Shoreline Contracting Limited launches arbitration in dispute with Turkish contractor

Shoreline Contracting Limted, a sister company of Shoreline Mall plc, has filed for arbitral proceedings against representatives of Koray Global Malta Limited and other respondents, following a dispute in relation to a contract of works enetered into by SCL and KGML.

SCL said in a statement on Friday it has commenced arbitral proceedings against KGML and other entities and persons affiliated or connected to Koray Group, including its ultimate beneficial owner, Orhun Kartal.

At the end of 2024, KGML, a Turkish construction company, launched legal proceedings against five Maltese firms linked to the Shoreline development at Smart City, claiming it was owed more than €56 million for construction work carried out on the luxury residential and retail project.

Koray Global Malta Limited, the local subsidiary of Turkey’s leading construction firm Koray Insaat, secured a court order on 20 December 2024 to freeze assets belonging to companies in the Shoreline group whilst it pursued the substantial unpaid debt.

The warrant of seizure, granted by Mr Justice Aaron Bugeja, compelled Bank of Valletta and HSBC Bank Malta to hold €388,089.74 already deposited, with further assets potentially to be frozen until the legal dispute is resolved.

In July this year the court partially upheld SCL’s request to reduce the amount of the garnishee order that had been placed as part of precautionary warrants filed by KGML.

SCL has commenced arbitral proceedings against Koray Insaat Sanayii ve Ticaret Anonim Sirketi; Koray Gayrimenkul ve Yatirim Anonim Sirketi; Koray Gayrimenkul Yatirim Ortakligi Anonim Sirketi; Orhun Kartal; Hun Yenilenebilir Enerji Üretim A.Ş.; Korsis Enerji ve Gayrimenkul Anonim Sirketi; and Astra Yapi Ve Isletmeciligi Sanayi Ve Ticaret A.S.

SCL is seeking relief in the form of damages, interest and costs in excess of €24million, for the respondents’ role in the dispute and particularly, for KGML’s failure to comply with the terms and conditions of the contract.

Koray Insaat Sanayii ve Ticaret Anonim Sirketi and Koray Gayrimenkul ve Yatirim Anonim Sirketi acted as guarantors for the timely performance of the works which had to be performed by KGML in terms of the contract and for all obligations contracted by KGML in the contract.

SCL said it will continue to seek securing its claims via, inter alia, the issuance of precautionary measures against KGML and the respondents both in Malta and in other relevant jurisdictions.