Arbitration procedures and practice in Turkey: overview

A Q&A guide to arbitration law and practice in Turkey.

The country-specific Q&A guide provides a structured overview of the key practical issues concerning arbitration in this jurisdiction, including any mandatory provisions and default rules applicable under local law, confidentiality, local courts' willingness to assist arbitration, enforcement of awards and the available remedies, both final and interim.

To compare answers across multiple jurisdictions visit the Arbitration procedures and practice Country Q&A Tool.

This Q&A is part of the global guide to arbitration. For a full list of jurisdictional Q&As visit www.practicallaw.com/arbitration-mjg.

Contents

Use of arbitration and recent trends

1. How is commercial arbitration used and what are the recent trends?

Use of commercial arbitration

Commercial arbitration in Turkey is not widely used for domestic disputes compared to litigation. Arbitration is not seen as a cost-effective method to resolve domestic disputes which do not involve significant amounts. However, arbitration is widely used to resolve international disputes. The main legal areas which commonly use arbitration are:

  • Construction.

  • Maritime.

  • Commercial.

Recent trends

As a party to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention), it is possible to apply to the Turkish courts to enforce an arbitral award granted in the territory of a foreign signatory country.

As arbitration is becoming more popular in international commercial disputes, national courts are becoming increasingly familiar with this alternative dispute resolution method. The recognition and enforcement of arbitral awards in Turkey is allowed if the relevant conditions are met.

Additionally, The Law on the Istanbul Arbitration Centre (Law No. 6570) (Published in the Official Gazette dated 29 November 2014 and numbered 29190) entered into force on 1 January 2015 and established an arbitration centre in Istanbul. The duty of the Arbitration Centre is to (Article 4, Law No. 6570):

  • Set the rules for arbitration and alternative dispute resolution methods and carry out related services.

  • Provide advertisement and publications, supporting scientific research, and co-operate with foreign and local persons and entities related to arbitration and alternative dispute resolution methods.

The Law also provides detailed explanations on the organisation of the centre.

Advantages/disadvantages

Arbitration for domestic disputes has no particular advantages over litigation where the subject matter of the dispute does not involve significant amounts as it is relatively costly. However, advantages include:

  • Speed.

  • Specialisation (that is, expertise of the arbitrator in a specific business sector, for example).

  • Freedom to agree the language of the arbitration proceeding, allowing for the more active participation of foreign parties.

 

Legislative framework

Applicable legislation

2. What legislation applies to arbitration? To what extent has your jurisdiction adopted the UNCITRAL Model Law on International Commercial Arbitration 1985 (UNCITRAL Model Law)?

There is a distinction between provisions relating to domestic and international arbitration. Both sets of rules are largely based on the UNCITRAL Model Law on International Commercial Arbitration 1985 (UNCITRAL Model Arbitration Law):

  • Domestic arbitration. The Code on Civil Procedure (Law No. 6100) (published in the Official Gazette dated 4 February 2011 and numbered 27836) (CCP) contains the provisions that apply to disputes that have (Articles 407 to 444):

    • no foreign element; and

    • agreed Turkey as the place of arbitration.

  • International arbitration. The only specific code relating to international arbitration proceedings is the Turkish International Arbitration Code (TIAC) (Law No. 4686) (published in the Official Gazette dated 5 July 2001 and numbered 24453). The TIAC contains the primary provisions to be applied in disputes:

    • with a foreign element where Turkey is the agreed place of arbitration; or

    • where the parties, arbitrator or arbitral tribunal have agreed that the TIAC will apply.

 

Mandatory legislative provisions

3. Are there any mandatory legislative provisions? What is their effect?

In Turkey, the application of the principle of freedom of contract means that parties are free to agree on the rules of procedure to be applied in arbitration proceedings, whether through specifically agreeing their own procedure or by referring to institutional rules (Article 424, Code on Civil Procedure (CCP) and Article 15, Turkish International Arbitration Code (TIAC)). This is on the basis that the mandatory provisions in the CCP and TIAC are respected. These include, for example, the rules that the parties are treated equally and that due process is provided for parties to raise their claims and defences. If the parties do not agree on the rules of procedure, the sole arbitrator or the arbitral tribunal conducts the arbitration proceeding in accordance with the default rules of the CCP or the TIAC.

 
4. Does the law prohibit any types of disputes from being resolved via arbitration?

In domestic arbitration, arbitration cannot be used to resolve disputes which either (Article 408, Code on Civil Procedure (CCP)):

  • Arise from immovable assets.

  • That are governed by areas of law that are not subject to the parties' choice (such as family law matters or those relating to public order).

In such circumstances, or where the award is contrary to public order, the court can cancel the award (Article 439, CCP) (see Question 28). A similar rule applies to international arbitration (Article 15, TIAC).

