A French court has rejected Turkey’s attempt to partially annul an international arbitration award arising from Ankara’s handling of Iraqi Kurdish oil exports, prompting an opposition lawmaker to call for the cost to be recovered from President Recep Tayyip Erdoğan and officials of his ruling party.
Deniz Yavuzyılmaz, a deputy chair of the main opposition Republican People’s Party (CHP), announced the March 10 decision of the Paris Court of Appeal on Monday, saying the government had concealed the outcome from the public.
“Now the countdown has begun for payment of the $1.471 billion arbitration penalty,” Yavuzyılmaz said on X. He argued that the amount should be collected from Erdoğan and officials of the ruling Justice and Development Party (AKP) rather than being borne by taxpayers.
The ruling, a copy of which was shared by Yavuzyılmaz, shows that the court dismissed Turkey’s application to partially annul a February 2023 award issued by an International Chamber of Commerce tribunal. It also ordered Turkey to pay Iraq 200,000 euros in legal costs.
The decision leaves the arbitration award intact. It does not, however, establish the amount Turkey must immediately pay.
A separate enforcement case is pending in US federal court, where Iraq and Turkey have submitted sharply different calculations of the amount due after interest.
What the tribunal found
The dispute arose from the operation of the Iraq-Turkey crude oil pipeline under agreements dating back to 1973.
Iraq filed for arbitration in 2014 after Turkey began loading crude oil from Iraq’s Kurdistan region onto tankers at the Turkish port of Ceyhan on instructions from the Kurdistan Regional Government (KRG), despite objections from Iraq’s federal Oil Ministry.
In its final award dated February 13, 2023, the tribunal found that Turkey had violated the pipeline agreements by loading the oil contrary to Baghdad’s instructions beginning May 21, 2014. It also found that Turkey had denied Iraqi personnel access to an Iraqi office at the Ceyhan facilities between January and March 2014.
The tribunal rejected broader Iraqi claims that the transportation and storage of Kurdish crude or the KRG’s use of the pipeline were in themselves violations of the agreements.
It awarded Iraq nearly $2 billion, including approximately $1.325 billion related to excess transportation charges and $673 million for losses connected to the sale of oil at discounted prices.
The tribunal also awarded Turkey approximately $526.6 million on counterclaims. Those amounts included unpaid or underpaid transportation charges dating back to 1990 and minimum-throughput obligations owed by Iraq.
After subtracting the $526.6 million awarded to Turkey from the nearly $2 billion awarded to Iraq, the tribunal found that Turkey owed Iraq a net principal amount of $1,471,390,486.05. Interest was to be calculated separately.
That distinction has become central to the subsequent dispute over the award.
Competing interest calculations
Iraq petitioned the US District Court for the District of Columbia in April 2023 to recognize and enforce the award under the New York Convention and US federal arbitration law.
Although the net principal was $1.47 billion, the tribunal did not calculate interest solely on that final amount. It ordered interest to be calculated separately on the amounts awarded to Iraq and Turkey because the underlying claims arose at different times.
The two interest-adjusted totals would then be compared to determine which country owed the other and how much.
Iraq later submitted a calculation under which Turkey would owe approximately $601.9 million after interest. Turkey argued that interest accruing on its older counterclaims more than reversed the balance, leaving Iraq owing Ankara approximately $956.9 million.
The US court has not adopted either calculation or entered a judgment fixing the amount payable.
Turkey’s Paris application was an attempt to annul parts of the underlying award, not a conventional appeal reconsidering the tribunal’s factual findings. The Paris court rejected all three grounds advanced by Ankara, according to the decision.
The ruling removes Turkey’s French annulment challenge as a potential obstacle to enforcement but does not resolve the interest dispute pending in Washington.
Yavuzyılmaz calls for Erdoğan trial
Yavuzyılmaz has repeatedly accused the Erdoğan government of misconduct in the Kurdish oil trade and has called for the president to be tried before Turkey’s Constitutional Court, which can act as the Supreme Criminal Tribunal for senior officials.
He has also alleged that more than $1 billion in transportation payments made in connection with the trade cannot be accounted for in transfers to Turkey’s state-owned pipeline operator, BOTAŞ.
The lawmaker based those claims on oil reports prepared for the KRG by Deloitte and on Turkish corporate and audit records.
Turkish authorities have not announced a domestic investigation into the government decisions underlying the arbitration award or the financial transactions identified by Yavuzyılmaz. Prosecutors have instead investigated the lawmaker over his disclosure of arbitration documents, according to his previous statements.
The 2023 award covers claims for the period from May 21, 2014 through September 30, 2018. A second arbitration concerning the period beginning October 1, 2018 is separate and remains unresolved.