International Arbitration in Turkey

1) ARBITRATION AGREEMENTS
1.1 What, if any, are the legal requirements of an arbitration agreement under the laws of your country?
The legislation governing arbitration proceedings in Turkey, is the “Civil Procedure Act No. 1086″ for domestic arbitration and the “International Arbitration Act No. 4686″ for international arbitration proceedings.
In order for an arbitration agreement to be valid:
- It must be enacted relating to an arbitrable matter (disputes relating to rights in rem over an immovable property in Turkey and disputes arising from issues which cannot be made a subject to the will of the parties are considered to be non-arbitral) (Act No. 1086 art. 518; Act No. 4686 art.l§4); and
- It must be concluded in written form (Act No. 1086 art. 517; Act No. 4686 art.4§2).
Pursuant to Act No. 4686, an arbitration agreement/clause shall be deemed to be in writing if it is signed by the parties stating their will for arbitration in a document or an exchanged letter, telegram, telex, facsimile, or electronic form (Act No. 4686 art.4§2).
An exchange of written submissions in arbitration proceedings in which the existence of an agreement is alleged by one party, and not denied by the other party, will constitute an agreement in writing as between those parties (Act No. 4686 art.4§2).
As to the content of the agreement, Act No. 4686 simply requires that the parties agree “to submit to arbitration any present or future disputes (whether they are contractual or not)” rising from a present legal relation (Act No. 4686 art.4§l).
Parties may agree on the specific terms of a written arbitration agreement or, alternatively, refer, in writing, to a document containing an arbitration clause. Such reference will constitute an arbitration agreement if the effect of it is to make such clause part of the agreement (Act No. 4686 art.4§2).
1.2 Are there any special requirements or formalities required if an individual person is a party to a commercial transaction which includes an arbitration agreement?
There are no special requirements or formalities other than the general requirement that the individual must have the mental capacity to enter into a contract.
1.3 What other elements ought to be incorporated in an arbitration agreement?
The arbitration agreement or clause may be anticipated for disputes arising or to be arised from a present legal relationship. An arbitral clause/agreement such as “all kind of disputes between the parties are subject to arbitration” would not be valid. Although the dispute is not to be specified or be present, the legal relationship from which a dispute may arise, must be present and specified.
The will of the parties on the arbitral resolution must be clear and non-contradictional (such as submitting both, arbitration and jurisdiction clauses to a dispute).
Other than the requirements set forth above, Act No. 4686 does not specify any other requirements for the validity of an arbitration agreement/clause. However, it is recommended that the following critical issues be covered in the arbitration agreement:
- designation of institutional rules if any;
- designation of the seat of the arbitration;
- designation of the number (and possibly qualifications) of arbitrators and the method of their appointment;
- designation of the language of the arbitration; and choice of law clause (unless contained elsewhere in the agreement of the parties).
1.4 What has been the approach of the national courts to the enforcement of arbitration agreements?
Act No. 4686 promotes party autonomy and the courts are expected to take a non-interventionist approach where parties have agreed to submit their disputes to arbitration.
Turkish courts generally take a prudent view as to what constitutes an “arbitration agreement” under Act No. 4686; the courts insist on the clarity of the intention to refer a dispute to arbitration. For example, clauses predicting that the disputes which cannot be solved by arbitral resolution should be solved by national courts are interpreted by courts as contradictional and therefore invalid.
The various default provisions of Act No. 4686 provide detailed procedures, designed to enable parties to use and enforce arbitration agreements in circumstances where the clauses themselves provide little or no practical assistance.
1.5 What has been the approach of the national courts to the enforcement of ADR agreements?
ADR agreements are not very common in the Turkish practice. For example, decisions/resolutions of a mediator are enforceable for the parties unless they agree on and sign it. On the other hand, agreements entered into by any two or more parties refer to a dispute arising from a technical issue to an “expert-arbitrator” are considered “exclusive evidence agreements” and the national courts are expected to take into consideration the expert-arbitrator’s detection as the sole evidence on the relevant technical matter.