 

Limitation

5. Does the law of limitation apply to arbitration proceedings?

Unless otherwise agreed by the parties, in both a domestic and international arbitration an arbitral award on the merits of the case must be granted within one year from the date of either the (Article 427, Code on Civil Procedure and Article 10/B, Turkish International Arbitration Code):

  • Appointment of the arbitrator (where there is one arbitrator).

  • Publication of the minutes of the first meeting of the arbitral tribunal (where there is more than one arbitrator).

The arbitration period can be extended by agreement. If the parties fail to reach agreement, either party can request an extension from the competent civil court of first instance. If the court rejects the request, the arbitration proceedings will end at the expiry of the arbitration period. The judgment of the court is final and binding.

Arbitration proceedings can be brought within the same limitation period as the legal proceedings of the right or claim subject to the arbitration proceedings.

 

Arbitration organisations

6. Which arbitration organisations are commonly used to resolve large commercial disputes?

For large commercial disputes, the two main arbitration organisations commonly used in Turkey are:

  • The Union of Chambers and Commodity Exchanges of Turkey (Turkiye Odalar ve Borsalar Birligi) (TOBB). Its website is www.tobb.org.tr.

  • The Istanbul Chamber of Commerce (Istanbul Ticaret Odasi) (ITO). Its website is www.ito.org.tr

These organisations have a list of arbitrators and their own arbitration rules in respect of both domestic and international arbitration.

The International Chamber of Commerce Turkish National Committee (Milletlerarası Ticaret Odası Türkiye Milli Komitesi) (www.icc.tobb.org.tr) organises seminars and training on domestic and international arbitration but does not conduct arbitration proceedings.

See box, Main arbitration organisations.

 

Jurisdictional issues

7. What remedies are available where one party denies that the tribunal has jurisdiction to determine the dispute(s)? Does your jurisdiction recognise the concept of kompetenz-kompetenz? Does the tribunal or the local court determine issues of jurisdiction?

The arbitrator or arbitral tribunal can determine its own jurisdiction, including objections to the validity of the arbitration clause (Article 422, Code on Civil Procedure and Article 7/H, Turkish International Arbitration Code). If one party claims the sole arbitrator or arbitral tribunal does not have jurisdiction, the claim must be filed with the response petition.

 

Arbitration agreements

Validity requirements

8. What are the requirements for an arbitration agreement to be enforceable?

Substantive/formal requirements

Article 412 of the Code on Civil Procedure (CCP) in the case of domestic and Article 4 of the Turkish International Arbitration Code (TIAC) in the case of international arbitrations, set out the definition and formal requirements for the validity of an arbitration agreement. A valid arbitration agreement must be:

  • Executed between the parties with the aim of resolving a part or all of the disputes which have arisen or which may arise from the legal relationship between them, whether from a contract or not.

  • In writing. It can be an arbitration clause in a contract or a separate agreement. This requirement is considered fulfilled if there is:

    • a written document signed by the parties;

    • written communications between the parties confirming agreement (for example, letter, telegraph, telex, fax or electronically);

    • no objection to the petition for arbitration claiming that there is a written arbitration agreement; or

    • reference to a document containing an arbitration clause, provided it is part of the main contract;

  • Accord with the rules of the jurisdiction agreed by the parties. In the absence of an agreement on jurisdiction, it must be valid in accordance with Turkish law.

If the main contract is invalid, this does not necessarily affect the validity of the arbitration agreement. In addition, an arbitration agreement can be validly established for a dispute which has not yet arisen.

Separate arbitration agreement

An arbitration agreement can be established as an arbitration clause in a contract or as a separate agreement (see above, Substantive/formal requirements).

 

Unilateral or optional clauses

9. Are unilateral or optional clauses, where one party has the right to choose arbitration, enforceable?

An arbitration clause or agreement is defined as an agreement between the parties for all or several disputes which have arisen or may arise from an existing legal relationship to be resolved through arbitration proceeding. An express and definite declaration of intent on this issue is one of the conditions of validity.

In numerous judgments, the Court of Appeal has stated that the resolution of a dispute through arbitration proceedings must be expressly and definitely agreed by the parties. Arbitration clauses that state that disputes which cannot be resolved through arbitration proceedings must be resolved through arbitration or that the disputes can be resolved through both arbitration and litigation are void. The Court of Appeal has accepted that an arbitration clause or agreement granting one party the right to choose the arbitral tribunal is not valid. Such a clause or agreement is contrary to public policy since it provides an advantage in the proceedings to one party over the other. Accordingly, unilateral or optional clauses where one party has the right to choose arbitration are unlikely to be enforceable.

 
10. In what circumstances can a third party that did not sign the contract incorporating the arbitral clause in question be compelled to arbitrate disputes relating to the contract in question?

There is no specific provision in the Turkish International Arbitration Code (TIAC) or Code on Civil Procedure (CCP) regarding the binding effect of an arbitral clause on third parties that did not sign the contract incorporating the arbitral clause.

