Obtaining a favorable award in international arbitration proceedings (such as the International Chamber of Commerce – ICC, etc.) is merely the first stage of a commercial victory.
A multi-million dollar arbitral award won in Geneva or London against a debtor headquartered or holding assets in Turkey has no direct legal execution power within Turkish borders.
For this award to be executed in Turkish banks, customs, or land registry offices, it must be recognized and its enforceability approved through a strategic enforcement lawsuit (tenfiz davası) in local courts.
However, this legal process is not a simple approval or translation procedure. It is a highly aggressive secondary legal battle where debtor companies can deadlock the process for years by exploiting exceptions in the New York Convention and the Turkish Private International Law (MÖHUK).
Notification and the Right to Defense: The Hidden Mine in the Litigation Process
Turkish courts do not delve into the merits of the dispute or debate the accuracy of the arbitrators’ decision in requests for the execution of foreign awards. This rule in law is called the “prohibition of reviewing the merits” (révision au fond).
Knowing this rule very well, the first strategy debtor companies employ is to sabotage the process through procedural law. The most frequently used weapon at this point is “notification errors” (service of process failures) made by the foreign arbitral tribunal while conducting the arbitration process.
It is highly risky if the notifications made to the defendant Turkish company during the arbitration phase do not comply with the strict formal requirements sought by Turkish law or international conventions. For example, relying solely on e-mail or serving notice to unauthorized personnel directly surfaces at the court stage as a “restriction of the right to defense.”
Turkish judges may reject the enforcement request purely due to this notification defect, regardless of what is written in the award. Therefore, even before the arbitral tribunal assumes its duties, it is imperative that notification procedures be audited through the lens of a Turkish procedural lawyer.
The Limits of the “Public Policy” Objection and Supreme Court Precedents
The broadest and most dangerous gray area leading to the rejection of foreign arbitral awards in Turkey is the “Violation of Public Policy” objection.
Turkish law does not permit the execution of any provision that contradicts fundamental moral rules, the core principles of the Constitution, and the indispensable mandatory rules of the system. Debtor companies frequently take refuge in these articles.
Defendants build their defense by claiming that high interest rates, exorbitant penal clauses, or punitive damages in the award violate Turkish public policy.
In the current precedents of the Turkish Court of Cassation (Supreme Court), a delicate line has been adopted stating that not every violation of a mandatory rule of law automatically disrupts this balance. For the heavy conditions contained in the arbitral award to pass the Supreme Court’s public policy test, a highly academic counter-thesis intertwined with the necessities of international trade must be presented. Superficial defenses failing to make this distinction will result in a hard-won victory being thrown in the trash in Turkey.
Precautionary Attachment and the Risk of Asset Dissipation During Enforcement
The most critical commercial dilemma of this lawsuit is the risk of the debtor company concealing, transferring, or emptying its assets in Turkey during the months or years the litigation continues.
Until the court decision becomes final, there is no valid court order (ilam) that can be directly processed in Turkish execution offices. This crisis moment requires a vital move: obtaining an urgent “Precautionary Attachment” (freezing of assets) approval from the Turkish judge based on the foreign arbitral award.
However, courts may be reluctant to place a block on the accounts of local companies based on a foreign document that has not yet become official. The due status of the receivable and the suspicion of asset smuggling must be presented to the file with concrete evidence and an aggressive request for preliminary injunction.
Otherwise, the danger arises of obtaining a victory won on paper at the end of the process, but with no collection capability left. The true mastery lies in delivering the arbitration result to the target assets with legal armor.
The Legal Armor of International Trade: The Importance of Expert Counsel
In summary, extracting a favorable decision from a foreign arbitral tribunal is only half the process. For this award to be executed within our borders, conducting a strategic enforcement lawsuit, purified of procedural traps, is a legal necessity.
It is extremely important that precautionary attachment requests are not rejected, notification errors do not fall victim to public policy objections, and years of effort are not wasted.
Proceeding from the very beginning of the process with a professional law firm well-versed in Turkish procedural law is the safest step to take to protect your company’s commercial assets. For more information and to manage your process professionally, you can contact us through the contact section of our website.
Legal Notice And Disclaimer
All articles, analyses, and legal evaluations contained on this website are provided for general informational purposes only and do not, under any circumstances, constitute a formal legal opinion, legal advice, or consultancy intended to be applied to a specific dispute or legal situation.
Due to the dynamic nature of legislation and the unique material characteristics of each concrete case, our firm accepts no liability for any loss of rights that may arise from actions taken or decisions made in reliance upon these texts.
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