An international arbitration tribunal has ordered the Ethiopian Railway Corporation (ERC) to pay Turkish construction company Yapı Merkezi $213.7 million in damages in a long-running dispute over the suspended Awash–Kombolcha–Woldiya–Hara Gebeya railway project.
The tribunal also ordered the repayment of $29.1 million in advance payments, bringing the total amount identified in the ruling to about $242.8 million, according to information obtained by Capital.
The dispute, which was heard in London under proceedings administered by the London Court of International Arbitration (LCIA), stems from disagreements over the performance of a contract awarded to Yapı Merkezi by the ERC in 2015 to construct the 392-kilometre railway line at an estimated cost of $1.7 billion.
Yapı Merkezi had reportedly sought more than $1 billion in compensation from the Ethiopian government, claiming losses incurred during the implementation of the project.
In response, the Ethiopian Railway Corporation filed a counterclaim seeking approximately $400 million in compensation, according to information obtained by Capital.
A senior ERC official, who requested anonymity, said the arbitration proceedings were concluded on September 23, 2026.
According to the ruling, the damages awarded to Yapı Merkezi included $67.4 million in unpaid amounts owed by the ERC, $76.7 million in compensation related to construction delays, and $89.2 million for damage to the company’s assets during the conflict in northern Ethiopia.
The award also provides for interest at an annual rate of nine percent. Separately, Yapı Merkezi was ordered to repay $29.1 million in advance payments to the Ethiopian side.
Yapı Merkezi had also brought claims against Ethiopia’s Ministry of Finance and Ministry of Transport and Logistics. However, the tribunal reportedly dismissed the claims against the two ministries.
The ruling is also expected to prevent Ethiopian government assets abroad from being used as security for enforcement of the award.
In addition, the tribunal ordered Yapı Merkezi to hand over vehicles and machinery used in the construction of the railway project to the Ethiopian Railway Corporation.
The dispute involved several issues, including delays in the construction of the railway, payment-related disagreements and damage to Yapı Merkezi’s equipment and assets during the war in northern Ethiopia.
Ethiopia’s defence before the tribunal was handled in London by a team of legal, financial and engineering experts, including representatives from the Ethiopian Railway Corporation and the Ministry of Justice. The team was led by Professor Tilahun Teshome, a law professor at Addis Ababa University.
The ERC said negotiations were held in Istanbul and Addis Ababa in an attempt to settle the dispute before a final arbitration ruling was issued. However, the negotiations failed to produce an agreement.
In a separate statement, Yapı Merkezi presented a different calculation of the outcome, saying it had secured a net arbitral award of $307.6 million in its dispute with the Ethiopian Railway Corporation.
The Turkish contractor said the final award was issued on September 23, 2026, under proceedings administered by the LCIA, and was formally communicated to both parties on October 2.
According to Yapı Merkezi, the tribunal determined that the company was entitled to $307.6 million after taking into account counterclaims submitted by the ERC. The company said the amount was calculated as of June 30, 2026.
Yapı Merkezi added that the award provides for simple interest at an annual rate of nine percent on the outstanding principal until the amount is fully paid.
The parties reportedly have 28 days from the issuance of the decision to challenge the award. However, sources familiar with the matter told Capital that neither the Ethiopian Railway Corporation nor Yapı Merkezi currently intends to appeal the decision.
