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Turkcell Suit Over MTN-Iran Deal Postponed by U.S. Judge

A lawsuit by Turkey’s biggest mobile-phone operator alleging bribery by MTN Group Ltd. (MTN), Africa’s largest wireless provider, was put on hold by a federal judge who said a pending U.S. Supreme Court ruling may determine whether the case can proceed.

Turkcell Iletisim Hizmetleri AS, based in Istanbul, contends the 1789 Alien Tort Statute gives it the right to sue MTN in American courts, a stance opposed by MTN. U.S. District Judge Reggie Walton in Washington said today that the issue may be settled by the Supreme Court, which heard arguments in a case involving the law on Oct. 1.

“Because the plaintiffs here premise jurisdiction in this court under the Alien Tort Statute based on alleged violations of the law of nations that occurred in foreign countries, the Supreme Court’s decision in Kiobel could substantially impact resolution of this case,” Walton said in his two-page order.

Turkcell sued its Johannesburg-based rival on March 28 for $4.2 billion in damages over its loss of an Iranian mobile-phone license it was initially awarded. The suit alleges MTN bribed officials, arranged meetings between Iranian and South African leaders, and promised Iran weapons and United Nations votes in exchange for a license to provide wireless service in the Islamic Republic.

Internal Memos

The complaint includes numerous alleged internal MTN memos that detail the company’s efforts to win the Iranian business after losing the bid to Turkcell in February 2004.

MTN fell less than 1 percent to 157.84 rand ($18.25) today in Johannesburg trading, almost erasing a loss of as much as 2.4 percent after the decision was announced.

Turkcell “believes jurisdiction is clear in the United States courts and for that reason welcomes today’s order as an efficient way for its claims to continue” before the court, the company said in an e-mailed statement. “Turkcell looks forward to addressing the issues, if any, raised by the Supreme Court’s decision.”

MTN said in a statement it expects the Turkcell suit to be “disposed of” after the Supreme Court issues its decision.

The Alien Tort Statute is usually cited in human rights and torture cases. The law gives U.S. courts jurisdiction in some instances to consider claims by foreigners for illegal conduct that occurred in another country.

MTN asked Walton to dismiss the case, arguing that Turkcell was trying to get paid by a “nonstate actor” for the Iranian license. The U.S. court “has no business deciding this dispute,” MTN said in a July 2 filing.

‘Turkcell’s Right’

MTN’s promises to arrange South African votes favorable to Iran at the International Atomic Energy Agency as well as arms deals, and its payment of bribes “to steal Turkcell’s right to the Iranian GSM license, clearly support Alien Tort Statute jurisdiction here,” according to Turkcell’s Aug. 1 filing.

The Supreme Court is considering an Alien Tort Statute case brought by a group of Nigerians who claim two units of Royal Dutch Shell Plc (RDSA) based outside the U.S. helped their government commit torture and murders in the early 1990s. In Kiobel v. Royal Dutch Petroleum Co., the Shell units said the Alien Tort Statute doesn’t apply to conduct beyond U.S. borders.

In today’s order, Walton said that 14 days after the Supreme Court rules in Kiobel, the parties must submit a joint filing discussing what effect the ruling has on the case.

The Alien Tort Statute has been invoked by human-rights activists more than 150 times in the past 20 years.

In arguments Oct. 1, the justices indicated they may throw out the Nigerians’ suit.

Such a ruling would be a boost for companies that have fought for years to undercut the statute. Highlighting the importance of the case, more than a dozen publicly traded companies filed briefs urging the court to limit the Alien Tort Statute. The group included Coca-Cola Co., Chevron Corp., Ford Motor Co. and GlaxoSmithKline Plc.

The case is Turkcell Iletisim Hizmetleri AS (TCELL) v. MTN Group Ltd, 12-cv-479, U.S. District Court, District of Columbia (Washington).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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