White & Case has secured victory for Turkish conglomerate Cukurova Holding, as a seven-year dispute with Russia's Alfa Group came to an end yesterday when Cukurova regained its controlling interest in Turkcell, the largest mobile telecommunications company in Turkey.
The firm reported that Cukurova paid USD 1.6 billion to redeem the security over the Turkcell shares, “giving effect to the order that it had won in the Privy Council in March 2014.” The redemption was financed by a loan from Ziraat Bank, a state-owned Turkish bank.
"It has been an extraordinary case on many levels," said White & Case Partner John Reynolds. "Cases of such legal and commercial significance are rare."
The case concerned a strategically significant block of Turkcell shares which Cukurova had provided to Alfa as collateral for a loan in 2005. Alfa claimed that Cukurova was in default under the loan facility and purported to appropriate the shares by way of enforcement. The core issue in the litigation was whether Alfa had effectively appropriated the shares and, if so, whether Cukurova had a right to redeem that security. The Privy Council determined in March this year, having considered authorities stretching back more than 200 years, that the long-established equitable principle of "relief against forfeiture" applies in the case of an appropriation under the 2003 Financial Collateral Arrangement Regulations.
The litigation began in 2007 in the British Virgin Islands and has involved 14 hearings before the Commercial Court in the BVI, seven appeals to the Eastern Caribbean Court of Appeal, and eight hearings before the Privy Council in London.
In the first phase of the case, between 2007 and 2008, the Courts determined a preliminary issue concerning the scope of the 2003 Regulations and Financial Collateral Directive, the first time that this pan-European legislation had been tested in any court. The matter went to a full trial in 2010, won by Cukurova, and the appeal was determined by the Privy Council in March 2014.
Reynolds added: "The British Virgin Islands is growing in popularity as a jurisdiction for cross-border investment vehicles and joint ventures and the BVI Commercial Court has become correspondingly busy. Cases like ours demonstrate the effectiveness of that jurisdiction in resolving complex international disputes."
The White & Case litigation team was led throughout by Reynolds, who was supported by Partner Charles Balmain and Associate Amanda Cowell, all based in London.
The team worked closely with a BVI litigation team led by Arabella di Iorio, head of Maples and Calder's BVI office. The counsel team throughout was Kenneth Maclean QC, James Nadin, and David Caplan of One Essex Court.
White & Case also advised Cukurova in relation to the Ziraat Bank loan. That London-based team was led by Partner Christopher Czarnocki and included Associates Sally Koo and Sophie West.