However, with regards to the precedents of the Court of Appeals, there are several judgments where it is accepted that the arbitration clause incorporated under a transport agreement is binding on a holder of a bill of lading. There are also several judgments of the Court Appeals where it is accepted that an insurance company will be bound by an arbitration agreement executed by and between the policy holder and the party that caused damage or violated the rights of the policyholder after subrogating the insured party by paying insurance indemnity. It is also accepted by the Court of Appeals in certain judgments that if a receivable arising from an agreement incorporating the arbitral clause is assigned to a third party, that party will be bound by the arbitral clause.

Additionally, in cases where a party to the arbitral proceeding loses its capacity of legal standing (for example, one of the parties dies), the arbitral tribunal suspends the arbitral proceedings and notifies the relevant parties (for example, successors of the party that lost its capacity to be a party to arbitral proceeding). In such a case, if, within six months the third party (for example, successor) who received the notification does not notify the other party or the arbitral tribunal of its intention to continue the proceedings, the arbitral proceedings will come to an end (Article 11, TIAC). Otherwise, the successor may continue the arbitral proceeding even though they did not personally sign the contract incorporating the arbitral clause. With regard to the similar provisions of the CCP, in cases where a party to a lawsuit dies, if its successors do not accept or reject the inherited claim, the lawsuit will be suspended until the end of the period specified in the relevant provisions. However, if there is a situation deemed urgent by the court, on request, it may also appoint a trustee to follow up on the lawsuit (Article 55, CCP).

 
11. In what circumstances is a third party that did not sign the contract incorporating the arbitral clause in question entitled to compel a party that did sign the contract to arbitrate disputes relating to the contract?

There is no specific provision in the Turkish International Arbitration Code (TIAC) or the Code on Civil Procedure (CCP) on this issue (see Question 14). If both parties to the arbitral proceeding lose their capacity of legal standing (for example, both parties die), it may be theoretically possible that their successors continue the proceedings even though they have not personally signed any contract incorporating the arbitral clause.

For insurance law, under Article 30 of the Insurance Code (IC) (Published in the Official Gazette dated 14 June 2007 and numbered 26552), in the event that the insurance company is a member of the Insurance Arbitration Commission, if the insurer or the party benefiting from the insurance contract files an application before the Insurance Arbitration Commission against the insurance company, the dispute must be resolved through arbitration even though the parties did not specifically and mutually sign any document referring to arbitration proceedings. However, in cases where the insurer or the party benefiting from the insurance contract files an application before the general courts, the arbitral proceeding will not be applicable due to lack of arbitration agreement. Therefore, for insurance companies that are members of the Insurance Arbitration Commission, if the insurer or the party benefiting from the insurance contract files an application before the Insurance Arbitration Commission, it is mandatory to have the dispute resolved through arbitration whereas it is optional for the insurer or the party benefiting from the insurance contract to apply to Arbitration Commission or general courts.

In addition, with an amendment implemented in 2013, it has also been accepted that if the subject of the insurance is indicated as mandatory in the relevant provisions, the insurer or the party benefiting from the insurance contract can also apply to the Insurance Arbitration Commission even though the insurance company is not a member of the same (Article 30, IC).

 

Separability

12. Does the applicable law recognise the separability of arbitration agreements?

If the arbitration agreement is a clause in a main contract, the invalidity of the contract does not necessarily invalidate the arbitration agreement, provided the necessary requirements for a valid arbitration agreement are otherwise met (see Question 8). In theory, it is possible for a null and void contract to contain a valid arbitration clause.

 

Breach of an arbitration agreement

13. What remedies are available where a party starts court proceedings in breach of an arbitration agreement or initiates arbitration in breach of a valid jurisdiction clause?

Court proceedings in breach of an arbitration agreement

If a claim is issued in court relating to a dispute that is the subject of arbitration proceedings, the other party can file an "objection of arbitration". If the court accepts the objection, the claim is rejected on procedural grounds. The objection of arbitration must be filed as a first objection in the response petition of the defendant (the court cannot consider this issue at a later date).

If the defendant fails to file an objection of arbitration, it is deemed to have waived its right to arbitration. Turkish courts do not have authority to restrain proceedings commenced overseas in breach of an arbitration agreement (Article 413, Code on Civil Procedure and Article 5, Turkish International Arbitration Code).

Arbitration in breach of a valid jurisdiction clause

Parties cannot apply to have the dispute resolved by arbitration if a dispute resolution clause in the agreement between them provides that disputes are to be resolved through litigation (see Question 8)

 
14. Will the local courts grant an injunction to restrain proceedings started overseas in breach of an arbitration agreement?

Turkish courts do not have the authority to grant an injunction to restrain proceedings started overseas in breach of an arbitration agreement (see Question 13, Court proceedings in breach of an arbitration agreement).

