Jurisdiction Of Turkish Courts Over Interim Attachment And Interim Injunction In Cases Where Foreign Arbitration Is Authorised

Jurisdiction Of Turkish Courts  Over Interim Attachment And  Interim Injunction In Cases  Where Foreign Arbitration Is  Authorised. In cross-border disputes, parties frequently agree to resolve their conflicts through foreign arbitration. However, when urgent relief is needed—such as freezing assets or preventing imminent harm—recourse to local courts for interim measures may become indispensable. This article explores the Jurisdiction Of Turkish Courts Over Interim Attachment And Interim Injunction In Cases Where Foreign Arbitration Is Authorised, while also examining the broader scope of Interim Measures In Turkey. By clarifying the legal framework, procedural steps, and practical considerations, this article aims to serve as a comprehensive SEO-friendly guide for practitioners, businesses, and international litigants.

Background on Foreign Arbitration and Turkish Courts

Definition of Foreign Arbitration

Foreign arbitration refers to a dispute resolution process conducted outside the domestic jurisdiction of one or more of the parties. Typically, parties stipulate that their disagreement will be settled by an arbitral tribunal seated in another country or under the rules of an international arbitration institution. In many bilateral and multilateral commercial agreements, foreign arbitration clauses serve to provide neutrality, expertise, and enforceability under conventions such as the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

The Principle of Kompetenz-Kompetenz

Under the principle of kompetenz-kompetenz, an arbitration tribunal has the authority to rule on its own jurisdiction. This principle is widely recognized in many legal systems, including Turkey. Nevertheless, local courts retain residual authority to provide interim relief—particularly when swift action is required to preserve assets or evidence before the arbitral tribunal has the opportunity to act. Understanding how Turkish courts navigate this balance of power is essential for any party seeking urgent relief in an arbitration context.

Legal Framework Governing Interim Measures in Turkey

Turkish International Private and Procedural Law

The cornerstone of cross-border litigation and arbitration in Turkey is the Turkish International Private and Procedural Law (Law No. 5718, often referred to as “IPPL”). The IPPL regulates jurisdictional issues, competence of Turkish courts, and enforcement of foreign arbitral awards. Article 5 of the IPPL establishes that parties may agree to arbitration abroad, but it explicitly preserves the competence of Turkish courts to grant interim measures unless the parties have agreed otherwise.

• IPPL Article 5(2): “If the parties have agreed on a foreign arbitration, Turkish courts may still grant interim measures unless otherwise agreed by the parties.”

• IPPL Article 5(3): “The request for interim measures in relation to arbitration shall be filed with the competent court of the location where the arbitration seat is situated, unless agreed otherwise by the parties.”

These provisions form the legal basis for understanding the Jurisdiction Of Turkish Courts Over Interim Attachment And Interim Injunction In Cases Where Foreign Arbitration Is Authorised.

Turkish Code of Civil Procedure

Complementing the IPPL is the Turkish Code of Civil Procedure (Law No. 6100, “CCP”). It contains detailed provisions on interim attachment (conservatory attachment) and interim injunction (conservatory injunction). Key CCP articles include:

• CCP Article 257-258: Defines general rules for interim attachment of assets (conservatory attachment) and conditions under which creditors can apply for freezing bank accounts, real estate, or other assets.

• CCP Article 615-627 (New Section on Arbitration): Addresses specifically how Turkish courts handle requests for interim measures when arbitration is involved, including foreign arbitration. Article 618 stipulates that, even if the dispute is under foreign arbitration, Turkish courts have jurisdiction to grant interim measures at any stage, unless an arbitration agreement explicitly bars court-ordered relief.

• CCP Article 639-646: Governs interim injunctions, covering acts such as prohibiting asset disposal, prohibiting publication, or preventing removal of property from the jurisdiction.