2) GOVERNING LEGISLATION
2.1 What legislation governs the enforcement of arbitration agreements in your country?
Act No 2675 and dated 1982 on International Civil Law and Procedure governs the enforcement of Turkish arbitral awards in Turkey. But Turkey signed and ratified the New York Convention (“NY Convention”) in 1991 (subject to the reservation that it applies only to awards made in the territory of another party which has signed the NY Convention. Article 90 of Turkish Constitution sets out that, international agreements signed and ratified properly has the force of a law. Therefore, New York Convention must be applied to the enforcement of the foreign (not granted in the Turkish teixitory) arbitral awards, as lex specialis and lex posterior.
2.2 Does the same arbitration law govern both domestic and international arbitration proceedings? If not, how do the laws differ?
The Civil Procedure Law No. 1086 applies to domestic arbitrations while the International Arbitration Act No. 4686 applies to international arbitrations. Arbitration is considered international if it obtains a “foreign element” and Turkey is designated as the place of seat of the arbitration. If a choice of law is not made or Turkey is not designated as the seat of arbitration. Act No. 4686 can still be referred to in the arbitration agreement or selected by the arbitrator board as the law to be applied.
A foreign element is deemed to be present if (Act No. 4686 art.2§2);
- Residences or businesses of parties take place in different countries or;
- Residence or business of one of the parties takes place in a different country than the arbitration’s place of seat or;
- Money or capital transfer realizes between countries or;
- The capital contribution of a company’s foreign shareholder who is a party to an arbitral procedure contribution ;
- A foreign credit or warranty was obtained from abroad for the transaction subject to dispute.
2.3 Is the law governing international arbitration based on the UNCITRAL Model Law? Are there significant differences between the governing law and the Model Law?
Act No. 4686 is, in large part, based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration dated 1985 (the “Model Law”).
The Model Law is intended to apply only to international commercial arbitration (Model Law art. 1). Act No. 4686, however, applies equally to all forms of arbitration and is not limited only to commercial arbitration.
3) JURISDICTION
3.1 Are there any subject matters that may not be referred to arbitration under the governing law of your country? What is the general approach used in determining whether or not a dispute is “arbitrable”?
According to Act No. 4686; matters which do not solely depend on the will of the parties and matters involving rights in rem on immobile properties in Turkey are not arbitrable. Other than this Act No. 4686 does not seek to define or describe matters that are arbitrable.
Under Turkish Law claims are deemed non-arbitrable because of their impact on public order or because of the necessity to protect the weak party.

Accordingly; please note that parties cannot apply to arbitration procedure for the disputes arising from the following legislation: Labour or Employment Law, Real Property Law, Consumer Code Law, Law of Execution, Family Law, Administrative Law (there are exceptions), Criminal Law
3.2 Is an arbitrator permitted to rule on the question of his or her own jurisdiction?
Act No. 4686 (art.7§H) confers upon the arbitral tribunal the competence to rule on its own substantive jurisdiction, including on the existence of the validity of an arbitration agreement.
3.3 What is the approach of the national courts in your country towards a party who commences court proceedings in apparent breach of an arbitration agreement?
Act No. 4686 art. 5 sets out that in case that a dispute subject to arbitration is raised before a court the defendant firstly must object. If an objection is not raised by the defendant, the court would not take into account the existence of an arbitration agreement.
3.4 Under what circumstances can a court address the issue of the jurisdiction and competence of the national arbitral tribunal?
The jurisdiction and competence of national arbitral tribunal can be argued by a court only during the awards annulment phase.
3.5 Under what, if any, circumstances does the national law of your country allows an arbitral tribunal to assume jurisdiction over individuals or entities which are not themselves party to an agreement to arbitrate ?
In the exchange of written submissions in arbitration proceedings if the existence of an agreement is alleged by one party, and not denied by the other party, the constitution of an arbitration agreement will be deemed accepted and thus, the arbitral tribunal will assume jurisdiction on both parties (Act No. 4686 art.4§24686 art.4§2).
Other than the aforementioned situation, the Turkish law does not grant an arbitral tribunal power to assume jurisdiction over individuals/entities not actually a party to an arbitration agreement. Arbitration is considered to be a consensual process.
4 ) SELECTION OF ARBITAL TRIBUNAL
4.1 Are there any limits to the parties’ autonomy to select arbitrators?

Parties are free to agree on the number of arbitrators, whether there is to be a chairman or an umpire, the qualifications of arbitrators, and the method of their appointment (Act No. 4686 art.4§2 art.7§A). However, Act No. 4686 sets out that the number of the arbitrators should be an odd number, in order to avoid equality of the votes of arbitrators. The Act remains silent for the cases where the number of arbitrators is set as an even number. It is advised in the doctrine to consider the situation as if an agreement on the number of arbitrators was not concluded. In the absence of the agreement of parties as to the number of arbitrators, the tribunal will be made up of tree arbitrators.