 

Joinder of third parties

15. In what circumstances can a third party be joined to an arbitration or otherwise be bound by an arbitration award?

There are no specific provisions under Turkish law regulating the joinder of a third party to arbitration proceedings. If all the parties consent to joinder, a multi-party arbitration clause can be drafted. However, a high number of parties can give rise to practical problems such as agreement on the choice of arbitrators.

 

Arbitrators

Number and qualifications/characteristics

16. Are there any legal requirements relating to the number and qualifications/characteristics of arbitrators? Must an arbitrator be a national of, or licensed to practice in, your jurisdiction in order to serve as an arbitrator there?

In the case of both domestic and international arbitration, parties can determine the number of arbitrators but it must be an odd number (Article 416, Code on Civil Procedure and Article 7, Turkish International Arbitration Code). In the absence of express agreement, the default number of arbitrators is three. Unless otherwise agreed by the parties, only real and not legal persons can be appointed as arbitrators. With regard to the qualifications/characteristics of arbitrators, see Question 17.

 

Independence/impartiality

17. Are there any requirements relating to arbitrators' independence and/or impartiality?

Under Turkish law, arbitrators must be impartial and independent (Article 416 to 417, Code on Civil Procedure and Article 7, Turkish International Arbitration Code). A person who is asked to act as an arbitrator must disclose any circumstances or interests which could create doubt as to his impartiality and independence. If the parties were not informed of any interests before the arbitrator's appointment, the arbitrator must immediately do so, in the event the issue of bias arises later. The parties can reject an arbitrator in cases where the arbitrator's independence or impartiality is in doubt.

 

Appointment/removal

18. Does the law contain default provisions relating to the appointment and/or removal of arbitrators?

Appointment of arbitrators

The parties can agree on a procedure for the appointment of arbitrators in both domestic and international arbitrations (Article 416, Code on Civil Procedure (CCP) and Article 7, Turkish International Arbitration Code (TIAC)). In the absence of an agreed procedure, the relevant Articles set out default provisions to be applied:

  • Disputes to be resolved by a sole arbitrator. If the parties cannot agree on an arbitrator, a party can ask the court to appoint one. For domestic arbitrations, the competent court is the district court at the place of arbitration. If the place of arbitration is not agreed, the competent court is the district court where the defendant has its domicile, habitual residence or place of business. (District courts have not yet been established. Courts of first instance presently determine these issues.)

    For international arbitrations, the competent court is either (Article 3, TIAC):

    • the court where the defendant has its domicile, habitual residence or place of business; or

    • the civil court of first instance of Istanbul.

  • Disputes to be resolved by three arbitrators. Each party must appoint one arbitrator. The two appointed arbitrators must then appoint the third arbitrator. If a party fails to appoint its arbitrator within 30 days of receiving a request from the other party to do so, or if the two arbitrators fail to agree on the third arbitrator within 30 days of their appointment, the appointment is made, at request of a party, by the civil court of first instance. The third arbitrator then acts as the chairman.

  • Disputes to be resolved by more than three arbitrators. When there are more than three arbitrators, the parties must equally appoint the arbitrators who then appoint the last arbitrator, in accordance with the procedure explained above.

Removal of arbitrators

A party can reject an arbitrator on any one of three grounds (Article 417, CCP and Article 7/c, TIAC):

  • Lack of requisite qualifications. An arbitrator can be challenged if he does not meet the qualifications the parties have determined to be necessary.

  • Partiality or dependency. An arbitrator can also be challenged if circumstances exist or arise that give rise to reasonable doubts as to his impartiality or independence.

  • Grounds determined by the parties under arbitration law. An arbitrator can be challenged under any of the provisions for challenge under arbitration law, determined by the parties. The grounds of challenge for the judges under Article 36 of the CCP can be referred to in this respect. Pursuant to the said article, it is deemed that a ground for the challenge to judge exists in cases where:

    • the judge has given advice to or lead either party;

    • the judge has disclosed its opinion on the lawsuit to either party or to a third party even though such disclosure is not required by law;

    • the judge has been heard as a witness or an expert or acted as judge or arbitrator in the proceedings;

    • there is collateral consanguinity between the judge and either party; and

    • there is dispute or hostility between the judge and either party during the proceedings.

    Grounds for challenging an arbitrator can also be determined by the parties.

Parties can also agree on a preferred procedure for challenging an arbitrator. In the absence of an agreed procedure, a challenge can only be made within two weeks of a party becoming aware of the circumstances giving rise to the challenge in the case of domestic arbitrations and 30 days in the case of international arbitrations.

