Turkey

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In summary

This chapter provides an overview of international arbitration in Turkey, in particular, the rules and procedures governing international arbitration as well as the main rules governing the enforcement procedure of foreign arbitral awards in Turkey including the recent developments. The chapter also examines certain decisions on these issues to shed light on the practice adopted by the courts.

Discussion points

Arbitrability
Arbitration agreement and jurisdictional concerns
Annulment of arbitral awards
Enforcement of foreign arbitral awards
Public policy
Istanbul Arbitration Centre

Referenced in this article

Turkish International Arbitration Law No. 4686
1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
Turkish International Private and Procedural Law No. 5718
Law on the Istanbul Arbitration Centre No. 6570
ISTAC Arbitration Rules
Court of Appeals 19th Civil Law Chamber, 21 May 2007, File No. 2007/380, Decision No. 2007/5114
Court of Appeals, 15th Civil Law Chamber, 5 November 2020, File No. 2019/3156, Decision No. 2020/2913
Court of Appeals, 13th Civil Law Chamber, 20 June 2019, File No. 2018/5543, Decision No. 2019/2891.
Court of Appeals Plenary Session of Civil Law Chamber, 27 June 2019, File No. 2017/19-930, Decision No. 2019/812
Court of Appeals, 15th Civil Law Chamber, 26 September 2019, File No. 2019/2474, Decision No. 2019/3640

Introduction

International arbitration in Turkey, regulated by the International Arbitration Law No. 4686 (IAL), continues to evolve, as illustrated by the most recent decisions of the Court of Appeals.

The IAL, which came into effect on 5 July 2001, is largely based on the UNCITRAL Model Law on International Commercial Arbitration dated 1985, although it does include certain principles not codified in the Model Law, such as the arbitration costs (arbitrator fees, payment of costs, deposit of advance) and the terms of reference. The IAL does not include the 2006 amendments of the Model Law.

Arbitrability

Article 1 of the IAL provides that disputes regarding issues independent of the parties’ wills may not be arbitrated. Therefore, commercial matters may be referred to arbitration, yet disputes concerning criminal issues, family law or issues related to employees’ payments arising from labour contracts are not eligible. ^[1]Article 1 further provides that disputes relating to rights in rem over immoveable properties located in Turkey are not arbitrable. Thus, disputes regarding ownership of real estate may not be submitted to arbitration, a position that the Court of Appeals (the Court) has upheld. In one case regarding the cancellation of title deeds, the Court ruled that a dispute requiring a change in the land register is non-arbitrable, as the matter pertains to public policy.^[2] It has also been held by the Court of Appeals that only disputes capable of being settled by the parties’ agreement without requiring a court decision are arbitrable. In this particular decision, dated 2012, the Court found that the arbitration clause in the company’s articles of association was invalid because general assembly resolutions may only be annulled by the courts.^[3]

The IAL also governs a number of procedural issues, including the form and validity of the arbitration agreement, the appointment of arbitrators and challenges to arbitrators. Moreover, the IAL codifies the procedure for challenging awards and determining arbitration expenses.

Form and validity of the agreement

According to article 4 of the IAL, which governs the form and validity of the arbitration agreement, agreements to arbitrate may either be included in a contract as an arbitration clause or in the form of a separate agreement, whether or not the legal relationship between the parties is contractual in nature.

The form of the arbitration agreement is also regulated by article 4 of the IAL. This article provides that the agreement to arbitrate must be in writing, though there are a number of ways to record it. As a result, the agreement to arbitrate may range from a written, signed document to a ‘letter, telegram, telex, or fax exchanged between the parties or in an electronic medium’. Pursuant to article 4, a valid arbitration agreement is considered to have been made where a party advances the existence of a written arbitration agreement in a statement of claim and the opposing party fails to object to this in its statement of defence, or where there is a reference to a document containing an arbitration clause that is intended to constitute a part of the main contract. In a 2013 case, the Court of Appeals affirmed the decision of a lower court, which found that the charter party agreement executed between the parties in an electronic medium gave rise to a valid arbitration agreement, as the agreement contained a reference to the GENCON 1994 Charter, which provides for an arbitration clause.^[4]

As regards validity, the Court of Appeals has held that for an arbitration agreement to be binding, there must be clear intent, without any doubt, that the parties intended to submit the issue to arbitration.^[5] In this case, the parties had agreed that the dispute would be submitted to arbitration, but also that ‘the dispute shall be resolved at the courts’. Since it was unclear whether the parties actually intended to submit the dispute to the courts or to arbitration, the Court of Appeals ruled there was insufficient intent to arbitrate and, as a result, the arbitration agreement was invalid. This requirement of unambiguous party agreement to arbitration has been and continues to be applied by Turkish courts.^[6] Moreover, in a 2019 decision, the Court of Appeals decided that a contractual clause stating that ‘all disputes arising from or in relation to this agreement shall be submitted to FIFA’ would not constitute an arbitration agreement as it did not mean resolving disputes arising from such agreement through arbitration.^[7]

