Challenging and Enforcing Arbitration Awards: Türkiye - Part 2

17. What is the applicable procedural law for recognition and enforcement of an arbitral award in your jurisdiction?

While domestic arbitral awards are directly enforceable under the CPL, arbitral awards within the scope of the IAL (where the seat is in Turkey and the matter has a foreign element) are enforced by obtaining a certificate of enforceability from the competent civil court of first instance. The certificate must be obtained on finalisation of the decision rejecting the setting aside of the award; if there is no application to set aside the award, on expiry of the time limit to file the application; or if the parties have waived the right to file setting-aside proceedings.

Foreign arbitral awards (ie, those rendered in a seat outside Turkey) must be recognised and enforced to have legal effect. Recognition and enforcement of foreign arbitral awards are primarily governed by the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). Where the Convention is silent or not applicable, the IPPL, which contains rules that are similar to those in the Convention, applies.

Turkey is a party to the New York Convention, the European Convention on International Commercial Arbitration and the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States.

18. Is your jurisdiction a party to treaties facilitating recognition and enforcement of arbitral awards (eg, the ICSID Convention or bilateral treaties)? (In particular, is your state a party to the 1958 New York Convention? If yes, what is the date of entry into force of the Convention? Was there any reservation made under article I(3) of the Convention?

Türkiye is a party to the 1958 New York Convention, which entered into force on 25 September 1992. Türkiye has made both reciprocity and commercial relationship reservations.

19. Is there a time limit for applying for the recognition and enforcement of an arbitral award?

The IPPL, the IAL or other relevant laws do not contain any specific time limit for applying for the recognition and enforcement of an arbitral award. However, there is a general time limit of 10 years for enforcement of judgments under the EBL; therefore, it is advisable to initiate the proceedings for the recognition and enforcement of a foreign arbitral award within 10 years as of the finalisation of the arbitral award.

20. Which court has jurisdiction over an application for recognition and enforcement of an arbitral award? Is there a specific court or chamber in place with specific sets of rules applicable to international arbitral awards?

The civil or commercial court of first instance located where the parties agreed or, in the absence of an agreement, where the defendant permanently or temporarily resides has jurisdiction over an application for recognition and enforcement of an arbitral award. If the defendant does not reside in Türkiye, the competent court is where the defendant’s assets that could be the subject of attachment are located (IPPL, article 60). There is no specific court or chamber with specific sets of rules applicable to foreign arbitral awards.

Whether to file the action to the competent civil or commercial court must be decided based on the subject matter of the underlying dispute.

21. What are the requirements for the court to have jurisdiction over an application for recognition and enforcement and for the application to be admissible?

The civil or commercial court of first instance located where the parties agreed or, in the absence of an agreement, where the defendant permanently or temporarily resides has jurisdiction over an application for recognition and enforcement of an arbitral award. If the defendant does not reside in Türkiye, the competent court is where the defendant’s assets that could be the subject of attachment are located (IPPL, article 60).

In terms of the admissibility of the application, the arbitral award must be final, enforceable and binding. The general procedural rules under the CPL must also be followed when filing the action for recognition and enforcement of an arbitral award.

Whether to file the action to the competent civil or commercial court must be decided based on the subject matter of the underlying dispute.

If the jurisdiction of the court is established over the assets, the applicant must prove that the assets are located in the jurisdiction of the court.

22. Are the recognition proceedings in your jurisdiction adversarial or ex parte? What are the different steps of the proceedings?

The proceedings for recognition and enforcement of arbitral awards are adversarial. As the proceedings are subject to a simplified procedure, the written phase is completed by exchanging plaint and response petitions; however, in practice, the parties could make further submissions, provided that such submissions do not breach the prohibition on expansion of the claims and defences. The court then sets the hearing date, and the oral phase will start.

23. What documentation is required to obtain recognition?

Along with the application for recognition and enforcement of an arbitral award, the applicant must submit:

1. the original or a duly certified copy of the arbitration agreement;

2. the original or a duly certified copy of the arbitral award; and

3. the certified translations of the documents in points (1) and (2).

The applicant must prepare a copy for the court and a copy for each defendant (IPPL, article 61).

24. If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with an application to obtain recognition? If yes, in what form must the translation be?