 

Procedure

Commencement of arbitral proceedings

19. Does the law provide default rules governing the commencement of arbitral proceedings?

Unless otherwise agreed by the parties, the first step for the commencement of arbitration proceedings is to give notice of the arbitration and nominate the arbitrator (Article 428, Code on Civil Procedure (CCP) and Article 10, Turkish International Arbitration Code (TIAC)). Depending on the parties' agreement or the rules of the arbitral institution, this can be done by filing a request for arbitration that must be filed with the competent arbitral institution and serving this on the respondent. In an ad hoc arbitration, the request or notice of arbitration is served only on the respondent.

The request for arbitration contains:

  • The claimant's nomination of an arbitrator.

  • The relevant facts.

  • A legal analysis of the case.

The CCP and TIAC do not provide any rules on how to serve the statements and other submissions in international arbitrations. Documents commencing arbitration proceedings do not need to be served through judicial or diplomatic channels, unlike court proceedings. As long as the delivery method is recorded, the method is deemed adequate.

 

Applicable rules

20. What procedural rules are arbitrators likely to follow? Can the parties determine the procedural rules that apply? Does the law provide any default rules governing procedure?

Applicable procedural rules

The parties can determine the procedural rules that apply (see Question 3).

Default rules

In the absence of the parties' agreement on the rules of procedure, the rules that are set out in the Code on Civil Procedure will apply, in the case of domestic arbitrations, and for international arbitrations the Turkish International Arbitration Code will be applied (see Question 3).

 

Arbitrator's powers

21. What procedural powers does the arbitrator have under the applicable law? If there is no express agreement, can the arbitrator order disclosure of documents and attendance of witnesses (factual or expert)?

Any petition, information or document submitted to the arbitrator or arbitral tribunal must be served on the other party (Article 429, Code on Civil Procedure (CCP) and Article 11/A, Turkish International Arbitration Code (TIAC)). Parties must also submit evidence within the period indicated by the arbitrator or the arbitral tribunal.

If a party does not provide the other party or the arbitral tribunal with the documents, information or evidence ordered to be disclosed, the arbitral tribunal is not entitled to enforce disclosure. However, the arbitrator or arbitral tribunal can request the assistance of the competent court of evidence, which will apply the provisions of the CCP and take the steps required for the disclosure and collection of evidence (Article 137, CCP). The courts can order that evidence ordered to be disclosed can be disclosed by the relevant governmental bodies and third parties in possession of the relevant evidence (Article 195, CCP). Alternatively, the arbitrator or arbitral tribunal can continue the proceedings and grant an award based on the existing evidence.

 

Evidence

22. What documents must the parties disclose to the other parties and/or the arbitrator? How, in practice, does the scope of disclosure in arbitrations compare with disclosure in domestic court litigation? Can the parties set the rules on disclosure by agreement?

Scope of disclosure

Parties can attach written evidence to their petitions or they can refer to evidence which they intend to submit later (Article 428, Code on Civil Procedure (CCP) and Article 10/D, Turkish International Arbitration Code (TIAC)). If a party does not submit evidence, the arbitrator or arbitral tribunal can continue the proceedings and grant the award based on the existing evidence (see Question 21).

If the dispute between the parties arises out of a contract, the contract and any translations must be submitted, if translations are necessary for the arbitrator or arbitral tribunal.

Disclosure in arbitration proceedings varies depending on the procedural rules that are agreed and applied. The procedure for the submission of evidence in civil litigation is regulated under the CCP and disclosure is not obligatory. A general comparison between arbitration proceedings and litigation in terms of the extent of the disclosure is, therefore, not feasible since disclosure in arbitration proceedings can vary so widely.

Parties' choice

Parties can agree the rules of disclosure. In the absence of agreement, the arbitrator or arbitral tribunal can determine a specific method for the submission of documents. If a method is not determined, the parties can submit their documents or evidence in any form including electronic, such as CDs, DVDs and USB flash drives.

 

Confidentiality

23. Is arbitration confidential? If so, what is the scope of that confidentiality and who is subject to the obligation (parties, arbitrators, institutions and so on)?

The Code on Civil Procedure and the Turkish International Arbitration Code do not contain specific provisions on confidentiality in arbitration proceedings. However, the nature of the proceedings and the reasons parties choose arbitration means that in practice proceedings are private and confidential. The parties can also expressly agree on a confidentiality term in the arbitration agreement.

 

Courts and arbitration

24. Will the local courts intervene to assist arbitration proceedings seated in its jurisdiction?

Local courts do not generally have jurisdiction to give judgment on a dispute concerning arbitration proceedings that are based on a valid arbitration agreement.

In domestic arbitrations, the courts can intervene in the circumstances specified in Article 411 of the Code on Civil Procedure, such as enforcing an injunction, collecting evidence or cancelling an arbitral award (see Question 28).

In international arbitrations, the courts can intervene in certain situations, to (Article 3/2, Turkish International Arbitration Code):

  • Grant provisional and protective measures before the arbitral tribunal is constituted.