The Court of Appeals has also dealt with the question of whether a representative can sign an arbitration agreement and, if so, under what conditions. In a 2007 decision, the Court applied article 388/3 of the Code of Obligations, which regulates that an arbitration agreement signed by a representative not granted special powers in his or her power of attorney will be invalid, where the attorney had signed the arbitration agreement on behalf of his or her client.^[8] Accordingly, if a representative signs an arbitration agreement, the power of attorney authorising him or her to act on behalf of his or her principal must clearly specify that the attorney has been granted the authority to sign an arbitration agreement or to bind his principal to arbitrate.

In the same vein, amendments to arbitration agreements signed by representatives have also been examined by the Court of Appeals.^[9] In one case, the Court of Appeals held that the power of attorney conferred to the legal representative who signed the terms of reference was limited to claims, defences and the appointment of arbitrators in the arbitral proceedings, but did not cover amending arbitration agreements or executing arbitration agreements on behalf of the parties.^[10] The Court further decided that the terms of reference cannot be considered as either an amendment to an arbitration agreement or a new arbitration agreement. Likewise, the Court of Appeals ruled in a similar case that amendments to arbitration agreements may not be made through the terms of reference.^[11] According to these decisions, arbitration agreements may only be entered into or amended by the parties themselves or by a representative clearly granted this special power.

In June 2015, the Court of Appeals reversed a court of first instance decision regarding an arbitral award arising from a dispute based on a concession agreement on the grounds that the claimant was not a party to the arbitration agreement. In the annulment case, the first instance court found that the award was binding on the claimant, which was not a party to the concession agreement, based on the fact that the claimant was a beneficiary to the concession agreement and also that it approved the agreement. The Court of Appeals reversed this decision, on the basis that an arbitration cannot be initiated against a person who is not a party to the arbitration agreement, and that the concession agreement was actually not approved by the claimant. The Court held that being a beneficiary to an agreement that has an arbitration clause does not automatically make the beneficiary a party to the arbitration agreement. ^[12]

Jurisdictional concerns

Observing the principle of competence-competence as codified in the Model Law, article 7(h) of the IAL governs the procedure for jurisdictional challenges to be brought before the arbitral tribunal. Since a jurisdictional objection is decided by the tribunal as a preliminary matter, any objection should be made with the first reply brief at the latest. A party is required to submit an objection as soon as it believes that the arbitral tribunal has exceeded its powers or the objection will not be entertained. However, if the arbitral tribunal concludes that the delay in filing an objection is justified, it may admit jurisdictional objections at a later stage. Finally, if the arbitral tribunal decides that it has jurisdiction, it will continue the arbitral proceedings and render an award.

Article 7(h) provides further parameters for jurisdictional challenges. When ruling on the tribunal’s jurisdiction, an arbitration clause shall be treated as independent from the other terms of the contract. Therefore, even if the tribunal decides that the main contract is null and void, this would not invalidate the arbitration agreement. Furthermore, the fact that a party has chosen an arbitrator or participated in the constitution of a tribunal does not invalidate its right to raise a jurisdictional objection.

According to the IAL, jurisdictional objections are to be contested within the confines of arbitral proceedings. In a case where the validity of an arbitration agreement was contested before a court after the initiation of the arbitral proceedings, the Court of Appeals ruled that, under the IAL, challenges of this sort should first be brought before the arbitral tribunal.^[13] The Court of Appeals also held that the decision of the arbitral tribunal on jurisdiction would be subject to review in an annulment action brought against the final award. In another decision, the Court confirmed its earlier ruling that after the initiation of the arbitral proceedings, the tribunal shall have jurisdiction to rule on its competence. It also held that this was not the case where an arbitration objection is raised during a pending court case as a preliminary objection under article 5 of the IAL,^[14] and ruled that in such a case the validity of the arbitration agreement shall be decided by the courts.^[15]

The Court of Appeals has also issued decisions relating to arbitral tribunals’ decisions on jurisdiction. In one instance, the Court of Appeals annulled an award in which the arbitral tribunal denied that it had jurisdiction despite the existence of an arbitration agreement.^[16] The Court noted that the dispute between the parties was within the scope of the contract and that the procedure agreed by the arbitration agreement had been properly followed. As a result, the tribunal’s award denying jurisdiction was found to be invalid and, consequently, set aside.

