Pursuant to Article 50 of Law No 5718 on Private International Law and Procedural Law (the "IPPL"), in order for arbitral awards rendered in a foreign country to be enforceable in Turkey, the award must be enforced by filing an enforcement action before the relevant court. One of the controversial issues that frequently arises in enforcement proceedings is whether the court fees should be fixed or pro-rata. In this newsletter, the issue of fees in the enforcement of foreign arbitral awards will be evaluated within the framework of the practice, the decisions of the Court of Cassation and the doctrine.

THE LAW ON FEES

Pursuant to Article 3 of Law No 492 on Fees (the "Law No 492"), judgment and writ fees for the execution of arbitral awards are calculated according to the nature of arbitral awards. Pursuant to the same article, cases that are required by law to be settled by arbitration, as well as foreign arbitral awards, are subject to the same fees. As a result, the article's requirements concerning fees also apply to the enforcement of a foreign arbitral ruling. However, due to a lack of a consensus about the legal nature of enforcement actions, there are often varying practices among court decisions regarding the fees (lump sum or proportional) to be charged for enforcement actions.

That being said, Article III – "Decision and judgment fee" of Tariff No (1) of Law No 492 has been amended by Law No 6278 on the Amendment of Certain Laws for the Improvement of the Investment Environment, which entered into force in 2016. With this amendment, arbitration proceedings were excluded from the application of pro-rata fees. However, it is not clearly stated whether this provision also covers the enforcement of foreign arbitral awards, since the exemption of court fees only relates to arbitration proceedings and does not mention enforcement. This has led to hesitation as to whether the fees are required in enforcement proceedings1 and resulted in there being no consistent practice regarding the fees to be charged for the enforcement of foreign arbitral awards.

SCHOLARS' VIEWS

The predominant view in the doctrine is that a lump sum fee should be charged for the enforcement of a foreign arbitral award. Due to the principle of révision au fond, no proportional fee should be charged in lawsuits filed for the enforcement of foreign arbitral awards. Indeed, the principle of révision au fond requires the judge to examine only whether the arbitral award satisfies the conditions for enforcement, without going into the merits of the dispute. In the absence of any obstacle to enforcement, the foreign arbitral award will be enforced. It is widely accepted in the doctrine that the enforcement action is not an action for performance, but an action for a declaratory judgement, and is therefore subject to a lump sum fee. Since the parties will already have paid fees during the arbitration proceedings, it would be unfair for them to pay pro-rata fees again in a case filed for the enforcement of the arbitral award.2

The basis of this view is Article 3 of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the "New York Convention"), to which Turkey is a party. Article 3 states that the enforcement of foreign arbitral awards cannot be subject to more onerous conditions than domestic arbitral awards and no judicial fees can be charged. This provision in the New York Convention has been interpreted to mean that only lump sum fees should be charged for the enforcement of foreign arbitral awards.3

COURT DECISIONS REGARDING LUMP SUM – PRO RATA FEES

The type of fees for the enforcement of foreign arbitral awards is not expressly regulated by the law, meaning that the courts have followed different practices for a long time. Prior to the 2016 amendment, the Court of Cassation regularly held in its decisions that the enforcement of foreign arbitral awards necessitated a pro-rata fee.4 At the same time, however, the same court issued some decisions stating that lump sum fees must be charged.5

With a decision6 rendered in 2019, the Court of Cassation General Assembly of Civil Chambers (the "General Assembly") stated that "Since it is regulated that no pro-rata fee shall be charged for arbitral awards rendered in Turkey, it should be accepted that no pro-rata fee shall be charged for the enforcement of foreign arbitral awards. However, since this regulation is only related to pro-rata fees, a lump sum fee shall be charged". Various chambers of the Court of Cassation have rendered decisions in the same direction and it has now become common practice for the courts to request lump sum fees.

However, despite the decision of the General Assembly, some regional courts of appeal persist in charging pro-rata fees for the enforcement of foreign arbitral awards.7

Given the determinative nature of the enforcement action, the 2016 amendment to the Law on Fees and the 2019 decision of the General Assembly, we are of the opinion that no pro-rata fee should be charged for the enforcement of foreign arbitral awards. Therefore, in cases filed for the enforcement of foreign arbitral awards, the courts must develop a consistent case law regarding the court fees to be charged.

Footnotes

1. Akıncı, Z. (2018). Current Developments in the Recognition and Enforcement of Foreign Court and Arbitral Awards. On İki Levha Publications

2. Ruhi, A. C. (2019). Recognition and Enforcement of Foreign Arbitral Awards under the 1958 New York Convention. On İki Levha Publications

3. Deynekli, A. (2014). Problems in the Recognition and Enforcement of Foreign Arbitral Awards in Turkey. Journal of Dokuz Eylül University Faculty of Law, 16 (Special Issue). 105-122.

4. Court of Cassation 15th Civil Chamber decision numbered E. 2016/935, K. 2016/1312, dated 1 March 2016; Court of Cassation 15th Civil Chamber decision numbered E. 2015/1055 K. 2015/1740, dated 6 April 2015; Court of Cassation 19th Civil Chamber decision numbered E. 2014/11188 K. 2015/8132, dated 2 June 2015

5. Court of Cassation 11th Civil Chamber decision numbered E. 2015/3987 K. 2015/10984, dated 26 October 2015

6. Court of Cassation General Assembly of Civil Chambers decision numbered E. 2017/930 K. 2019/812, dated 27 June 2019

7. 16th Civil Chamber of the Istanbul Regional Court of Appeal decision numbered E. 2017/3494 K. 2019/2686, dated 9 December 2019; 14th Civil Chamber of İzmir Regional Court of Appeal decision numbered E. 2019/2762 K. 2022/27, dated 12 January 2022; 31st Civil Chamber of Ankara Regional Court of Appeal decision numbered E. 2022/579 K. 2022/836, dated 04.10.2022

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.