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Authors: Gizem Ak Yürek, Serdarhan Güler
Arbitration is a method of resolving disputes related to private law that serves as an alternative to judicial procedures, where the parties, in accordance with their will or due to mandatory provisions stemming from specific agreements, submit the dispute to be resolved by an independent and impartial arbitrator or arbitration board. Although the competent arbitration board may rule a decision as a result of an arbitration agreement between the parties, foreign arbitral awards rendered outside of Türkiye can only be enforced in Türkiye through the process of recognition and enforcement. In other words, for a foreign arbitral resolution to be enforced in Türkiye, it must first be recognized and enforced through a court procedure. In this article, we will explain this enforcement process along with its legal basis.
- Legal Basis for the Enforcement of Foreign Arbitral Awards
The regulations regarding the enforcement of foreign arbitral awards are set in Articles 60 to 62 of the Private International Law and Civil Procedure Code (“IPPL”). However, pursuant to Article 90/5 of the Constitution and Article 1/2 of IPPL, the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Resolution, to which Türkiye is a party, will primarily apply. Therefore, it can be stated that only arbitral awards that do not involve within the scope of the New York Convention may be enforced under the provisions of IPPL.
The applicable provisions, regardless of the nationality of the arbitrators, the citizenship or nationality of the parties, arbitral awards rendered in another country that is a party to the New York Convention, or awards issued in Türkiye that involve foreign elements but are not subject to the mandatory rules of the Civil Procedure Code (CPC) or International Arbitration Law (IAL) by the parties’ will, will be enforced according to the New York Convention. Therefore, it would not be incorrect to state that the majority of enforcement procedures today are carried out in accordance with the New York Convention[1].
- Procedural Rules in the Enforcement of Foreign Arbitral Awards
The New York Convention refers to the procedural rules of the country where the enforcement action is to be filed. Therefore, the competent and authorized court, the type and amount of collateral and charge, the form of the proceedings, and the appeals process will be determined according to the procedural law of the country where the enforcement action is initiated.
According to Turkish law, the party requesting the enforcement of a foreign arbitral award must apply to the authorized commercial court of first instance with the necessary documents (as stipulated in Article 61 of IPPL and Article IV of the New York Convention) (Law No. 5235[2], Article 5). Enforcement actions, in the absence of an agreement on jurisdiction between the parties, should be filed in the court of domicile of the losing party in Türkiye, or, if such residence does not exist, in the place where the party is residence. If neither of these applies, the enforcement action should be filed in the court located where assets subject to enforcement are found. If none of these locations exist, it will be stated that there is no competent court in Türkiye to enforce the relevant arbitral award. However, if it has not been filed in the authorized jurisdiction, it is essential for the defendant to raise an objection to jurisdiction within the prescribed time limit[3].
Following the application by the applicant, the request will be examined and decided in accordance with the simplified procedure. Additionally, the decision ruled in the case is subject to appeal. An appeal or cassation petition filed against the relevant decisions will automatically suspend the execution of the decision[4]. Furthermore, the foreign arbitral award enforced by Turkish courts must be executed within 10 years from the date the enforcement decision becomes final (Article 39 of the Enforcement and Bankruptcy Law).
- Grounds for Refusal of the Enforcement of Arbitral Awards
In an enforcement action concerning an arbitral award, the Court will not examine the substance of the case. According to the New York Convention, the Court may refuse to enforce the arbitral award if:
– The parties to the arbitration agreement are under some incapacity, or the agreement is invalid under the law it is subject to, or failing any indication thereon, under the law of the country where the award was made;
– The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case;
– The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration,
– The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place;
– The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
If any of these conditions are proven by the party against whom the award was given, the court may refuse the enforcement of the foreign arbitral award. In addition:
– If the dispute that the arbitral award concerns pertains to a matter that, under the law of the country where recognition or enforcement is sought, cannot be resolved through arbitration (the matter is not arbitrable);
– If the recognition or enforcement of the arbitral award is contrary to the public policy of the country where recognition or enforcement is sought, the judge may refuse to enforce the award ex officio.
Under IPPL , the grounds for refusal of enforcement are quite similar. A key difference between the two legal frameworks is that under IPPL if the circumstances outlined for refusal of enforcement exist, the judge has no discretion in deciding whether to reject the enforcement request, while under the New York Convention, even if one of these grounds is present, the judge has discretion to accept enforcement[5]. In addition, there are some other differences, but overall, the two legal frameworks contain parallel regulations[6].
- Enforcement of Foreign Arbitral Awards Without a Judgment and the Provisional Attachment Procedure
Under usual circumstances, the party in favor of a foreign arbitral award must have the award enforced in Türkiye and then proceed to enforce the judgment by initiating an execution proceeding based on the decision (execution with judgment). However, in some cases, this procedure may be bypassed, allowing the party to initiate an execution proceeding without a judgment (non-judgment execution proceedings), relying on the foreign arbitral award as the basis. Nevertheless, the procedure of execution proceeding and the subsequent annulment of objection process is a subject of significant legal debate[7].