In another decision on jurisdiction of an arbitral tribunal, the Court of Appeals found that arbitrators are bound by the requests of the parties and they cannot render a decision exceeding those requests.^[17] In this dispute, the defendant requested in its defence for an amount to be deducted from the claimed receivables and it reserved its right to file a counterclaim regarding this deductible; however, the defendant did not file such a counterclaim. The arbitrators ruled in favour of the defendant that the deductible amount be collected as if a counterclaim had been made, instead of deducting this amount from the plaintiff’s receivable. The Court of Appeals determined that the award should be annulled because the arbitrators had exceeded their authority. In a more recent case, the Court of Appeals held that the principle of being bound by the requests of the parties is a public policy issue that may lead to annulment of arbitral awards.^[18]

Annulment of arbitral awards

In accordance with the IAL, challenges to an arbitral award may only take the form of an annulment action, although the court’s decision regarding annulment may be appealed. According to article 15 of the IAL, an arbitral award may be annulled if one of the following grounds is proven by the party filing an annulment action:

invalidity of the arbitration agreement stemming from incapacity of one or both of the parties subject to the arbitration agreement;
invalidity of the agreement to arbitrate under the law the parties chose or, if the parties did not make a choice of law, under Turkish law;
non-compliance in arbitrator appointment procedure under either the IAL or, if the parties had agreed otherwise, as defined in the parties’ agreement;
failure to make a timely award during the arbitration period;
unlawful decision of the arbitrator or the tribunal regarding the competence of the arbitrator or the tribunal;
decision by the arbitrator or the arbitral tribunal on a matter that falls beyond the scope of the arbitration agreement, that does not decide the entirety of the claim or that exceeds the arbitrator or the arbitral tribunal’s authority;
non-compliance with the procedures set out in the parties’ agreement, or with the procedures set out in the IAL in the absence of such an agreement, which have affected the final award;
unequal treatment of the parties; or
if the court ex officio determines that:
- the subject of the arbitration is non-arbitrable under Turkish law; or
- the award violates or is contrary to public policy.

The Court of Appeals has issued decisions relating to the partial annulment of an arbitration award and the scope of a potential re-adjudication in such circumstances. In one case, the Court held that an arbitration award may be partially or wholly annulled. If only partially annulled, parts that are not annulled will be considered to be procedural rights enjoyed by the party that has prevailed on the non-annulled parts. Arbitrators will then re-examine only the annulled parts and issue an award regarding them.^[19]

In 2018, the IAL’s provision concerning the competent court in annulment actions was amended. Accordingly, any annulment actions against a final arbitral award must now be filed at the competent regional judicial court within 30 days, which commences after the notification of the award or the notification of any decision correcting, interpreting or supplementing the award. Initiation of annulment actions halts the enforcement of arbitral awards.

Prior to the 2018 amendments, the IAL provided that the competent court to hear annulment actions was the civil court of first instance. In different cases, the Court of Appeals provided different interpretations of this provision. In one dispute where it was found that the defendant did not have a residence, habitual residence or place of business in Turkey, the Court of Appeals ruled that the Istanbul Commercial Court of First Instance was the competent court to hear the annulment action.^[20] First, the Court held that the location of a subsidiary incorporated in Turkey cannot be considered as the place of business of the defendant itself, which was a French company with its headquarters in France. Thus, as the defendant did not have residence in Turkey, the Court found that pursuant to article 3 of the IAL, which states that any reference to a court in the IAL will refer to the Istanbul Civil Court of First Instance in those cases where the respondent is not domiciled in Turkey, the Istanbul Civil Court of First Instance would be competent to hear the annulment case. However, the Court then took the provisions of the Turkish Commercial Code into account, which provide that where commercial courts of first instance are established, they should hear disputes of a commercial nature, since there is a division of work between these courts. Consequently, it ruled the Istanbul Commercial Court of First Instance to be the competent court to hear the annulment case in question rather than the Istanbul Civil Court of First Instance.

In another case, it was held by the Court of Appeals that, as per (the former) article 15 of the IAL, the civil courts of first instance were specifically competent to hear annulment cases, even though the dispute was commercial in nature.^[21] With the 2018 amendments, the competent courts for cases other than annulment actions were also clarified. According to additional article 1 of the IAL, competence granted to the civil court of first instance under the IAL would be undertaken by civil courts or commercial courts of first instance, depending on the subject of dispute. ^[22]

In a decision regarding the burden of proving the existence of the grounds for annulment, the Court of Appeals reversed a first instance court’s decision in which the court dismissed the annulment application due to the claimant’s failure to prove that the award was against public policy. The Court of Appeals held that according to article 15 of the IAL, it is the court’s duty to ex officio determine whether the award was against public policy or whether the subject of the arbitration is non-arbitrable under Turkish law.^[23]

