Mehmet Vedat Ervan
Arbitration In Turkey: Should the Objection to an Interim Measure Order be Filed to the Original Court that Issued it or to the Foreign Arbitration Panel?06.11.2023 / Doç. Dr. Anıl Köroğlu, Av. Mehmet Vedat Ervan
1. Relevant Decision and the Subject of the Dispute
Pursuant to paragraph 3 of Article 35 of Act No. 5235, in order to eliminate the difference of jurisprudence between the civil chambers of the regional court of appeal, the Istanbul Regional Court of Appeals Presidents' Board has requested the Court of Cassation to decide on “whether the objection against the interim measure decision should be evaluated by the court of first instance that issued the decision or by the foreign arbitration panel where the actual dispute is heard”, and the said difference of jurisprudence was resolved by the decision of the 6th Civil Chamber of the Court of Cassation’s decision dated 10.10.2022 and numbered 3529/4699.
In this context, the 6th Civil Chamber of the Court of Cassation resolved the dispute concerning which authority is competent to assess objections to interim measure decisions by Turkish Courts when a lawsuit follows before a foreign arbitral tribunal.
2. Relevant Legislation
Pursuant to Article 1, titled “Purpose and scope,” and Article 2, titled “Foreign element,” of the International Arbitration Act No. 4686, provisional legal protection measures for disputes subject to international arbitration are regulated under Article 6, titled “Interim measures or interim attachments” of the same Act. When the regulations regarding national arbitration on the same subject are examined, it is seen that provisional legal protection measures are regulated under Article 414, titled “Interim injunction and discovery of evidence,” of the Code of Civil Procedure No. 6100 (“CCP”).
3. Opinions from Authorities
Pursuant to paragraph 3 of Article 35 of Act No. 5235, the decision of the President's Council of the Istanbul Regional Court of Appeals includes the decision of the 45th Civil Chamber of the Istanbul Court of Appeals decision numbered 2281/226, and the decision of the 15th Civil Chamber of the Istanbul Court of Appeals (“CoA”) numbered 825/476.
3.1. Decision of the 45th Civil Chamber of Istanbul CoA
The 45th Civil Chamber of the Istanbul CoA, in determining which authority should examine an objection to an interim measure decision, took into account Article 394/2-2 sentence, Article 407, and Article 414/5 of the CCP.
According to the decision of the 45th Civil Chamber of Istanbul CoA dated 03.03.2021; “It is understood that the objection to the interim measure decisions issued by the Turkish courts will be decided by the Turkish courts hearing the main case, and that the interim measure decision issued by the court regarding the disputes that do not contain a foreign element as defined by the International Arbitration Act and where the place of arbitration is determined as Turkey can be changed or eliminated by the arbitrator or arbitral tribunal.
It is not possible to apply the relevant provisions of the CCP to the concrete case by analogy. Moreover, the acceptance of a foreign arbitral tribunal's annulment of a decision rendered by the Turkish courts constitutes an interference with the decision-making authority of the Turkish courts. The decision of the court of first instance that the objection to the interim measure decision should be evaluated from file No. 25466/GR of the International Court of Arbitration of the International Chamber of Commerce (ICC), where the main dispute is seen, is not appropriate, and the objection should be evaluated and decided by the court of first instance”.
Accordingly, the 45th Civil Chamber of Istanbul CoA concluded that the first instance court should examine the objection to the interim measure decision.
3.2. Decision of the 15th Civil Chamber of Istanbul CoA
In its judgment dated July 18, 2017, the 15th Civil Chamber of the Istanbul CoA emphasized that under Article 6 of the International Arbitration Act No. 4686, a party has the right to request an interim measure or attachment from the courts before or during arbitration proceedings. The Chamber highlighted that, legally, the Turkish Courts are empowered to grant interim measures before the commencement of a lawsuit. However, the Chamber noted that since it was reported that a lawsuit had already been filed within the jurisdiction of the Algerian Courts/Arbitration panel before the challenged decision of the court was made, any objections to the interim measures should be considered by the court or arbitral tribunal that will deliberate on the main case. Consequently, it was established that the objection to the injunction should be reviewed by the arbitral tribunal.
