Turkey: Relationship Between Arbitrability And Public Policy In Light Of The Decisions Of The Court Of Cassation

The issue of arbitrability defines whether a dispute may be resolved through arbitration by the free will of the parties, instead of through the state courts. The disputes that are held to be arbitrable are set forth under the Code of Civil Procedure numbered 6100 ("CCP"), with regard to domestic arbitration, and in the International Arbitration Act numbered 4686 ("IAA"), with regard to disputes having a foreign element.

In this newsletter article, we analyze the relationship between arbitrability and public policy in light of the decisions of the Court of Cassation.

In General

The issue of arbitrability manifests itself as the most important condition for validity pertaining to the substance of the arbitration agreement1. The issue of whether a dispute is arbitrable is related to the applicable law. As a result, a dispute that is held to be non-arbitrable in a given jurisdiction may be resolved through arbitration in another jurisdiction.

As the issue of arbitrability is also grounds to refuse recognition and enforcement of arbitral awards, the recognition and enforcement of an arbitral award given on a non-arbitrable matter would not be possible. As a result, the arbitrability of the dispute that the parties aim to resolve through arbitration is of great importance.

In terms of domestic arbitration, pursuant to Article 408 of the CCP, disputes pertaining to rights in rem on immovable property, or disputes arising out of issues that do not depend on the will of the parties are not arbitrable. In terms of international arbitration, arbitrability is regulated under Article 1/4 of the IAA. This article is in parallel with Article 408 of the CCP, and sets forth that the IAA shall not be applied to those disputes pertaining to rights in rem on immovable property located in Turkey, and to the disputes that are not subject to the will of the parties. As both of these provisions set forth that the disputes pertaining to rights in rem on immovable property are not arbitrable, the disputes that relate to issues such as property, usufruct, easement and liens may not be resolved through arbitration under Turkish law. The disputes that are not subject to the will of the parties cover issues upon which the parties do not have freedom of contract. These issues are either regulated through mandatory rules, or are not subject to the will of the parties, based on their characteristics. For instance, criminal law issues and disputes on enforcement and bankruptcy law are held to be non-arbitrable. In addition, the Court of Cassation opines that the disputes pertaining to determination of lease payments, evacuation of property, tax disputes, and labor law disputes are non-arbitrable2.

The issue of arbitrability is analyzed under two different categories, namely, procedural law and substantive law3. The arbitrability pertaining to substantial law provides that the parties may dispose of the subject matter through their free will. Accordingly, if procedures, such as settlement, acceptance and waiver are possible concerning the subject matter, the dispute is arbitrable in terms of procedural law. A dispute is arbitrable in terms of substantive law in the event that the parties to the dispute may dispose of the right that is subject to dispute.

The Relationship between Arbitrability and Public Policy

Whether a dispute is arbitrable or not is determined in accordance with public policy and the political and economic policies of the relevant country4. Accordingly, there is a close link between arbitrability and public policy. On the other hand, arbitrability is not the same issue as public policy, and conducting a review of public policy during the review pertaining to arbitrability is insufficient.

Indeed, the necessity of analyzing these two issues, separately, manifests itself in terms of recognition and enforcement proceedings. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), ("New York Convention") regulates these two issues under different provisions. Article V(2) of the New York Convention distinguishes between the issue of arbitrability and public policy. Subsection (a) of the relevant article sets forth that recognition and enforcement of an arbitral award may be refused if the subject matter of the difference is not capable of settlement by arbitration under the law of that country. On the other hand, the subsection (b) sets forth that the enforcement may be refused if it would be contrary to the public policy of that country.

On the other hand, as generally accepted by the Court of Cassation, as the issues pertaining to public policy may not be subject to the free disposal of the parties, it would not be possible to conclude an arbitration agreement on issues pertaining to public policy5. Accordingly, the refusal of arbitration agreements on issues pertaining to public policy manifests itself as a practice of the Court of Cassation.

This perception of the Court of Cassation setting forth that issues unrelated to public policy are arbitrable is subject to criticism by the Turkish doctrine. Accordingly, in the doctrine, it is stated that the acceptance of a parameter, such as public policy, which does not find its justification under codified sources, has survived until this day as a manifestation of the distrust in arbitration6.

