Turkish Law Blog
Is it Sufficient? : Application of the New York Convention
Arbitration has become one of the most applied alternative dispute resolution methods more and more every day due to long proceeding of domestic courts or concerns about neutrality and so on. What makes changeling of the arbitration system is enforcement of an arbitral tribunal award. Undeniably, the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) is one of the cornerstones of the international arbitration to recognize and enforce foreign awards. Currently, the New York Convention has 159 contracting states. If we take into account the number of states recognized by the United Nations, 159 contracting states mean that this Convention is applicable in most countries in the world. And yet, recently celebrated 60th anniversary of the New York Convention hosted a discussion on whether the New York Convention needs to be replaced. According to the 2018 International Arbitration Survey carried out by the Queen Mary University of London and White & Case; 43% of the respondents have a view that practical experiences to enforce an award through the New York Convention in the different jurisdictions are less successful than the theory. There is a motto for a change of the New York Convention right now claiming that the New York Convention is too short, incomplete and uncertain for a modern treaty. The New York Convention has been criticized particularly following two reasons; the uncertainty of the public policy rule and configuration of the setting aside rule.
According to the New York Convention Article V (2) (b), if the recognition or enforcement of an award is against the public policy of that country, courts may refuse the recognition or enforcement request, and there is no certain definition of public policy. Not having a definition of public policy leads to a different interpretation of the term, this creates uncertainty. But most importantly as a consequence of it, practicing of an international convention would be leaving to the national courts’ hands. The courts have implemented the public policy in various ways; whereas some countries hold their domestic policy so strictly like China, Vietnam, or Russia; some countries have preferred applying international public policy like England. As an example of an English case; in RBRG Trading v Sinocore, English court recognized and addressed the judgment of the international arbitration tribunal in an illegality matter rather than applying pure domestic policy as a demonstration of arbitration-friendly approach. On the other hand, China implements a bit different approach than England. The public policy contains traditional and societal sentiment; it is broader than just public morals and courts in China consider public policy in every case even though the parties have not raised it. Since the adaptation of the New York Convention, China aimed to the implementation of the pro-enforcement regime, however, the case records of the Supreme Courts showed that they have the inconsistent interpretation of public policy term in the international practice and even sometimes unconvincing.
As it is clear, every country practices public policy in different forms, and that may not create a standard of understanding of public policy. However, the different interpretation of the public policy should be seen only as a matter of state sovereignty, which is a complicated issue to overcome, rather than the inadequacy of the New York Convention. Furthermore, the drafters of the New York Convention may specifically be prepared the article in this way to protect state sovereignty even though they knew that this might undermine the enforcement power of the New York Convention because of the idiosyncratic local rules used by the court. Though, after the 60th anniversary of the New York Convention, today, the courts are actually more able to understand the nature of the arbitration system and respect the award because of the development of technology, globalization, and better communication techniques. It is likely to be better in the future if the courts’ tendency continues to go arbitration-friendly.
The second important issue has been discussing under the New York Convention is setting aside the rule. Under Article V (1) (e) of the New York Convention, “Recognition and enforcement of the award may be refused ….. the award has been set aside by a competent authority of the country in which, or under the law of which, that award was made” . Some commenters note that there is no argument on the discretionary nature of Article V (1) (e) since it has been regulated with the word ‘may’ rather than mandatory nature of ‘shall’. On the other hand, some claims that there is no possibility to recognize or enforce an international award if that award has been set aside in the country of origin. The most recent decision that sparks a debate through the New York Convention lately is Comissa v PEMEX. Even though an award set aside in Mexico where the award was rendered, enforcement of the award was granted in New York and confirmed by the Court of Appeal. The Court of Appeal applied the unfettered discretion to enforce an annulled award.