The issue regarding who shall bear the costs of arbitration after the annulment of an arbitral award was also examined by the Court of Appeals. In a 2019 decision, the Court of Appeals held that the losing party of an arbitral award cannot be held responsible for the arbitrator fees as the arbitral award was annulled. In this case, the Court found that as a result of the annulment, article 16 of the IAL (which provides that in the absence of an agreement to the contrary, the costs of arbitration, including the arbitrator fees, shall be borne by the losing party, or where both parties are successful to a certain extent, the costs shall be shared by both parties pursuant to their degree of success) cannot be applied. It held that the arbitrator fees, which was the subject of the lawsuit, should be completely borne by the party that initiated the arbitral proceedings.^[24]

Enforcement of foreign arbitral awards

The majority of foreign arbitral awards enforced in Turkey are subject to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), which Turkey ratified on 2 July 1992, as well as the International Private and Procedural Law No. 5718 (IPPL) as the applicable rules of procedure of the territory where the award is relied upon pursuant to New York Convention. Consequently, the Court of Appeals has issued a number of decisions regarding enforcement under the New York Convention.

In a 2014 decision, the Court of Appeals ruled on interim attachment requests made prior to the enforcement of foreign arbitral awards. The Court held that an interim attachment order may be granted in the enforcement proceeding of a foreign arbitral award, even if an enforcement decision has not yet been issued on the basis that the assets or rights of the debtor are only temporarily attached by the interim attachment orders. Consequently, an enforcement decision of a foreign arbitral award is not a required condition for granting an interim attachment order.^[25]

There are different decisions of the Court of Appeals regarding court fees to be collected when applying for an enforcement decision. The 19th Civil Chamber of the Court of Appeals decided in 2009 that a decision fee shall be collected from the party requesting the enforcement pursuant to the nature of the arbitral award. Therefore, in cases that are subject to a proportional fee, a proportional decision fee shall be collected.^[26] Likewise, in other cases, the same chamber of the Court of Appeals held that if a foreign arbitral award requested to be enforced in Turkey is for the collection of a receivable, the enforcement proceedings must be subject to a proportional decision fee.^[27] In this instance, the Court of Appeals ruled that because the award related to the collection of a debt, the application for enforcement is subject to proportional court fees. Similarly, in 2015, the 15th Civil Chamber of the Court of Appeals^[28] decided in the same vein based on article 3/II of the Law on Fees No. 492. Article 3/I of Law No. 492 states that if an enforcement decision regarding an arbitral award is requested, the court fees shall be collected according to the nature of the award. The subsequent article provides that the same shall apply to the enforcement requests of the foreign arbitral awards.

Conversely, in another case in which the claimant was seeking enforcement of a decision made by the Russian State Court of Arbitration, the 11th Chamber of the Court of Appeals reversed the enforcement decision of the first instance court and held that the dispute between the parties regarding whether the award was made by an arbitral tribunal or a court was not sufficiently examined, and that the submission of the arbitration agreement to the enforcement court would be required if the award in question was rendered by an arbitral tribunal. It also held that the court fees in the cases for the request for enforcement shall be subject to fixed fees instead of proportional fees.^[29] Moreover, the 11th Chamber decided in the same vein in cases regarding the enforcement requests for foreign court decisions and applied fixed fees on the basis that the cases for the request for enforcement are in the nature of declaratory actions rather than actions of performance.^[30]

However, the provision that regulates the proportional fees in the Tariff No. 1, which is attached to the Law on Fees with No. 492 and is updated every year, was amended effective as of 9 August 2016. According to the amendment, proportional ‘fees shall not be collected in the arbitration proceedings under this provision’. Subsequent to this, the Plenary Session of the Civil Law Chambers of the Court of Appeals held that as a result of this amendment made in the Tariff No. 1, only fixed fees can be collected in cases of enforcement of foreign arbitral awards.^[31]

The question of whether an application of a party for the correction and interpretation of an award from the tribunal would suspend its enforcement in Turkey was examined by the Regional Judicial Court in a 2018 decision. The court first relied on article V of the New York Convention, which provides that enforcement of an award can only be refused if certain conditions exist. According to the court, the arbitral award in question was final and enforceable, and an application for an additional award from the arbitrators by way of correction and interpretation is not one of the conditions for refusal of enforcement under the New York Convention. The court held, considering that even the initiation of an action for annulment of an award in the seat of arbitration does not prevent its enforcement in another state, as per article VI of the New York Convention, an application for an additional award from the arbitrators would not prevent its enforcement.^[32]

