VZCZCXRO8892
PP RUEHDA
DE RUEHAK #0828/01 1661339
ZNR UUUUU ZZH
P 151339Z JUN 09
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC PRIORITY 9882
INFO RUCPDOC/USDOC WASHDC PRIORITY
RUEATRS/TREASURY DEPT WASHDC PRIORITY
RUEHIT/AMCONSUL ISTANBUL PRIORITY 5868
RUEHDA/AMCONSUL ADANA PRIORITY 3925

UNCLAS SECTION 01 OF 02 ANKARA 000828 
 
DEPT FOR EEB/IFD/OIA - HGOETHERT, KBUTLER AND L/CID - 
PPEARSALL 
DEPT PLEASE PASS USTR 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EINV KIDE OPIC PGOV CASC TU
SUBJECT: TURKEY: 2009 REPORT ON INVESTMENT DISPUTES AND 
EXPROPRIATION CLAIMS 
 
REF:  STATE 49477 
 
¶1. (U) The following is Embassy Ankara's submission for 
the 2009 report to the U.S. Congress on expropriation 
claims and investment disputes, providing an update on 
the two ongoing cases reported in 2008 and adding two new 
cases that have been brought to Post's attention. 
 
¶2. (SBU) Claimant Data: 
 
-- Claimants A are Victor and Kristy Bedoian, both U.S. 
citizens.  They filed a Privacy Act Waiver in 2001. 
Victor Bedoian told us that he "technically" has a 95 
percent share in the Turkish company owning the real 
estate in dispute, but that there are also six other 
partners in the venture. 
 
-- Claimants B are U.S. companies with build-operate- 
transfer (BOT) and transfer-of-operating-rights (TOR) 
contracts in dispute (company, location, value of 
contract in USD millions): 
 
B1. AES (BOT project), Eskisehir, 165, Gas-fired Power 
Plant 
 
B2. GE (BOT project), Atam Elektrik, 195, Gas-fired Power 
Plant 
 
B3. NRG (TOR project), Seyitomer, 200, Coal-fired Power 
Plant 
 
B4. NRG (TOR project), Kangal, 125, Coal-fired Power 
Plant 
 
-- Claimant C is Izmer A.S., a U.S. limited partnership. 
 
-- Claimant D is Merck, Sharpe & Dohme, a subsidiary of 
the U.S.-based Merck & Co. 
 
¶3.  (SBU) Begin text of 2007 Report: 
 
The United States is aware of four (4) claims of United 
States persons that may be outstanding against the 
Government of Turkey. 
 
¶1. a) Claimants A 
 
b) 2001 
 
c) Claimants A purchased and renovated a hotel and 
restaurant in Van for approximately USD 750,000 in 2001. 
Claimants A assert that they have been unable to operate 
their property, however, due to persistent police 
harassment and obstruction by local government 
authorities. In 2004, administrative courts decided 
against Claimants A in their suit to obtain a residence 
permit and an operating permit for the hotel. In early 
2005, a Van court dismissed a civil case initiated by 
Claimants A, in which Claimants A sought to annul the 
transfer of title to a hotel which they claim was sold 
without their knowledge or consent.  In September 2005, 
Claimants A lost their appeal of the decision in the 
civil case in the Turkish courts, which was upheld by the 
court in Van in February 2006.  This was their last 
resort in the Turkish legal system.  Claimants A started 
the process to appeal this decision under a "cancellation 
of rights" case at the European Court of Human Rights, in 
which they have also appealed the permit decisions.  Post 
has no new information on this case. 
 
¶2. a) Claimants B 
 
b) 2000 - 2001 
 
c) In 2001, the Turkish Government cancelled 46 
contracted (but unbuilt) power projects based on the 
build-operate-transfer (BOT) and transfer-of-operating- 
rights (TOR) models.  Turkey's constitutional court ruled 
in 2002 that the Turkish Government would have to either 
honor the contracts or compensate the companies involved. 
Claimant B4 filed an international arbitration claim 
through the International Chamber of Commerce (ICC).  The 
tribunal ruled in favor of the company but did not 
include any financial compensation.  Claimants B1 - B3 
 
ANKARA 00000828  002 OF 002 
 
 
did not seek arbitration for their disputes.  The Turkish 
partners of B1 and B2 chose to pursue arbitration and won 
their case.  Claimant B4 has decided not to pursue 
further legal action.  Post considers this case to have 
been settled and will not include it in future reports. 
 
¶3. a) Claimant C 
 
b) 2003 
 
c) Claimant C entered into a lease arrangement with the 
Turkish Government in 1996 to modernize and restore a 
retail and entertainment facility along the Izmir 
waterfront.  In October 2002, Phase I of the restored 
facility opened its doors but the local government of 
Izmir claimed that certain documents were missing and 
ordered the property to close on January 8, 2003.  After 
the intervention of the U.S. Secretary of Commerce and 
U.S. Ambassador, as well as high-ranking officials from 
the central Turkish Government, the necessary documents 
were obtained and the center was allowed to reopen on 
December 23, 2003.  Despite this success, the Turkish 
Government is still refusing to deliver the approximately 
one-third of the leased property to Claimant C that is 
necessary for Phase II of the project, claiming that it 
is owed back rent.  Claimant C paid this back rent, but 
has still not been able to take possession of the parcel 
of land.  Claimant C has advised Post that without this 
land the investment will not be viable and it may be 
forced to abandon the project.  It has already invested 
$35 million in Phase I and is planning to invest an 
additional $15 million in Phase II.  Post is raising this 
issue with the Turkish government. 
 
¶4. a) Claimant D 
 
b) 2009 
 
c) Claimant D is a pharmaceutical firm with various 
products approved for the Turkish market.  In January 
2009, the Turkish Ministry of Health gave marketing 
approval for a copycat generic version of one of Claimant 
D's products, basing its decision in part on the 
confidential test data submitted during Claimant D's own 
approval process.  Under Turkish law (and Turkey's 
European Union and World Trade Organization commitments), 
pharmaceutical firms enjoy six years of data exclusivity, 
during which generic firms cannot receive marketing 
approval for a copycat product without conducting their 
own tests.  Both Post and the European Commission 
Delegation to Turkey have raised this issue during 
bilateral discussions with the Turkish Government. 
Claimant D attempted to resolve the issue directly with 
the Ministry of Health but was unsuccessful, so it has 
opened a lawsuit against the Ministry, alleging that the 
approval violated Turkish law.  As of June 2009, the 
lawsuit is being evaluated by the Turkish courts.   The 
annual market in Turkey for the disputed product is 
approximately $30 million. 
 
JEFFREY