The Precedents of the Court of Cassation

In many precedents of the Court of Cassation in which the issue of arbitrability has been analyzed, a review on public policy has been conducted. As a matter of fact, in some of its decisions, the Court of Cassation makes use of statements implying that the matters not pertaining to public policy are arbitrable7.

In a decision of the General Assembly on the Unification of Judgments dated 1994, an arbitration agreement is defined as an agreement whereby natural or legal persons leave the resolution of their disputes that are not subject to public policy, which have arisen or are to arise, to one or several arbitrators8.

One of the interesting decisions of the Court of Cassation on this matter concerns a dispute upon which the arbitrators decided on an issue of value added tax ("VAT") during arbitration proceedings. In the relevant arbitration proceedings, the arbitrators decided that the claimant shall be entitled to the right of recourse from the other party with regard to VAT paid by the claimant. In the enforcement phase concerning this arbitral award, at the end of the enforcement lawsuit, the court of first instance admitted the request of enforcement9. On the other hand, the Court of Cassation, on its review, reversed the decision of the court of first instance, stating that the arbitral award concerns a taxation issue, and, as a result, it relates to public policy and it is subject to administrative jurisdiction, and it, therefore, reversed the decision of the court of first instance.

This decision is open to criticism as the relevant arbitral award does not directly relate to tax issues, but to the right of recourse of the tax amounts paid by one of the parties from the other party. This issue is among the issues that the parties may freely dispose of, and it may not be asserted that this is a public policy issue.

In another decision, the Court of Cassation decided that the disputes pertaining to determination of lease payments are not arbitrable. In its analysis, the Court of Cassation made reference to the criterion of whether the parties may conclude an agreement of their free will on the subject matter of dispute and, in addition, it asserted that the matter of determination of lease payments is not subject to the parties' free will, as it concerns public policy and, therefore, it is not possible to resolve this dispute through arbitration10.


Arbitrability is one of the conditions of validity pertaining to the substance of the arbitration agreement, and is important not only in terms of validity of the arbitration agreement, but also in terms of recognition and enforcement lawsuits. Accordingly, the determination of whether a dispute is arbitrable or not is important. In many of its decisions, the Court of Cassation has a practice to accept that disputes are non-arbitrable, if the subject of dispute is of public policy. Indeed, one of the elements that determine arbitrability is public policy. However, the criteria of public policy is not found in the legal provisions that regulate this issue of arbitrability. Accordingly, it is important not to ground the issue of arbitrability solely on public policy, and not to give rise to confusion between these two concepts, which are distinct grounds for refusal of recognition and enforcement of arbitral awards.


[1] Ercüment Erdem, Tahkim Anlaşması, Prof. Dr. Hamdi Yasaman'a Armağan, İstanbul 2017, p.189 ("Erdem").

[2] Erdem, p.189.

[3] Burak Huysal, Milletlerarası Ticari Tahkimde Tahkime Elverişlilik, İstanbul 2010, p.197 ("Huysal").

[4] Erdem, p.189.

[5] Huysal, p.199.

[6] Huysal, p. 203.

[7] "On the other hand, the parties to an agreement may choose to resolve the disputes not subject to public policy, and which are subject to their own will, through arbitration." The Decision of the 11th Civil Chamber of the Court of Cassation dated 12.04.2005 and numbered 2004/6686 E., 2005/3600 K. Source: www.kazanci.com.

[8] Decision of the General Assembly of the Unification of Judgments of the Court of Cassation dated 28.01.1994 and numbered 1993/4 E., 1994/1 K. Source: www.kazanci.com.

[9] The decision of the Istanbul 3rd Commercial Court dated 25.07.2005 and numbered 2004/922 E., 2005/646 K. Source: Huysal, p.198.

[10] Decision of the 3rd Civil Chamber of the Court of Cassation dated 02.12.2004 and numbered 2004/13018 E., 2004/13409 K. Source: www.kazanci.com.

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”

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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.