Author: Duygu Oner Aycicek
Introduction
Under Turkish law, the legal remedy that can be applied against arbitral awards is an annulment action. Law on International Arbitration No. 4686 (“IAL”) finds its application area in arbitration proceedings where Turkey is the place of arbitration and which contain foreign elements. In the IAL, which includes provisions regarding trial procedure, the circumstances under which an arbitral award can be annulled are specifically identified. One possible ground for annulment is that the arbitral award is contrary to public order. Even if the violation of public order is not raised by the parties, it must be considered by the court ex officio.
In a recent decision of the 40th Civil Chamber of the Istanbul Regional Court of Appeal, numbered 2019/2541 E. 2021/1346 K. and dated 05.10.2021 (“Decision”), the Court concluded that the misinterpretation of the law applied to the merits in the arbitral award is not sufficient for the decision to be deemed contrary to public order.
Dispute Subject to the Decision
The Decision concerned a dispute between the parties arising from construction agreement. The contractor resorted to arbitration for the collection of its unpaid receivables. The employer filed a counterclaim with a claim for compensation for the defective work, the cost of the materials that had not been sent and for breach of contract. As a result of the proceedings before the arbitral tribunal, a decision was made to accept the case and partially accept the counter case. The employer alleged that the arbitral tribunal misinterpreted the law to be applied to the merits of the dispute and claimed that the decision was contrary to public order. Accordingly, they requested the annulment of the arbitral award in accordance with Article 15 of the IAL.
