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THE ENFORCEMENT PROCEDURE OF ARBITRAL AWARDS IN TURKEY

November 2009 - Litigation & Dispute Resolution. Legal Developments by ADMD Law Office .

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Foreign judgments including the ones from arbitration courts or tribunals become recognizable under Turkish law via separate judgment of the Turkish Courts called ‘recognition and enforcement decisions’(in Turkish the procedure is named ‘tenfiz’). Following such decisions by Turkish Courts, the foreign judgment or arbitral award becomes enforceable in Turkey as a Turkish Court decision and any monetary debt may be collected accordingly through execution filings dependent on the execution (bailiff) offices of the Courts.

The main legislation on the enforcement of arbitral awards in Turkey are International Private and Procedure Law No.5718 dated December 12, 2007 (hereinafter referred to as ‘IPPL') and Convention on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter referred to as ‘New York Convention' and/or ‘Convention') which is ratified by Turkey on July 2, 1992 and entered into force on September 30, 1992.

In respect of enforcement of foreign arbitral awards in Turkey, provisions of the IPPL are applicable only if the award is decided by a non-contracting (signatory) State to the New York Convention mentioned above. It shall also be noted that there are no significant differences between the rules of enforcement provided in IPPL and the provisions of the New York Convention with the last amendments at IPPL dated December 12, 2007.

For the purpose of enforcement of final awards by parties, it is necessary to bring an action to the Civil Court of first instance. The territorial jurisdiction of such Court may be determined by parties with contractual terms, if not the defendant's habitual residence or place of defendant's assets may constitute the territorial jurisdiction of Court.

According to Article 4 of the New York Convention and Article 61 of the IPPL, at the time of the application of recognition and enforcement decision, the applicant shall provide the following documents to the Turkish Court:

  1. The original or a duly certified copy of the arbitration agreement or the arbitration clause,
  2. The duly authenticated original award or a duly certified copy of the formal enforceable final arbitral of such a decision having binding force as an arbitration awards, (hence, a request in relation to awards which do not finally settle the dispute may be denied by the Court),
  3. If the documents mentioned above are not in the official language of the Country in which the award is relied upon (here in Turkish), the applicant shall provide a (Turkish) notarized (or approved by a diplomatic or consular agent) official sworn translation of these documents.

Under Article 62 of the IPPL and the Article 5 of the New York Convention, recognition and enforcement of an arbitral award may be rejected if the competent authority (the Court) in Turkey, where recognition and enforcement is sought, finds that:

  1. There is an absence of an arbitration agreement or an arbitration clause;
  2. The subject matter of the dispute is not capable of settlement by arbitration under the laws of Turkey (such as matrimonial or civil status cases);
  3. The recognition or enforcement of the award would be contrary to the public policy and general ethics of Turkey (such as matters of civil status again or military related issues).

In principle, the recognition and enforcement of an arbitral award may also be rejected at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, with proof that:

a) The party, against whom the award is invoked, was not properly presented through the arbitration process (due to the lack of procedure; not their own discretion);

b) The party, against whom the award is invoked, was not given proper notice to the appointment of the arbitrator or the arbitration proceedings or was otherwise unable to present his case;

c) The party to the arbitration agreement was under legal incapacity or the said agreement is not valid under the law to which the parties have subjected or fails any indication thereon;

d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or with the law to which the agreement is subjected and/or the law of the country where the arbitration took place;

e) The part of the award that deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or that contains decisions on matters beyond the scope of the submission to arbitration;

f) The award submitted for recognition and enforcement has not yet become binding on the parties, or has been set aside or suspended by a competent body.

Therefore, even if a party does not object to the arbitral procedure and in some cases, even if they participate in such procedures, if there is no written agreement among parties of the dispute stating the authorization of an arbitral tribunal or proceeding is not present in form of an agreement or as an arbitration clause in another agreement, then the arbitral award may not be recognized or enforced. However the Courts in Turkey accept that the contractual agreement between the parties can be settled down in form of letters or telegraphs as well and stipulate that the written format is not of an issue but the fact that it is written and accepted by parties at any time is sufficient for the purposes of recognition and enforcement.

The examination of the recognition and enforcement request by the Turkish Courts is limited to determination of the fact that whether the arbitral award and the arbitral proceedings meet the conditions under the IPPL or the New York Convention. In Turkish legal practice, if trial Courts determine the case in relation to its merits, then such decision would be ultra vires and the Appellate Courts may overrule the decision of recognition and enforcement accordingly.

As an exception to this above mentioned general rule; if the foreign arbitral award violates the main principles of the public policy and general ethics of Turkish legal system, the Courts may rule the award regarding the merits as well if one of the parties of the dispute also sought for relief on those merits.

After the examination of the enforcement request, if the Court denies the request the arbitral award will be unenforceable in Turkey. The Court may also decide partial enforcement of the arbitral award or recognize the arbitral award entirely eligible for enforcement. Consequently, the requesting party may pursue the execution of the foreign award in accordance with Turkish laws and legal procedures.

According to article 57 of the IPPL, the decision of the first instance Court concerning the enforcement of the foreign arbitral awards may be submitted to the appeal before the Appellate Courts. In such case, the enforcement of the arbitral award will be suspended until the appellate procedure is concluded.

By Ayça Bayburan ADMD Law Office,

www.admdlaw.com

Istanbul TURKEY