The term “arbitration” has recently become more popular for settling disputes which is especially arising from the contracts drafted to regulate international commercial relations. In fact, the parties’ will to solve the problems due to breach of contracts or any other reasons by using quick and low-cost methods have increasingly made arbitration one of the most frequently used alternative dispute resolution methods these days.
Arbitration may briefly be defined as a private judiciary proceeding conducted by an impartial arbitrator or the arbitral tribunal, without any application for state-affiliated national judicial authorities, against the disputes that may arise or have already arisen between parties. Therefore, in the event that parties apply for international arbitration, the validity of an arbitral award rendered by an arbitrator at the end of the process depends on its recognition and enforcement by national courts in accordance with the governing law.
For a foreign arbitral award to be legally binding in the Turkish law system, it is required to be recognized and enforced by Turkish courts. In this context, the conditions for the recognition and enforcement of foreign adjudications are mainly regulated under “Private International and Procedural Law No. 5718” (“IPPC”) and the “UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958” (New York Convention) which is ratified by Turkey.
|The New York Convention||The Turkish International Private and Procedural Code|
|Under Turkish law The New York Convention is applied to arbitral awards which are granted in the contracting state of the convention and related to a commercial dispute.||Where a party to the arbitration is not a contracting state or the New York Convention is inapplicable due to the reservations of Turkey, then the rules provided under Article 60 and following of the Turkish International Private and Procedural Code applies.|
What are the Requirements for the Recognition and Enforcement of Foreign Arbitral Awards under Turkish Law?
- The award must be issued in a foreign country.
- The award must be binding and finalized under the governing law or the law of state where it was granted
- The award cannot violate the main principles of the public order and general ethics of Turkish legal system.
- The award must be issued in a matter which is not under the exclusive jurisdiction of the Turkish courts.
- The award must be issued in compliance with the defendant’s rights of defence.
- The existence of an original and valid arbitration agreement, or arbitration clause on a reciprocal basis between the Republic of Turkey and the state where the foreign judgement is rendered or a de facto practice or a provision of law enabling the authorization of the execution of final decisions given by a Turkish court in that state.
Competent Court: It is regulated that the competent court to give a verdict on the recognition and enforcement of foreign arbitral award is the Commercial Court of First Instance at the domicile of defendant, unless the territorial jurisdiction of such court may be mutually determined by parties pursuant to contractual terms. In case of the absence of domicile, the defendant’s habitual residence, and in the absence thereof, the court at the location of the property subject to the enforcement shall have jurisdiction and be the competent court.
Which documents shall be attached to the petition when requesting the enforcement of the foreign arbitral award?
These following documents with authenticated copies in the number of the opposing parties must be supplied;
- Duly authenticated original award or a duly certified copy thereof;
- The original or duly certified copy of the arbitration agreement or arbitration clause thereof.
- If the documents mentioned above are not in in Turkish), the applicant shall provide a Turkish notarized (or approved by a diplomatic or consular agent) official sworn translation of these documents.
Trial Procedure: The simple trial procedure is applied in the process of examining and concluding an application for recognition and enforcement of a foreign arbitral award. Within the scope of this procedure, only pleading and response petitions can be filed by the parties and no further proceeding regarding exchange of petitions take place. The litigation process continues with a hearing in which the parties ‘ claims are evaluated. In the event that the case pertained to the enforcement of a foreign arbitral award is rejected by the first instance court as a result of the trial, this decision can be appealed at the higher court.
In which situations may the court refuse to recognise and enforce a foreign arbitral award?
The competent court shall refuse the request for the recognition and enforcement of foreign arbitral award upon the existence of the following situations stipulated under the IPPC, where:
- an arbitration agreement is not concluded or an arbitration clause is not incorporated into the main agreement,
- one of the parties was incapacitated; or the arbitration agreement or arbitration clause is legally invalid,
- one of the parties was not duly defended through the arbitral process,
- the party, against which enforcement is sought, has not been duly notified related to the appointment of arbitrator or arbitral tribunal or has not been present during trial,
- The composition of the arbitral tribunal or the arbitral procedures violates the arbitration agreement or the law to which the agreement is subjected and/or the law of the country where the award is granted,
- The foreign arbitration award is beyond the scope of the arbitration agreement between the parties
- the award has not yet become binding or finalised,
- the arbitral award violates general ethics or public order,
- the applicable Turkish laws do not enable the dispute to be solved through arbitration.
In conclusion, foreign arbitral awards which are recognized and enforced by the competent courts are enforced same as the awards given by Turkish Courts. In case of the enforcement decision granted by the court becomes final and binding, the plaintiff will be able to commence execution proceedings in execution offices in Turkey.
Nilsu Sertoğlu, Attorney At Law