The provisions of the Law on International Private and Civil Procedure Law No. 5718 (MOHUK) are applied in our local legislation regarding the recognition and enforcement of foreign arbitral awards. In addition to the provisions of MOHUK No. 5718, the New York Convention No. 1958, to which Turkey is a party, also contains regulations regarding the recognition and enforcement of foreign arbitral awards. The New York Convention No. 1958 is related to the recognition and enforcement of the arbitral award in any state other than the one in which it was issued.
Although the provisions of MOHUK No. 5718 and the New York Convention No. 1958 have parallel regulations for the recognition and enforcement of foreign arbitral awards, there are some differences in practice. However, in accordance with the provisions of both the MOHUK and the New York Convention, the recognition of the foreign arbitral award in a country other than the country where it was issued is subject to certain conditions.
Conditions on Recognition and Enforcement of Foreign Arbitral Awards:
- The decision must be a foreign arbitral award.
- The arbitral award must be final, enforceable, and binding on the parties.
- There must be an arbitration agreement or arbitration clause between the parties regarding dispute resolution (if pursuant to article 62 of MOHUK, there is no arbitration agreement between the parties or if an arbitration clause is not included in the main agreement, the court rejects the enforcement request.)
- The party losing the arbitral case must be aware of the arbitration proceedings.
- The subject of the dispute must be suitable for arbitration.
- The arbitral award requested to be recognized must not be contrary to the public order of the state to be recognized.
On the other hand, when signing the New York Convention, the parties to the convention have the right to make reservations on the implementation of foreign arbitral awards. When signing the Convention, Turkey made a reservation that if the dispute, which forms the basis of the arbitral award, is of a COMMERCIAL NATURE, it will be possible to make an application. For this reason, the New York Convention can only be applied to arbitral awards given in relation to disputes arising from commercial transactions and relationships.
Procedure for Recognition and Enforcement of Foreign Arbitral Awards:
Competent Court: In its established practices, the Supreme Court accepts that the Commercial Court of First Instance is responsible for the enforcement of the foreign court decision. Since the enforcement cases of foreign arbitral awards and the subject of these cases are not in the nature of "commercial business" or "commercial lawsuit," the essence of the subject cannot be discussed in enforcement cases; therefore, the court will not make a judgment here due to its expertise, it will only determine whether the conditions for enforcement exist. Therefore, whether the dispute is commercial or not, the court responsible for recognizing and enforcing foreign arbitral awards is the Civil Court of First Instance. Pursuant to Article 60/2 of the MOHUK regarding the enforcement of foreign arbitral awards, it has been decided that the competent court is the Court of First Instance as well.
After enactment of the Law No. 6545 amending Law No. 5235, regardless of whether the dispute is in the nature of commercial business or lawsuit in the recognition and enforcement of foreign arbitral awards, it should be accepted that the competent court is the Commercial Court of First Instance.
Competent Court: Competency rules for the enforcement of foreign arbitral awards are regulated in article 60/2 of MOHUK. First of all, the competency in the place determined by the parties in the contract is checked; otherwise, the court in the defendant's place of residence is authorized.
The competent court for recognizing and enforcing foreign arbitral awards is the court where the parties have agreed in writing. In the absence of such agreement, the competent court shall be the court at the domicile of the person in Turkey against whom the award is rendered, or in the absence of domicile, the person's place of habitual residence, and in the absence thereof, the court at the location of the property that may be subject to execution. (MOHUK article 60/2). If the defendant has no property in Turkey that may be subject to execution, the Turkish courts will have no jurisdiction over recognizing and enforcing foreign arbitral awards. However, in cases where the competency is not certain, the court does not ex officio consider the objection of authority. The defendant must make the first objection to the competency within the response time.
Security Payment: If the plaintiff requesting the recognition of the foreign arbitral award is a foreigner, then s/he has to deposit the security determined by the court pursuant to article 48 of MOHUK. If there is a bilateral or multilateral agreement between the country of residence or residence of the plaintiff and Turkey on the exemption from the security payment, the security will not be requested. Considering the regulation in CCP article 87, the amount and form of the security can be freely appreciated by the court. In practice, in disputes that can be measured in money, it is seen that the courts determine the security rate as 10% of the dispute subject to the case.
