Telsim Steps Up Lawsuit Pressure

Telsim, Turkey's second largest mobile phone company, has urged Motorola and Nokia to participate in arbitration proceedings in Switzerland in order to settle the ongoing commercial disputes between the companies. Telsim says that the vendor financing agreements between Telsim and Motorola and Nokia expressly provide that disputes between the parties would only and exclusively be resolved through arbitration under Swiss law. Arbitration proceedings, which were originally started in 2001 and 2002, were renewed last month when the Swiss Arbrital Tribunal dismissed Motorola's motion to stay these proceedings.

Telsim's call for arbitration is in line with legal precedent. The United States Supreme Court reaffirmed only a few days ago, in Pacificare Health Systems v. Book (7 April 2003), its longstanding position in favour of arbitration as the appropriate way to resolve commercial disagreements.

Hakan Uzan, Chief Executive of Telsim, said: "Rather than abide by the explicit arbitration terms of our agreements, Motorola and Nokia have instead damaged both Telsim and its owners by pursuing unnecessary legal actions in the US and the UK. This has been costly and distracting for all the companies involved. The United States Court of Appeals' decision and the resulting US District Court ruling to dismiss RICO claims brought against Telsim's owners by Motorola and Nokia again points the parties to Swiss arbitration as the forum to resolve these commercial disputes.

"Telsim is a successful business with over six and a half million customers. This dispute has always been a commercial disagreement between Telsim and Motorola and Nokia, precipitated by the rapid, unpredictable collapse of the Turkish economy in the last four years and Motorola's own internal conflicts over debt-based marketing initiatives. Like other Turkish companies, the fall in value of the Turkish Lira meant that our original repayment schedule was unsustainable. Like other similarly situated Turkish companies, we sought to reschedule our obligations, and if the terms for rescheduling could not be agreed, submit to arbitration to resolve the matter. But unlike other companies we have been the subject of sustained heavy-handed legal attack from those whose very interests are best served by preserving the value of Telsim.

"Legal action benefits no one but lawyers. Our objective has been, and continues to be, to follow our contractual agreements and resolve this dispute through Swiss arbitration that would reschedule Telsim's obligations to Motorola and Nokia and allow us to continue to build our company and serve the interests of our customers."

Posted to the site on 17th April 2003