuing its legal efforts, TeliaSonera last year secured an order freezing Çukurova’s assets until it paid the damages, though that order was last month overturned by a U.S. appeals court.
The UK Privy Council said in a statement on Friday it would rule on whether the Geneva tribunal had the jurisdiction to make the demand for damages, which Çukurova disputes.
The Privy Council is involved because Çukurova Finance International is registered in the British Virgin Islands, part of the British Commonwealth, a grouping of countries which are mostly former territories of the British Empire. The council is the final court of appeal for some Commonwealth countries.
Turkcell declined to comment.
The ownership dispute is complicated by a separate but related case involving fellow Turkcell shareholder Altimo, an arm of Russian oligarch Mikhail Fridman’s Alfa Group.
Instead of selling to Telia, Çukurova took out a loan from Altimo secured against its Turkcell stake. But it then defaulted on the loan, prompting Altimo to appropriate the holding.
A ruling by the Privy Council in Çukurova’s favor - that the International Chamber of Commerce has no jurisdiction in the case - could be a boost for Çukurova, because it would remove the damages award and free its hand to find financing to repay the Altimo loan.
Çukurova has been ordered to pay around $1.6 billion to Altimo to recover its Turkcell stake.