For those arbitral awards rendered in countries not party to the New York Convention, enforcement in Turkey is regulated by IPPL. The grounds for enforcement as codified in the IPPL are very similar to those in the New York Convention. Under article 62 of the IPPL, the court will reject enforcement of a foreign arbitral award if:

there is no arbitration agreement, or there is no arbitration clause in the contract;
the arbitral award is contrary to public morals or public policy;
the dispute resolved in the award is not one that can be resolved through arbitration under Turkish law;
one of the parties was not represented before the arbitral tri-bunal in accordance with due process and said party does not accept the tribunal’s award;
the party against which enforcement is requested was not informed of the appointment of an arbitrator (or arbitrators) in accordance with due process;
the arbitration agreement (or clause) is invalid under the law to which it was subject or, where there is no agreement, the arbitral award is invalid under the law of the state in which it was made;
the appointment of the arbitrators, or procedural rules applied by the arbitrators, is contrary to the parties’ agreement, or if there is no agreement, is contrary to the law of the country in which the award was made;
the arbitral award relates to a matter that was not in the arbitration agreement (or clause), or it exceeds the scope of the arbitration agreement (in which case the court only refuses to enforce the part that exceeds the scope of the arbitral agreement);
if the arbitral award has not become final or enforceable or binding under:
the law under which it was issued;
the law of the state where it was made; or
the procedural rules to which it was subject; or
the arbitral award was annulled by the competent body of the place where it was made

According to article 56(1) of the IPPL, the court may decide to enforce all or part of the award, or refuse to enforce it. In a case where one of the three agreements between the parties did not include an arbitration clause, the Court of Appeals stated that the partial enforcement of the foreign arbitral award, as decided by the court of first instance, was impossible, and the request for enforcement should be rejected. The Court of Appeals ruled that it was not possible to determine which portion of the damages awarded had resulted from the agreement that did not contain an arbitration clause.^[33]

Moreover, the Court of Appeals recently reviewed whether a partial award in which a tribunal held that it had jurisdiction could be recognised. In its analyses, the Court of Appeals first stated that according to the IPPL, the recognition of awards shall be subject to the provisions regarding enforcement. Afterwards, it indicated that the ICC Rules, which were agreed on by the parties, stated that every award was binding on the parties and also that the New York Convention emphasised the binding effect of the awards instead of their finalisation in order to be enforced. The Court of Appeals then held that in order for a partial award, such as the said partial award declaring jurisdiction, to be considered as a final award, it was sufficient that the aspect of the dispute decided by such partial award is separable and independent. Consequently, it reversed the lower court’s decision by holding that the conditions for recognition was established for the said partial award on jurisdiction.^[34]

Decisions on enforcement requests can be appealed and subject to rectification; appeal stays the execution of the enforced award according to IPPL article 57(2).

Public policy

Recent decisions by the Court of Appeals provide insight into when an arbitral award seated in Turkey may be annulled or when a foreign arbitral award may be denied enforcement for violating or contravening public policy.

In a 2012 decision, the Court of Appeals ruled that customs and tax laws pertain to public policy and, as a result, foreign arbi-tral awards calling for receivables that contravene the tax leg-islation may be denied enforcement on the basis of the public policy clause found in article V of the New York Convention. According to the Court of Appeals, in such cases, the merits of the dispute may be partially examined by the Court, but only to the extent necessary to determine whether the award is contrary to public policy; thus, the merits of the case would not techni-cally be reviewed. The Court of Appeals reversed the court of first instance’s decision to enforce the foreign arbitral award stating that the investigation conducted was not sufficient to determine whether enforcement would result in tax evasion and violate the tax legislation. ^[35]

Subsequent to this 2012 decision, the Court of Appeals ruled that an arbitral award regarding receivables in violation of the tax legislation may also be annulled on the basis that customs and tax laws are a matter of public policy, while stating that partial review of the merits may be necessary to examine objections relating to public policy.^[36] In this case, which concerned a dispute between a Turkish governmental agency and a telecommunications com-pany, the Court found the arbitral award to violate public policy because the award ruled that it was no longer mandatory for the telecommunications company to make previously agreed-upon payments to the state for its expenses. The Court of Appeals held that even though these payments for the authority’s expenses are not taxes, they represent an important and continuous form of income deriving from the transfer of public services by the state and, thus, cannot be left to the discretion of the telecommunica-tions company. Also of note in this decision was the Court’s find-ing that compliance with public policy shall be evaluated pursuant to the governing law chosen by the parties, which was Turkish law in this particular case. Consequently, the award was annulled pursuant to article 15 of the IAL.