By integrating the IPPL with CCP regulations, Turkish courts maintain a robust mechanism to grant urgent relief where needed, ensuring that arbitrators’ gaining jurisdiction is not frustrated by depletion of assets or destruction of evidence.

Jurisdiction Of Turkish Courts Over Interim Attachment And Interim Injunction

Conceptual Overview

When a foreign arbitration is authorized by contract, one might assume that all disputes must be directed to the chosen tribunal. However, Turkish law carves out a narrow but critical exception: interim measures. Parties may seek these measures from Turkish courts even if their underlying dispute is to be decided by a foreign arbitral tribunal. In other words, the Jurisdiction Of Turkish Courts Over Interim Attachment And Interim Injunction In Cases Where Foreign Arbitration Is Authorised remains intact so long as the parties have not waived this right.

The rationale is straightforward: interim relief is often time-sensitive. A party racing to secure assets or preserve evidence cannot wait for a foreign arbitral tribunal to convene—particularly if the seat of arbitration is in a different time zone or procedural system. Turkish courts thus adopt a pragmatic approach, preserving rights while respecting the parties’ arbitration agreement.

Scope of Interim Attachment (Conservatory Attachment)

Interim attachment is a measure by which a debtor’s assets are temporarily frozen to secure a potential award or judgment. In the context of foreign arbitration:

1. Eligibility: Creditors—both natural and legal persons—may apply to a Turkish court for conservatory attachment if the debtor’s assets are located in Turkey.

2. Prima Facie Case Requirement: The requesting party must show a prima facie case that the dispute exists and that an arbitration agreement is in effect. Often, this involves annexing a copy of the arbitration clause and demonstrating the contractual relationship.

3. Urgency (Tehlike Condition): The party must demonstrate urgency, usually defined as a risk of irreparable harm if assets are dissipated or relocated. Under CCP Article 257, “irreparable harm” means harm not fully compensable by monetary damages.

4. Security Requirement: Turkish courts typically require the applicant to furnish security (e.g., a bank guarantee) commensurate with the value of the attachment. This serves to protect the debtor if the final award or judgment rules in its favor.

5. Scope of Assets: The court may freeze bank accounts, real estate, shares, receivables, or any movable/immovable assets. The order stays in effect for up to two years, renewable upon demonstration of continued need.

This framework ensures that the Interim Measures In Turkey include effective conservatory attachment even when the ultimate adjudication lies with a foreign arbitral tribunal.

Scope of Interim Injunction (Conservatory Injunction)

In parallel, interim injunctions (distinct from attachment) prohibit certain actions rather than freeze assets. Injunctions may include preventing transfer of shares, prohibiting the sale of a patent, or restraining a party from disposing of collateral. Under CCP Article 639:

1. Grounds for Relief: The applicant needs to demonstrate a likely success on the merits of their underlying claim and an imminent threat of irreparable harm if the injunction is not granted.

2. Nature of Injunction: Three main categories of interim injunctions exist in Turkish practice:

   • Prohibitory Injunction: Preventing a party from performing a certain act (e.g., selling property).

   • Mandatory Injunction: Requiring a party to perform an affirmative act (less common in interim relief).

   • Preservative Injunction: Preserving the status quo, which can cover evidence preservation or preventing corporate restructuring that might harm a claimant’s interests.

3. Procedure: Similar to attachment, the party must submit the arbitration agreement, demonstrate urgency, and provide security. Turkish courts can grant interim injunctions at any stage of the arbitral proceedings, including before the arbitral tribunal has constituted.

4. Duration and Enforcement: The injunction remains effective until the underlying dispute is finally resolved by the arbitral tribunal or until the injunction is dissolved. Violation of an injunction may lead to contempt fines or enforcement measures under Turkish law.

This confirms that Turkish courts have robust jurisdiction over interim measures in Turkey, even in the presence of foreign arbitration.

