Let's assume that, after spending a lot of time and expense, your legal struggle has finally resulted in your victory and you have received a foreign arbitral award in your favor. So, is this arbitral award really convenient for recognition and enforcement within the framework of Turkish Law? Or are you holding a foreign arbitral award that may not be enforceable ?

(There are two regulations in the recognition and enforcement of foreign arbitral awards (other than ICSID arbitral awards) in Turkey, and in the rest of this article are only included the recognition and enforcement of international commercial arbitral awards issued by Contracting States. In this article, International Private Law No. 5718 and other foreign arbitral awards that may be subject to recognition and enforcement within the scope of the Law on Procedural Law and bilateral agreements between Turkey and some countries are not included.)

INTRODUCTION

Nowadays Contracting parties prefer arbitration, which is an alternative way to state courts, so as to save time and money. To be able to for foreign arbitral awards made subject to recognition and enforcement in Turkey (for ease of expression, hereinafter referred to as "enforcement", which includes the recognition of decisions), certain conditions regarding both procedural and substantive principles are required to be met. Within the scope of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards dated 1958 ("New York Convention"), in order for a foreign arbitral award to be subject to enforcement in our country, the foreign arbitral award must be issued by in the territory of another state (or the arbitral award is not considered as national) and must be nature of its dispute related to commerce.

Grounds to Refuse Enforcement :

The provisions of Article V (1) and (2) of the New York Convention clearly state the possible obstacles to enforcement by domestic courts, and these grounds are as follows:

1. Invalid Arbitration Agreement

According to Turkish Legal System, in principle , the place of resolution of disputes is subjected to the state courts. As a matter of fact, Article 9 of the Constitution Of The Republic of Turkey states that " Judicial power shall be exercised by independent courts on behalf of the Turkish Nation..". As we may see this authority shall be exercised by the state and through the courts established by the state.1 However, the jurisdiction of the courts might be excluded in the case a valid arbitration agreement concluded between the parties. Therefore, if one of the contracting parties brings the dispute to court despite the valid arbitration agreement between them, the court shall issued not to have jurisdiction. As mentioned in Article 412/2 of the Code of Civil Procedure ("TCC"), the arbitration agreement may be drafted as a clause within contract between the parties or it may be drafted as a separate contract (for ease of expression, hereinafter referred to as "arbitration agreement").

So, what elements shall be present we may talk about a valid arbitration agreement?

I. Intention to Arbitrate: The intention of the parties to arbitrate must be mutual and consistent to each other rather than a mere intention to arbitrate. To be able to mention about the existence of the intention of the parties, these arbitration intentions must be clear and precise, without causing any confusion. However, sometimes in practice it may be seen that the contracting parties may alternatively authorize both arbitration proceedings and a state court at the same time. However, arbitration agreements drafted in such ambiguous terms may be cause the intention of the parties to be unclear and at the end of the day may be result in to the invalidity of the arbitration agreement.2

II. Written Form: It is stated that in Article 4 titled as "Definition and Form" of the International Arbitration Law No. 4686 ("ITC") and in the 3rd paragraph of Article 412 of the Civil Code that the arbitration agreement is required to be made in written form. However, as we may understand from the rest of the text of Article 4 of the ICC, this written condition has been interpreted broadly and it is aimed to sustain of the intention of the parties on arbitration .

III. A specific legal relationship: The arbitration agreement shall not be made indefinite, unlimited or about any subject. When concluding an arbitration agreement between the parties, it is recommended that contracting parties first of all carefully examine whether they have concluded an arbitration agreement regarding a specific legal relationship or at least identifiable legal relationship. As a matter of fact, in the event of any dispute in the future, the arbitration agreement, which is vague, unlimited and possibly drafted on any subject, may came across with the risk of being invalid. However, it is not necessary for any dispute to exist between the parties at the time the arbitration agreement is concluded. But probably, at the time of concluding the arbitration agreement, the parties who signed this agreement should know for which dispute they have concluded the arbitration agreement and signed the relevant contract. Therefore, it is accepted that if it is decided that disputes arising from such a legal relationship with certain boundaries are resolved through arbitration, the dispute is considered as certain.3

IV. Legal Capacity : The legal capacity requirement, which is one of the validity conditions of ordinary contracts pursuant to Turkish legal system, is also one of the validity conditions of the arbitration agreement. As a matter of fact, in order to be able to talk about a valid arbitration agreement, the parties are required to be competent, as well as there must be no collusion or their intentions shall not be impaired.

V. Arbitrability: It is clear that the parties shall not subject every dispute they want to choose for arbitration, and that if the limits set by the law are exceeded, the arbitral award shall constitute as grounds to refuse enforcement. To be able to mention a valid arbitral award, the parties shall have the authority of the relevant matter. In other saying; Contracting Parties are allowed to only arbitrate disputes that have arisen/will arise regarding matters over which they have the freedom to contract.

