The Guide to Challenging and Enforcing Arbitration Awards in Turkey - Third Edition / Part 1

1. Must an award take any particular form?

Article 14(A) of the International Arbitration Law (IAL) provides that an award must include:

• the names, surnames, titles and addresses of the parties, their representatives and lawyers;
• the legal grounds on which the award is based and, if there is a claim for compensa-tion, the amount of compensation;
• the place of arbitration and the date of the award;
• the name, signature and a dissenting opinion, if any, of the arbitral tribunal; and
• a notice informing the parties that an action to set aside the award could be filed.

The above also applies in terms of domestic awards that are regulated under Article 436(1) of the Civil Procedural Law (CPL). Article 436(1) also requires the award to include the rights and obligations attributed to the parties and the costs of arbitration.

Applicable procedural law for recourse against an award (other than applications for setting aside)

Applicable legislation governing recourse against an award

2. Are there provisions governing modification, clarification or correction of an award? Are there provisions governing retractation or revision of an award? Under what circumstances may an award be retracted or revised (for fraud or other reasons)? What are the time limits?

Article 14(B) of the IAL and Article 437 of the CPL regulate the correction, interpreta-tion and clarification of an award.

According to Article 14(B) of the IAL, each party can apply to the arbitral tribunal for correction of the errors of fact or calculation or for interpretation of an award partially or in full, within 30 days of the service of the award (two weeks for domestic arbitration). The tribunal has 30 days to correct or interpret the award as of the date of the request (one month for domestic arbitration). The tribunal can also make the corrections ex officio within 30 days of the date of the award (two weeks for domestic arbitration).

Each party is also entitled to request a supplementary arbitral award for the matters raised during the proceedings but that were not decided within 30 days (one month for domestic arbitration) of the service of the award. The tribunal has 60 days (one month for domestic arbitration) to issue the supplementary arbitral award if it deems the request rightful. For domestic arbitration, the arbitral tribunal can extend this period once, by a month.

There is not any way of revising or retracting the award. The only recourse that the parties can initiate is to file an action to set aside the award.

3. May an award be appealed to or set aside by the courts? What are the differences between appeals and applications to set aside awards?

Appealing an award is not possible under Turkish law as the courts are not allowed to review the merits of the case; therefore, setting aside an award is the only recourse available under Turkish law for both international and domestic arbitration (IAL, Article 15(A); CPL, Article 439(1))

Applicable procedural law for setting aside of arbitral awards.

4. Is there a time limit for applying for the setting aside of an arbitral award?

The time limit for instigating a setting-aside action is regulated under Article 15(A)(4) of the IAL and Article 439(4) of the CPL.

The setting-aside action must be filed within 30 days of the service date (one month for domestic arbitration). If there is an application for correction, interpretation or supplementation of the award, this period starts running from the service of the correction, interpretation or supplementation of the arbitral award.

5. What kind of arbitral decision can be set aside in your jurisdiction? What are the criteria to distinguish between arbitral awards and procedural orders in your jurisdiction? Can courts set aside partial or interim awards?

Regional appellate courts can set aside final and partial awards under Turkish law but not procedural orders. Although Turkish law does not clearly define arbitral awards and procedural orders, the main differentiation is that arbitral awards are related to the merits of the case, whereas procedural orders are not.

6. Which court has jurisdiction over an application for the setting aside of an arbitral award? Is there a specific court or chamber in place with specific sets of rules applicable to international arbitral awards?

The court that has the jurisdiction to hear the setting-aside proceeding is the regional appellate court at the respondent’s domicile, habitual residence or place of business (IAL, Article 15(A); CPL, Article 439(1)). If the respondent does not have any of these in Turkey, the Istanbul Regional Appellate Court has jurisdiction (IAL, Article 3).

Although it is highly recommended and proposed by scholars, there is currently no specific court or chamber in place with specific sets of rules applicable to international arbitral awards.

7. What documentation is required when applying for the setting aside of an arbitral award?

The IAL does not foresee a specific form of application for the setting aside of an arbitral award. In contrast, the party applying for domestic arbitration must include the mandatory elements of a plaint petition as listed in Article 119 of the CPL.

In domestic arbitration, the application must contain, among other things, the subject matter of the claim, a summary of material facts, legal grounds and prayers for relief. The courts do not require an original or duly certified copy of the arbitral award. The applicant must submit copies of the briefs and exhibits with copies for each defendant.

Translation of required documentation

8. 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 the application for the setting aside of an arbitral award? If yes, in what form must the translation be?

A Turkish translation certified by a sworn translator must be submitted (CPL, Article 223). Turkish courts generally request a full translation.

Other practical requirements

9. What are the other practical requirements relating to the setting aside of an arbitral award? Are there any limitations on the language and length of the submissions and of the documentation filed by the parties?

According to Article 15(1) of the IAL, setting-aside actions must be heard as a primary and urgent matter.

