Arbitration is a method by which private law disputes are resolved by an arbitrator or arbitral tribunal, and the decisions rendered at the end of the process are called “arbitral awards”. Arbitral awards are final, binding and enforceable in the same way as judgments rendered by state courts. Arbitration is divided into two categories: domestic arbitration and international arbitration. Domestic arbitration without a foreign element is subject to the CCP, while international arbitration with a foreign element is subject to the IAA. The New York Convention of 1958, to which Turkey is a party, sets important criteria for the recognition and enforcement of international arbitral awards. The ICC provides similar criteria for determining the foreignness element.
Under Turkish law, according to Article 439 of the CCP and Article 15 of the ICC, the only remedy available against arbitral awards is an action for annulment. The annulment action allows for the review of arbitral awards on procedural or substantive grounds, but the courts do not evaluate the merits of the dispute. The annulment action must be filed within one month following the notification of the award.
Under the CPL, annulment actions filed against domestic arbitration awards are primarily heard by the regional courts of justice. The grounds for annulment are as follows: the incompetence of one of the parties or the invalidity of the arbitration agreement, irregularities in the selection of the arbitrator and the proceedings, failure to render the award within the prescribed period, the arbitral tribunal exceeding its authority, violation of the equality of the parties and the right to be heard, and violation of public order.
Although the grounds for annulment under the IAA are largely similar, there are some differences. According to the IAA, the filing of an annulment action automatically suspends the enforcement of the arbitral award. Moreover, the grounds for annulment are divided into those that may be raised by the parties and those that will be taken into consideration by the court ex officio.
As a result of the annulment proceedings, the court may set aside the award or dismiss the case. In the event of annulment, the dispute may be retried and this process may be conducted in court or through arbitration.
As a result, the only legal remedy available against arbitral awards, whether in domestic arbitration or international arbitration, is annulment proceedings. While the CCP and the IAA regulate annulment proceedings in a similar manner, there are some differences due to the nature of international arbitration.
