The right to file an action for annulment/ cancellation of an international arbitration award is regulated under Article 15 of the International Arbitration Law numbered 4686 (“IAL”).   IAL applies to disputes where a foreign element is involved in the case and Turkey is designated as the place of arbitration; or where the provisions of this law are chosen to be applied to the case by the parties or arbitral tribunal.  One of the important differences between international arbitral awards and domestic arbitral awards is that provisions of domestic arbitral awards are regulated under the Code of Civil Procedure (“CPC”) [you may read our article on Annulment of a Domestic Arbitral Award Under Turkish Law here], while international arbitral award provisions are regulated under IAL.  In this note, we would focus on the annulment of an international arbitral award. 

As per Article 15/1, only an action for annulment can be filed against the arbitral award before the regional civil court of justice (BAM).  The grounds for annulment, which are defined in both the International Arbitration Law and the Code of Civil Procedure, are restricted in number.  Hence, the party who is not satisfied with the arbitral decision can request the annulment of the award with an annulment action only on grounds specified in Article 15 as follows:

1. A.  Where the party making the application proves that:

• A party to the arbitration agreement lacks capacity, or the arbitration agreement is not valid under the law to which the parties have applied to it or, failing any indication thereon, under the Turkish law,
• The selection of the arbitrator or the arbitral tribunal is not in accordance with the procedure specified in the parties' agreement or in this Law,
• The arbitral award is not rendered within the arbitration period,
• The arbitrator or the arbitral tribunal unlawfully found itself authorized or unauthorized,
• The arbitrator or the arbitral tribunal decides on a matter other than the arbitration agreement, or did 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,
  • The principle of equality of the parties has not been respected, or

1. B.  Where the regional court of justice finds that:

• The dispute subject to the arbitral award is not capable of being settled by arbitration under Turkish law,
• The decision is contrary to public order.

As specifically stated in the above quoted Article, the request for the annulment of the arbitral awards can only be made in the presence of the grounds set forth in the law.  Put differently, the parties cannot file an action based on any reason other than those stipulated in the article, nor can they request any assessment and/or award on the merits of the dispute.  That being said, we witness in practice that the party who initiates the annulment requests also elaborates on the merits of the case by suggesting that one or more elements included under the merits is against the public order.  Such an attitude, surely, is driven from the broad interpretation of the public order stipulated under the above quoted Article, which might enable a party to speculate that any aspect of the substantive issues under the award to be non-compliant with the public order and thus the award shall be set-aside. 

According to Article 15/4 of IAL, the action for annulment can be filed within thirty days from the date of notification of the award to the parties.  It should be noted that, unlike the annulment process regulated under CPC, filing an action for annulment against the arbitrator’s decision automatically stops the execution of the arbitral award, as per IAL.  The reason for this is that, in international arbitration, if an arbitral award that has been enforced is later annulled, there may be a need for refunding the amount collected and unlike domestic arbitral awards, ensuring such a refund in international arbitration could potentially require a challenging procedure.  In order to prevent such a complicated procedure, the parties shall wait for the court to decide on the annulment of the arbitral award for the enforceability of the award.

As a final matter, decisions regarding the action for annulment can be appealed under the provisions of CPC.  In the absence of any appeal, the ruling of the regional civil court of justice would become final and binding.  Upon the finalization of the decision rejecting the action for annulment, the civil court of the first instance grants a certificate concerning the enforceability of the arbitral award to the party who made a request for it and the award becomes enforceable.