“The Turkish Court of Appeal upheld a Turkish Civil Court’s decision regarding enforcement of a GAFTA arbitral award.”

November 3, 2022 | NEWS 
By Gokhan Bozkurt, Mustafa Bozkurt 

The 11th Chamber of the Turkish Court of Appeal, ratifying the Istanbul Regional Court of Appeal’s decision, stated that GAFTA arbitration case proceedings were conducted properly and are in accordance with Turkish law.

Background

A plaintiff filed a case before the Karacabey 2nd Civil Court [1] (“the Civil Court”) and sought the enforcement of an arbitral award rendered by an arbitral tribunal according to The Grain and Feed Trade Association’s (“GAFTA”) arbitration rules. In the case, the plaintiff asserted that the respondent party breached its obligations arising from the commercial agreement that was entered into between the parties on 09.25.2014. The plaintiff took the dispute to the GAFTA under the agreement’s arbitration clause and successfully obtained an arbitral award in favor of itself. Afterward, the plaintiff applied to the Civil Court to enforce the arbitral award in Türkiye.

The respondent asserted in its pleading that it was not duly informed concerning the arbitration proceedings, and the award has been rendered in the absence of it. The defendant, therefore, stated that these violations breached its right to a fair trial and Turkish public policy. Based on these arguments, the respondent sought the Civil Court to refuse the enforcement request.


Decision

At the end of the trial, the Civil Court held that the case is related to the enforcement of an arbitral award which is rendered in accordance with the GAFTA’s arbitration rules pursuant to Article 58 of the Turkish Code on International Private and Procedural Law. The Civil Court stated in its decision that the arbitral award is final and binding on parties and has been rendered by the arbitral tribunal in accordance with the arbitration rules that the parties agreed on in the arbitration clause. The Civil Court also pointed out that in terms of procedural law, the GAFTA’s rule should be applied to the dispute, and during the arbitration procedure, the defense right of the respondent has been abided by the arbitral tribunal. The Civil Court indicated that the arbitration clause in the agreement is valid and binding for the parties, and the award also complies with Turkish public policy and moral and ethical rules. The Court also said that the matter which is subject to the dispute is arbitrable, and the tribunal did not restrict the defense right of the parties. Considering these facts and findings, The Civil Court decided that the arbitral award and its subsequent are explicitly enforceable in Türkiye.

 

The respondent appealed the decision before the 16th Chamber of the Istanbul Regional Court of Appeal. Except for some minor procedural implementations of the Civil Court, The Regional Appeal Court found the grounds of the Civil Court in accordance with the applicable law regarding the enforcement of the arbitral award.

 

The respondent also appealed the Regional Court of Appeal's decision before the 11th Chamber of the Court of Appeal. The Court of Appeal, however, upheld the decision of the Regional Court of Appeal, reasoning that the conclusion of the Regional Court of Appeal was in accordance with the law [3]. Thus, the Court of Appeal ruled that the first instance court's decision was lawful.

Takeaways

As mentioned above, the Turkish Civil Court mainly focused on the enforcement trial of the arbitral awards that whether (a) the arbitral award is in breach of Turkish public policy or moral and ethics rules, (b) the subject matter of the dispute is arbitrable, (c) the respondent is duly represented during arbitral proceedings, (d) the respondent is given proper notice to participate or to be present in the arbitration proceedings (e) the arbitration agreement is valid under the applicable law, (f) the award became final and binding on the parties in terms of the Turkish Code on International Private and Procedural Law. Therefore, when it comes to the enforcement stage of any arbitral awards in Türkiye, the parties should pay attention to whether the award meets enforcement requirements set forth under the Turkish Code on International Private and Procedural Law Act provisions. 
 

If you have any questions about the issues addressed in this article, please do not hesitate to contact us:
 
Gokhan Bozkurt
Email: [email protected]
Phone: +1 212 209 7158
 
Mustafa Bozkurt
Email: [email protected]
Phone: +90 212 214 7040
 
 
[ENDNOTES]
 
[1] 01/10/2017, 2016/102 – 2017/9
 
[2] 01/17/2020, 2017/3696 – 2020/67
 
[3] 12/06/2021, 2020/4516 – 2021/6853