4. Decision of the 6th Civil Chamber of the Court of Cassation
In the decision dated October 10, 2022, by the 6th Civil Chamber of the Court of Cassation, it was first stated that the disputes subject to the conflict between chambers do not fall under the scope of the International Arbitration Act (“IAA”). However, it was mentioned that Article 6 of the IAA could be applied exceptionally in accordance with Article 1 of the IAA for temporary legal protection measures. The decision highlighted that there are significant differences between Article 6 of the IAA and Article 414 of the CCP, which applies to national arbitration. Article 414 of the CCP imposes much more limited conditions for applying to the court for an interim measure or evidence discovery, and these differences were intentionally made by the legislator.
According to the decision; “Although the provisions on arbitration regulated in Chapter 11 of the Code of Civil Procedure, which entered into force in 2011, are generally based on the International Arbitration Act, it is seen that there is a conscious departure from this trend in some matters. One of these deviations is related to provisional legal protection measures (...) Considering that this difference was not eliminated in the subsequent amendments made to the International Arbitration Act, it is understood that this difference was deliberately created”.
The Supreme Court then illustrated the difference between Article 6 of the IAA and Article 414 of the CCP with the following examples;
- According to Article 6(3) of the IAA, an interim measure or attachment order that requires enforcement by compulsory execution authorities or needs to be carried out by other official authorities cannot be issued by arbitrators. In contrast, in national arbitration conducted under the provisions of the CCP, there is no such limitation.
- Contrary to the CCP, which allows for the issuance of interim measures or attachments that bind third parties, various limitations have been imposed in the IAA.
While Article 414/5 of the CCP explicitly grants arbitrators the authority to change or lift an interim measure decision made by the court, Article 6/5 of the IAA regulates that the decision on an interim measure or attachment, regardless of whether it is given before or during the arbitration proceedings, cannot be lifted by the arbitrators in international arbitration. The decision becomes automatically null and void with the finalization of the judgment subject to the proceedings or the rejection of the case by the arbitrators.
Following these explanations and examples, the Court of Cassation accepted that the nature of international arbitration, the nature of provisional legal protection measures and the content of Article 6 of the IAA should be evaluated as a whole, since, unlike Article 414 of the CCP, Article 6 of the IAA does not explicitly regulate who will hear the objection regarding the provisional legal protection measures granted by the court.
In light of these issues, the 6th Civil Chamber of the Court of Cassation stated that “In our law, the court in charge of interim measures is the court in charge and authorized on the merits before the lawsuit is filed, and after the lawsuit is filed, it is the court where the main lawsuit is heard. This principle is accepted as a general principle and is expressed as the first principle that comes to mind in arbitration. However, this provision is not applicable here. This is because, according to Article 17 of the IAA, the provisions of the Code of Civil Procedure shall not apply to the matters regulated by this law, unless otherwise provided. Since there is no contrary provision in this regard, this provision of the CCP is not applicable in arbitration.
On the other hand, since interim measures provide temporary protection, it is not possible to recognize and appeal interim measures issued by foreign courts or arbitral tribunals. In this case, an interim measure issued by the foreign court or arbitral tribunal hearing the underlying dispute in relation to the goods or receivables located in Turkey will not have any effect in Turkey, and therefore will not provide any protection to the parties in terms of the ultimate objective of the case before the foreign court or arbitral tribunal. (...)
According to this conclusion, despite the existence of an arbitration agreement, an interim measure may be requested from the Turkish courts in relation to a dispute involving a foreign element. And the objection to the interim measure decisions rendered by the Turkish courts may be heard by the Turkish courts, regardless of whether a lawsuit has been filed in arbitration or not”.
Consequently, the Court of Cassation determined that the differences between the CPC and the IAA reflect a deliberate choice by the legislator, that arbitrators or arbitral panels in international arbitration must also be specifically authorized, that the rule “the court of original jurisdiction will have competence after a lawsuit is filed” cannot be applied to international arbitration in accordance with IAA Article 17, that interim measures ordered by foreign courts or arbitral panels cannot be recognized and thus cannot provide protection to the parties. Therefore, the Court of Cassation ruled that objections to interim measures issued by Turkish courts should be evaluated by Turkish courts, not by arbitrators or arbitral panels in international arbitration.