The procedure of the setting-aside action is governed by the CPL. The defendant has two weeks to file its response petition as of the service of the plaint petition. It is possible to request an extension for two weeks. A Turkish translation of the documents must be submitted.

Whether the application fee is fixed or proportionate varies depending on the court; however, most courts apply a fixed application fee.

Form of the setting-aside proceedings

10. What are the different steps of the proceedings?

Setting-aside actions are subject to the simplified procedure, meaning that each party will submit one brief, plaint petition and defence petition (CPL, Article 316(1)(f)); however, the parties can make further submissions.

Although the courts prefer holding a hearing, it has the discretion not to do so.

11. May an arbitral award be recognised or enforced pending the setting-aside proceedings in your jurisdiction? Do setting-aside proceedings have suspensive effect? If not, which court has jurisdiction over an application to stay the enforcement of the award pending the setting-aside proceedings, what are the different steps of the proceedings, and what are the criteria to be met?

It is not possible to successfully complete the recognition or enforcement proceedings when there is a pending setting-aside action. In other words, setting-aside actions have suspensive effect. Only if one of the following three conditions is met can a recognition, enforcement or execution proceeding be successful (International Private and Procedural Law (IPPL), Article 62; IAL, Article 15(A)); otherwise, it would be rejected:

• the setting-aside proceeding is rejected, and the decision has been finalised;
• the setting-aside proceeding is not filed within the time limit; or
• the parties waived their right to file setting-aside proceedings (waiver is only possible if both parties are not residents in Turkey).

For domestic arbitration, setting-aside proceedings do not have suspensive effect; however, the respondent can request a stay of execution in return for security that would suffice to cover the amount of the receivable in the award (CPL, Article 439(4)).

Article 439 of CPL does not specify the competent court to render a stay of execution decision. Although some are of the view that the regional appellate courts must have jurisdiction over an application to stay the execution of an award, most scholars opine that the enforcement courts are competent, in accordance with Article 36 of the Execution and Bankruptcy Law (EBL).

12. What are the grounds on which an arbitral award may be set aside?

The grounds for setting aside arbitral awards of domestic and international arbitration are identical as both are adopted from the UNCITRAL Model Law on International Commercial Arbitration (CPL, Article 439; IAL, Article 15).

Accordingly, the parties can assert that:

• a party to the arbitration agreement did not have the capacity to agree on arbitration, or the arbitration agreement is invalid;
• the composition of the arbitral tribunal was not in compliance with the parties’ agreement or with the IAL;
• the final award was not rendered within the required period;
• the arbitrator or the arbitral tribunal unlawfully decided their competence or incompetence;
• the arbitrator or the arbitral tribunal decided beyond the scope of the arbitration agreement or did not decide on the entire claim or decided beyond their competence;
• the arbitral proceedings were not in compliance with the parties’ agreements, or with the IAL if there is no agreement, and the non-compliance affected the substance of the award; and
• the parties were not treated equally.

The court can examine ex officio whether the dispute subject to the arbitration is arbitrable and whether the award violates public policy.

13. When assessing the grounds for setting aside, may the 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 can only examine setting-aside applications based on limited grounds, such as the violation of public policy and other grounds specified in Article 15 of the IAL.

14. Is it possible for an applicant in setting-aside proceedings to be considered to have waived its right to invoke a particular ground for setting aside? Under what conditions?

The parties can waive the right to file setting-aside proceedings in full or in part or to invoke particular grounds for setting aside. The waiver must be explicit and made by a party whose domicile or usual place of residence is outside Turkey. The waiver does not have to be in the arbitration agreement; it can be made later (IAL, Article 15(A)).

Decision on the setting-aside application

15. What is the effect of the decision on the setting-aside application in your jurisdiction? What challenges or appeals are available?

The regional appellate court’s decision on the setting-aside application can be appealed before the Court of Cassation within two weeks of the service of the reasoned decision (IAL, Article 15(A); CPL, Article 439).

Effects of decisions rendered in other jurisdictions

16. Will courts take into consideration decisions rendered in relation to the same arbitral award in other jurisdictions or give effect to them?

The courts will consider the court decisions of other jurisdictions before rendering a recognition or enforcement decision. For example, if the award has been set aside by the competent court of the country in which it was made, the enforcement or recognition request in Turkey must be rejected (IPPL, Article 62(1)(h)).

Applicable procedural law for recognition and enforcement of arbitral awards
Applicable legislation for recognition and enforcement

17. What is the applicable procedural law for recognition and enforcement of an arbitral award in your jurisdiction? Is your jurisdiction party to treaties facilitating recognition and enforcement of arbitral awards?

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 (i.e., 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 the 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?

Turkey is a party to the 1958 New York Convention, which entered into force on 25 September 1992. Turkey 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 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 Turkey, 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.

First published by Global Arbitration Review in 08.06.2023.