Cengiz Case

The case involved the Turkish claimant’s locally created entity which entered into contracts with a Libyan state entity for the construction of housing in two remote regions in the south of the country. The Tribunal awarded some US $50 million to the investor because Libya breached its full protection and security (FPS) obligation under the Libya-Turkey bilateral investment treaty (BIT), in the context of incidents that occurred during the civil war in 2011 and 2014.Footnote ³

The award examined acts of violence, destruction, and robbery committed in August 2011 by troops loyal to the Gaddafi regime at the WAH Main Camp and similar acts by other groups at the Sebha Main Camp. The Tribunal examined whether the attacks were in breach of the FPS standard and, specifically, of “the negative obligation to refrain from directly harming the investment by acts of violence attributable to the State.”Footnote ⁴ While the reasoning of the Tribunal regarding this due diligence obligation can generally be praised,Footnote ⁵ the same cannot be said about its application of Article 10 of the International Law Commission (ILC) Articles on State responsibility.Footnote ⁶ As explained elsewhere,Footnote ⁷ the Tribunal failed to apply basic rules of state responsibility and attribution applicable in the context of civil wars. Under Article 10, whether or not the wrongful acts committed by rebels during a civil war are attributable to the state depends on whether they are victorious in replacing the government. Assessing who the government is in that context is fundamental. This question is beyond the scope of this contribution. I will critically examine the reasoning of the Tribunal on matters related to identifying the government of Libya and its recognition by other states. I consider that the way the Tribunal addressed these issues is somewhat controversial.

The Cengiz Tribunal’s Identification of the Attackers and the Government at the Time of the Events

For the application of Article 10, one crucial question for the Tribunal was to determine who had committed the attacks and who was in charge at the time the events took place. The civil war started in early 2011, and by March of that year groups of insurgents formally established the National Transitional Council (NTC), which only had control over some parts of Libya’s territory at the time. Yet, by June 2011, several states had issued statements whereby they considered the NTC the “legitimate government” of Libya.Footnote ⁸

The Tribunal stated that “on August 23, 2011, the rebels invaded Tripoli and thus, Libya fell under control of the opposition.”Footnote ⁹ The timing is important here given that on the very same day, the Tribunal explained that “a group of armed individuals … violently restrained the site personnel at the WAH Main Camp and forcibly took equipment, motors and vehicles belonging to Cengiz Libya.”Footnote ¹⁰ Three days later, “a group of citizens, supported by police vehicles and the Tank Battalion, again entered the WAH Main Camp and stole everything at hand.”Footnote ¹¹ The award explained that the pillage in both cases was done by “armed soldiers belonging to the Libyan army”Footnote ¹² who were “still defending the old Gaddafi regime.”Footnote ¹³

The Tribunal used the expression “old” Gaddafi regime because it considered that at the time the attacks took place (August 23), the NTC had already established itself as the new government, replacing the Gaddafi dictatorship. For instance, the Tribunal explicitly said that it “agreed” with the respondent’s statement that the “Libyan military units which attacked the WAH Main Camp were loyal to the previous Government of Colonel Gaddafi and must be considered as unsuccessful insurrectional forces seeking to displace the new government of Libya.”Footnote ¹⁴ This passage can only be logically interpreted to mean that the troops loyal to the Gaddafi regime were now considered rebels fighting the new NTC government. Under Article 10 of the ILC Articles on State Responsibility, the acts committed by rebels during an insurgency are not attributable to the state when they are not successful at establishing a new government.

The Cengiz Tribunal’s Misinterpretation of the Effect of Statements Recognizing the NTC as the “Legitimate” Representative of the People

The Tribunal focused on who was the “legitimate Government of Libya” at the time when the attack took place. Thus, the first line of the award explaining the Tribunal’s decision states: “To settle this issue, it is necessary first to establish the legitimate Government of Libya at a certain time (i), to identify the attackers in each specific incident (ii), and then to decide on the alleged responsibility of the Libyan State (iii).”Footnote ¹⁵ This notion of “legitimate” government is of limited legal relevance in the context of state responsibility. As noted by Stefan Talmon, recognition of an opposition group as the “legitimate” representative of a people “is a purely political act,” which has “only limited practical effect.”Footnote ¹⁶ The Tribunal seemed to have confused this concept of “legitimacy” with the other fundamental question of whether or not the NTC was forming the new government at the end of August 2011. In any event, several passages in the award show that the Tribunal believed that the NTC had been recognized as the new government at that time.Footnote ¹⁷ It is true that “by the end of August, international legitimacy had passed from the Gaddafi Government to the NTC Government,”Footnote ¹⁸ which led some states to affirm that the NTC was now the “legitimate” representative of the country. Yet, this did not amount to recognizing the group as the new de jure government. For a while, very few states crossed that line. More did by the summer of 2011. Yet, many other states did not. What should have mattered for the Tribunal was not so much whether by the end of August 2011 “the legitimate Government of Libya was that of the NTC” but rather whether it was the de jure government. This is because fundamental legal consequences (such as who is entitled to state property and assets abroad) arise from such a status under international law. As further discussed below, the evidence suggests that the NTC was not the de jure government.