Some believe that discretionary of the article is not also in the text; it also about the spirit of the New York Convention. The aim of the convention is that facilitate the recognition and enforcement of the international awards, not harmonization. Convention aims to prohibit restrictive applications of the courts for recognition and enforcement, and there is no limit to pro-enforcement bias. Moreover, if drafters aimed at a restrictive application, they would have added a provision to give that effect in the text. Furthermore, some believe that there is no reason for the state which set aside the award to be concerned about the enforcement of that award outside of their border since that would not be a threat of their legal order. Also, every country has their own rules for the setting aside reasons, and they do not correspond to generally accepted standards; therefore, international recognition should not be abandoned because of the setting aside decision in the origin of the award. There is no doubt that Article V(1) (e) of the New York Convention gives discretion power to the courts and this is neither against the aim of the New York Convention nor creates disorder at the international level. Also, courts have been encouraged to enforce an international award and act arbitration-friendly lately. Setting aside one award in one country due to the restrictive attitude of the court should not affect the enforcement in another country. Furthermore, double control on the similar grounds may assist the other countries’ court to consider some certain issues like in such circumstances that a decision would not be set aside, other courts may not be able to notice that particular issues. Discretion power of Article V (1) (e) is clear, and it should be kept in the New York Convention. As long as the courts do not apply Article V (1) (e) to restrict the enforcement of an award, there is no need to abolish it.
In Turkey, according to the domestic law, disputes relating to rights in rem in immovable property located in Turkey and disputes that are not subject to the wills of parties are not arbitral outside Turkey; therefore an award related to these two issues cannot be recognized and be enforced in Turkey under the New York Convention. Non-arbitrability and public policy are ex officio even though the parties do not raise them during the proceedings; courts have no discretion power on not looking at these grounds. There is not a specific definition of public policy under Turkish law; it can only be defined through the doctrine and judicial. Unfortunately, some courts are still unfamiliar to the New York Convention; therefore they tend to deny enforcement relying on the ground public policy. (METEX v TEX - Court of Appeal 15th Legal Decision, 1 February 1996 No. 1996/ 627) 
In the Turkish version of the convention, it is not clear whether the court has a discretion power on enforcing an award set aside at seat; however, generally, the doctrine has accepted that courts have discretion power. On the other hand, as it is adopted under Turkish domestic law; if an award cannot be used practically in its place of origin, it cannot be used in Turkey. If a party apply Turkish Acts on International Private and Procedural Law (AIPPL) to enforce a foreign award set aside a place of origin, that award cannot be enforced in Turkey. This regulation may seem giving a vision of the Turkish courts’ approach, but it is unknown because there are no published cases to make a worthwhile assessment in this matter. Since the AIPPL presents an idea that an annulled award in the place of origin cannot be enforced in Turkey, Turkish courts may apply in the same view when they interpret the set-aside rule under the New York Convention. But, Turkish courts have become more familiar to the recognition and the enforcement of the foreign arbitral award under the New York Convention. Since the recognition of the New York Convention, Turkish courts have started to decide to favor the enforcement of foreign arbitral awards even though courts delicate about public policy. The New York Convention has influence positively to the development of commercial arbitration in Turkey phenomenally, and it is one of the most successful conventions in private international law. Organizing conferences or seminars about the convention, especially for judges, or maybe even establishing specific department in the supreme court only to deal with both foreign arbitration awards and court decisions might help developing recognition and enforcement system in Turkey.
Despite the fact that the New York Convention may need some amendments, there is no proper environment right now for it. Furthermore, there is no guarantee that each contracting states would accept another convention that may interfere in their sovereignty. Applicability of the New York Convention in a large scale is the biggest success of it and if the replacement convention would not be able to obtain that support, then bringing a new system would not provide better arbitration world than the New York Convention. There is also no guarantee that even if a new convention is approved, states may not apply the rule as it is necessary. Law and regulations, including international rules, are efficient as long as the exerciser bodies use them as they supposed to do. By the time passes, courts have started to become familiar to international arbitration, and countries put an effort to become an attractive place for international arbitration. As the robust and reliable judicial system is a key part of it, courts have started to implement an arbitration-friendly approach. The unfamiliarity of the international arbitration is the biggest reason for the problems and discussions abovementioned rather than the provisions of the New York Convention; vice versa the courts have become familiar to the international arbitration thanks to the New York Convention.
