Turkish Law Blog
Enforcement of ICSID Awards in Turkey in light of Recent Developments
This article is written for the purpose of enlightening the law society concerning the last developments in Turkey regarding the enforcement of ICSID awards. There was a debate about the enforceability of ICSID awards due to lack authorization appointment concerning validation of ICSID awards in Turkish Territory. In other words, until today Turkey did not assign any administrative body for certification of ICSID award despite the fact that the Washington Convention is ratified by Turkey.
Article 54 P 2 of the convention is as follows:” A party seeking recognition or enforcement in the territories of a Contracting State shall furnish to a competent court or other authority which such State shall have designated for this purpose a copy of the award certified by the Secretary-General. Each Contracting State shall notify the Secretary-General of the designation of the competent court or other authority for this purpose and of any subsequent change in such designation.”
Accordingly, there was a big question mark regarding the implementation of the enforcement provision of the Washington Convention. The main debate was concentrated on the lack of establishment or assignment of such authority for certification of ICSID award would result with a rejection by the local execution office. However, doctrinal main opinion was against it. There are currently two law books written by Prof. Nuray Eksi and Salih Uygun particularly touches the subject of the “execution” or “enforcement” of ICSID awards in Turkey. In consideration of two authors’ main idea, rejection of enforcement of ICSID award due to lack of certification means the violation of the international convention under article 90 of the Turkish Constitution. Formal conditions of the award must not affect the enforcement which is declared by Turkey.
Under Turkish Law, direct enforcement of an award given by foreign arbitration without any court case is a very exceptional situation. There are only a few exceptions that applicant can apply to the administrative execution office for the direct implementation of execution procedure along with an award given by a foreign arbitration. This exceptional situation is also important to see the reaction of the executive officers which is unlike the common procedure. Additionally, foreign awards enforcement without any certification of Turkish administrative bodies is not also a common practice as compared to other implementations related to foreign award enforcement.
Turkey ratified Washington Convention on the 27.05.1988 and the convention is entered into force on 02.06.1988. From that day to today, there were 4 cases initiated against Turkey by foreign investors. 2 of 4 cases are still pending and other 2 is already concluded. As can be seen from the ICSID case records of Turkey, all cases were filed against the Republic of Turkey. Cases against the Republic of Turkey did not clarify lack of ICSID authorization body because execution against administrative bodies does not have any similarity as a private law execution procedure and the most needed clarification for certification issue was execution procedure under Turkish Private Law. Because there is no requirement of any originality of the award copy where Turkey as a defendant part of the arbitration. However, awards against Turkish companies are not the same. Accordingly, there had been no award given against Turkish Legal Entity (company) since 2016 and debate related to lack of certification body issue was an ongoing issue.
In the Award rendered on 8 March 2016, which was accompanied by the dissenting opinions of both the Claimant- and the Respondent-appointed arbitrator, the Tribunal decided that it had jurisdiction to hear the dispute between İçkale İnşaat Limited Şirketi and the Republic of Turkmenistan and that the Claimant’s claims were admissible. The Tribunal also found that none of the claims made by the Claimant had merit and hence dismissed them in their entirety.
Turkmenistan Justice Ministry requested execution of said award against İçkale İnşaat Limited Şirketi from Cindemir Law Office. And the award firstly and directly executed against Turkish Company in Turkish History. Execution of award is implemented by Istanbul Anadolu 2. İcra Dairesi ( Istanbul Anadolu 2nd Chamber of Execution). However, the execution procedure is objected by İçkale İnşaat Limited Şirketi based on the main legal ground mentioned above. İçkale raises an objection claiming that award which is not certified by an assigned authority cannot be executed in Turkey. There were also additional objections by İçkale but the most debated matter in doctrinal discussion was the objection related to certification.
The objection is reviewed by Court of 2. İstanbul Anadolu İcra Mahkemesi (Court of the 2nd chamber of Istanbul Anadolu Execution Court). The court decided to get an opinion from Kocaeli University Law Faculty. After submission of the expert report, the court rejected İçkale’s objection to the execution procedure. The expert report also stated that even Turkey did not assign any administrative body for certification of ICSID award, a binding international agreement cannot be violated due to the failure of the assignment. Article 54 of convention explicitly states that “Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State.”. The court did not want to violate article concerned because Turkey did not fulfill the duty of authority assignment stemming from the international agreement which has superiority and direct applicability under article 90 of the Constitution.
Upon rejection of 2nd Chamber of İstanbul Anadolu Court, İçkale applied to the high court and the court rejected the objections as a final decision is given in 2017. İstanbul Bölge Adliye Mahkemesi 21. Hukuk Dairesi ( 21st Chamber of Istanbul Regional Court) ended discussion of ICSID Award.