The right to file an action for annulment/ cancellation of a domestic arbitration award is regulated under Article 439 of the Code of Civil Procedure (“CPC”).  One of the important differences between domestic arbitral awards and international arbitral awards is that provisions of domestic arbitral awards are regulated under CPC, while international arbitral award provisions are regulated under International Arbitration Law.  In this note, we would focus on the annulment of a domestic arbitral award.

An annulment can be filed in the existence of the conditions specified in Article 439 of CPC.  Accordingly, the party who is not satisfied with an arbitral decision can request the annulment of the award with an annulment action to be filed before the regional civil courts of justice (BAM).  Article 439/1 of CPC regulates as follows:

“Only the annulment action can be filed against the arbitral decision. The annulment case shall be filed in the regional civil courts of justice of arbitration and shall be taken into consideration primarily and immediately.”

In this regard, the party who is willing to have the award annulled shall file an action for the annulment of the arbitral award within one month from the date of notification of the award.  This one-month period is the statute of limitation (hak düşürücü süre), thus, failure of such may lead to cease of right to file an action for annulment.

The reasons for the annulment of the domestic arbitral award are listed in Article 439/2 of CPC as follows:

• If one of the parties to the arbitration agreement is incompetent or the arbitration agreement is invalid,
• Failure to comply with the procedure specified in the agreement or in law for the selection of the arbitrator or arbitral tribunal,
• Failure to rule the decision within the arbitration period,
• The arbitrator or arbitral tribunal unlawfully decides that it is authorized or unauthorized,
• The arbitrator or arbitral tribunal decides on a matter other than the arbitration agreement or does not decide on the entire request or exceeds its authority,
• The arbitration proceedings have not been conducted in accordance with the procedural agreement or, in the absence of such agreement, in accordance with the provisions of the law and such inconvenience has an impact on the merits of the decision,
• Failure to comply with the principle of equality of the parties and the right to be heard,
• The dispute subject to the decision of the arbitral tribunal or the arbitrator is not arbitrable according to Turkish law,
• The decision is contradictory to public order.

Since it is clearly stated in the justification of the article that these reasons for annulment are limited, the parties cannot file an action for annulment based on any reason other than the reasons stipulated in the article.  That is to say, in the action for annulment, the parties are not entitled to request any assessment and/or award on the merits of the dispute and to rule a decision.  Annulment of the domestic arbitral award can only be requested upon the determination of the existence of reasons for annulment[1]. 

According to Article 439/4 of the CPC, filing an action for annulment against the arbitrator's decision does not stop the enforcement of the decision.  However, upon the request of one of the parties, the enforcement may be suspended, provided that a warranty is presented to cover the value of the money or property.

If the court finds the grounds for annulment appropriate, it could only decide on the annulment of the arbitrator's decision and cannot rule a new decision regarding the merits of the case.  If the court cannot determine the alleged grounds for annulment, the case shall be rejected. 

As a last matter, pursuant to Article 439/6 of the CPC an appeal can be made against the decision of the regional civil court of justice on the annulment.  In the absence of any appeal, the ruling of the regional civil court of justice would become final and binding.