The Cengiz Tribunal’s Wrong Determination that the NTC Had Already Become the New Government When the Damage Occurred

In my view, it would have been more appropriate to consider that, by the end of August, the Libyan army (loyal to the Gaddafi regime) had not yet been defeated and that the NTC had not yet firmly established itself as the new government. At the time, the situation was simply too fluid to draw any clear-cut conclusion.

As observed by Talmon, “the main criterion in international law for government status is that the individual or group of individuals claiming to be the government of a State exercise effective control over the State’s territory,” which means that “it must be in possession of the machinery of State which, as a rule, requires control of the State’s capital.”Footnote ¹⁹ Can it realistically be said that on the day of the attack, the NTC had effective control of the territory and the capital, which it had just invaded the very same day? It seems very doubtful if one considers the list of relevant factors mentioned by Danielle Morris.Footnote ²⁰ The same conclusion seems inevitable if one takes into account the remark made by Aruna Bundu-Conteh: “momentary (or brief) effectiveness is not enough; it must be accompanied by at least a reasonable suspicion or a real likelihood that it will last.”Footnote ²¹ On the day of the attack, it was simply too soon to assess whether or not there was “real likelihood” that the NTC’s push to power would last.

The award also refers to events that took place on August 26, 2011 at the Sebha Main Camp, which “was taken over by armed men and the remaining personnel on site were physically restrained and threatened, and machinery and equipment were taken away.”Footnote ²² The Tribunal explained that the “attackers belonged to militias controlled by the NTC Government.”Footnote ²³ While the Tribunal refers to the NTC as the “Government,” it should be recalled that these events took place merely three days after the group had taken over the capital.

M.J. Peterson speaks of a “general presumption” according to which the government in power will continue to be regarded as such “until a rebel-organized rival has gained effective control of all or most of the territory.”Footnote ²⁴ Writers are referring to the existence of a high threshold to establish that a change of government has occurred. For Brad Roth, the presumption in favor of the established government should prevail “even after its rival has established effective control over the bulk of the population and territory, for as long as the established government continues to exert authority within the territory.”Footnote ²⁵ The Tribunal’s own description of the situation on the ground suggests that this high threshold had not been met at the end of August:

While the NTC may have been “in control of the major part of Libyan territory,” the pro-Gaddafi forces were still controlling other parts of the country and were still fighting. For Rüdiger Wolfrum, “as long as the lawful government offers resistance which is not ostensibly hopeless or purely nominal the recognition of the revolutionary party as a government would constitute a premature recognition.”Footnote ²⁷ By the Tribunal’s own account, the pro-Gaddafi forces were indeed still offering “resistance” which was not at all “ostensibly hopeless or purely nominal”; they were finally crushed only later. In fact, the Tribunal mentioned that “fighting continued across Libya” until mid-September 2011.Footnote ²⁸

In sum, it could be argued that by the end of August, no new government had yet been established. Thus, when the events took place at the WAH Main Camp, the NTC was still a rebel group, and the Gaddafi regime was the government. In my view, the Cengiz Tribunal came to a different conclusion based on its misinterpretation of basic principles of international law regarding how to identify a government. This failure, in turn, had important consequences on how the Tribunal examined issues of state responsibility. This is because the Tribunal analyzed the case as a failed attempt by the rebels (troops loyal to the Gaddafi regime) to overthrow what it considered to be the newly established NTC government.Footnote ²⁹

Other Procedural Issues Related to Identifying the Government

Other awards have dealt with one related procedural question: to which entities should a state notify its completion of constitutional formalities for a BIT to be in force in the context of a civil war? Libya argued that the Libya-Turkey BIT had never entered into force because Turkey (now named Türkiye) had not properly notified its implementation under its domestic law. Tribunals have rejected the argument. They held that Turkey was correct to send its notification to the entity it considered at the time (April 2011) the government of Libya, i.e., the Gaddafi regime, and not the NTC.Footnote ³⁰ As noted by one Tribunal, when Turkey sent its notification, the NTC “had not been recognized generally, or by Turkey, as the de jure government of Libya.”Footnote ³¹ The Court of Appeal of Paris came to the same conclusion in set aside proceedings in other cases.Footnote ³²

Another interesting issue dealt with by tribunals and courts is related to the practical consequences of having two entities controlling at the same time different parts of the territory, with both claiming to be the “government” of Libya. During the “second phase” of the civil war, which started in mid-2014, the conflict eventually opposed the Government of National Accord (GNA) located in the capital city of Tripoli and the “Libyan National Army” of General Haftar who established a parallel “government” (the “House of Representatives”) located in Tobruk and controlling the eastern and central parts of Libya. Tribunals have had to examine the legality of settlement agreements signed by claimant investors and the “House of Representatives” government ending arbitration proceedings.Footnote ³³ The question was further complicated by the fact that at the time when these agreements were signed, these rival groups were (at least formally) part of a coalition government recognized by the international community. In set aside proceedings in one case, the Court of Appeal of Paris avoided diving into the controversy about who the government was at a particular time by concluding that the settlement was void because it had been obtained by corruption.Footnote ³⁴