Memorandum submitted by Black & Veatch
Ltd
We are a major engineering company specialising
in the water, wastewater and energy sectors and have been associated
with Turkey for over 30 years. We have played a leading part in
projects such as Izmit water supply which at the time was the
world's largest privately financed water supply project (£36
million) and the first BOT contract in Turkey. We have provided
professional services on many other projects including over a
10 year period in Joint Venture with Taylors (now Hyder), the
Istanbul Sewerage project which had a construction value of over
£100 million. We currently have a Turkish business development
representative based in Istanbul and approximately one year ago
we identified Turkey as one of the countries that should be given
future priority for our overseas business. To maintain our Turkey/UK
business links I am a member of the Business Council.
However there are certain issues which unless
resolved could seriously inhibit our plans to expand our interests
in Turkey namely: (a) contractual conditions pertaining to professional
service providers bidding for EU funded contracts and (b) the
archaic procedures of the Turkish commercial court system.
In the former, the conditions are quite clear
namely that "contractors" will be allowed to revert
to international courts of arbitration in the event of a legal
dispute whereas a "consultant" providing professional
services is restricted only to a Turkish commercial court. This
is clearly unacceptable to us as you will see from the attachments.
We have taken this issue up with the UK Reps office in Brussels
who is very supportive and has been lobbying the key persons in
the relevant DG. She is also gaining support in this matter from
her German and Austrian colleagues and hopefully other country
representatives will also join. At the same time and working in
conjunction with the UK Reps office we are also lobbying through
British Expertise which is the most appropriate UK Trade Association
and who is also very supportive and who are also lobbying on our
behalf in Brussels. The EU's position in this matter is that they
introduced this differential as in their opinion consultants would
not need to revert to international courts of arbitration as their
fees were small in comparison to the construction costs and they
would not believe it financially viable to follow that route.
Though EU officials now understand the inappropriateness of their
restrictions they have indicated to the UK Reps office that they
are reluctant to make Turkey a special case. We will continue
to press for change and from a commercial risk point of view will
not bid for EU funded projects in Turkey till we are allowed to
process any contractual dispute through the international courts
of arbitration.
In the latter case, you will see from one of
the attachments that our Joint Venture consortium has had a court
case before the Turkish commercial courts for the past 13 years!!
That every time the case has come to court it has been found in
our favour yet every time the other party has been allowed to
appeal. We feel that this is a clear case of the other party deliberately
using the failings of an antiquated legal system to wear us down.
With costs and outstanding interest included the figure claimed
is now not far short of £1 million and the Joint Venture
is determined to continue to fight. In this respect I sought authorisation
and obtained permission from the legal teams to show the summary
attachment to a third party, the UK government. I have discussed
this attachment with Nick McInnes, International Director of UKTI,
with a view that he discuss it further with Lord Digby Jones who
might be able to take it up directly with his opposite number
in Turkey. I have also given a copy to the UK Reps office in Brussels
as an example of why we are not prepared to go through Turkish
commercial courts in any future dispute. I can assure you that
in other circumstances we are not by nature a litigious company.
17 December 2007
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