The dispute over the ownership of Turkcell between Russian Alfa Group and Turkey’s conglomerate Cukurova Holding, which is owned by one of Turkey’s most powerful businessmen, is close to resolution. The appeals court is expected to say its final verdict on this long-running litigation case.
The case has its roots in a dispute between Cukurova and Alfa in 2005, when the Turkish company was close to defaulting on a US$3 billion loan to the Turkish State Savings Deposit Fund. Alfa purchased shares from Cukurova, giving it an indirect 13% stake in Turkcell, and also loaned it US$1.7 billion, secured with a further 13.7% interest in the firm. After this deal, the Swedish telecommunications giant TeliaSonera claimed Cukurova had already promised it the same shares. In January 2007, the Swedish company won an arbitration award upholding its right to purchase the Turkcell shares.
In its turn, Alfa said that award amounted to an “event of default”, and demanded Cukurova pay back the US$1.7 billion loan. After a series of legal actions in London, the case was referred to the High Court of the British Virgin Islands, which ruled that Alfa wasn’t entitled to demand Cukurova repay its loan. Alfa appealed that decision in the Eastern Caribbean Court of Appeal.
By words of James Hildson, an expert on the British Virgin Islands law who has followed the Alfa-Cukurova case, Alfa is in a strong position, and it has very reasonable prospects for a successful appeal.
However, this might not be the end. If this time Cukurova loses, it can appeal to the London-based Privy Council Office, the highest court of appeal.
Winning the case would allow Altimo and TeliaSonera to pursue their long-term goal of merging their interests in Turkcell and the Russian mobile operator MegaFon into a single mobile-phone company.