 Nigel Blackaby, Constantine Partasides, Alan Redfern, J Martin Hunter, Redfern and Hunter on International Arbitration, (Oxford University Press 2009).
 Marike R. P. Paulson, ‘The Eve of the New York Convention’s 60th Anniversary and the Birthday Party: How to Prepare with too Many Guests at the Table’ Kluwer 20.07.2018 <http://arbitrationblog.kluwerarbitration.com/2018/06/21/eve-new-york-conventions-60th-anniversary-birthday-party-prepare-many-guests-table-il-ne-faut-pas-melanger-les-tables/> accessed 11 November 2018.
 Queen Mary University of London, White&Case, ‘2018 International Arbitration Survey: The Evolution of International Arbitration’ 2018 <http://www.arbitration.qmul.ac.uk/media/arbitration/docs/2018-International-Arbitration-Survey---The-Evolution-of-International-Arbitration-(2).PDF> accessed 29 July 2019.
 V.V. Veeder, ‘Is There a Need to Revise the New York Convention’ 1(2) 2010 Journal of International Dispute Settlement 499.
 New York Convention Article V (2) (b).
 RBRG Trading (UK) Limitd v Sinocore International Co. Ltd.  EWCA Civ 838.
 Blackaby N., Partasides C., Redfern A., Hunter J. M. (n 1).
 Nadia Darwazeh, Friven Yeoh, ‘Recognition and Enforcement of Awards under New York Convention’ 25 (6) (2008) Journal of International Arbitration, Kluwer Law International 837.
 Margaret Moses,, ‘Public Policy: National, International and Transnational’,2018 Kluwer Arbitration Blog <http://arbitrationblog.kluwerarbitration.com/2018/11/12/public-policy-national-international-andtransnational/> accessed 13 November 2018.
 New York Convention Article V (1) (e).
 Jonathan Hill, ‘The Exercise of Judicial Dicretion in Relation to Applications to Enforce Arbitral Awards under the New York Convention’ 36(2) (2016) Oxford Journal of Legal Studies 304.
 Marike Paulsson, Comissa v Pemex the Sequel: Are the Floodgates opened? The Russian Doll Effect further defined’ 2016 Kluwer Arb. Blog <http://arbitrationblog.kluwerarbitration.com/2016/08/11/reserved-pemex-decision/> accessed 14 November 2018.
 Pierre Lastenouse, ‘Why Setting Aside an Arbitral Award is not Enough to Remove it from the International Scene’ 16(2) (1999) Kluwer Law International 25.
 Ergun Ozsunay, Murat R. Ozsunay, Interpretation and Application of the New York Convention in Turkey, in George A. Bermann Recognition and Enforcement of Foreign Arbitral Awards The Interpretation and Application of the New York Convention by National Courts (Springer 2017).
 Nuray Ekşi, ‘The Courts: A Critical Analysis of the Precedent of the Turkish Court of Appeal Relating to the Enforcement of Foreign Arbitral Awards’, in Christian Klausegger , Peter Klein , et al. (eds), Austrian Arbitration Yearbook 2008, Austrian Yearbook on International Arbitration, Volume 2008.
 Bilgin Tiryakioglu, Asli Bayata Canyas, 'Challenges to Arbitral Awards', in Ali Yesilirmak, Ismail G. Esin (eds), Arbitration in Turkey, (Kluwer Law International 2015).
 Ozsunay E., Ozsunay M. R. (n 19).
 Tiryakioglu B., Canyas A. B. (n 23).
 Yasin Cakır, Aysen Yasar ‘Recognition and Enforcement of Arbitral Awards in Turkey’ Marh 2018 Gurulkan& Cakır < http://www.gurulkan.com/Docs/Publications/928443755.pdf> accessed 15 November 2018.
 Ozsunay E., Ozsunay M. R. (n 19).