The consent of the arbitrators is required to ensure the validity of their appointment.
An arbitrator may be removed by the court in the event that he or she does not possess the qualifications required by the arbitration agreement of the parties (Act No. 4686 art.4§2 art.7§D/3).
4.2 If the parties’ chosen method for selecting arbitrators fails, is there a default procedure?
Parties are free to agree on the procedure for appointing arbitrators. In the event that the agreed appointment procedure of the parties fails, Act No. 4686 provides that, a sole arbitrator or an arbitral tribunal will be chosen by the court upon request by one of the parties (art.7§B/II) as explained below:
- a sole arbitrator would be chosen by the court on the request of one of the parties (art.7§B/2);
- a tribunal comprised of tree (or more) arbitrators (each party to appoint one arbitrator within 30 days of a written request by one party to do so, the two party-appointed arbitrators shall forthwith appoint a chairman within 30 days of their own appointment, in case that the 30 days limit is exceeded (art.7§B/l/3) parties can apply to the court to appoint the chairman.
4.3 Can a court intervene in the selection of arbitrators? If so, how?
In the event that a sole arbitrator is to be appointed, and the parties cannot agree on the arbitrator, the court determines the arbitrator at the request of one of the parties.
In all other cases where the appointment procedure has failed because of any of the following reasons;

- one of the parties’ breach of the agreement;
- the parties cannot reach a consensus on the appointment as it was agreed;
- in case of the inactivity of the third party empowered with the appointment;
unless the parties have agreed otherwise, they are entitled to apply to the court for the appointment of arbitrator(s)
4.4 What are the requirements (if any) as to arbitrator independence, neutrality and/or impartiality?
Act No. 4686 requires that the person who has been selected as arbitrator, before consenting to his appointment, inform the related parties about the existence of circumstances and conditions, if any, that may raise suspicions on his independence, neutrality and/or impartiality (art.7§B/2).
Furthermore, parties can raise objections regarding the independence, neutrality and/or impartiality of the arbitrator or arbitrators. However, since Act No. 4686 aims to provide maximum autonomy for the arbitral tribunal by minimising the interventions of courts during the arbitration procedure; parties cannot apply to courts for the removal of an arbitrator and instead, the fact that the equality of the parties principle was not considered may be used as a cause for the cancellation of the award.
5) Procedural Rules
5.1 Are there laws or rules governing the procedure of arbitration in your country? If so, do those laws or rules apply to all arbitral proceedings sited in your country?
The provisions of Act No.4686, which govern arbitration pursuant to an arbitration agreement, apply to arbitration proceedings seated in Turkey or where Act No. 4686 was selected as the applicable procedural law (art.l § 2). However, Act No. 4686 recognizes the autonomy of parties to create their own procedural rules, and allows references to procedural Acts or procedural rules of ICC, UNCITRAL, GAFTA, FOSFA etc., provided that such procedural rules do not contradict with the statutory provisions of Act No.4686.
Under Act No. 4686, the “seat of the arbitration” is the judicial seat, which is the place where the arbitration has its formal legal seat and where the arbitration award will be made. Although it is usually the case, it is not essential that the physical hearings take place at the seat of the arbitration.

The parties are free to agree on the seat of the arbitration in their arbitration agreement, or to vest the power to select it to an arbitral (or any other) institution or person, if the parties fail to agree on the seat of the arbitration or the way to define it, the arbitral tribunal will designate the seat in accordance with the features of the matter (Act No. 4686 art.4§2 art.9).
5.2 In arbitration proceedings conducted in your country, are there any particular procedural steps that are required by law?
The parties are free to agree as to how their disputes are to be resolved, subject only to those safeguards necessary to protect the public interest. By virtue of art. 8 of Act No. 4686, the tribunal is required to act fairly and impartially between the parties, giving each a responsible opportunity to bring forward its case.
5.3 Are there any rules that govern the conduct of an arbitration hearing?
Under Act No. 4686 parties can always agree on an extension of the arbitration period, but if they fail to agree on this issue only a court can decide on the extension.
Other than this provision, the parties have the right to request a fair trial on the following issues: (arbitrator independence, neutrality and/or impartiality), jurisdictional issues (the right to object to the substantive jurisdiction of the tribunal and determination of a preliminary point of jurisdiction), the securing of witnesses, the enforcement of awards and the right to challenge an award on the basis of substantive jurisdiction and serious irregularity.
In all other respects, parties are free to agree to the application of any other procedural rules, either by reference to an arbitral tribunal or other institution or otherwise. In particular, parties are entitled to agree in relation to any procedural or evidential matter and, in the absence of agreement, the tribunal may decide on such matters.
Procedural and evidential matters include location of hearings, languages used, form of statements, document production, examination and cross-examination of witnesses and form of submissions (Act No. 4686 art.4§2 art. 12).
5.4 What powers and duties does the national law of your country impose upon arbitrators?
The impartiality of arbitrators is the central issue of the arbitration process.
Act No. 4686 requires that a person who has been selected as arbitrator, informs the parties regarding any circumstances and conditions that may raise suspicions on his independence neutrality and/or impartiality before giving its consent to the appointment (art.7§C).
Arbitrators have indemnity responsibility towards the parties for any damages suffered due to failure to perform the arbitral function without any legitimate cause (art,7§F).
5.5 Do the national courts have jurisdiction to deal with procedural issues arising during an arbitration?
In principle, intervention by national courts to arbitral process must be minimal. Nevertheless, the national courts have jurisdiction to act in support of arbitral proceedings (Act No. 4686 art.4§2 art.l2§B) and may deal with several procedural issues such as: securing attendance of witnesses, the obtaining and preservation of evidence, making orders relating to property, sale of goods, granting of interim injunctions or the appointment of a receiver.
5.6 Are there any special considerations for conducting multiparty arbitrations in your country (including in the appointment of arbitrators)? Under what circumstances, if any, can multiple arbitrations (either arising under the same agreement or different agreements) be consolidated in one proceeding? Under what circumstances, if any, can third parties intervene in or join an arbitration proceeding?
Because the aim is to provide as much autonomy to the parties as possible, provisions of Act No. 4686, would be applicable for multiparty arbitrations as well. Since Act No. 4686 does not contain any provisions prohibiting multiparty arbitrations; parties are free to agree that the proceedings shall be consolidated with others or that concurrent hearings shall be held. The parties are also free to agree on the terms of consolidation or concurrent hearings.
5.7 What is the approach of the national courts in your country towards ex parte procedures in the context of international arbitration?
Ex Parte procedures are governed by art. 11§C of the Act No. 4686 provides that;
- If the complaint petition is not or properly served, the tribunal will end the arbitral proceeding.
- If the reply petition is not served, it would not mean that the claims were accepted, the proceeding shall continue,
- In case that one of the parties will not attend the hearing or submit his/her evidence without an appropriate cause, the tribunal can continue with the proceeding and grant its decision based on the existing evidence.
Other than the cases which are considered to affect the substance of the award, the cases which affect the fair trial rights of the parties for a fair trial (e.g. rules on the parties’ equity, arbitrator’s impartiality, notification principles etc.) are supposed to infringe ex parte procedures.
6) Preliminary Relief and Interim Measures
6.1 Under the governing law, is an arbitrator permitted to award preliminary or interim relief?
If so, what types of relief? Must an arbitrator seek the assistance of a court to do so?
Unless the parties have agreed otherwise, the tribunal is permitted to award a preliminary order or an internal relief which does not require the intervention of an executive body (Act No. 4686 art.6§2) and needs not be exercised. If the tribunal deems necessary, it may require that a security is granted for the insurance of a preliminary or interim relief.
Parties are free to demand preliminary and interim relief from the court. This shall not be considered a breach of the arbitration agreement (Act No. 4686 art.4§2 art.6§l).
6.2 Is a court entitled to grant preliminary or interim relief in proceedings subject to arbitration? In what circumstances?
Can a party’s request to a court for relief have any effect on the jurisdiction of the arbitration tribunal?
Parties are free to demand preliminary and interim relief, before or during the trial, from the courts without conducting breach to the arbitration agreement (Act No. 4686 art.4§2 art.6§l). A party may also request from a court the enforcement of a preliminary or interim relief granted by the tribunal and not being complied with by the other party (Act No. 4686 art.4§2 art.6§3).