Similarly, in 2017, the Court of Appeals ruled that an award that results in a reduction of the public income of the state would violate public policy and reversed a court of first instance decision rejecting an application for annulment of an arbitral award arising from a concession agreement. The Court of Appeals found that the first instance court erred when it had not determined whether the arbitral award in question would result in the reduction of public income of the state and held that the first instance court should have obtained an expert report determining the impact of the arbitral award on public income, considered the characteristics and purpose of concession agreements and taken into account that a reduction in the public income of the state would clearly violate public policy.^[37] In this case, the Court of Appeals again stated that merits of the dispute may be partially reviewed to examine objec-tions relating to public policy.

In a case regarding the enforcement of a foreign court deci-sion, however, the Court of Appeals came to a different conclu-sion. The Court held that, during the examination of whether a foreign judgment is contrary to public policy, the prohibition against reviewing the merits of the content cannot be removed by discretionary right.^[38]

In another enforcement decision, the Court of Appeals exam-ined the extent to which an arbitration agreement may be contrary to public policy if such an agreement grants a superior position to one of the parties during the arbitral proceedings. In this case, the Court ruled that an arbitration agreement or clause granting the right to appoint the arbitral tribunal to only one of the parties would be invalid and, as a result, not enforceable. However, since the arbitration agreement in this case granted the right to choose the arbitral tribunal to both parties (to the ‘claiming party’), the agree-ment is valid and cannot be considered to be against public policy.^[39] The Court also found that an arbitration agreement providing the choice between two alternative arbitration centres is valid since the parties clearly intended to submit any dispute to arbitration. On the other hand, in a different decision, the Court of Appeals refused enforcement of an arbitral award rendered in a different arbitral institution than the one determined in the arbitration agreement.^[40]

In a decision regarding a domestic arbitration award, the first instance court annulled an award based on the reason that the tribu-nal should have obtained an expert report regarding the calculation of damages instead of making the decision by itself as none of the members of the tribunal were experts in finance, and as the tribunal had erred in the application of the law, thus finding the award to be against public policy. However, the Court of Appeals reversed the annulment decision of the first instance court, as it stated that the tribunal has discretion in deciding whether to obtain an expert report. Moreover, the Court of Appeals also ruled that the merits of the case and the application of the law cannot be reviewed dur-ing an annulment case.^[41] Similarly the Court of Appeals also held that the issues of conducting site inspections and obtaining expert reports concern collection of evidence, and the tribunal’s failure to perform these are not listed as a ground for annulment under article 15 of the IAL. Accordingly, the Court reversed the lower court’s decision to annul the award and decided that an annulment based on the failure to conduct a site inspection and obtain an expert report would be contrary to the prohibition of reviewing the merits of the case.^[42]

Finally, in a decision regarding the enforcement of a for-eign court decision, the Court of Appeal’s General Assembly for Unification of Judgments addressed the issue of whether a foreign judgment that does not contain reasoning violates public policy.^[43] The Court held that, although it is mandatory for all Turkish court decisions to contain the court’s reasoning, this cannot be a ground on which to deny the enforcement of a foreign judgment. Such a requirement would contravene the principle of lex fori, whereby a judgment is subject to the procedural laws of the country where it is rendered. During the course of determining whether a lack of reasoning violates public policy, the Court provided examples of what would constitute a public policy violation:

the violation of fundamental principles of Turkish law, Turkish morals and public decency;
the basic notion of justice and general policy behind the Turkish legislation, fundamental rights and freedoms in the Turkish Constitution;
the general principles of international law;
the good faith principle of private law; and
the violation of human rights and freedoms.

The Istanbul Arbitration Centre

In 2015, the Istanbul Arbitration Centre (ISTAC) was established by the Law on the Istanbul Arbitration Centre No. 6570 (LIAC), which was published in the Official Gazette on 29 November 2014 and came into effect on 1 January 2015. Pursuant to article 1 of the LIAC, the ISTAC oversees the settlement of disputes, including those containing a foreign element, through arbitration or alternative dispute resolution methods.

The ISTAC Arbitration and Mediation rules went into effect on 26 October 2015.44 The ISTAC offers services such as fast track arbitration and emergency arbitrator procedure. Apart from this, on 15 November 2019, the ISTAC established the rules governing ‘Mediation Arbitration’.^[45] According to article 1 of said rules, the purpose of the rules is to regulate the procedure and practice to be followed where mediation and arbitration are together deter-mined as the dispute resolution mechanism. Furthermore, due to the need arising from the covid-19 pandemic, ISTAC announced online hearing procedures and principles in April 2020.^[46]

In 2016, the Prime Ministry’s office issued a circular that stated all public authorities shall consider including ISTAC arbitration clauses in their domestic and international agreements.^[47] In line with this circular, the template contracts attached to the Tender Application Regulations (within the scope of the Public Procurement Contracts Law No. 4735) were amended, which came into force on 19 January 2018.^[48] According to the amend-ments, the administration may choose to include an arbitration agreement in the contracts made within the scope of the Tender Application Regulations, as opposed to a jurisdiction clause in favour of Turkish courts.

