MTS’s lawsuit against Turkmenistan was dismissed by arbitration

The International Centre for Settlement of Investment Disputes, which operates under the World Bank Group, has rejected the claim of the Russian mobile operator MTS (Mobile TeleSystems) against the government of Turkmenistan. This is an international arbitration, which was established to resolve legal disputes between international investors and individual states. Turkmenistan hired a US-based law firm Squire Patton Boggs to represent its case. The arbitrators concluded the case on June 14, 2023 in favor of Turkmenistan. Turkmen state media did not report on this case.

What is it all about?

MTS started operating in Turkmenistan in 2005 when they bought a local mobile operator Barash Communication Technologies, then a monopolist in Turkmen market. MTS was given a license for five years to operate in Turkmenistan and they agreed to share 20% of their net profit with the government of Turkmenistan.

MTS’s license was suspended in 2010 by the Turkmen government. At the time, MTS had 2.5 million subscribers, while the local Altyn Asyr had 0.5 million.

In 2012, MTS resumed its operations in Turkmenistan, while in return they agreed to share 30% of their net profit with Turkmentelekom. In September 2017, Turkmenistan did not renew the contract with MTS and cut them off from the country’s network.

In August 2018, MTS filed a lawsuit against Turkmenistan at the International Centre for Settlement of Investment Disputes. At first, the amount of the claim was 750 million USD, in 2019 it grew to 1.5 billion USD, and then to 2 billion USD. The main point of the complaint was that Turkmenistan’s decision not to renew its contract with MTS was seen as a seizure of the Russian company’s operations, violating the bilateral investment treaty between Russia and Turkmenistan.

On June 15, 2023 the website of the Squire Patton Boggs, which represented Turkmenistan, mentioned that the arbitration dismissed all the claims of MTS and the MTS was ordered to pay 11 million USD to Turkmenistan in legal fees. Arbitrators have concluded that Turkmenistan did not breach any laws in not renewing the license for MTS.

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