The Privy Council Deliver A Further Boost For The BVI Arbitration Sector

Only weeks after the decision of the US Court of Appeals for the Second Circuit decided that it lacked jurisdiction to enforce in New York the award of the arbitral Tribunal in the ICC arbitration between the Cukorova Holding A.S and Sonera Holding B.V, the Judicial Committee of the Privy Council delivered its latest Judgment on 13 May 2014 in the long saga1 in relation to the same award, dismissing all of Cukurova's grounds of appeal and leaving the way open to Sonera to enforce its' arbitral award in BVI. Sonera was awarded some US$932 million in damages under the Award (the Final Award).

In doing so the Privy Council, affirmed the decision of the Eastern Caribbean Supreme Court of Appeal (Court of Appeal)2, which had agreed with the first instance decision of Hon. Justice Bannister QC, and upheld the Award, which had found Cukorova liable to Sonera for defaulting on a 2005 agreement to sell Sonera its 53% stake in Turkcell.

Cukurova challenged enforcement on three principal grounds: (1) that the Tribunal lacked jurisdiction to grant the relief in the Final Award; (2) that it had been unable to present its case before the Tribunal3; and (3) enforcement of the Final Award would be contrary to the public policy of the BVI4. In other words, the identical challenge to that which had failed in the Court of Appeal.

The Final Award is a "Convention Award" within the definition given in the BVI Arbitration Ordinance (an "award made in pursuance of an arbitration agreement in the Territory of a State other than [BVI] or the United Kingdom which is a party to the New York Convention").

Noting that the grounds upon which the court can refuse to enforce a Convention Award are to be narrowly construed, and in particular that it cannot refuse on the ground of error of law or fact, the Board saw no reason to interfere with the conclusions reached by the Judge and the Court of Appeal (which centered on the expert evidence of Swiss law given at the trial) "On the contrary, their conclusions seem to the Board to make very good sense".

Issues (2) and (3) were dealt with together under the "public policy" umbrella. The Board summarised Cukurova's objections thus: "First, the Tribunal decided the key issue in the dispute ... on a basis that had never been put to Cukurova and that Cukurova never had the opportunity to address. Secondly, the Tribunal ignored (and failed to give reasons for rejecting) Cukurova's evidence and submissions on a key point in...