The possibility of a foreign arbitral award having legal effects and being subject to enforcement by execution with a judgment in Turkey arises through the recognition and enforcement of the foreign arbitral award in the country. In Turkish law, the recognition and enforcement of foreign arbitral awards are regulated within the scope of the Rules of Conflict of Laws (hereby will be referred to ask “MÖHUK”) numbered 5718.
A General Overview on Recognition and Enforcement of Foreign Arbitral Awards in Turkey
In accordance with Article 90 of the Constitution of the Republic of Turkey and Article 1 of Law No. 5718, the provisions of international agreements to which Turkey is a party must be applied as a priority. Therefore, the international agreement to which Turkey is a party and which will be primarily applied to ensure the recognition and enforcement of foreign arbitral awards is the New York Convention dated 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
In this context, in the event of a recognition and enforcement request, if there is an arbitration award rendered in countries of foreign states that are parties to the New York Convention, the provisions of the New York Convention will be applied. If, on the other hand, arbitration awards rendered in countries of foreign states that are not parties to the New York Convention are involved, the provisions of MÖHUK (5718 numbered Law) will be applied.
Court Procedures on Recognition and Enforcement of Foreign Arbitral Awards in Turkey
According to Article 60 of Rules of Conflict of Laws No. 5718 (MÖHUK), the enforcement of a foreign arbitral award shall be requested by a petition from the Court of First Instance mutually designated by the parties in writing.
In the absence of such an 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 such domicile, the person’s place of residence, and in the absence thereof, the court at the location of the property that may be subject to execution.
As per Article 61 of Rules of Conflict of Laws No: 5718 and Article IV of 1958 numbered New York Convention, the party requesting enforcement of a foreign award shall attach the following documents to their petition:
- The original or duly certified copy of the arbitration agreement or arbitration clause,
- The original or duly certified copy of the arbitral award that is final and executable or binding upon the parties,
- Translations and duly certified copies of the documents listed above.
The petition for the request for enforcement shall be served upon the opposing party and the service letter shall also contain the date of the hearing (Article 55 of the Rules of Conflict of Laws No. 5718).
While filing the recognition and enforcement lawsuit, half of the proportional fees (it was ¼ of the proportional fees before) must be deposited by the Plaintiff to the court. The proportional fees to be paid to the court is 6,831% TL of the value of the claim. On the other hand, it is important to check if the filing party’s country is a party to the Hague Convention on Civil Procedure dated 1954 or not. If the filing parties country is a party to the Hague Convention, mentioned party will not be required to deposit a security when filing the request for recognition and enforcement of the foreign arbitral award.
In the recognition and enforcement lawsuit, the defendant may assert that the conditions for enforcement are not met, that the foreign court decision has been partially or completely fulfilled, or that there are grounds for dismissal of the case under the provisions of the Rules of Conflict of Laws No. 5718 and Article V of the New York Convention.
If the filing party is a party to the New York Convention. If a foreign arbitral award has been rendered in a foreign state that is a party to the New York Convention and the relevant dispute is deemed a ‘commercial dispute’ under Turkish laws, the provisions of the New York Convention will be applied in the enforcement of such arbitral awards.
The law prohibits a substantive review of arbitral awards in the enforcement of foreign arbitral awards (revision au fond). In accordance with this rule, the enforcement court cannot conduct a review of the substance of the arbitral award in the enforcement of foreign arbitral awards; it only assesses whether the arbitral award fulfils the conditions stipulated by the law. These conditions are also specified in Article 62 of the 5718 numbered Law (MÖHUK) and the relevant articles of the New York Convention.
The court shall dismiss the enforcement request of a foreign arbitral award,
- If as stated in Article 62/1-a, an arbitration agreement is not executed or arbitration clause is not included in the main agreement,
- If as stated in Article 62/1-b, the arbitral award is contrary to public morality or public order,
- If as stated in Article 62/1-c, t is not possible to settle the dispute subject to the arbitral award by way of arbitration under Turkish law,
- If as stated in Article 62/1-ç, one of the parties has not been duly represented before the arbitrators and has not expressly accepted the acts concluded thereafter,
- If as stated in Article 62/1-d, the party against whom the enforcement of the arbitral award is requested has not been duly notified of the appointment of arbitrators or has been deprived of his/her right to make claim and defence,
- If as stated in Article 62/1-e, the arbitration agreement or clause is invalid pursuant to the governing law designated by the parties, or in the absence thereof, pursuant to the law of the place where the arbitral award is rendered,
- If as stated in Article 62/1-f, the appointment of the arbitrators or the procedure applied by the arbitrators violates the agreement of the parties, or in the absence thereof, the law of the country where the arbitral award is rendered,
- If as stated in Article 62/1-g, the arbitral award has been rendered on an issue that is not included in the arbitration agreement or arbitration clause or exceeds the limits of the agreement or the clause -only the exceeding part-,
- If as stated in Article 62/1-h, the arbitral award is not final, enforceable, or binding under the governing law or the governing procedure or the law of the country where it is rendered or it is annulled by the competent authority in the place where the award is rendered.
If none of the above conditions are present, the court will decide to recognize and enforce the foreign arbitral award.
If the dispute is a commercial dispute, the competent court for the enforcement of foreign arbitral awards will be the commercial court of first instance. Foreign judgements that have been granted enforcement decisions are executed in the same manner as judgements issued by Turkish courts. Therefore, if a recognition and enforcement decision is issued, the reasoned decision can be executed after the decision is finalized by starting ‘enforcement procedures with judgement’. Decisions on the acceptance or rejection of the enforcement request can be appealed by the defendant. If an appeal is made, the judgement cannot be enforced until the decision becomes final.
The lenght of recognition and enforcement proceedings depends on the complexity of the matter but a rough estimate would be that it takes between 7 to 20 months. The appeal stage may also take around one to two years depending on the workload of the relevant court.
Our Services Related to Recognition and Enforcement of Foreign Arbitral Awards in Turkey
In the ever-expanding global marketplace, businesses and individuals engage in international transactions that often necessitate dispute resolution through arbitration. As businesses thrive across borders, the importance of recognizing and enforcing foreign arbitral awards becomes paramount.
In a world where legal disputes transcend borders, Mesci Law Firm as a law firm in Turkey stands as a beacon of legal excellence, offering top-tier recognition and enforcement lawsuit services for foreign arbitral awards in Turkey. With a team of dedicated legal professionals, an in-depth understanding of the Turkish legal system, and a commitment to client satisfaction, Mesci Law Firm is your trusted partner in unlocking justice on the global stage. Our legal services includes all of the below stages:
- Analysing of an arbitral award and providing legal consultancy on enforcement of the arbitral award.
- Advising a personalized legal strategy on enforcing a foreign arbitral award in Turkey including any applications to be made in order to secure subject of the arbitral award through interim measures such as provisional seizure against the defendants.
- Preparation and filing of the lawsuit petition and evidence list in order to make the foreign arbitral award recognized and enforced in Turkey.
- Following up lawsuits filed for recognition and enforcement of arbitral awards in Turkey and representing clients in mentioned lawsuits.
- Appealing the decision of the court of first instance.
