TRANSPORT LAW

ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN TURKEY

Yasar Ozturk

Attorney At Law

The recognition and enforcement of foreign court judgments and awards are regulated by the Act Regarding International Private Law and Procedure, Act Number 5718, enacted on 27 November  2007 superseding the Act Number 2675, dated 20.05.1982 . Turkish Courts  recognize and enforce foreign judgments and arbitral awards under the provisions of abovementioned Act Number 5718. The requirements of granting an exequatur for a foreign judgment or arbitral award are stipulated in the Articles 50-63 of the said Act. We must state that recognition and enforcement are distinctive concepts. Therefore some requirements are not sought for recognition while they are sought for the enforcement process by the judge.  

I – Enforcement of non-New York Convention awards under the Private International Law and Procedural Law Act (PILA) 

Enforcement of non-New York Convention awards which are the ones made in countries not party to the New York Convention is proceeded according to the provisions of the Articles 60-62 of  the PILA.  Article 1(2) of  PILA states that the provisions of  international conventions to which the Republic of Turkey is a party are reserved. We can say that the PILA gives priority to international conventions ratiified by Turkey with regards to the enforcement of foreign arbitral awards. The Act Number 5718 ( the new PILA) superseding the former Act brought in some new stipulations putting the Act in consistence with the New York Convention. The PILA previously required that only final and enforceable  foreign arbitral awards should be subject to enforcement, the amended current Act requires that final and enforceable or “binding” foreign arbitral awards shall be subject to enforcement.[Art.60(1)]. Lodging the petition for enforcement and review : Under Article 60(2) the enforcement of foreign arbitral awards shall be requested by a petition from the civil court of  first instancemutually designated by the parties to the award in writing. In the absence of  such an agreement between the parties, the competent court at the domicile of  the party in Turkey against whom the enforcement is sought  shall have the jurisdiction . If the defendant does not have his domicile in Turkey or  in case of the absence  of the domicile, the defendant’s habitual residence, and in the absence thereof, the court at the location of the property subject to enforcement shall have jurisdiction. The party requesting the enforcement of the foreign arbitral award shall attach the following documents with authenticated  copies in the number of the opposing parties: 

  • The original or duly authenticated copy of the arbitration agreement or clause,
  • The original or duly authenticated copy of the final and enforceable, or binding arbitral award,
  • The duly authenticated translations of the documents listed under paragraphs (a) and (b) above. (Article 61)

Grounds of refusal of the enforcement of foreign arbitration award(Article 62): Article 62 of the PILA provides the grounds for refusal of enforcement which are similar to those of the New York Convention. Article 62 of the PILA stipulates that the court will refuse the enforcement of the foreign arbitral award on the following grounds; 

  • In case no arbitration agreement was ever entered into nor any arbitration clause was put in the  contract,
  • In case the arbitral award is violation of common ethics or public order,
  • In case the dispute subject of the foreign arbitral award is not arbitrable according to Turkish law,
  • In case  the party against whom the award is sought to be enforced, was not duly represented in compliance of the procedures before the arbitral tribunal and has not afterwards clearly accepted the concluded proceedings in his absence,
  • In case  the party against whom the award is sought to be enforced, was not duly notified of the appointment of arbitrators accordingly or deprived of the possibilities of claim and defenses,
  • In case the arbitration agreement or clause is considered invalid under the applicable law agreed by the parties, in absence of such an agreement on this subject, under the law the country where the award was made,
  • In case the appointment of the arbitrators or the procedure applied by the arbitrators is in violation of the agreement of the parties, in absence of such an agreement in case it violates the law of the country wherein the award was made,
  • In case the arbitral award is on an issue not covered by arbitration agreement or clause or is excessing the limits of the agreement or clause, on this excessing part,
  • In case the arbitral award has not been  final and enforceable or binding according to the law to which it depends on or law of the country wherein it was made or according to the procedure it is subject to or in case it has been annulled by the competent authority of the place where the award was made.

The party against whom enforcement is sought shall bear the burden of proof  on the facts mentioned under the sub-paragraphs d, e, f, g, h and i. 

II – Enforcement of New York Convention awards 

Turkey ratified New York Convention with two reservations. The Convention is applied only; 

  • to the recognition and enforcement of awards rendered in the territory of another contracting state and,
  • to the disputes arising out of  legal  relationships, whether contractual or not, that are considered commercial under Turkish law.

Article 1(1) of the New York Convention  stipulates “..It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought”. Accordingly arbitral awards consisting a foreign element in Turkey with respect to Article 2 of the International Arbitration Act of Turkey can be  enforced in Turkey according to the New York Convention. New York Convention’s article 5 sets out the grounds on which a state court may refuse to enforce an arbitral award. The grounds set out under Article 5 must be established by the party against whom the enforcement is sought.