If the administration prefers arbitration for the dispute resolu-tion mechanism and if the dispute does not include a foreign ele-ment, the dispute shall be resolved pursuant to ISTAC Arbitration Rules. On the other hand, if the dispute includes a foreign ele-ment, the administration may choose the ISTAC Arbitration Rules or the provisions of the IAL.^[49]

Conclusion

There have not been any fundamental changes in the Turkish international arbitration system since its enactment in 2001, but as described above, it has been continuously evolving by the Court of Appeals decisions. On the other hand, there have been changes to domestic legislation, namely, the ratification of a new Code of Civil Procedure (CCP), which entered into force on 1 October 2011, in addition to a new Code of Obligations and a new Commercial Code, which entered into force on 11 July 2012 and 1 July 2012, respectively. The new CCP governs domestic arbitration, specifically those disputes that do not contain a for-eign element and for which Turkey is designated as the place of arbitration, while the IAL remains the governing legislation for international arbitration. The arbitration provisions of the new CCP (articles 407–444), which are being drafted along the lines of the UNCITRAL Model Law, are mostly parallel to the provi-sions of the IAL.

Notes

^[1] Court of Appeals, 9th Civil Law Chamber, 22 March 2004, File No. 2004/5846, Decision No. 2004/5621.

^[2] Court of Appeals, 15th Civil Law Chamber, 18 June 2007, File No. 2007/2680, Decision No. 2007/4137; Court of Appeals, 15th Civil Law Chamber, 10 October 2011, File No. 2011/4411, Decision No. 2011/5792.

^[3] Court of Appeals 11th Civil Law Chamber, 5 December 2012, File No. 2011/13485, Decision No. 2012/19915.

^[4] Court of Appeals 11th Civil Law Chamber, 18 April 2013, File No. 2012/6961, Decision No. 2013/7612.

^[5] Court of Appeals 15th Civil Law Chamber, 18 June 2007, File No. 2007/2680, Decision No. 2007/4137.

^[6] Court of Appeals 15th Civil Law Chamber, 13 April 2009, File No. 2009/1438, Decision No. 2009/2153.

^[7] Court of Appeals 13th Civil Law Chamber, 23 October 2019, File No. 2018/2348, Decision No. 2019/10372.

^[8] Court of Appeals 19th Civil Law Chamber, 21 May 2007, File No. 2007/380, Decision No. 2007/5114.

^[9] Court of Appeals Plenary Session of Civil Law Chambers, 18 October 2006, File No. 2006/15-609, Decision No. 2006/656; Court of Appeals Plenary Session of Civil Law Chambers, 18 July 2007, File No. 2007/15-444, Decision No. 2007/554.

^[10] Court of Appeals Plenary Session of Civil Law Chambers, 18 October 2006, File No. 2006/15-609, Decision No. 2006/656.

^[11] Court of Appeals Plenary Session of Civil Law Chambers, 18 July 2007, File No. 2007/15-444, Decision No. 2007/554.

^[12] Court of Appeals 11th Civil Law Chamber, 25 June 2015, File No. 2014/9538, Decision No. 2015/8707.

^[13] Court of Appeals, 15th Civil Law Chamber, 27 June 2007, File No. 2007/2145, Decision No. 2007/4389.

^[14] Pursuant to article 5 of the IAL, if a dispute subject to an arbitration agreement was brought before the courts, the counter party may raise an arbitration objection. If the court accepts such objection, it dismisses the case based on procedural grounds.

^[15] Court of Appeals, 15th Civil Law Chamber, 5 November 2020, File No. 2019/3156, Decision No. 2020/2913.

^[16] Court of Appeals, 11th Civil Law Chamber, 16 July 2009, File No. 2007/13799, Decision No. 2009/8820.

^[17] Court of Appeals, 15th Civil Law Chamber, 11 May 2011, File No. 2010/7197, Decision No. 2011/2857.

^[18] Court of Appeals, 15th Civil Law Chamber, 11 July 2019, File No. 2019/1234, Decision No. 2019/3335.

^[19] Court of Appeals, 15th Civil Law Chamber, 15 November 2007, File No. 2007/3708, Decision No. 2007/7216.

^[20] Court of Appeals, 11th Civil Law Chamber, 15 March 2012, File No. 2012/ 2110, Decision No. 2012/3915.

