Accuracy counters a real estate litigation in Turkey

Accuracy assists a public body in Turkey in a litigation related to a real estate development project.

 

Context

 

Our client was subject to a litigation case from a Dutch investment company related to its investments in a large residential and commercial construction project in the suburbs of Istanbul. The Dutch investors arranged to bid on and signed a contract for revenue-sharing in exchange for sale of parcels to develop the project site.

After a late start due to a zoning dispute, the contract experienced serious financing issues, which resulted in major construction delays. As the Turkish institution was not satisfied with progress (only c. 10% at the termination date) and the Dutch company’s commitment, the contract was terminated. The Dutch company decided to claim in international court that the Turkish institution had violated its international legal obligations. The Turkish institution then sought legal counsel and Accuracy was hired to provide expert delay and quantum advice to counter the Dutch company’s expert.

 

How we helped

 

The claim was divided into two parts: damages resulting from the termination of the project (20%) and damages resulting from apparent harm to other potential opportunities in Turkey (80%).

We began by discussing with our client, going through the timeline, milestones and contracts to understand the delay, its causes and the impact on the project. For the quantum, we analysed actual sales, costs and sources of funding in order to understand the events leading to the termination, counter the opposing party’s assumptions and prepare the basis of our own valuation.

We prepared our report and provided additional financial information to legal counsel to show that the financial investments from the Dutch company had been insufficient and that this lack of funds was the root cause for the construction delays. In addition, our valuation experts were brought in to challenge the opposing party’s technical assumptions.

Another part of our task was to understand the ‘ripple effect’ that the Dutch company claimed the project had on its other potential projects in Turkey (80% of the damages claimed). We were able to prove that the situation described by the Dutch company had been grossly exaggerated and that the valuation of such potential opportunities was not reasonable nor reasonably substantiated.

 

Outcome

 

Our report was highly technical, and it was important to ensure that it was clear without over-simplifying the content. Our added value was our experience in the real estate sector and in valuation. We were able to show that, although the initial claim seemed plausible, thorough and detailed at first sight, it was in fact characterised by a lack of supporting evidence and inappropriate application of valuation methodologies.

Part of what helped our client was our close cooperation with their lawyers from day one, as well as regular close communication between our teams internally to decide upon the choice of approach and assumptions. The other party, on the other hand, had one expert supervise from afar and sign off on his team’s work. This was reflected in the hearing when the tribunal spent the better part of the session on quantum tackling them on each and every point of their report, only pausing once to ask us a simple question.

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