It is necessary to file a lawsuit in Turkish courts for the recognition and enforcement of foreign arbitration awards in Turkey. Even if the parties have embraced the arbitration and resolved the dispute through arbitrators, the arbitral award must pass through the Turkish judicial system and it should be reviewed in terms of whether it meets the necessary conditions for enforcement to be applicable in Turkey. This is a result of national sovereignty. Otherwise, legal scrutiny for compliance with the law cannot be carried out regarding arbitration decisions, leading to potential violations of rights. This article will examine the legal basis, conditions, and procedures on how to enforce arbitration awards in Turkey, and provide answers to frequently asked questions.
Legal Basis for the Recognition and Enforcement of Foreign Arbitral Awards in Turkey
The legal basis for the recognition and enforcement of foreign arbitral awards is the Law on Private International Law and Procedure and the 1958 New York Convention. Turkey is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, allowing applications for recognition and enforcement in Turkey for awards rendered in countries that are also parties to the Convention.
Conditions for the Recognition and Enforcement of Foreign Arbitration Awards in Turkey
The recognition and enforcement of foreign arbitral awards are subject to certain conditions, which can be classified under the Law on Private International Law and Procedure and the conditions in the New York Convention.
Conditions in the 1958 New York Convention
According to the Law Approving the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards Turkey has declared that it will apply the Convention only to awards made in a country that is a party to the Convention on the basis of reciprocity; additionally, it will apply the Convention to disputes deemed commercial under its domestic law, whether contractual or non-contractual.
1) Principle of Reciprocity
Turkey applies the Convention only to awards made in countries that are parties to the Convention based on reciprocity. Therefore, arbitration awards made in a country not party to the Convention cannot be subject to recognition and enforcement of awards in Turkey. The exception to this is bilateral agreements. For countries that are not members of the New York Convention but have bilateral recognition and enforcement agreements with Turkey, awards rendered in those countries can be recognized and enforced. Therefore, if there is no agreement between Turkey and the country where the award was rendered, seeking enforcement of that award in Turkey is not possible.
2) Arising from Legal Relationships
Recognition and enforcement of foreign arbitral awards in Turkey will only be applicable if the award arises from a legal relationship. This means that arbitration awards on criminal law or purely administrative law issues cannot be enforced in Turkey. The New York Convention also allows states to place restrictions on the subject matter in their accession to the Convention. Therefore, Turkey has restricted the recognition and enforcement of foreign arbitral awards to legal relationships, in accordance with the Convention.
3) Applicability to Commercial Disputes
In order to enforce arbitral awards in Turkey, they should be related to commercial disputes. Whether a dispute is commercial or not will be determined according to the Turkish Commercial Code. Matters regulated in the Turkish Commercial Code and all transactions and acts related to commercial enterprises are considered commercial. Therefore, matters regulated by the Commercial Code, transactions related to commercial enterprises, matters concerning the obligations of a trader, and contracts considered commercial for one party to the legal relationship are also considered commercial for the other party. Therefore, foreign arbitral awards on such matters may be applicable in Turkey. On the other hand, arbitral awards on non-commercial matters, such as family law issues, cannot be subject to recognition and enforcement in Turkey.
4) Other Conditions
According to the New York Convention, each state party must recognize the validity of foreign arbitral awards and decide on the enforcement of the award by the procedural rules applied in the place where the award was made. In this regard, state parties will not impose significantly stricter conditions or higher court fees for the recognition and enforcement of arbitral awards than those applied to domestic awards. Turkey has aligned its legislation on the recognition and enforcement of foreign arbitral awards with the Convention and has not imposed conditions that are more restrictive than those for domestic arbitration, except for the translation requirement. Moreover, the Convention specifies that a certified copy of the translation of the foreign award and the contract between the parties must be submitted.
In comparison to the New York Convention, if a state party introduces favorable provisions in its domestic law or bilateral agreements, those provisions will apply. Therefore, if there is a bilateral agreement between Turkey and another state, and that agreement contains provisions that facilitate recognition and enforcement compared to the New York Convention, the provisions of the bilateral agreement will apply. It is recommended to conduct legal research to take advantage of favorable provisions.
Conditions in the Law on Private International Law and Procedure
According to Article 60 of the Law on Private International Law and Procedure, foreign arbitral awards that have become final and enforceable or binding on the parties can be enforced. Therefore, the finality and enforceability of the award are essential conditions for enforcement under this law. Foreign arbitral awards that have not become final according to the chosen arbitration rules by the parties cannot be recognized and enforced in Turkey.
1) Finality of the Arbitral Award
For enforcing foreign arbitral awards in Turkey, the arbitral award must have become final. The finality will be determined according to the arbitration rules chosen by the parties. If an application for recognition and enforcement is made before the award becomes final, the application will be rejected on procedural grounds.
