After more than six years of legal wrangling, a foreign investment dispute that began on the outskirts of Addis Abeba’s water reservoirs has ended with Ethiopia winning the case but ordered to pay millions of dollars to a Turkish construction company, bringing to a close one of the country’s longest treaty-based arbitration cases.

The final award, issued last February by the Permanent Court of Arbitration (PCA) in the Hague, The Netherlands, capped a case over a proposal by Akgun Insaat Makina Sanayii ve Dis Ticaret Ltd. Sti., a Turkish construction and machinery firm, to invest more than one billion dollars in an industrial zone. The federal government, through the Ministry of Industry, had allocated 100hct near the Legedadi and Dire dams, which supply fresh water to Addis Abeba.

The project moved ahead, but what had been promoted as an investment opportunity began to collide with public interest. Concerns surfaced over the risk that industrial activities in the planned park could pose to the capital’s water supply. A Sudanese lubricating oil processing company leased land on the site and began operations. Officials at the Addis Abeba Water & Sewerage Authority (AAWSA) were alarmed by potential contamination and urged the Industry Ministry to order an environmental impact assessment.

The Ministry complied, putting pressure on the company to commission the assessment.

Akgun claimed to have spent 50 million dollars on the study, court documents reveal. The Ministry's officials rejected the impact assessment report, arguing it did not meet expected standards. As concern over the site deepened, the officials banned industrial activity there. They then offered Akgun a 100hct plot in another location, along with available infrastructure and tax exemptions. The company refused, and subsequently, a dispute over land and environmental safeguards hardened into an international legal battle.

By August 2019, Akgun had taken the case to the Arbitration in Hague, demanding more than half a billion dollars for what its managers claimed was "expropriation and the destruction of investment." Ethiopia's authorities rejected the claim, insisting there had been "no expropriation" and arguing that the relocation offer was made to protect Addis Abeba’s water reserves.

Ethiopia and Turkey have maintained diplomatic relations for nearly a century, and ties have expanded in trade, investment and infrastructure. Turkish President Recep Tayyip Erdogan visited Addis Abeba in February 2026, emphasising these relations. Under the bilateral investment treaty between them, such disputes first enter a cooling period for negotiations. Those talks failed. The case then moved into investor-state arbitration, with the court handling the proceedings.

The case was heard under the UNCITRAL Arbitration Rules 2013. Oral hearings were held in May 2022 at the Peace Palace in The Hague, where Michael Hwang of Singapore chaired the three-member panel. David A. R. Williams sat for the claimant, and Philip J. McConnaughay represented Ethiopia.

Ethiopia’s defence was led by the Ministry of Justice and Addis Law Group LLP, a U.S.-based law firm founded by lawyers of Ethiopian origin, including Zewdineh Beyene (PhD).

After four years of proceedings, the Tribunal handed down a mixed ruling. It rejected Akgun’s central claim that Ethiopia had expropriated the investment or unlawfully impaired it, finding that its government had "acted within its rights" to protect the environment and the city’s water supply. However, the state did not escape liability. The Tribunal found that Ethiopia had failed to meet the standard of "fair and equitable treatment."