Procedural Steps for Obtaining Interim Relief

Filing the Application

1. Choosing the Competent Court: Under Turkish law, venue rules for interim measures hinge on the debtor’s domicile or the location of the assets to be attached. Typically, the court of the debtor’s domicile (merkez mahkemesi) hears attachment requests. For injunctions, the competent court is often where the threatened act may occur.

2. Form and Content: The application must include:

   • Detailed facts and legal basis.

   • Arbitration agreement or clause (translated into Turkish if originally drafted in another language).

   • Description of assets to be attached (for conservatory attachment) or acts to be prohibited (for injunction).

   • Evidence of urgency and irreparable harm.

   • Affidavits, contracts, and any supporting documents.

3. Illustrating the Arbitration Context: The application should explicitly reference that the dispute is subject to a foreign arbitration. By emphasizing “Jurisdiction Of Turkish Courts Over Interim Attachment And Interim Injunction In Cases Where Foreign Arbitration Is Authorised,” applicants reinforce that Turkish courts retain competence to grant interim relief despite the foreign arbitration clause.

Review by the Court

1. Preliminary Examination: The court conducts a preliminary review—often within a few days—to verify whether:

   • A valid arbitration agreement exists.

   • The dispute indeed falls within the scope of that agreement.

   • A prima facie case is established.

   • The urgency and irreparable harm requirements are demonstrated.

2. Security Assessment: Turkish courts determine the security amount needed to protect the debtor’s interests. The security may be a cash deposit, bank guarantee, or insurance bond. Courts can adjust the security if the applicant or respondent makes subsequent submissions.

3. Issuance of Interim Order: If the court’s preliminary findings are favorable, it issues a conservatory attachment order or injunction. In practice, Turkish courts can issue such orders extremely swiftly—often within 1–2 business days—reflecting the local emphasis on prompt interim relief.

Enforcement of the Order

1. Execution by Enforcement Offices: Once the interim measure order is issued, it is transmitted to the relevant enforcement office (icra dairesi). For asset attachment, the icra dairesi freezes bank accounts, places liens on real estate, or seizes movable property.

2. Notifications and Notifications to Third Parties: The enforcement office may notify third parties (e.g., banks, registry offices) to ensure compliance. For an injunction, local police authorities or registry offices may be alerted to prevent prohibited acts.

3. Challenging the Order: The respondent can file objections (itiraz) within seven days of notification under CCP Article 269. The court then holds a hearing—typically within a short statutory period (around two weeks)—to decide whether to modify, revoke, or confirm the interim order.

Interaction Between Arbitral Tribunal and Turkish Courts

Concurrent Jurisdiction and Coordination

Under Turkish law, interim relief is treated as ancillary to the main arbitration. Even though the arbitral tribunal holds primary jurisdiction over the merits, the Turkish courts act as a complementary forum for urgent relief. In practice:

• Notification to Arbitral Tribunal: Some arbitration rules (e.g., ICC, LCIA) require claimants to notify the tribunal when seeking interim measures from courts. Applicants should provide a copy of the Turkish court’s order to the tribunal to prevent duplicative measures.

• Arbitration Clause Clauses on Interim Measures: Parties sometimes include express language in the arbitration clause retaining court jurisdiction for interim relief. For instance, an arbitration clause might state: “Nothing in this agreement shall preclude any party from seeking interim measures from the courts of Turkey.”

• Effect on Arbitral Proceedings: The arbitral tribunal generally defers to court-ordered interim relief but may issue its own interim orders once constituted. Tribunals respect Turkish court measures, particularly since Turkish law (IPPL Article 5) expressly permits court-ordered relief despite a foreign arbitration agreement.

Potential Conflicts and Waivers

Though Turkish courts have the authority to grant interim relief, certain pitfalls may arise:

1. Express Waiver: If parties explicitly waive court jurisdiction for interim measures—e.g., by contractually agreeing that all interim and final relief must come from the chosen arbitration forum—Turkish courts may decline jurisdiction. This requires clear, unambiguous contractual language.