  • Assist in enforcing or obtaining provisional and protective measures ordered by the arbitral tribunal, if a party does not comply voluntarily with such measures.

  • Assist in taking evidence requested by the arbitrators to support the arbitration.

  • Appoint an arbitrator if a party fails to appoint its arbitrator or if the arbitrators appointed by two parties fail to agree on the third.

  • Decide on whether an application for challenge can be made (unless the parties have already agreed on an arbitral institution to do so) to relieve the parties or the arbitrators if they are unable to reach a decision.

  • Grant an extension of time if an award cannot be made within the necessary time limit.

 
25. What is the risk of a local court intervening to frustrate an arbitration seated in its jurisdiction? Can a party delay proceedings by frequent court applications?

Risk of court intervention

The role of local courts in arbitration proceedings is limited (see Question 24). The intervention permitted by the Code on Civil Procedure (CCP) or the Turkish International Arbitration Code (TIAC) is intended to facilitate the course of the arbitration proceedings and does not in practice cause a risk of frustration.

Delaying proceedings

Neither the CCP nor the TIAC contain specific provisions regarding the delay of arbitration proceedings by frequent court applications. If a party does not attend the arbitration hearing without a valid cause or fails to present evidence, the arbitrator or arbitral tribunal can proceed and grant an award based on the existing evidence.

If a party intentionally delays the arbitration proceedings by frequent court applications, this may constitute an "abuse of right" under Article 2 of the Turkish Civil Code (Law No. 4721) (published in the Official Gazette dated December 8, 2001 and numbered 24607).

 

Remedies

26. What interim remedies are available from the tribunal?

Interim measures

In domestic arbitrations, unless otherwise agreed, the sole arbitrator or arbitral tribunal can grant a preliminary injunction decision or order the determination of evidence at the request of a party (Article 414, Code on Civil Procedure (CCP)). The determination of evidence is a measure which ensures that relevant evidence for the claim is gathered and protected to prevent its loss before the evidence is examined. For example, in the case of an accident, the court can decide (at the request of a party) that the relevant evidence is determined before the trial since it might otherwise be lost or damaged.

In international arbitrations, unless otherwise agreed, the arbitrator or arbitral tribunal can grant a preliminary injunction or a preliminary attachment decision at the request of a party (Article 6, Turkish International Arbitration Code (TIAC)).

The arbitrator or arbitral tribunal can also require a party to deposit security before it makes a decision on a preliminary injunction or preliminary attachment (Article 414, CCP). However, in respect of international arbitrations, the TIAC states that for decisions that require the involvement of a forced execution authority or other official authority, the arbitrator or arbitral tribunal cannot grant a preliminary injunction or preliminary attachment decision. In addition, preliminary measures granted by the arbitral tribunal are not binding on third parties.

The right of parties to request interim measures in accordance with Articles 257 to 268 of the Execution and Bankruptcy Law and the CCP is reserved (Article 6, TIAC).

Ex parte

There is no specific provision in the TIAC or CCP regarding the granting of interim relief on an ex parte basis. However, it is stated in Article 6 of the TIAC that the right of the parties to file a request in terms of the CCP is reserved. In that regard, concerning the provisions of CCP, in cases where the protection of the rights of the requesting party requires, a preliminary injunction decision may also be granted without hearing the counter party (Article 390, CCP).

Additionally, in the event a preliminary injunction or preliminary attachment judgment has been obtained from a court (including the cases where such judgment has been obtained on an ex parte basis), the relevant party must file the arbitral proceeding within two weeks. Otherwise, the preliminary injunction or preliminary attachment will be removed (Article 436/2, CCP).

Security

There are no specific provisions in the CCP or TIAC regarding security for costs. Accordingly, there are no restrictions on the arbitral tribunal awarding security if it considers it necessary. See also above, Interim measures.

 
27. What final remedies are available from the tribunal?

A sole arbitrator can grant awards. In the case of an arbitral tribunal, awards are granted by a majority vote (Article 433, Code on Civil Procedure (CCP) and Article 13, Turkish International Arbitration Code (TIAC)). Unless otherwise agreed, an arbitrator or arbitral tribunal can grant a partial award (Article 436, CCP and Article 14, TIAC).

At the request of the relevant party, awards can be granted for:

  • Damages.

  • Interest applied (if any).

  • Specific performance.

  • Declarations.

Awards must also include relevant costs (Article 436, CCP and Article 16, TIAC).

 

Appeals

28. Can arbitration proceedings and awards be appealed or challenged in the local courts? What are the grounds and procedure? Can parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitral clause itself)?

Rights of appeal/challenge

An arbitral award can be appealed by filing a cancellation lawsuit in the relevant court (Article 439, Code on Civil Procedure (CCP) and Article 15, Turkish International Arbitration Code (TIAC)).

