Turkey: State Courts To Determine Effectiveness Of Turkey’s International Arbitration Law

With the introduction of the International Arbitration Law in July 2001 (the "Arbitration Law"), the Turkish legislator clearly expressed its intention to promote arbitration as a means of dispute resolution. Parties had their frights about filing arbitration proceedings in Turkey thanks to the Turkish courts’ tendency to review the dispute on its merits as well as procedure. For foreign investors, this usually meant excluding Turkey as the venue for arbitration, regardless of whether or not it would be the most convenient venue for the proceedings, relying on the fact that Turkey is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention"). The Arbitration Law is intended to eliminate those frights and is expected to scale back the intervention by state courts to levels commensurate with international best practice.

Scope of the Law

The purpose of the Arbitration Law is to regulate the procedures and rules of international arbitration. It is applicable to disputes where the seat of arbitration is Turkey and there is a foreign element involved or where the Arbitration Law is selected by agreement of the parties, the arbitrator, or the arbitral tribunal.

What the Law Brings

The Arbitration Law was modelled after the principles of the UNCITRAL Rules of Arbitration, and provides for only one legal action for challenging an arbitral award, i.e. setting aside proceedings. Thanks to the Arbitration Law, the parties no longer need to file a separate suit for enforcing the award. However, either party may apply to a local court for setting it aside. The principal advantage of the Arbitration Law in this respect is that the possible grounds for setting aside proceedings have been set forth in a numerus clausus manner. These grounds were inspired by the New York Convention, and exclude the possibility of any appeal on merits. The Turkish Parliament’s general justification –published by the Parliament in connection with the draft law in 2001- states that the primary objective of the Arbitration Law is to ensure a speedy dispute resolution process with as little intervention by state courts as possible.

Grounds for Setting Aside and Impossibility of Examining Awards on their Merits

Turkish scholars have been consistently clear on the point that the state courts cannot review an arbitral award on its merits, if that award was rendered within the framework of the Arbitration Law. Thus far the Court of Appeals has not ruled otherwise. According to the Turkish Parliament’s justification for the Arbitration Law, state courts cannot intervene on any grounds outside the scope of those set forth under Article 15 of the Arbitration Law. The only remedy for a party that is not satisfied with the arbitral award is an action for setting aside (i.e. annulment). Under the Arbitration Law, the reasons for annulment are enumerated and these reasons are exhaustive. For instance, the award can be annulled if the court determines, among others, that (i) the procedure in selection or appointment of arbitrators set forth in the parties’ agreement or stipulated in the Arbitration Law is violated; or (ii) the award is not issued within the agreed upon or legal term for arbitration. The Arbitration Law expressly prevents the judge from going into the merits of the dispute when the award is evaluated as the result of the annulment action.

Application of the Arbitration Law to Old Contracts

The Court of Appeals did create some confusion in 2003, when it held that the Arbitration Law was not applicable to arbitration proceedings that were pending at the time of its enactment in July 2001. Under Turkish law, disputes must, in principle, be reviewed in light of the substantive legal rules that are in force at the time of occurrence of the transaction in question; whereas if a procedural law is amended or a if new law related to procedure is introduced, then that law must be applied immediately. The rationale behind this principle is that the legislator introduces new procedural rules in order to make dispute resolution more efficient.

The Court of Appeals’ decision resulted in the application of Turkey’s Civil Procedural Code (according to the interpretation of which an award can be appealed on its merits). This approach of the Court of Appeals attracted heavy criticism by scholars, who drew attention to the fact that such narrow interpretation of the Arbitration Law would essentially hinder its effectiveness and remove its appeal. Consequently, in 2004, the Court of Appeals clarified its view, stating that the provisions of the Arbitration Law must be applied to any international arbitration with a seat in Turkey, regardless of when the proceedings were initiated and whether or not such arbitration was pending at the time of entry into force of the Arbitration Law.

In light of the Court of Appeals rulings, it is clear that any potential controversy or debate on this matter would be avoided by including an express provision in the Terms of Reference (as per Article 10(E) of the Arbitration Law) stating that the Arbitration Law shall apply to the resolution of the dispute. The lack of such provision in the Terms of Reference was the triggering point of the first Court of Appeals decision. If the parties agree on the Terms of Reference that the Arbitration Law is applicable to their arbitration, then the Arbitration Law would govern the dispute.


Recent legislative efforts reveal that Turkey is determined to establish the legal basics for an arbitration friendly environment. The practice also shows that Turkish courts are letting go of their fears regarding arbitration, allowing liberalization trends to find their way into practice in this area of law as well. The Arbitration Law seems to eliminate the previous concerns of foreign investors, by addressing the problems regarding the applicability, appeal process and local courts’ examination of the merits of a dispute and it is expected that future Court of Appeal decisions will confirm this. Indeed, Turkey is taking strong steps to create a better environment for international investment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions