The Civil Procedure Law dated June 18, 1927 and numbered 1086 (the “CPL”) used to be the governing legislation in Turkey in terms of all arbitration proceedings whether domestic or international. However, the relevant provisions of the CPL were originally intended to regulate domestic arbitration proceedings. Those provisions were therefore not properly responding to the needs of those parties to international disputes. Taking into consideration the need for a specific and more comprehensive legislation, the International Arbitration Law dated June 21, 2001 and numbered 4686 (the “Law No. 4686”) was enacted to regulate international arbitration proceedings. Law No. 4686 is essentially based on the United Nations Commission on International Trade Law (“UNCITRAL”) Model Laws on International Commercial Arbitration dated June 21, 1985 (the “Model Law”). Turkey is a party to some of the major international conventions on arbitration. Turkey ratified the New York Convention on the Recognition and Enforcement of Arbitral Awards (the “New York Convention”) and the European Convention on International Commercial Arbitration in 1991 and the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States in 1987. These conventions constitute a part of the Turkish arbitration legislation together with the Law No. 4686. We will present below an overview of the rules governing international arbitration proceedings in Turkey.
A) Arbitration Agreement under the Law No. 4686
The Law No. 4686 stipulates certain conditions for the validity of an arbitration agreement. In this respect, in order for an arbitration agreement to be valid:
(i) 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); and
(ii) It must be concluded in written form.
Turkish courts generally take a prudent view as to what constitutes an “arbitration agreement” under Law No. 4686; the courts insist on the clarity of the intention of the parties 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 contradictory and therefore invalid.
B) Number of Arbitrators and Appointment Method
Pursuant to Article 7 of the Law No. 4686, parties are free to agree on the number of arbitrators and the method of their appointment, however, the number of arbitrators must be an odd number.
C) Preliminary Orders – Interim Reliefs
Unless the parties have agreed otherwise, an arbitral tribunal is permitted to award a preliminary order or an interim relief which does not require the intervention of an executive body. Parties are free to demand preliminary and interim relief, before or during the trial, without conducting a breach to the arbitration agreement. The arbitrator(s) can order the disclosure of necessary documents only from related parties. However, arbitrator(s) may ask for help from 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.
D) Appeal of International Arbitration Awards
There is no appeal procedure for international arbitration awards; the only possibility is a cancellation action. The parties to an international arbitration can partially or completely waive their rights to claim the cancellation of the arbitration award.
E) Application of Different Procedural Rules
The provisions of the Law No. 4686 which govern arbitration, apply to arbitration proceedings, seated in Turkey or where the Law No. 4686 was selected as the applicable procedural law. However, the Law No. 4686 also recognizes the autonomy of the parties to create their own procedural rules and allows references to procedural acts or procedural rules of ICC, UNCITRAL, GAFTA, etc., provided that such rules do not conflict with the statutory provisions of the Law No. 4686.
F) Recognition and Enforcement of International Arbitration Awards
As mentioned above, Turkey ratified the New York Convention in 1991. Since Turkey is a party to the New York Convention, national courts apply the provisions of the New York Convention for the recognition and enforcement of the foreign awards granted in the territory of a foreign member country.