Grounds and procedure

Cancellation lawsuits are considered urgent matters (Article 439, CCP and Article 15, TIAC). The grounds for cancellation include:

  • Lack of legal standing of a party.

  • Invalidity of the arbitration clause.

  • Procedural errors in the appointment of arbitrators.

  • Failure to grant the arbitral award within the legal period.

  • Incompetence by the arbitrator or arbitral tribunal or an incompetent decision contrary to law.

  • Failure to grant the arbitral award in respect of part or all of the claim.

  • Procedural errors in the conduct of the arbitration proceedings.

  • Unfair treatment of the parties.

  • The subject-matter of the dispute is not appropriate for arbitration under Turkish law.

  • The award is contrary to public order.

See Question 3.

Excluding rights of appeal

The parties can partially or totally waive their right to file a cancellation lawsuit.

 
29. What is the limitations period applicable to actions to vacate or challenge and international arbitration award rendered?

A cancellation lawsuit may be filed within 30 days starting from the date of notification of the award or the decision on correction or interpretation or completion to the relevant party that is planning to file a lawsuit to vacate the international arbitral award (Article 15, Turkish International Arbitration Code).

 

Costs

30. What legal fee structures can be used? Are fees fixed by law?

Clients and lawyers can agree legal fees. There is a tariff regulating the minimum fee that is based on a percentage of the amount in dispute. The success fee of the successful party's lawyer is determined by the arbitrator or arbitral tribunal in accordance with the minimum fee tariff (Article 441, Code on Civil Procedure and Article 16, Turkish International Arbitration Code).

 
31. Does the unsuccessful party have to pay the successful party's costs? How does the tribunal usually calculate any costs award and what factors does it consider?

Cost allocation

The unsuccessful party must pay the costs of the arbitration (Article 442, Code on Civil Procedure (CCP) and Article 16, Turkish International Arbitration Code (TIAC)). If both parties are partially successful, the costs of the arbitration are divided between them according to the extent of their success.

Cost calculation

Costs include:

  • The arbitrators' fees.

  • The arbitrators' travel and other expenses.

  • Expert fees and examination fees.

  • Witness fees (if any).

  • Lawyers' fees.

  • Court fees (if any).

  • Notification expenses relating to all mandatory notifications during the arbitration proceedings such as the notification of the petition or award.

Costs are calculated by the arbitrator or arbitral tribunal and included in the award.

Factors considered

The arbitrator or arbitral tribunal considers factors such as the:

  • Conduct of the parties during the arbitration proceedings.

  • Expenses incurred in preparation for the proceedings including the cost of:

    • translations;

    • stenographers;

    • the hearing;

    • notary expenses.

 

Enforcement of an award

Domestic awards

32. To what extent is an arbitration award made in your jurisdiction enforceable in the local courts?

An arbitration award obtained in Turkey is enforceable in the local courts when it becomes final and binding. For international disputes, see Question 33.

 

Foreign awards

33. Is your jurisdiction party to international treaties relating to recognition and enforcement of foreign arbitration awards, such as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention)?

Turkey has been a party to the New York Convention since 30 September 1992. Therefore, arbitral awards obtained in Turkey can be enforced in other signatory states. Turkey’s participation in the New York Convention is subject to reservations. Turkey applies paragraph 3 of Article 1 of the New York Convention only with respect to the recognition and enforcement of an award rendered in a signatory state in accordance with the reciprocity principle and that it must apply the New York Convention only to the disputes arising from contractual or non-contractual legal relationships and the disputes which are deemed as commercial under its domestic law.

 
34. To what extent is a foreign arbitration award enforceable?

When evaluating the enforceability of a foreign arbitral award, Turkish courts take into consideration Article 5 of the New York Convention. Article 60 of the International Private and Procedural Law (Act No. 5718) states that foreign arbitral awards that are final and executable or binding on the parties can be enforced.

According to Article 62 of the International Private and Procedural Law, a competent court can refuse a request for an enforcement order of a foreign arbitral award under the following circumstances:

  • No arbitration agreement was made or no arbitration clause is included in the main contract.

  • The arbitral award is contrary to the public decency and order.

  • The dispute subject to the arbitral award cannot be settled through arbitration according to Turkish laws.

  • One of the parties was not properly represented before the arbitrators and afterwards has not expressly accepted the proceedings.

  • The party against whom an enforcement order is requested was not properly informed of its choice in the appointment of arbitrators or has been deprived of the opportunity of filing its claims and defences.

  • The arbitration agreement or clause is invalid and void according to the governing law accepted by the parties or, in the absence of an agreement on governing laws, according to the laws of the country where the arbitrators made their award.

  • The appointment of arbitrators or the procedure followed by them is contrary to either the agreement of the parties or the laws of the country where the arbitrators made their award.

  • The arbitral award is related to a question which is not included in the arbitration agreement or clause or it exceeds the limits of the agreement or clause.