6.3 In practice, what is the approach of the national courts to requests for interim relief by parties to arbitration agreements?
Under Act No. 4686, only courts, not arbitral tribunals are authorised to grant interim relief which needs to be exercised. Thus, assisting an arbitral tribunal and granting interim or preliminary relief which needs to be exercised are duties of the courts. However, parties are free to apply to an arbitral tribunal or courts for interim relief which does not need to be exercised. Nevertheless, there is no practical example for the second circumstance.
6.4 Does the national law allow for the national court and/or arbitral tribunal to order security for costs?
Both the national courts and the arbitral tribunal (unless otherwise agreed by the parties) may seek the submission of a security before granting a preliminary or interim relieves.
7 ) Evidentiary Matters
7.1 What rules of evidence (if any) apply to arbitral proceedings in your country?
If the Turkish Law is chosen by the parties as a procedural law, it is possible for the parties to make an evidence agreement and limit the evidence which will be submitted to the tribunal. According to Act No. 4686, arbitrators may assign expert(s) or ask the parties to give the necessary documents and information to the experts or decide to do a direct investigation.
7.2 Are there limits on the scope of an arbitrator’s authority to order the disclosure of documents and other disclosure of discovery (including third party disclosure)?
The arbitrator’s authority is limited to order the disclosure of necessary documents from related parties. However, arbitrators may ask for help from the national courts which will have the authority to compel the attendance of witnesses, to request the disclosure of the necessary documents from related parties and third parties according to the general rules of the Turkish Civil Law procedures.
7.3 Under what circumstances, if any, is a court able to intervene in matters of disclosure/discovery?
The court may intervene if the arbitrators ask for help to collect the necessary evidence since the courts have the compulsory power.
7.4 What is the general practice for disclosure / discovery in international arbitration proceedings?
In practice, disclosing of necessary documents is a service provided by arbitral tribunals. However, arbitral tribunals usually ask for help from national courts to compel the attendance of witnesses, to request the disclosure of the necessary documents from third parties.
7.5 What, if any, laws, regulations or professional rules apply to the production of written and/or oral witness testimony?
For example, must witnesses be sworn in before the tribunal? Is cross-examination allowed?
Parties may agree in the arbitration agreement that witnesses can be heard. Accordingly, arbitrators can hear witnesses within the scope of the arbitration agreement and may ask witnesses to take an oath. However, the witnesses do not have to take an oath before the tribunal. On the other hand, the witnesses must swear before the court if the arbitrators request from the court to hear witnesses. Cross-examination is allowed.
7.6 Under what circumstances does the law of your Country treat documents in an arbitral proceeding as being subject to privilege? In what circumstances is privilege deemed to have been waived?
The parties may agree not to disclose particular documents and in such a case, the arbitrators are bound with the scope of the agreement. On the other hand, for purposes of protecting the fundamental rights of the parties which are mostly related to the race, religious, gender, colour of the skin of the parties and to observe the general rales of privilege the arbitrators may refrain from asking for particular documents.
8) Making an Award
8.1 What, if any, are the legal requirements of an arbitral award?
An arbitral award must include the following; the names, surnames and addresses of the parties of their representatives, the judicial basis, the grounds of the decision, the amount of indemnity if it is requested, the place of the tribunal, the date of the award, the signatures and names of the arbitrators and a phrase explaining that a cancellation action against the award is possible. The award should be given in a one year period starting from the appointment of the arbitrator or from the first session of the arbitrator’s committee.
9) Appeal of an Award
9.1 On what bases, if any, are parties entitled to appeal an arbitral award?
There is no appeal procedure to apply for international arbitral awards in Act 4686. The only possibility is a cancellation action under Act No. 4686. (Art. 15/A). The grounds to file a cancellation action are limited. A party may request the cancellation of the award by basing on the following grounds:
a) in the event that one of the parties of the arbitration agreement does not have the mental capacity to enter into a contract or the arbitration agreement is invalid under the substantive law;
b) in the event that arbitrators are unlawfully nominated according to the agreement between the parties or according to the related legislations;
c) in the event that the award is not granted within the time limit determined for arbitral awards;
d) in the event that authorities or non-competence of arbitrators are unlawfully determined;
e) in the event that award is granted for the subject matter/s which fall/s outside the arbitration agreement of the parties or the entirety of claims is not taken into consideration in the award or the arbitrators exceed their authorities;
f) in the event that ruling of arbitral tribunals is not conducted according to the agreement of parties or according to the related legislations;
g) in the event that the principle regarding the equality of parties is not considered during the ruling of arbitral tribunals; or
h) in the event that subject matter of arbitral award is considered inadequate for arbitration by courts under Turkish Law or the arbitral award is not complied with the public order.