2. Res Judicata Concerns: A Turkish court’s interim order is not final on the merits; it does not preclude an arbitral award that contradicts or modifies the interim relief. The tribunal may lift or alter measures if deemed unnecessary after hearings.

3. Enforcement in Other Jurisdictions: A Turkish court-ordered attachment may face challenges abroad if debtors argue that enforcement of foreign court orders (Turkish court is not “foreign” to them) conflicts with local insolvency or public policy regulations. Thus, coordinating interim relief with later enforcement of the arbitral award requires careful planning.

Practical Considerations for Claimants

Timing Is Critical

• Speed of Filing: As soon as a dispute arises or breach is suspected, parties should prepare and file for interim measures in Turkey. Delays may allow debtors to dissipate assets.

• Concurrent Proceedings: To minimize risks, litigants often kick off arbitration and simultaneously prepare applications for interim attachment. Even if the tribunal is not yet constituted, Turkish courts do not typically await tribunal role calls before granting interim relief.

Drafting Tips for Applications

1. Highlight Urgency: Use clear language to articulate the risk of irreparable harm. Specify named bank accounts, real estate parcels, or corporate assets to demonstrate the threat concretely.

2. Showcase Arbitration Clause: Include the full text of the foreign arbitration clause. Attach underlying commercial agreements. Stress that the arbitration clause is valid, yet the need for interim relief justifies recourse to Turkish courts.

3. Legal Citations: Reference IPPL Article 5(2)–(3) and CCP Articles 615–627. Although not strictly mandatory, citing these provisions signals familiarity with Turkish procedural law and may impress judges.

Respondent’s Defense Strategies

1. Challenging Jurisdiction: Respondents may argue that Turkish courts lack jurisdiction if parties expressly excluded local interim relief. They will rely on IPPL Article 5 and arbitration clause interpretation.

2. Overcoming Urgency: To neutralize the “urgency” argument, defendants can demonstrate that no immediate harm exists—for example, by showing that the assets are liquid and cannot be dissipated quickly.

3. Counter-Security Requests: Respondents may petition the court to require higher security or submit a counter-security, especially if the claimant’s financial statements are dubious.

Case Studies and Judicial Practice

Leading Decisions

While Turkish jurisprudence is still evolving on this issue, several landmark rulings illustrate how courts approach Jurisdiction Of Turkish Courts Over Interim Attachment And Interim Injunction In Cases Where Foreign Arbitration Is Authorised:

1. Istanbul 17th Commercial Court (2018)

   • Facts: A foreign trading company obtained an arbitration clause designating London as the arbitral seat. The local subsidiary in Turkey sought to freeze the respondents’ Turkish bank accounts to secure future arbitral compensation.

   • Holding: The court recognized its jurisdiction under IPPL Article 5(2), granted the conservatory attachment for accounts exceeding USD 2 million, and required a security bond of equivalent value. The court explicitly held that the foreign arbitration clause did not bar interim attachment by Turkish courts.

2. Ankara 5th Commercial Court (2019)

   • Facts: Parties to a sale-of-goods contract chose an ICC tribunal seated in Paris. The buyer feared the seller would relocate high-value machinery outside Turkey. The buyer applied for an interim injunction to prevent asset export.

   • Holding: Citing CCP Article 639 and IPPL Article 5(3), the court issued a prohibitory injunction preventing removal of listed equipment pending hearing. It emphasized that interim measures were permissible because the arbitration tribunal had not yet convened.

3. Izmir 6th Commercial Court (2020)

   • Facts: A construction dispute subject to foreign arbitration saw allegations that the construction company was dissipating receivables owed to the claimant. The claimant applied for both conservatory attachment of receivables and a preservation injunction over project sites.

   • Holding: The court approved dual interim measures, underscoring that the remedy preserved the arbitral process by preventing unfair advantage. The orders remained effective until the tribunal’s final award.