Additionally, it is important to note that the applicant party also has the possibility of applying for a precautionary attachment procedure. In some of its rulings, the Court of Cassation has held that the condition of enforcement of a foreign award is not required for granting a precautionary attachment – which is a provisional measure – regarding a debt established by a decision of a foreign court or arbitral tribunal[8]. Although there are decisions contrary to this, it cannot yet be said that a consistent case law has been established on this issue[9].
Conclusion:
– Foreign arbitral awards rendered outside of Türkiye can only be executed in Türkiye upon being enforced. As explained above, arbitral awards that do not fall within the scope of the New York Convention will be enforced in accordance with the provisions of IPPL. Therefore, the applicability of these two legal frameworks should be evaluated in the context of the recognition and enforcement application process.
– Enforcement actions should be filed in the competent court of the place of domiciliation of the losing party in Türkiye, or, if no domiciliation exists, in the place where the party is residenced. If neither of these applies, the case should be filed in the court located where assets subject to enforcement are found.
– In enforcement proceedings, the court shall not be entitled to conduct an examination on the merits of the case. It may only conduct a limited review with respect to the grounds specifically enumerated in the law.
[1] Cemal Şanlı, Emre Esen, İnci Ataman-Figenmeşe, Milletlerarası Özel Hukuk, 10th Edition, Beta Yayınları, 2023, İstanbul, p. 825-826.
[2] 5235 sayılı Adlî Yargı İlk Derece Mahkemeleri İle Bölge Adliye Mahkemelerinin Kuruluş, Görev Ve Yetkileri Hakkında Kanun (Law No. 5235 on the Establishment, Duties and Powers of the Courts of First Instance of the Judicial Judiciary and the Regional Courts of Appeal)
[3] Şanlı/ Esen/ Ataman-Figenmeşe, ibid., p. 832.
[4] Şanlı/ Esen/ Ataman-Figenmeşe, ibid., p. 833.
[5] Ziya Akıncı, Milletlerarası Tahkim, 6th Expanded and Updated Edition, Vedat Kitapçılık, İstanbul, 2021, p. 649-650.
[6] Akıncı, ibid., p. 643.
[7] Cemre Tüysüz, “Tenfiz Edilmemiş Yabancı Hakem Kararları Açısından İlamsız İcra Takiplerine ve İhtiyati Hacze İlişkin Bazı Meseleler”, 41(2) PPIL 701, 2021. https://doi.org/10.26650/ppil.2021.41.2.997201
[8] Ruling of the 6th Civil Chamber of the Court of Cassation, Merits No. 2014/3906, Decision No. 2014/4941, dated 14.04.2014: “The regulation states: ‘A preliminary injunction or precautionary attachment decision rendered by the court upon the request of one of the parties before or during the arbitration proceedings shall automatically expire once the award of the arbitrator or arbitral tribunal becomes enforceable, or if the case is dismissed by the arbitrator or arbitral tribunal.’ According to this article, since it is possible to decide on a precautionary attachment before or during the arbitration proceedings, it is also possible to decide on a precautionary attachment after the award has been rendered. In this regard, while the court should have evaluated the plaintiff’s request for precautionary attachment by considering the conditions set forth in Article 257 of the EBL (Execution and Bankruptcy Law), it was not appropriate to decide on the rejection of the request based on written justification.” (Note: The original text of the ruling is in Turkish and has been translated from the original by us.)
[9] Ruling of the 15th Civil Chamber of the Court of Cassation, Merits No. 2014/7100, Decision No. 2015/365, dated 26.01.2015: “In the concrete case, it is understood that the decision of the […] Court, which has not been enforced, does not yet possess the status of a court decree (judgment) under Turkish Law. Following this admission, if the question of whether the debt has become due (i.e., whether it is exigible) needs to be discussed; there is no debt tied to a specific maturity date between the parties, and the existence of the debt is not certain and is of a nature that requires trial. Therefore, one cannot speak of a debt that has fallen due. Even if it were considered a debt that has not yet fallen due; although conclusive evidence is not sought regarding any of the matters listed among the conditions for precautionary attachment for debts not yet due, no evidence has been submitted showing that the conditions in Article 257/2 of the Law—which may be considered justified and reasonable—have been met. In this situation, rather than accepting the objection regarding the precautionary attachment whose conditions were not met and deciding to lift the attachment, the rejection of the objection as a result of a misinterpretation was not correct, and the decision had to be reversed.” (Note: The original text of the ruling is in Turkish and has been translated from the original by us.)