However it is possible to appeal a domestic arbitral awards according to the Civil Procedure Act (Art. 533). A party may appeal if the award is granted; (i) after the termination of the arbitration period, or (ii) by exceeding the authority of arbitrators or (iii) without covering each and every request of the parties.
9.2 Can parties agree to exlude any basis of appeal or challenge against an arbitral award that would otherwise apply as a matter of law?
It is not possible for the parties of a domestic arbitration to waive their right to appeal or exclude any basis of appeal which can be a partial waive of the right to the appeal.
However, under Act 4686, the parties to an international arbitration can partially or completely waive their rights to claim the cancellation of the arbitration award. A party whose domicile is abroad may waive its right to file a cancellation action or exclude any basis for a cancellation action. (Act No. 4686 art.4§2 art. 15/A/6).
9.3 Can parties agree to expand the scope of appeal of an arbitral award beyond the grounds available in relevant national laws?
The bases of the appeal or the cancellation action are stated in both of the domestic and international arbitration legislation. The bases are “numerus clauses” and it is not possible to expand the scope of appeal of an arbitral award. However, in practice, for the domestic arbitral awards, the Court of Appeal has accepted the appeals on other bases which are not cited in the Civil Procedural Code. On the other hand, since the grounds to file a cancellation action for international arbitral awards are extensive enough, the practice does not seem to allow other bases for cancellation then those stated in the law.
9.4 What is the procedure for appealing an arbitral award in your country?
The parties may appeal the domestic arbitral awards within 15 days beginning from the notification date of the award with an appeal petition. The arbitrators must comply with the decision of the Court of Appeal on cancellation of the arbitral award.
The cancellation action against international arbitral awards must be filed within 30 days beginning from the notification of the arbitral award. The cancellation action will stop the enforcement of the arbitral award. The parties are entitled to appeal the decision regarding the cancellation action pursuant to Civil Procedure Act.
10) Enforcement of an Award
10.1 Has your country signed and/or ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards? Has it entered any reservations? What is the relevant national legislation ?
Turkey ratified the New York Convention in 1991 by reserving two points. According to the reservations, the Convention shall apply only for the arbitration awards regarding commercial affairs and granted in member states.
10.2 Has your country signed and/or ratified any regional Conventions concerning the recognition and enforcement of arbitral awards?
Turkey also ratified the European Convention on International Commercial Arbitration in 1991 and ICSID Convention in 1987.
10.3 What is the approach of the national courts in your country towards the recognition and enforcement of arbitration awards in practice? What steps are parties required to take?
Since Turkey is a party of the NY Convention, national courts apply the NY Convention for the recognition and enforcement of the foreign awards granted in the territory of a foreign member country.
A party to the arbitration may apply to a first instance court by filing a petition to enforce the award and it is possible to appeal the decision of the first instance court. The party must submit to the court the arbitration agreement/clause, arbitral award and their translation approved by the relevant authorities. Then the court will consider if there are any grounds of refusal according to the NY Convention or the Turkish Act numbered 2675.
Fortunately, courts rarely reject the recognition and the enforcement of arbitral awards in Turkey.
10.4 What is the effect of an arbitration award in terms of res judicata in your country? Does the fact that certain issues have been finally determined by an arbitral tribunal preclude those issues from being re-heard in a national court and, if so, in what circumstances?
Finalised arbitral awards have the effect of res judiciata in national courts and such award constitutes final evidence in a new lawsuit between the same parties on the same issue.
11) Confidentiality
11.1 Are arbitral proceedings sited in your country confidential? What, if any, law governs confidentiality?
In arbitration proceedings, confidentiality is the rule. Parties may also agree on a confidentiality clause which will be respected by arbitral tribunals.