2) Enforceability of the Arbitral Award
The recognition and enforcement of foreign arbitral awards in Turkey requires the award must have gained the capability for enforcement. An award that is not enforceable cannot be sought for recognition and enforcement in Turkey. On the other hand, seeking recognition and enforcement of a decision that has not yet become binding for the parties as if it were binding can also lead to various problems. Therefore, the legislator has stipulated that non-binding arbitral awards cannot be subject to recognition and enforcement.
3) Absence of Grounds for Refusal
Turkish courts conduct various examinations for the recognition and enforcement of foreign arbitral awards in Turkiye. If certain deficiencies are identified in the examinations, the court may decide not to enforce the award or enforce it partially. The court will reject the request for recognition and enforcement of foreign arbitral awards in Turkiye if the following grounds for refusal exist:
a) No arbitration agreement or no arbitration clause in the main agreement,
b) The arbitral award is contrary to public morality or public order,
c) Arbitration is not possible under Turkish laws for the dispute covered by the arbitral award,
d) One of the parties was not represented before the arbitrators in accordance with the procedure and did not explicitly accept the proceedings later,
e) The party against whom the enforcement of the arbitral award is requested was not informed about the arbitrator's selection in due course or was deprived of the opportunity to assert claims and defenses,
f) The arbitration agreement or clause is void according to the law to which it is subject, or, in the absence of an agreement, according to the law of the country where the arbitral award was rendered,
g) The selection of arbitrators or the procedure applied by arbitrators is contrary to the agreement of the parties or, in the absence of such an agreement, to the law of the country where the arbitral award was rendered,
h) The arbitral award relates to a matter not included in the arbitration agreement or clause, or exceeds the limits of the agreement or clause,
i) The arbitral award is not final or enforceable under the law it is subject to or the procedure it is subject to, or has been canceled by the competent authority of the place where it was rendered.
How to Enforce Foreign Arbitral Awards in Turkey
The recognition and enforcement of foreign arbitral awards involve not only awards rendered by arbitrators chosen by the parties but also awards rendered by permanent arbitration institutions chosen by the parties.
The procedures to be followed for the recognition and enforcement of foreign arbitral awards are regulated in the Law on Private International Law and Procedure. The party seeking recognition and enforcement must submit certain documents. If there is a separate arbitration agreement, the party will submit that agreement or, if there is an arbitration clause in an existing contract, they will submit that contract to the court. The submission of original documents is not mandatory; duly-certified copies can also be submitted. Alongside the arbitration agreement, the party must submit the award along with evidence that it has become final and enforceable, such as an endorsement. Whether the award has become final is determined by the arbitration rules chosen by the parties. For example, if the parties have designated an appellate mechanism or if the chosen arbitration rules provide for it, recognition and enforcement can be sought after the appeal.
If the arbitration agreement and award are in a language other than Turkish, notarized translations of these documents will also be required. Untranslated petitions and evidence are not accepted by Turkish courts. In such cases, the parties must have Turkish legal translation done and have the documents notarized.
The court may decide to partially or completely enforce or reject the enforcement of the arbitral award in Turkey. If recognition and enforcement of foreign arbitral awards are granted, the award can be executed in Turkey as if it were a decision of a Turkish court. Decisions on the recognition and enforcement of foreign arbitral awards can also be appealed to higher courts like decisions of local courts.
The rules regarding the enforcement of foreign arbitral awards apply to recognition as well. Therefore, recognition is not subject to separate legal rules. All documents required for enforcement will also be required for recognition.
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Competent Court for the Enforcement of Foreign Arbitral Awards in Turkey
The enforcement of foreign arbitral awards is requested through a petition to the primary court agreed upon in writing by the parties. If there is no such agreement between the parties, the court at the place of residence of the party against whom the decision is rendered or, if there is no residence, the court where the assets that can be subject to execution are located will have jurisdiction. Therefore, if the debtor is in Istanbul, it would be beneficial to work with a lawyer in Turkey.
Frequently Asked Questions
CONCLUSION
The recognition and enforcement of foreign arbitral awards in Turkey are regulated by the New York Convention and the Law on Private International Law and Procedure. The old translation of the international convention has been updated and largely incorporated into the Law on Private International Law and Procedure. Additionally, bilateral agreements can also find application in the recognition and enforcement of foreign arbitral awards. As seen, there are multiple sources to be applied for the recognition and enforcement of arbitral awards. It is crucial to meticulously examine the process and refer to the correct sources for a swift and effective resolution of the arbitral award. Therefore, it is strongly recommended to seek assistance from an international law firm in Turkey to manage the process.
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.