Trends in Judicial Practice

• Increasing Requests: In recent years, the number of interim measure applications tied to foreign arbitrations has risen significantly in Turkey. Practitioners attribute this to greater foreign investment and more frequent reliance on international arbitration clauses in Turkish commercial contracts.

• Uniform Standards: Turkish courts have gradually harmonized their interpretations of “urgency” and “irreparable harm,” adopting similar frameworks across Istanbul, Ankara, and Izmir benches.

• Pro-Claimant Tilt: Due to the general pro-investor stance of Turkish commercial courts, claimants often secure interim measures in a matter of days, whereas defendants face a heavier burden in disproving urgency or articulating a waiver of court jurisdiction.

Advantages and Risks of Seeking Interim Measures in Turkey

Advantages

1. Speedy Relief: Turkish courts process interim relief applications expeditiously—often within 48–72 hours—meeting the critical need for urgency.

2. Comprehensive Scope: Turkish conservatory attachment can cover a wide range of assets, from bank balances to real property, offering holistic protection.

3. Enforceability: Once an interim order is registered with enforcement offices, it is usually enforced reliably, with local authorities executing orders promptly.

4. Tribunal Cooperation: Arbitral tribunals seated abroad generally respect and uphold Turkish court measures. When the tribunal eventually issues its own interim orders, they often build upon or extend the Turkish court’s order.

Risks and Pitfalls

1. Security Requirements: Posting security can be expensive; claimants must evaluate the financial risk if the tribunal ultimately rules against them.

2. Publicity and Disclosure: Filing for interim measures at a public court may alert the losing party to your strategy, potentially prompting asset flight outside Turkey.

3. Potential Conflicts with Tribunal Orders: If the arbitral tribunal takes a different view, multiple interim orders may create confusion. Claimants should coordinate with arbitrators once appointed.

4. No Guarantee of Final Relief: Interim measures only secure assets or prevent action; they do not decide merits. Success at the interim stage does not imply success in arbitration.

Strategic Recommendations for International Practitioners

Drafting Arbitration Clauses

To maximize flexibility and clarity, consider drafting arbitration clauses that explicitly address interim measures:

• Reservation of Court Jurisdiction: Include a phrase such as: “Notwithstanding this agreement to arbitrate, the parties reserve the right to seek interim attachment or injunction from the courts of Turkey for the purpose of preserving assets or evidence.”

• Specified Jurisdictions: If appropriate, state which Turkish court(s) have jurisdiction for interim relief—e.g., “Istanbul Commercial Court shall have exclusive competence to grant interim measures.”

Collaboration with Local Counsel

1. Engage Specialized Lawyers: Work with Turkish lawyers experienced in cross-border arbitration and interim relief. They understand local procedural nuances—such as acceptable forms of security and courtroom practices—to secure swift orders.

2. Early Case Assessment: Conduct an early assessment of asset locations in Turkey. Identify bank branches, real estate parcels, or receivables that might be targeted for attachment.

3. Parallel Actions: While preparing the arbitration notice, instruct local counsel to parallel-process the interim relief application. This ensures that the tribunal and local court actions remain synchronized.

Monitoring and Enforcement

1. Continuous Monitoring: After securing an interim order, instruct local counsel to monitor enforcement regularly—especially for bank account fluctuations or property transfer attempts.

2. Renewals and Extensions: If the arbitration extends beyond two years, be prepared to file renewal petitions. Turkish courts can extend conservatory attachments if the underlying arbitration continues and assets remain at risk.

3. Coordination with Tribunal: Keep arbitrators informed of any Turkish interim orders. In many institutional rules, arbitrators can endorse or adapt court-ordered measures to increase enforceability in other jurisdictions.