Required Documentation for Recognition and Enforcement of Foreign Arbitral Awards:
Documents to be requested pursuant to article 61 of MOHUK and article 4 of the New York Convention:
A party requesting enforcement of a foreign arbitral award attaches the copies of the following documents to its petition, depending on the number of the counterparties:
- The original or duly certified copy of the arbitration agreement or arbitration clause,
- The original or duly certified copy of the arbitral award,
- Translations and duly certified copies of the documents listed above.
Due to the nature of the work, the petition requesting enforcement must be written in the official language of the state, where enforcement of the award is requested. If the arbitral award or the arbitration agreement is not written in the official language of the state where enforcement is requested, it is translated by a sworn translator and certified at the notary office.
The judicial procedure regarding the recognition and enforcement of a foreign arbitral award is bound by the provisions of the CCP. Article 119 of the CCP numbered 6100 includes elements that must be present in the content of a lawsuit petition. In the lawsuit that is substituted for the recognition of the foreign arbitral award, the petition of application must have the elements specified under Article 119 of the CCP. The incompleteness of the matters specified in the relevant provision in the petition of the lawsuit and its failure to complete within the given period causes duly dismissal of the lawsuit.
Ancillary Attachment Request in the Course of Recognition and Enforcement of Arbitral Awards:
Considering the decisions of the Supreme Court and the doctrine, it is possible to request an ancillary attachment regarding a foreign arbitral award that has not yet been recognized in our country. Before recognizing the foreign arbitral award, the Supreme Court deems it appropriate to request an ancillary attachment to protect the creditor's debt without waiting for the recognition and enforcement to be concluded if the subject of the dispute is based on debt.
Pursuant to the decree of İstanbul BAM, 13. HD., E. 2020/353 K. 2020/328 T. dated 5.3.2020;
"... Pursuant to Article 355 of CCP, the appeal examination has been performed limited to the reasons stated in the petition of appeal and in case of violation of public order, as ex-officio. The request is an ancillary attachment request based on the foreign arbitral award, for which an enforcement decision has been made but not finalized due to being appealed. The court decided to reject the request for ancillary attachment, and an application of appeal was made against the decision by the attorney who requested the ancillary attachment. The dispute is at the point of whether the decision given by the court is appropriate and whether the ancillary attachment conditions have been met. As the court admitted and stated in the jurisprudence of the 19th Civil Chamber of the Supreme Court w/Docket No. 2015/1656, Decision No. 2015/4049, the jurisprudence of the 23rd Civil Chamber of the Supreme Court w/Docket No. 2016/6937, Decision No. 2016/4665, and jurisprudence of the 6th Civil Chamber of the Supreme Court w/Docket No. 2014/3906, Decision No. 2014/4941; although the enforcement decision cannot be executed before it is finalized, there is no legal obstacle for requesting an ancillary attachment based on this decision. Article 257 of the EBL No. 2004 regulates the conditions of the ancillary attachment. Accordingly, the creditor of a monetary debt that has not been pledged and is due may have an ancillary attachment on movable and immovable properties, receivables, and other rights owned by the debtor or held by a third party on behalf of the debtor. It has been seen that the conditions in the EBL 257/2 are not required for an ancillary attachment decision pursuant to EBL 257/1; that it is sufficient to provide approximate proof in order to make an ancillary attachment decision; and accordingly, it has been seen that the approximate proof conditions regarding the existence and maturity of the receivable have been met with the documents submitted in the annex of the petition by the court; therefore, due to the occurrence of the conditions, an ancillary attachment decision should have been made in return for the security pursuant to EBL 257; for this reason, it was not appropriate to reject the request; consequently, the reason for the appeal of the applicant's attorney has been deemed appropriate..." As can be seen in the said decision, it is possible to request an ancillary attachment for a receivable arising from a foreign arbitral award.
As explained above in general terms, the recognition of a foreign arbitral award in our country is bound by the provisions of the CCP. The court in Turkey does not have the authority to evaluate the merits of the disputed issue. The competent court only examines whether the conditions for recognition and enforcement are fulfilled. The foreign arbitral award is subject to only procedural examination in our country and is accepted if it meets the conditions for recognition and enforcement.
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.
