London Arbitration Court Rejects Majority of Turkish Firm’s USD 980 Million Claim Against Ethiopia

The London Court of International Arbitration rejects USD 750 million of Yapi Merkezi's claim against Ethiopia over a delayed railway project.

By: AXL Media

Published: May 2, 2026, 5:44 AM EDT

Source: Information for this report was sourced from The Reporter Ethiopia

A Major Judicial Victory for the Ethiopian Railway Corporation

The London Court of International Arbitration has delivered a landmark ruling, dismissing the bulk of a USD 979.9 million compensation claim brought by the Turkish construction giant, Yapi Merkezi Insaat. The firm had initiated legal proceedings against the Ethiopian Railway Corporation, ERC, seeking damages related to the Awash–Kombolcha–Woldia–Hara Gebeya railway project. The tribunal rejected approximately USD 750 million of the total demand, dealing a significant blow to the contractor's efforts to recover losses it attributed to government delays and regional conflict. This decision significantly reduces the financial liability facing the Ethiopian state regarding one of its most ambitious infrastructure developments.

The Origins of the Multi-Million Dollar Dispute

Yapi Merkezi Insaat argued that its work was delayed by nearly nine years due to the ERC’s failure to secure financing and settle right-of-way compensation claims on schedule. The contractor also cited a lack of sufficient electric power and the outbreak of war in northern Ethiopia as primary factors that exposed the company to severe financial losses. Under the original 2012 EPC turnkey agreement, the Turkish firm was responsible for the design, procurement, and construction of the 392-kilometer railway. Despite these arguments, the tribunal's ruling suggests that the legal burden of these delays did not rest entirely with the Ethiopian government.

Financial Reversal and Asset Transfer Mandates

In a sharp turn of events for the Turkish contractor, the tribunal ordered Yapi Merkezi to return a USD 29.1 million advance payment it had previously received from the ERC. Furthermore, the court ruled that all machinery, vehicles, and materials temporarily imported for the project must be fully handed over or formally transferred to the Corporation. This aspect of the ruling ensures that the physical assets associated with the project remain under Ethiopian control, potentially facilitating the eventual completion of the railway. The removal of the Ministry of Transport and the Ministry of Finance as co-defendants also eliminated the risk of joint liability for the federal government.