April 10, 2012 / 3:29 PM / 6 years ago

Analysis: Turkcell faces battle to bring MTN case in U.S

JOHANNESBURG (Reuters) - Turkish mobile operator Turkcell (TCELL.IS) may struggle to make its case against MTN Group (MTNJ.J) in a $4.2 billion legal battle over an Iranian mobile network license that hinges on U.S. human rights law.

Turkey’s biggest mobile firm filed the suit against MTN in a Washington court last month on the grounds that MTN’s significant U.S. business meant the case could be heard there.

In so doing it hopes to show that MTN breached U.S. and international law relating to bribery and trading in influence, at a time when relations between the United States and Iran are particularly tense over the latter’s nuclear program.

Turkcell was initially awarded the Iranian license in 2004 before a disagreement over the terms of the deal prompted an about-face by Tehran, which made a deal with MTN a year later.

The Turkish firm says MTN lobbied the South African government to support Tehran’s nuclear program in exchange for winning the contract, and bribed officials from both governments. Iran is a huge growth market for mobile telecoms, as reflected in the size of Turkcell’s claim for damages.

Turkcell’s lawyer, Read McCaffrey of Patton Boggs LLP, says the nature of the charges and the extent of MTN’s business in the U.S. makes the case applicable to a U.S. court.

MTN’s shares also trade as American Depository Receipts and the company also sells airtime and offers roaming services to U.S. customers.

But several U.S. legal experts, including one due to argue a related case at the Supreme Court this year, say Turkcell may not get far with the suit because the case has only tenuous links to the United States.

“The courts in South Africa or other countries are certainly capable of handling disputes like this. Why should the U.S. want to get involved in this, any more than a South African or Turkish court wants to concern itself with commercial disputes between U.S. companies in the U.S.?” said Robert Mittelstaedt, a partner with Jones Day in San Francisco.

18TH CENTURY LAW

Turkcell’s suit may also be hampered by the fact that it relies on a U.S. law usually reserved for human rights abuses.

The Alien Tort Statute (ATS) allows non-U.S. citizens to make claims in the United States for torts, or civil wrongs, committed against the law of nations or U.S. treaties.

The law, which dates back to the 18th century, has been used in cases of extrajudicial killing - murder for political reason - mass political rape, or slavery and slave labor.

Lawyers say the U.S. courts are unlikely to be persuaded that the law applies to less grave, commercial instances despite Turkcell’s argument that it applies because MTN violated the law of nations prohibiting bribery and influence trading.

“I believe all of the ATS cases have involved fundamental human rights abuses. No court has indicated any willingness to go beyond those rights,” said Michael Hausfeld, chairman of Hausfeld LLP in Washington.

“In other instances, where for example employment discrimination and environmental issues were at stake, courts have denied including those types of violations under the Alien Tort Statute.”

Turkcell lawyer McCaffrey says the bribery charges make the statute relevant.

“The Alien Tort Statute has been used in a variety of situations including situations involving bribery of public officials, other treaties and other aspects of international law that have been breached,” he told Reuters.

SUPREME COURT

Turkcell’s case may in any case be delayed until the outcome of a Supreme Court briefing expected later this year, which will consider whether the Alien Tort Statute should be limited to disputes within the United States.

Paul Hoffman of Schonbrun DeSimone Seplow Harris Hoffman and Harrison, LLP is one of the attorneys who will be briefing the Supreme Court on that later this year.

Turkcell’s case is likely to be stayed, Hoffman said, until the Supreme Court makes a decision, which it is expected to do by June 2013.

It is impossible to tell which way the Supreme Court will ultimately go.

“No one can guarantee that cases without a direct connection to the United States will definitely be dismissed,” said Richard Faulk, a partner at Texas-based law firm Gardere Wynne Sewell LLP.

Editing by Sophie Walker

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