Turkish bank fails to lift €25 million security tied to Shoreline’s dispute

Turkish bank Akbank has failed in its attempt to release or reduce €25 million held as security for a claim by Shoreline, adding another chapter to the legal battle surrounding the SmartCity development.

In a judgment delivered a few days ago, Judge Miriam Hayman rejected the bank’s application and ordered it to pay the costs.

The decision does not mean Akbank owes Shoreline the money. It means the security remains in place while the underlying claim is unresolved.

The case stems from Shoreline’s dispute with Turkish contractor Koray over construction of its residential and shopping complex in Kalkara.

Koray claims unpaid construction bills, while Shoreline alleges delays, overpayments and contractual breaches. Their competing claims are subject to arbitration.

Akbank became involved because Shoreline alleged that Koray-related parties held funds in accounts at the bank in Turkey.

Shoreline sought to freeze those funds through court orders served on Akbank’s Malta branch. The branch declared that it held no relevant assets. Shoreline subsequently pursued the bank itself for alleged damages arising from its failure to secure the money.

Akbank argued that the claim was premature, since Shoreline had not obtained an arbitration award against Koray or established an actual loss. Alternatively, it asked for the security to be reduced to approximately €490,597, the balance it said Shoreline had identified.

The court rejected the application on procedural grounds.

The original freezing order had already been cancelled after replacement security was provided, and the judge ruled that the grounds advanced by Akbank could not be considered within the procedure used.

The ruling comes against a wider financial dispute affecting Shoreline’s bondholders.

A separate court order obtained by Koray, covering approximately €43 million, remains in force against Shoreline companies.

In July, the court rejected Shoreline’s attempt to replace that order with security over property.

Shoreline has blamed the restrictions for obstructing refinancing needed to repay investors.

Bondholders agreed to extend repayment of the company’s €14 million bond from August 2026 to August 2028, with annual interest increased from 4% to 6.5%.

The project has also faced controversy over changes to SmartCity’s original plans and questions about disclosure of the contractor dispute to investors.