Introduction
International commercial arbitration has become a preferred dispute resolution mechanism for cross-border business transactions due to its neutrality, efficiency, and enforceability. Turkey, as a key player in global trade, has established a robust legal framework for the enforcement of international commercial arbitration awards. The enforcement process is governed primarily by the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (“New York Convention”) and the Turkish International Arbitration Law No. 4686 (“TIAL”). This essay explores the enforcement of international commercial arbitration awards in Turkey, the legal framework, procedural requirements, and potential challenges faced in the process.
Although there are different practices regarding the enforcement of disputes where the seat of arbitration is determined as Turkey under the Code of Civil Procedure and the International Arbitration Law, such awards do not require separate recognition and enforcement before Turkish courts. However, if the seat of arbitration is outside Turkey and the award is to be enforced in Turkey, the arbitral award must be recognized and enforced before Turkish courts.
What is Recognition and Enforcement?
Recognition and enforcement is a legal mechanism generally applied when a court decision issued in one country is to be enforced or used in another country. It can be sought not only for court judgments but also for arbitral awards rendered in a country other than the enforcement country. A recognized or enforced foreign court decision or arbitral award is executed as if it were rendered by Turkish courts.
Recognition applies to decisions that do not contain an obligation to perform but only establish a determination. In contrast, if a decision orders the transfer of something from one party to another, enforcement is required. An enforcement decision inherently includes the element of recognition. Since arbitral awards typically contain orders for performance, enforcement is generally more relevant; however, it is also possible to seek only recognition. Given that recognition and enforcement share procedural similarities, they are usually sought together.
Legal Framework for Enforcement
The New York Convention
Turkey became a party to the New York Convention in 1991, with two key reservations: reciprocity and commercial disputes. The reciprocity reservation means that Turkey enforces awards only from other contracting states of the Convention. The commercial reservation limits enforcement to disputes considered commercial under Turkish law.
The New York Convention provides a uniform and straightforward mechanism for enforcing foreign arbitral awards. Under Article V of the Convention, recognition and enforcement of an award may only be refused on limited grounds, such as procedural irregularities, violation of due process, lack of valid arbitration agreement, or public policy concerns.
Turkish International Arbitration Law (TIAL)
TIAL, enacted in 2001, aligns with the United Nations Commission on International Trade Law (UNCITRAL) Model Law. It applies to arbitrations where a foreign element exists and parties have agreed to arbitration in Turkey. The law complements the New York Convention by providing domestic rules for enforcement.
Additionally, the Turkish Code of Civil Procedure No. 6100 (“TCCP”) applies in cases where arbitration agreements do not fall under TIAL’s scope. Together, these legal instruments create a comprehensive regime for the enforcement of international commercial arbitration awards.
Procedural Aspects of Enforcement
The enforcement of foreign arbitral awards in Turkey requires judicial approval, and parties must file an enforcement lawsuit (“exequatur”) before Turkish courts. The procedural steps are as follows:
Application to the Competent Court: The enforcement petition is submitted to the competent commercial court of first instance.
Required Documentation:
- The original or certified copy of the arbitral award
- The original or certified copy of the arbitration agreement
- A certified Turkish translation of both documents
Judicial Review: The court reviews the award in light of the New York Convention and TIAL. Enforcement may be refused if:
- The arbitration agreement is invalid
- The award was issued beyond the arbitrator’s jurisdiction
- The party against whom enforcement is sought was not properly notified
- The award contradicts Turkish public policy
If the court grants enforcement, the arbitral award is treated as a Turkish court judgment and can be executed accordingly.
Recent Developments and Trends
Turkey continues to modernize its arbitration framework to promote investor confidence. Reforms in the judicial system aim to expedite enforcement proceedings. Additionally, Turkish courts increasingly adopt arbitration-friendly interpretations, reflecting a pro-enforcement stance aligned with international standards.
Arbitration Centers in Turkey
Turkey hosts several arbitration centers that facilitate the resolution of international disputes:
- Istanbul Arbitration Centre (ISTAC): Established in 2015, ISTAC is Turkey’s leading arbitration institution, offering services for both domestic and international disputes. It has its own set of arbitration rules and provides fast-track arbitration options.
- Union of Chambers and Commodity Exchanges of Turkey (TOBB) Arbitration Council: Focuses on resolving commercial disputes and supports arbitration among Turkish businesses and international parties.
- Istanbul Chamber of Commerce (ITO) Arbitration Center: Provides arbitration services tailored to commercial disputes within the business community.
Conclusion
The enforcement of international commercial arbitration awards in Turkey is well-regulated under the New York Convention and TIAL. While procedural challenges and public policy objections remain concerns, Turkish courts have demonstrated a growing commitment to upholding international arbitration principles. As Turkey strengthens its legal framework and judicial efficiency, it is likely to further enhance its position as a favorable jurisdiction for arbitration enforcement in international commerce.
Companies based in Ankara and Istanbul are generally more familiar when it comes to initiating arbitration proceedings. In this regard, if the opposing party is domiciled in Ankara, enforcement proceedings will be initiated before the Ankara courts, making it more advisable to work with Ankara law offices.
International commercial arbitration proceedings can be conducted in different languages, with English and Italian being among the commonly preferred ones. To ensure the protection of your rights, it would be beneficial to work with lawyers who are proficient in English or Italian and have experience in arbitration. Ankara Law office employ competent lawyers who can assist you in these matters.