  • The arbitral award has not yet become final or enforceable or binding according to the governing law or the law of the country where it was granted, or it has later been repealed and annulled by the competent authority of that country.

The court grants or refuses the enforcement of foreign arbitral awards at inter party proceedings. Its decision can be appealed and reviewed by the Court of Appeal. The filing of an appeal request suspends execution of the decision.

As New York Convention signatories, US and UK arbitral awards, are generally enforceable.

 
35. What is the limitations period applicable to actions to enforce international arbitration awards rendered outside your jurisdiction?

There is no specific provision in the International Private and Procedural Law (IPPL) or Turkish International Arbitration Code (TIAC) regarding the limitations period for the enforcement of international arbitration awards. However, within the general provisions section of the IPPL, it is indicated that the limitations period is subject to the law that is applied to the merits of the legal transaction and relationship (Article 8, IPPL). Therefore, the limitations period applicable to concrete cases should be evaluated separately depending on the specific circumstances of that case prior to initiating the enforcement procedure.

 

Length of enforcement proceedings

36. How long do enforcement proceedings in the local court take, from the date of filing the application to the date when the first instance court makes its final order? Is there an expedited procedure?

The length of enforcement proceedings varies according to each specific case. Generally, enforcement proceedings in the local courts can take approximately one year with an additional year for any appeal process. There is no expedited procedure for enforcement and no general difference between domestic and foreign awards in terms of the length of enforcement proceedings.

 

Reform

37. Are any changes to the law currently under consideration or being proposed?

There are no changes to the legal framework, except for the Law on establishment of an arbitration centre in Istanbul (see Question 1, Recent trends).

 

Main arbitration organisations

Istanbul Chamber of Commerce

Main activities. Administering domestic and international arbitration.

W www.ito.org.tr

Union of Chambers and Commodity Exchanges of Turkey

Main activities. Administering domestic and international arbitration.

W www.tobb.org.tr

International Chamber of Commerce Turkish National Committee

Main activities. Organising seminars and training programmes for domestic and international arbitration.

W www.icc.tobb.org.tr

Istanbul Arbitration Centre

Main activities. Setting the rules for arbitration and alternative dispute resolution methods and carrying out related services, providing advertisement and publications, supporting scientific research and co-operating with foreign and local persons and entities related to arbitration and alternative dispute resolution methods.



Online resources

General Directorate of Legislation Development and Publication

W www.mevzuat.gov.tr

Description. The official website maintained by the General Directorate of Legislation Development and Publication, Prime Ministry of the Republic of Turkey. It contains up-to-date information on all kinds of applicable legislation together with the abrogated laws. All information provided on this website is in Turkish. There is no official or formal English language translations of the relevant legislation.



Contributor profiles

Gökben Erdem Dirican

Pekin & Pekin Law Firm

T +90 212 313 35 00
F +90 212 313 35 45
E gerdem@pekin-pekin.com
W www.pekin-pekin.com

Professional qualifications. Attorney-at-law registered with the Istanbul Bar Association

Areas of practice. Advice and specialist representation in complex and significant international arbitrations and the enforcement of foreign awards in Turkey.

Recent activities

  • Acting as chairman of the working group including several reputable lawyers and professors specialised in arbitration, for preparation of the legal opinion addressed to TheCityUK regarding the draft law on establishment of Istanbul Arbitration Centre.

  • Assisted an international advertising company in co-operation with a Swiss law firm concerning a foreign arbitration lawsuit filed before the ICC International Court of Arbitration in Paris. Client obtained payment of US$3.5 million (including expenses related to the arbitration).

  • Assisted a Turkish real estate company in an arbitration lawsuit filed against the client in Turkey for US$4.5 million in relation to a construction project. The arbitral tribunal in Istanbul ruled in favour of the client and rejected the claims for payment of US$3.5 million. The decision was approved by the Court of Appeal.

  • Assisted a foreign textiles company in a dispute for the collection of client's receivables based on a foreign judgment awarded in the UK.

  • Drafted a legal opinion to be used as an expert opinion in an arbitration proceeding before the ICC between a Finland based limited liability company and the counterparty regarding the share purchase agreement executed between the parties and acted as an expert witness for the client in the same.

Languages. English

Erdem Atilla

Pekin & Pekin Law Firm

T +90 212 313 35 00
F +90 212 313 35 49
E eatilla@pekin-pekin.com
W www.pekin-pekin.com

Professional qualifications. Attorney-at-law registered with the Istanbul Bar Association

Areas of practice. Currently as a Senior Associate and member of the Dispute Resolution team, involved in a wide range of lawsuits including commercial disputes, consumer disputes, employment disputes, criminal proceedings, administrative disputes, execution and bankruptcy proceedings, compensation lawsuits, disputes arising from contracts having an international aspect as well as local contracts subject to Turkish Law.

Languages. English, French


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