Limits of Public Order Violation Factor In Enforcement of Foreign Arbitral Awards 9 August 2016
The question how the public order violation factor in the enforcement of foreign arbitral awards is examined by the local courts and the limits of public order violation constitute the subject matter of this work. Given the judgments of Supreme Court and the doctrinal views, the public order violation factor in the enforcement of foreign arbitral awards can be divided into 4 parts generally:
1) The award to be enforced including performances that are forbidden to be performed and ensuring performances that arise from the agreements against to the public morality;
For example, the debt of gamble and bribe, the delivery of goods that are prohibited to be imported and exported, the trade of drugs and white women traffic etc.
2) The infringement of the principles of independence and impartiality of arbitrators;
What is meant by the impartiality of arbitrators is that they neither take any orders, instruction, offer or suggestion from any office, authority, member or person nor involve in any mutual relationship with the parties to the case as a result of which can prevent them holding an objective judgment. In some cases, the claims that the arbitrators are not independent can be clearly revealed by proving bribe and self-interest relationship between the arbitrator and the parties.
It should also be noted that while deciding whether or not the arbitrator is independent, a mere suspicion is not enough but the same must have an impact in the content of decision.
3) The violation of the right to defense because of some procedural faults;
For example, the fact that one of the parties to the case has not been informed about the arbitration procedure in accordance with Article V(1)(b) of the New York Convention or his/her statement has not been taken due to any other reason will violate the fundamental rights as a result of which will be considered as violation of public order and prevent the enforcement of foreign arbitral award.
4) The arbitral award to be enforced including provisions contrary to another finalized judgment held by the Turkish Court;
There is no doubt that two awards including contradictory provisions could violate the public order due to the violation of legal security, social peace and stability, if they are to be executed at the same time in Turkey[1].
In addition to above, it is decided that some cases arising from procedural law may also be considered as against to the public order. Those can be listed as follows;
1) It could be stated that the public order would be violated, if the parties waives their right to the challenge of arbitrator prior to the commencement of arbitral procedures or if the request for the challenge of arbitrator is decided by the arbitral tribunal itself instead of the state courts.
On the other hand, the arbitral tribunal is empowered to determine the request for the arbitrator challenge according to Article 7 paragraph (D) of the International Arbitral Law No.4686. In that respect, the arbitral award regarding the challenge of arbitrator shall not constitute a violation of public order in cases where the said law applies. However, what constitutes a violation of public order is theagreement made by the parties in which the person, who claimed the arbitrator challenge, waives in advance his right to apply to the Civil Court of First Instance within 30 days in the event that his request is rejected by the arbitral tribunal or the parties agree to remove the power of the Civil Court of First Instance to review the request of arbitrator challenge against the arbitrator, who is solely empowered to resolve the dispute, or over the request of arbitrator challenge made in such a way that the majority of resolution of the arbitral tribunal is somehow removed.
2) Taking compelling precautions by the arbitrators during the arbitration procedure also constitutes a violation of public order.
It is possible for the arbitrators to summon the parties to the case and the witnesses in order to listen to the same and they are also entitled to have an expert examining. However, the arbitrators do not have any right to use force against the parties and the witnesses to be brought before the tribunal. Similarly, the arbitrators cannot impose any obligatory measures on the parties and witnesses such as fine, imprisonment, disciplinary penalty and etc.. In addition, the arbitrators can neither request the third parties to submit any written evidences nor use force against them to be summoned as witnesses. In fact, the arbitrators are not even entitled to use force against the parties to the arbitral case to submit any written evidences.
3) The enforcement of arbitral awards in which the arbitrators decided their own fees may confront the intervention of public order.
What constitutes a basis for the said situation is the rule that a person cannot render a judgment regarding his personal receivables by taking the judge’s place. The said principle is adopted by Unified Decision of Supreme Court No.1/3 dated 19.5.1964. In this judgement it is held that the arbitrators can take a decision regarding their fees provided that such issue is determined by the parties in the agreement and it will not constitute a violation of public order. There are also other decisions of the Supreme Court similar to the said judgment; however, the abovementioned interpretation is also considered as going beyond its aim. Although it is stated that the arbitrators deciding their own fees is not related to the public order, it is also claimed that the foreign arbitral awards can be partially enforced as per Article V(1)(c) of New York Convention or Article 45(h) and Article 44 referring to Article 40 of the International Private and Civil Procedure Law No.5718 as to the parts excluding their fees. In that respect, the arbitrators can mutually determine their fees with the parties to the case or they can determine it as is envisaged by the parties in their agreement[2].
In addition, it is also indicated that the arbitral awards through which the rules become effective to provide the arbitral awards to be rendered without a justification as per the agreement of the parties can face the public order issue. The legal basis of this matter is shown in Article 141 of the Constitution which states that “All court decisions must be rendered with a justification in accordance with Article 141 of Constitution. Article 141 of the Constitution, which is a mandatory provision, is also applicable for arbitral awards. On the other hand, only arbitral awards with a justification enable to examine whether or not the conditions for enforcement are fulfilled.” On the contrary to this judgment, Unified Decision of Supreme Court indicated in its judgment numbered 2010/1 E. 2012/1 K. and dated 10.02.2012 that;
“The enforcement judge is not empowered to analyze and evaluate accuracy of a foreign court judgment in terms of substantive law. Within the scope of this prohibition, the enforcement judge can neither analyze nor evaluate justification in the judgement. The question whether there is a justification in the judgment or not is of the essence to determine if the said judgment is contrary to the public order. It is clear and indisputable that the principles envisaged in Article 141 of Constitution is exclusively valid for the Turkish Courts. The enforcement of foreign court decisions, which could cause results against the public order by applying decree article of foreign court judgment, is not possible. It is decided that the absence of a justification in a foreign court judgment cannot be considered as a mere reason to prevent the enforcement of finalized foreign court judgment and this issue does not constitute a violation of public order in terms of Article 54/c of the International Private and Civil Procedure Law No. 5718.”
For that reason, the absence of a justification in a foreign arbitral award does not affect its enforcement.
As is stated in the abovementioned judgment of the Unified Decision of Supreme Court, which is that “The enforcement judge is not empowered to analyze and evaluate accuracy of a foreign court judgment in terms of substantive law”, the domestic courts are not empowered to examine a file case in terms of substantive law in a case brought for the enforcement of a foreign court judgment. Therefore, the Turkish courts should only analyze and examine the foreign court judgments to determine whether or not they are contrary to the public order.
[1] Prof. Dr. Mustafa Topaloğlu, Tahkimde Kamu Düzeni Etkisi, International Conference on Eurasian Economies, 2013
[2] Işılar Umut Mutlu, Yabancı Hakem Kararlarının Tanınması ve Tenfizinde Kamu Düzeni Etkisi, Ankara Üniversitesi Sosyal Bilimler Enstitüsü Özel Hukuk (Devletler Özel Hukuku) Anabilim Dalı Yüksek Lisans Tezi, Ankara 2003.
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