Recognition and Enforcement of ICC Arbitral Awards in Turkey

1. Introduction

In order for foreign arbitral awards to be effective in Turkey, the relevant award must be recognized and enforced. In order to decide which of these two types of cases should be filed, it is necessary to consider the nature of the arbitral award. If the relevant foreign arbitral award is enforceable, it is necessary to file an enforcement case and if it is not enforceable, it is necessary to file a recognition case.[1] As a result, while the decision of enforcement given in an enforcement case turns a foreign arbitral award into a definitive, enforceable decision constituting conclusive evidence, the recognition case does not impose enforceability on the foreign arbitral award. In this context, it can be said that the recognition case is a case for the use of foreign arbitral awards as conclusive evidence or final judgment.

Turkish Law, together with Articles 60-63 of the International Private Law and Procedural Law numbered 5718 and the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards to which Turkey is a party, has extensive regulations on the recognition and enforcement of foreign arbitral awards and in terms of the fact that foreign arbitral awards have definitive provisions, constitute conclusive evidence and are enforceable.

In this context, it should be noted that international commercial arbitration tribunal’s decisions and procedures for rendering arbitral awards regarding investment disputes enforceable also differ. For example, the Convention on Settlement of Investment Disputes between States and Nationals of other states – ICSID sets forth a special system for the enforcement of foreign arbitral awards. Accordingly, arbitral awards resulting from arbitration disputes concluded by the ICSID Arbitration Centre differ from the New York Convention in accordance with Article 54 of the ICSID Convention and the resulting arbitral award shall be binding, final and enforceable for each contracting state without any action.

2. Recognition and Enforcement of ICC Arbitral Awards

In accordance with the Rules of Arbitration of the International Chamber of Commerce (ICC), the arbitral award given as a result of the dispute must be submitted to the ICC International Court of Arbitration for the formal approval of the award by the arbitral tribunal before it is signed by the arbitrators. It is not possible to send or notify the parties of the arbitral awards that are not approved by the court. In addition, this court has the right to amend the award without touching the basis of the award. After the approval procedure, the award of the International Court of Arbitration shall be submitted to the Secretariat of the ICC International Court of Arbitration, as it is the duty of the Secretariat to notify the parties of the signed copies of the agreed arbitral award. Upon the notification of the related foreign arbitral award to the parties, the award becomes binding. In this context, according to Article 28 of ICC Arbitration Rules, the parties are under the obligation to fulfill the arbitral award without delay, but the party, who thinks there is a mistake of fact in the award, has the opportunity to apply to the Secretariat within 30 days.

Although the ICC arbitral award may be binding upon the notification of the parties, in terms of the law of the country in which the award is to be enforced, it is possible that there may be conditions to sue to the court of the relevant country for entrustment or recognition or enforcement. Certainly, these conditions are not included in the ICC arbitration rules because they are the conditions imposed by national law, so the law of the country in which the award will be enforced is important for the enforcement of arbitral awards. In this context, the enforcement of an ICC arbitral award in Turkey, the final judgment, and the conclusive evidence of the award is subject to recognition or enforcement by the local courts.

When examining the New York Convention for the enforcement of an ICC arbitral award in Turkey, it is seen that it refers to the procedural law of the enforcement state. In this context, the law that should be considered in terms of Turkish Law will certainly be the “Law on International Private Law and Procedural Law (MÖHUK)” numbered 5718. In this context, it is possible to say that the provisions contained in MÖHUK No. 5718 shall be applied in the enforcement of decisions subject to The New York Convention. In this context, enforcement is requested from the court of First Instance, which is the place agreed by the parties in writing. If there is no such agreement between the parties, in accordance with Article 60 of MÖHUK, the court of the residential area of the party decided against in Turkey, or the court of the place where he or she is located, or the court of the place where the properties may be subject to execution shall be deemed authorized. The procedure for requesting enforcement is also regulated in Article 61 of MÖHUK. Accordingly; “the party requesting the enforcement of a foreign arbitral award shall attach the documents written below to the petition, together with the copies in the amount of the number of persons in the opposing party:

a) An original or certified copy of the arbitration agreement or condition.
b) The original or duly certified copy of the arbitral award, which has been duly finalized and enforced or has become binding for the parties.
c) Translated and duly certified copies of documents listed in sub-paragraphs (a) and (b).”
Upon the submission of the relevant documents to the court, the petition and attachments are notified to the other party and the trial date is set. The case in question is subject to a simple trial procedure.

The terms of enforcement of the foreign arbitral award also apply to the recognition, certainly. However, there is no obligation to file a separate case for recognition, as in the enforcement process. Certainly, there is the possibility of filing a case for recognition, but in practice, the parties request recognition within an existing case. As mentioned above, recognition does not impose enforceability on the foreign arbitral award; it only gives the quality of final judgment and conclusive evidence to the award.

3. Conclusion

International arbitration is the number one alternative way of dispute resolution in the settlement of disputes arising from international conventions. The functioning of this resolution depends on the fact that the arbitral awards given are soundly enforceable and can constitute a judgment. If the awards in question do not have any effect or cannot be enforced, that will render the system meaningless. The parties who submit the settlement of the dispute to the arbitral tribunals in accordance with the ICC Arbitration are also obliged to ensure that these decisions, which are binding on them, are recognized or enforced in the countries in which they will be adjudicated.
In this context, the national laws of the countries in which the decision will be adjudicated are of importance, and for the decision of an ICC arbitration award to be executed or to be adjudicated in Turkey, the relevant award must be recognized or enforced. Otherwise, although the arbitral award in question shall bind the parties, it shall not be enforceable in terms of national law, nor shall it constitute conclusive evidence or final judgment.

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Hansu Attorney Partnership provides legal services to local and international clients, particularly in the areas of real estate, corporate, tax, energy and intellectual property law. This article is intended to present recent developments in Turkey and does not constitute legal or professional advice. Readers of this article should contact a lawyer to obtain advice with respect to any particular legal matter.