^[21] Court of Appeals, 19th Civil Law Chamber, 12 February 2014, File No. 2014/111, Decision No. 2014/2806. See also: Court of Appeals, 19th Civil Law Chamber, 27 May 2013, File No. 2013/6262, Decision No. 2013/10896.

^[22] Articles 53–54 of the Law Amending the Enforcement and Bankruptcy Code and Certain Laws No. 7101, published in the Official Gazette dated 15 March 2018 with No. 30361.

^[23] Court of Appeals, 13th Civil Law Chamber, 13 November 2012, File No. 2011/19737, Decision No. 2012/25406.

^[24] Court of Appeals, 13th Civil Law Chamber, 20 June 2019, File No. 2018/5543, Decision No. 2019/2891.

^[25] Court of Appeals, 6th Civil Law Chamber, 14 April 2014, File No. 2014/3906, Decision No. 2014/4941.

^[26] Court of Appeals, 19th Civil Law Chamber, 15 September 2009, File No. 2007/5703, Decision No. 2009/8256.

^[27] Court of Appeals, 19th Civil Law Chamber, 14 April 2012, File No. 2012/1885, Decision No. 2012/5598; Court of Appeals, 19th Civil Law Chamber, 2 June 2015, File No. 2014/11188, Decision No. 2015/8132; Court of Appeals, 19th Civil Law Chamber, 29 May 2013, File No. 2013/5305, Decision No. 2013/9912.

^[28] Court of Appeals, 15th Civil Law Chamber, 18 March 2015, File No. 2015/385, Decision No. 2015/1303.

^[29] Court of Appeals, 11th Civil Law Chamber, 26 October 2015, File No. 2015/3987, Decision No. 2015/10984.

^[30] Court of Appeals, 11th Civil Law Chamber, 11 May 2015, File No. 2015/1353, Decision No. 2015/6701; Court of Appeals, 11th Civil Law Chamber, 23 June 2014, File No. 2014/9333, Decision No. 2014/11865.

^[31] Court of Appeals Plenary Session of Civil Law Chambers, 27 June 2019, File No. 2017/19-930, Decision No. 2019/812.

^[32] Istanbul Regional Judicial Court, 14th Civil Law Chamber, 11 October 2018, File No. 2018/130, Decision No. 2018/1042.

^[33] Court of Appeals, 19th Civil Law Chamber, 18 December 2003, File No. 2003/7270, Decision No. 2003/12888.

^[34] Court of Appeals, 11th Civil Law Chamber, 11 June 2019, File No. 2017/3469, Decision No. 2019/4259.

^[35] Court of Appeals Plenary Session of Civil Law Chambers, 8 February 2012, File No. 2011/13-568, Decision No. 2012/47.

^[36] Court of Appeals, 13th Civil Law Chamber, 17 April 2012, File No. 2012/8426, Decision No. 2012/10349.

^[37] Court of Appeals, 13th Civil Law Chamber, 16 March 2017, File No. 2015/16140, Decision No. 2017/3322.

^[38] Court of Appeals Plenary Session of Civil Law Chambers, 26 November 2014, File No. 2013/11-1135, Decision No. 2014/973.

^[39] Court of Appeals Plenary Session of Civil Law Chambers, 9 June 1999, File No. 1999/19-467, Decision No. 1999/489.

^[40] Court of Appeals, 19th Civil Law Chamber, 07 June 2011, File No. 2011/4149, Decision No. 2011/7619.

^[41] Court of Appeals, 11th Civil Law Chamber, 22 June 2016, File No. 2016/4931, Decision No. 2016/6886.

^[42] Court of Appeals, 15th Civil Law Chamber, 26 September 2019, File No. 2019/2474, Decision No. 2019/3640.

^[43] Court of Appeal’s General Assembly for Unification of Judgments, 10.02.2012, File No. 2010/1, Decision No. 2012/1.

^[44] http://istac.org.tr/en/istanbul-arbitration-center-arbitration-and-mediation-rules-come-into-force/.

^[45] https://istac.org.tr/en/istac-med-arb-kurallarini-ilan-etti/.

^[46] https://istac.org.tr/en/dispute-resolution/arbitration/istac-online-hearing-rules-and-procedures/.

^[47] Circular No. 2016/25, published in the Official Gazette dated 19 November 2016 and No. 29893.

^[48] The Official Gazette dated 30 December 2017, with No. 30286 (Reiterated).

^[49] www.ihale.gov.tr/Duyuru/243/sozlesme_uyusmazliklarinin_cozumunde_tahkim_yolunun_tercih_edilebilmesine_yonelik_duzenlemeler_yayimlandi.html.