11.2 Can information disclosed in arbitral proceedings be referred to and/or relied on in subsequent proceedings?
Parties may agree on disclosing the information disclosed during arbitral proceedings.
11.3 In what circumstances, if any, are proceedings not protected by confidentiality?
The confidentially may not be protected if the information is related to public order, has already been made public by other means, for the protection of the other party’s rights or the general interest of justice.
12) Remedies / interests / Costs
12.1 Are there limits on the types of remedies (including damages) that are available in arbitration (e.g., punitive damages)?
There are no limitations on remedies. However, since punitive damages are not recognized under Turkish legislation, national courts may cancel the award regarding the punitive damage on grounds that it is contrary to the Turkish public order as punitive damage is not considered a type of penalty
12.2 What, if any, interest is available
The parties may agree freely on the interest. Agreeing on charging interest over interest may be assumed against public order.
12.3 Are parties entitled to recover fees and/or costs and, if so, on what basis? What is the general practice with regard to shifting fees and costs between the parties?
Fees and costs are born by the party who is found to be in default, (Art 16 of the International Arbitration Act) unless decided otherwise. If the parties have not agreed on the fee of the arbitrator, it will be decided by the fee tariff prepared by the Ministry of Justice every year.
12.4 Is an award subject to tax? If so, in what circumstances and on what basis?
An arbitral award may be subject to earnings-related tax, but the payment of tax is a personal matter for the party to whom damages are paid. Essentially, damages intended to replace lost income or profit may be taxable.
13) Investor State Arbitrations
13.1 Has your country signed and ratified the Washington Convention on the Settlement of Investment Disputes Between States and Nationals of Other states (1965)?
Turkey signed and ratified the Washington Convention on May 27, 1988. Turkey entered two reservations. Firstly, disputes arising from the right in rem could not be subject to the 1CSID. Secondly, Article 64 of the agreement which provides investment disputes arising from Bilateral Investment Treaties (BITs) be filed to the La Haye Court is subject to a reservation.
13.2 Is your county party to a significant number of Bilateral Investment Treaties (BITs) or Multilateral Investment treaties (such as the Energy Charter Treaty) that allow for recourse to arbitration under the auspices of the International Centre for the Settlement of Investment Disputes (‘ICSID’)?
Turkey is the party of more than 60 Bilateral Investment Treaties and also to the Energy Charter Treaty since 1994.
13.3 Does your country have standard terms or model language that it uses in its investment treaties and, if so, what is the intended significance of that language?
Turkey does not use any model language in investment treaties.
13.4 In practice, have disputes involving your country been resolved by means of ICSID arbitration and, if so, what has the approach of national courts in your country been to the enforcement of ICSID awards?
Turkey is a party in many disputes which are subject to the ICSID arbitration e.g. “Libananco” case. However, all these cases are still pending and no award has been granted yet. Since it has been agreed, the ICSID awards would be directly enforced in Turkey without any intervention by national courts.
13.5 What is the approach of the national courts in your country towards the defence of state immunity regarding jurisdiction and execution?
As has been explained above there is no award granted in accordance with the ICSID arbitration against to the Republic of Turkey. However, a “state immunity” defence would not be possible for Turkey since the ICSID arbitration is subject to the direct enforcement procedure without any intervention by courts.
14) General
14.1 Are there noteworthy trends in the use of arbitration or arbitration institutions in your country? Are certain disputes commonly being referred to arbitration?
Under Turkish law, certain issues are directly referred to arbitration and, for these issues, it is not possible to apply to the court. Those issues arc limited to disputes arising from the Tobacco Act, the Attorney Act, the Notary Public Act, etc. There are also domestic arbitration committees founded by Turkish laws such as Arbitration Committee for disputes arising from Consumer Law.
14.2 Are there any other noteworthy current issues affecting the use of arbitration in your country?
Turkey has accepted a new legislation parallel to the Model Law in 2001 which is Act No. 4686. The main aim of Act No. 4686 is to make Turkey a centre of Arbitration and to increase the number of foreign investors.
Now, Turkey has new projects regarding arbitration. One of these projects is to put into effect a new procedural law that will change the domestic arbitration procedure. The purpose of the new domestic arbitration procedure is to make the Turkish domestic and international arbitration law more parallel to each other. Another project is to settle both the domestic and international arbitration procedures under one common law which is highly debatable in the doctrine.