Arbitration is one of the leading form of dispute resolution which is typically faster and less expensive than domestic court proceedings. It is sometimes called a hybrid form of international dispute resolution, since it blends elements of civil law and common law procedure, while allowing the parties an opportunity to design the procedural rules under which their dispute will be resolved.
Despite the existence of Arbitration in rare areas of law (i.e Board of Arbitration for Sport and Arbitration Center for Insurance), however it still can be stated that Domestic Arbitration is some sort of newly imposed in Turkish Legal System indeed.
Arbitrations are mostly divided into two types as administrated arbitrations and ad-hoc arbitrations (which is more common in Turkish Legal System). In administered arbitration, the arbitration shall be administered by an institution, which provides arbitration services, such as LCIA, AAA or ICC in Paris.
In ad-hoc arbitrations, the tribunals are appointed by the parties or by an authority, which is again chosen by the parties. Nevertheless, this article hereby was aimed to analyze the execution progress following to the finalization of the arbitral award below by comparison of earlier and current regulations.
Earlier Code of Civil Procedure Nr. 1086 & International Arbitration Act Nr. 4686
When examining the Article 532 of the earlier Turkish Code of Procedure (“Nr: 1086”); it has been clearly stated that Arbitral awards can only be enforced by the way of legal affirmation of competent court’s judge decision, in case of failing that, Arbitral awards were not considered as final and binding by no manner of means.. Even if both parties renounce on the cancellation claim before courts or any of the parties do not assert any claim in 30 days following to the final arbitral award rendered by the tribunal, present award should have been affirmed by local courts in any event. In consideration of provisional measures and any other claims, Arbitral Tribunal is not entitled to rule any provisional measures or judgments according to the earlier Code of Civil Procedure.
Yet, this implementation has been altered with reference to the current Turkish Code of Procedure (“Nr. 6100”), which is distinctly interpreted that arbitral awards rendered under domestic Arbitration Rules can however be immediately enforced without being appealed.
Naturally, losing party has the possibility to apply for the annulment of the award under certain time limits and circumstances, but nevertheless that doesn’t change the fact that parties can easily enforce the awards without any affirmation of local courts within the scope of current Turkish Code of Procedure (“Nr. 6100”). Moreover, the Tribunal may rule on provisional measures or seizure by way of ensuring warrants by claimant.
Current Code of Civil Procedure Nr. 6100
Within the new version of Turkish Code of Civil Procedure has come into force in 2011, some amendments and changes have been imposed in regard to the Arbitration regulations. The most essential changes within this framework were considered as the removal of execution procedure of arbitral awards at this stage.
In order to interpret the execution process after the award rendered by the tribunal in accordance with Turkish Code of Civil Procedure, two different forms of the validity of the verdict shall be examined in cooperation.
Following to the final arbitral award rendered by the tribunal, both parties have 30 days in order for file a claim not against the merits of the award but for the cancellation of the award due certain justifications defined on the regulations. In case of a cancellation claim asserted against the arbitral award, the competent court shall examine the merits and rule the acceptance or the refusal of the claim in short notice. In principle, the execution of the arbitral award shall not be ceased with the claim of cancellation, however, the judge of the court may provisionally rule to cease the execution in the act of some warranties provided by the claimant in accordance with the Article 439(4) of Turkish Code of Civil Procedure.
In the event of the cancellation claim refused by the competent court, then the award comes in possession of a court rule, which can be executed in the competent execution office as an enforcement proceeding with judgment.
On the other hand, if both parties somehow renounce on the cancellation claim before courts or any of the parties do not assert any claim in 30 days following to the final arbitral award rendered by the tribunal, in that case, the decision comes in possession of a court rule and can
be executed in the competent execution office as an enforcement proceeding with judgment indeed.
In practical terms, court decisions have to be certified with the finalization statement in order to become legally final and binding. Comparing this application with the arbitral awards, the finalization statement keeps its existence, stating that, it eventually has to be implemented on both court decision and arbitral awards as well in order to be executed by the competent execution bodies.
The question hereby may arise whether the losing party can request the suspension of execution in case of the enforcement of arbitral award, which constitutes an infringement of public order or not. Different types of considerations are brought forward in this
respect, however common ideas clearly state that the suspension of execution can not be asserted at that phase since the arbitral award has already become final and binding, in particular, this type of a request can not be asserted against the enforcement proceedings with judgement according to the Turkish Bankruptcy and Enforcement Law.