Article 61 of the IPPL requires the submission of certified translations of the arbitration agreement and the arbitral award. The translations should be certified by a sworn translator. Turkish courts generally request full translations.

25. What are the other practical requirements relating to recognition and enforcement? Are there any limitations on the language and length of the submissions and of the documentation filed by the parties?

As the CPL governs the procedure of the proceedings, on service of the plaint petition, the defendant has two weeks to file its responses, with an opportunity to request a two-week time extension (CPL, article 317).

26. Do courts recognise and enforce partial or interim awards?

Although partial awards can be recognised by Turkish courts, this does not apply to interim awards in most cases as they are not deemed final and binding.

27. What are the grounds on which an arbitral award may be refused recognition? Are the grounds applied by the courts different from the ones provided under article V of the New York Convention?

Article V of the New York Convention is directly applicable to the recognition and enforcement of foreign arbitral awards. Regarding cases where the IPPL applies, the grounds for refusal listed under article 62 of the IPPL are very similar to those in article V of the New York Convention.

Among the grounds for refusal, Turkish courts give particular importance to public policy, the standards and scope of which are set by court precedents. The concept of public policy has changed over time, embracing a trend towards a more enforcement-friendly approach.

28. When assessing the grounds for refusing recognition, may the recognition judge conduct a full review and reconsider factual or legal findings from the arbitral tribunal in the award? Is the judge bound by the tribunal’s findings? If not, what degree of deference will the judge give to the tribunal’s findings?

The courts do not have the power to conduct a full review. They may only review a case based on limited grounds, such as violating public policy and other grounds specified in article 62 of the IPPL and article V of the New York Convention.

29. Is it possible for a party to be considered to have waived its right to invoke a particular ground for refusing recognition of an arbitral award?

The parties or courts have no discretion in limiting, extending or varying the grounds for recognising and enforcing arbitral awards; however, although there is no provision, it is accepted that the parties can waive their rights to invoke a particular ground for refusing recognition of an arbitral award if it is explicit.

30. What is the effect of a decision recognising an arbitral award in your jurisdiction?

Recognition and enforcement are separate mechanisms under Turkish law. Although the scope of enforcement covers recognition, recognition of an award can also be sought separately. While recognition would give the award the effect of res judicata or final evidence, enforcement would enable the execution of the award. A foreign arbitral award which is not recognised by Turkish courts would only be deemed prima facie evidence before the recognition.

31. What challenges are available against a decision refusing recognition in your jurisdiction?

The first instance court’s decision on the recognition and enforcement of an arbitral award is subject to appeal before the competent regional appellate court, and the regional appellate court’s decision can be appealed before the Court of Cassation. These appeals have a suspensive effect. There are no remedies available to third parties.

32. What are the effects of annulment proceedings at the seat of the arbitration on recognition or enforcement proceedings in your jurisdiction?

As provided under article VI of the New York Convention, the court can adjourn the recognition and enforcement proceedings pending the outcome of annulment proceedings at the seat of the arbitration. The party seeking adjournment of the proceedings must establish on aprima facie basis that the award is likely to be annulled, and its adjournment request is not merely to delay the recognition and enforcement of the award. Cases requiring the application of article VI of the New York Convention are not common in practice, but there is a decision of Istanbul 14th Civil Chamber dated 11 October 2018 and numbered 2018/130 E., 2018/1042 K., ruling that awaiting the annulment proceedings at the seat of the arbitration is at the discretion of the enforcement judge, so an annulment proceeding would not prevent enforcement.

33. If the courts adjourn the recognition or enforcement proceedings pending annulment proceedings, will the defendant to the recognition or enforcement proceedings be ordered to post security?

Under article VI of the New York Convention, Turkish courts have the discretion to order security on the applicant’s request to preserve its chances for the successful execution of an award; however, there is no published case law specific to this matter.

Based on the general practice of Turkish courts, the court can grant provisional attachment to secure the successful enforcement of the award; therefore, the party seeking enforcement may (separately or from the court hearing the enforcement action) ask for an interim attachment if the court adjourns the enforcement action pending annulment proceedings.

34. Is it possible to obtain the recognition and enforcement of an award that has been fully or partly set aside at the seat of the arbitration? If an arbitral award is set aside after the decision recognising the award has been issued, what challenges are available?