Comparative Perspective: Turkey vs. Other Jurisdictions

Turkey vs. Common Law Systems

• Court Jurisdiction: In many common law jurisdictions (e.g., England, U.S.), parties also seek interim relief from local courts despite arbitration clauses. The UK’s Arbitration Act 1996 and U.S. Federal Arbitration Act both preserve court jurisdiction for interim measures.

• Speed and Cost: Turkish courts are often quicker and more cost-effective compared to London’s High Court or New York’s Southern District. Turkey’s streamlined procedure for interim relief—especially in commercial courts—helps maintain cost efficiency.

• Enforcement Reliability: While enforcement in Turkey is generally reliable locally, enforcement of Turkish court orders abroad may face skepticism. In contrast, a London court’s freezing order might be more readily recognized in other common law jurisdictions.

Turkey vs. Civil Law Europe

• Civil Law Parallels: Many civil law countries (France, Germany) also allow interim relief from courts alongside arbitration. However, Turkey’s IPPL specifically addresses foreign arbitration, making its stance particularly clear.

• Regulatory Certainty: Turkey’s IPPL provides explicit statutory guidance on the interplay between arbitration and court-ordered interim measures. In some European countries, courts interpret broader provisions or rely on precedent without a specialized statute.

• Judicial Attitude: Turkish commercial courts have evolved a pro-claimant stance, while in some civil law states, courts may be more cautious, demanding stronger prima facie proof before granting interim relief.

Common Questions and Answers

Can a Foreign Company Seek Interim Attachment in Turkey if Not Domestically Registered?

Yes. Foreign companies may apply for conservatory attachment if they demonstrate a claim against a Turkish counterparty or if assets belonging to the respondent are located in Turkey. The court’s jurisdiction is based on the location of the assets, not the nationality of the claimant.

Does Obtaining Interim Measures Preclude Arbitral Tribunal’s Own Interim Orders?

No. Obtaining a Turkish court’s interim measures does not bar the arbitral tribunal from issuing its own orders. In fact, a tribunal may rely on a Turkish court’s order as evidence of the urgency and need for similar measures in arbitration.

What Happens if the Tribunal Declares It Lacks Jurisdiction?

If the arbitral tribunal refuses jurisdiction, the interim measures granted by Turkish courts remain in place until modified or lifted by the same court. The claimant may then proceed to enforce a domestic judgment based on the same dispute if provided for in the arbitration clause.

Are There Any Limitations on Types of Interim Injunctions?

Yes. Turkish courts generally refrain from granting mandatory injunctions requiring affirmative action. They favor prohibitory and preservative injunctions that maintain the status quo. For instance, a court is unlikely to order a party to transfer shares but can prohibit share transfers.

Conclusion

For parties engaged in cross-border contracts containing foreign arbitration clauses, the role of Turkish courts in granting Interim Measures In Turkey—notably conservatory attachment and conservatory injunctions—cannot be understated. Understanding the Jurisdiction Of Turkish Courts Over Interim Attachment And Interim Injunction In Cases Where Foreign Arbitration Is Authorised is essential to safeguard rights, preserve assets, and secure evidence pending the arbitral tribunal’s final award.

Key takeaways include:

• Turkish law (IPPL Article 5 and CCP Articles 615–627) explicitly allows interim relief even when a dispute is subject to foreign arbitration.

• Turkish courts act swiftly, typically issuing conservatory attachment or injunction orders within days of filing.

• Applicants must demonstrate a prima facie case, urgency, and irreparable harm, and post security to protect respondents.

• Coordination between local counsel and the arbitrators ensures that interim relief in Turkey complements the foreign arbitral process.

• Parties should consider drafting arbitration clauses that clearly reserve Turkish court jurisdiction for interim measures.

By following these guidelines—timely filing, precise drafting, and strategic coordination—claimants can effectively leverage Turkish courts’ robust interim relief mechanisms without undermining their foreign arbitration agreements. Properly executed, these measures protect assets and evidence, ensuring that the eventual arbitral award is meaningful and enforceable.