Originally from World Arbitration and Mediation Review

Does Turkish Law Favor Arbitration?
by Muge Onal∗
I. Introduction and Background
International arbitration in Turkey is governed by the International
Arbitration Act No. 4686 (Act No. 4686), which became law in 2001. Act
No. 4686 applies only to foreign arbitrations, and, according to the Act,
for an arbitration to be considered “foreign,” the dispute must involve
some foreign element. Act No. 4686 can also apply to an international
arbitration by way of party agreement, institutional practice, or court
ruling. The European Convention on International Commercial
Arbitration of 1961 (the Geneva Convention) also governs international
arbitration in Turkey. Act No. 4686, as well as Act No. 2675, and the
United Nations Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (the New York Arbitration Convention or the
Convention) govern the enforcement of foreign arbitral awards under
Turkish law. Specifically, Act No. 2675, which became law in 1982, sets
forth the rules for conflicts of law, the international jurisdiction of Turkish
courts, and the recognition and enforcement of foreign judgments. Turkey
became a party to the New York Arbitration Convention in 1991. The
Turkish ratification included the two standard reservations: that the
Convention only applies to awards arising from commercial relationships
under Turkish law and to awards made by States that are party to the
Convention.
Turkish law generally favors freedom of contract and, therefore,
the recourse to arbitration. Additionally, the Turkish Supreme Court is
generally favorable to arbitration. Because Turkey is not a case law
jurisdiction, stare decisis does not exist in Turkish law. Turkish Supreme
Court decisions do not have precedential value unless the Court issues a
special decision, called a “unification decision,” that binds other courts.
Recent unification decisions have presented a problem for international
arbitration practice in Turkey. They have opened the door to court
supervision of the arbitrators’ application of law. Facilitating appeal of
arbitral ruling ignores the parties’ intent to have recourse to arbitration and
compromises the reliability of arbitration.
Public policy constitutes another potential problem for
international arbitration in Turkey. The Turkish courts do not have a
predictable approach to the definition and application of public policy in