Within the context of the New York Convention, recognition and enforcement of an award that has been fully or partly set aside are at the court’s discretion; however, Turkish courts would generally refuse to recognise or enforce an arbitral award that has been fully set aside at the seat, especially where the award is annulled based on grounds other than public policy or arbitrability.

On the other hand, according to the IPPL, the court should refuse the recognition and enforcement of an award that has been fully or partly set aside at the seat of arbitration (IPPL, article 62(1)).

If the arbitral award is set aside at the seat of the arbitration after a Turkish court’s decision recognising or enforcing the award, an annulment action could be filed in accordance with article V(1)(e) of the New York Convention.

35. What is the procedure for service of extrajudicial and judicial documents to a defendant in your jurisdiction?

If the defendant and court are domiciled in Türkiye, service must be made to the last known residence address of the defendant by post (Notification Law, article 10). The service date is the date of delivery. If the addressee has a registered email address, the court may serve the documents electronically. In this case, the deemed service date is the end of the fifth day following the delivery date (Notification Law, article 7/a).

If the official language of the documents is not Turkish, the documents must be served with a Turkish translation.

36. What is the procedure for service of extrajudicial and judicial documents to a defendant outside your jurisdiction? Is it necessary to serve these documents together with a translation in the language of this jurisdiction? Is your jurisdiction a party to the 1965 Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the Hague Service Convention)? Is your jurisdiction a party to other treaties on the same subject matter? When is a document considered to be served to the opposite party?

The applicable rules differ if the court requesting the service is located in a different country. Türkiye is a party to the 1965 Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the Hague Service Convention) and the 1954 Convention on Civil Procedure, although the application of the latter is rare owing to the specific nature of the Hague Service Convention. If the court is located in a country that is a party to these conventions and no bilateral treaty exists, the Turkish authorities will apply the Hague Service Convention. If the Hague Service Convention does not apply and there is no bilateral treaty, then article 25 of the Notification Act applies.

The documents must be served with a translation into the language of the jurisdiction. The service date is when the documents are delivered to the opposite party.

37. Are there any databases or publicly available registers allowing the identification of an award debtor’s assets within your jurisdiction? Are there any databases or publicly available registers providing information on award debtors’ interests in other companies?

The award creditor can use public databases to identify the award debtor’s assets. For example:

— general information about companies can be found in the public trade registry records;

— ownership details for identified land and real estate can be accessed in the Turkish land registry, provided that the applicant can show a legitimate interest to see the details of those records; and

— trademark and patent ownerships can be accessed in the public records of the Turkish Patent and Trademark Office.

A limited number of trade registries provide a publicly available database enabling access to information regarding a person’s shareholding, board membership or directorship in companies. There is no publicly available database providing information on award debtors’ interests in other companies.

In addition, once an enforcement proceeding is initiated and the attachment becomes definite, the award creditor can conduct an asset search through the National Judiciary Informatics System (UYAP), which produces information on the debtor’s assets, rights and receivables (EBL, article 78).

38. Are there any proceedings allowing for the disclosure of information about an award debtor within your jurisdiction?

The award creditor can apply to the bailiff’s office to send a payment order with the judgment to the award debtor. The bailiff’s office will send a payment order to the debtor and request the payment of the debt and disclosure of assets (by indicating their value) within seven days of the service date; however, since the bailiff’s offices can search the debtor’s assets using their systems, the disclosure of assets is not commonly used to identify assets.

Nevertheless, the award debtor’s failure to disclose its assets might result in 10 days’ imprisonment (EBL, article 337); however, imprisonment is rarely imposed, and even if it is, the debtor will be released from imprisonment once the assets are disclosed.

39. What kinds of assets can be attached within your jurisdiction?

Any of a debtor’s movable and immovable assets, rights and receivables with economic value can be attached, although there are exceptions. There are safeguards to ensure that the debtors have sufficient means to survive and continue their economic existence. Accordingly, goods required for the debtor to continue its business and a certain percentage of the debtor’s salary cannot be attached.

In January 2022, an amendment was made to the Law on the Central Bank of the Republic of Türkiye (CBRT) granting immunity against any attachment, interim injunction or provisional attachment to the assets of a foreign central bank held by the Turkish Central Bank (CBRT, Article 40).

First published by Global Arbitration Review in Mar 07, 2024.