However, it is important to remember that in the case of the asserting the invalidity of the arbitration agreement constitutes a violation of Article 2 of the Civil Code, this objection shall not be heard.4

2. Violation of the Right of Defense During the Foreign Arbitration Trial

The most common reason for annulment claimed by the parties before the national courts in order to annul the arbitral awards decided against them or to prevent the enforcement of the decision is that the parties' rights of claim and defense have not been respected . Because only arbitral awards issued by the result of a fair trial may be subject to enforcement. This is beacuse the parties claim that their defense rights were violated during the arbitration proceedings and that the arbitral award in question was made. Although different decisions have been issued by different state jurisdictions, the number of annulment cases in which these claims have been successful is relatively low.The party against whom the foreign arbitral award is requested to be recognized or enforced shall have been informed of the appointment of the arbitrator, and proper notification has been made to the Arbitrator. He/she must have been granted sufficient time for the appoint, duly noticing, submission of evidence or preparation of defense, or shall not have been deprived of the opportunity to use means of claim and defense due to any other reason.

3. Arbitral Award Not Issued Within the Scope of Authority/Excess of Authority

In cases of excess of authority or lack of authority, one may face with serious consequences such as refusing the recognition and enforcement of arbitral award. Therefore, arbitrators shall decide on the dispute brought to arbitration solely by being bound by the will of the parties. This authority requirement also applies to both final decisions and interim decisions issued by arbitrators.

4. Establishment of the Arbitral Tribunal and Arbitration Procedure, Agreement of the Parties to Arbitration; In Cases No Provision in the Agreement, It Constitutes a Violation of the Law of the Place of Arbitration

The establishment of the foreign arbitral tribunal and whether the arbitration procedure constitutes a violation of the arbitration agreement of the parties or, in case no provision in the agreement, the law of the place of arbitration (lex arbitri), are among the issues that shall be carefully examined at the enforcement stage.

5. The Decision Required to be Recognized and Enforced Should Not Be Binding, Cancelled or Execution Postponed

The arbitral award whose enforcement is requested shall be issued and become binding for the parties. In addition to this, its arbitral award shall not be subject to enforcement in the case of its case for the annulment of the decision or its execution is postponed.

6. The Subject Matter of the Dispute is Not Arbitrable According to the Law of the State for which Recognition or Enforcement is Requested

The element of arbitrability is a legal institution related to public order and shall be taken into consideration by the court ex officio, even if it is not put forward by the parties. In other words, it is not possible for the parties to arbitrate on every issue as they wish. As a matter of fact, in any case, even if there is an agreement on arbitration in the will of the parties; Disputes arising from matters that are not subject to the will of the parties in accordance with the legal regulations of the states may constitute an obstacle to enforcement. As stated in the ITC; Arbitration proceedings may not be conducted and arbitral awards may not be issued in disputes regarding real rights over immovable properties located in Turkey and in disputes that are not subject to the will of both parties.

7. Recognition or Enforcement of the Foreign Arbitral Award is Contrary to the Public Order of the Requested State

The arbitral award is not allowed to constitute a violation of general morality and public order (such as the arbitrators not being independent and impartial, one of the parties being given the upper hand in the arbitration agreement, the subject of the contract being immoral, judgment without justification of arbitral award, etc.). The spirit of arbitration proceedings consist of freedom of will and ultimately the will of the parties to arbitrate. However, in cases of violation of public order, freedom of will and state sovereignty come into conflict with each other. In the jurisdiction of the state where recognition and enforcement of the foreign arbitral award is requested, the court exercises its sovereign authority and automatically checks whether the decision is compatible with its own authority.

As stated above under these circumstances New York Convention entitles to contracting states right to refuse the requests for recognitn and enforcement of the foreign arbitral awards.

Reference:

1. https://www.anayasa.gov.tr/media/7258/anayasa_eng.pdf

2. "In case of a dispute between the parties, under the title of "Miscellaneous Provisions" of the Agreement of the Export Association, the parties shall first apply to the arbitration of the financial advisor Kemal B. and in the case written notification and arbitral award may not resolve the dispute, they shall apply to the court. In this case, it is stated that the competent authority shall be the Istanbul Judicial Authorities." With the arbitration agreement, the parties agree to resort to arbitration to resolve a dispute between them (Article 516 of Civil Code). In the event of the parties want to file a lawsuit regarding the dispute that is the subject of the arbitration agreement between them, they shall go to arbitration,so they are allowed to file the lawsuit with arbitration, not in state courts. The arbitration clause agreed between the parties is deemed to be invalid as its clause entitles the parties the authority to apply to court after the arbitration and does not stipulate the arbitral award as the sole authority in resolving the dispute. On the other hand, even if it is accepted for an instant that there is a valid arbitration clause, the letter dated of 06.2000 is regulated, which is accepted as a petition for filing a lawsuit with the arbitrator, is not in the form of a petition, but in the form of requesting an opinion on the dispute from H. Kemal, who is accepted to as arbitrator. The fact that this letter was by accepting as a "petition" for filing a lawsuit to the arbitration and rendering a verdict is deemed to be inaccurate.'', Y. 11. HD. 31.03.2013, 1050/3012, (www.kazanci.com, ET: 01/10/2019).

3. AKINCI, p. 111.

4. HD. 17.4.2007, 2005-14428/6022.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.