An Evaluation of Setting Aside of Arbitral Awards on Turkish International Arbitration Code
Gizem Ersen PerçinUnder Turkish law, arbitration involving foreign elements is regulated under Turkish International Arbitration Code 4686, which solely addresses setting aside arbitral awards. In this action, parties file cases before the local court based on the Code’s numerus clausus grounds for setting aside of arbitral awards; if the case is accepted by the local court, the award is partly or entirely annulled. In accordance with the policy of setting aside such an award, the trial restarts before either an arbitral tribunal or a local court, which markedly increases judicial costs in addition to wasting. On the one hand, broad interpretation of the grounds for setting aside arbitral awards could increase the number of such awards that are annulled, which could interfere with and impede Turkey’s goal of becoming an attractive hub for arbitration. On the other hand, an arbitration system with no system for annulment could allow for enforcement of unjust arbitral awards. Therefore, determining clear boundaries for both the grounds and the procedure for setting aside arbitral awards is crucial. In this study, Turkish International Arbitration Code is compared with both the UNCITRAL Model Law on International Commercial Arbitration (1985) and Switzerland’s Federal Code on Private International Law, which are the sources of Turkey’s code to assess differences in the regulations.
MTK Tahkiminde İptal Davalarına İlişkin Bir Değerlendirme
Gizem Ersen PerçinTürk Hukukunda yabancılık unsuru içeren tahkim yargılamalarına ilişkin düzenlemeler 4686 sayılı Milletlerarası Tahkim Kanunu’nda yer almaktadır. Söz konusu kanun uyarınca verilen hakem kararlarına karşı tek kanun yolu iptal davasıdır. Bu kanun yolunda, taraflar haklarında verilen hakem kararlarına karşı, kanunda sayılan iptal sebeplerine dayanarak yerel mahkemede dava açarlar. İptal davasının kabulüne karar verilmesi durumunda hakem kararının tamamı veya bir kısmı iptal edilir. İptal edilen karar için yargılama faaliyeti iptal sebebine göre yerel mahkemede ya da hakem heyeti önünde en baştan başlar. Bu da hiç şüphesiz ki yargılama faaliyeti giderlerinde ciddi bir artış ve zaman kaybına sebebiyet verecektir. Ayrıca iptal davalarında başvurulan iptal sebeplerinin çok geniş yorumlanması hakem kararlarının iptal edilme oranlarını artırarak bu alanda bir cazibe merkezi olmayı hedefleyen Türkiye’de tahkime olan güveni azaltabileceği gibi aksi yönde bir uygulama da keyfi uygulamalar sonucunda oluşabilecek adaletsiz hakem kararlarının icra edilmesine neden olacaktır. İşte bu olumsuzlukların bertaraf edilebilmesi için gerek iptal davasında uygulanan usuli işlemlerin gerekse iptal sebeplerinin sınırlarının net bir şekilde çizilmesi büyük önem arz etmektedir. Bu çalışmada, söz konusu sınırların belirlenmesi bakımından, MTK’daki düzenlemelerin kaynağını oluşturan 1985 tarihli UNCITRAL Model Kanunu ve İsviçre Milletlerarası Özel Hukuk Federal Kanunu’nda yer alan düzenlemeler MTK’daki düzenlemeler ile karşılaştırılacak, farklılıklar tespit edilerek bunların yerindeliği konusunda yorumlarda bulunulmaya çalışılacaktır.
Setting aside arbitral awards is regulated as a sole course of law in Turkish International Arbitration Code. To avoid local courts’ intervention in arbitral awards, it is necessary to establish clear boundaries for both the grounds and the procedure for setting aside these awards are crucial. An arbitration system without annulment may result enforcement of unjust arbitral awards, but the limited and exceptional characteristics of the process in Turkey make it a reliable country for international arbitrations. To ensure this, it is necessary to clarify some issues related to grounds and procedures for setting aside arbitral awards.
In the procedure to set aside an arbitral award, the first modification is to convert the common open hearing to a file review; this aligns legislation and practice to maintain the speed of arbitration proceedings. Following this procedure also ensures that awards are not set aside in bad faith through needless delays. Although there is an option for proportional rather than fixed appeal fees, we believe that there are sufficiently few bad faith appeals that a fixed appeal fee is still fair.
There is no regulation regarding an arbitral award that a court has set aside when there is a stay pending appeal. For an appeal of an arbitral award to stay the execution of the award would also belie the speedy character of arbitration. Therefore, it is necessary to amend the law to clarify that arbitral awards will be executed during appeal review.
If a local court sets aside an arbitral award in part while the applicant obtains a certificate of enforceability for the executable part of the award, another arbitral trial will take place for the part based on the grounds for annulment. In some cases, a court sets aside an arbitral award on more than one ground for annulment; when one ground is subject to arbitration retrial and another is subject to court trial, the trial should be heard before local court. Otherwise, except for exceeding time limits, which is a ground for setting aside an arbitral award, it is clear that the new award would be set aside under the same grounds as before.
The regulation in the Turkish International Arbitration Code regarding setting aside arbitral awards is mostly inspired by UNCITRAL Model Law, although some points derive from Switzerland’s Federal Code on Private International Law. However, the process for setting aside arbitral awards under Turkish law is not exactly the same as that under UNCITRAL Law. For example, UNCITRAL Model Law sets “breach of arbitral proceedings” as one of the grounds for annulment, and Turkish law does as well but adds one criterion: Under Turkish International Arbitration Code, breach of proceedings is only grounds for setting aside an award if it affects merits of the award, and this additional criterion decreases the number of award annulments, fitting what should be the limited and exceptional nature of setting aside these awards. For similar legal motivation, some grounds in Turkish International Arbitration Code should be changed to match the guidelines in UNCITRAL Model Law to restrict local courts’ scopes of jurisdiction. In this course, it would be appropriate to amend “breach of the principle to treat the parties equally” to “the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case.”
Moreover, it would be also appropriate to amend “public order” to “clear breach of public order” as a ground for setting aside arbitral awards to emphasize the exceptional nature of such decisions. One of the grounds for setting aside these awards that is only regulated in the Turkish code is “time extension for final award.” We suggest that this should be canceled and that such extensions should be considered within the scope of “breach of arbitral proceedings” to ensure that setting aside an award is appropriate where this extension affects merits of the dispute.