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Amendments Made Regarding the Competent Courts in Charge of Handling Actions for Annulment Brought against Arbitration Awards and the Competent Courts in Charge of Handling Certain Procedures in Arbitration

By “The Law No. 7101 on the Amendment of the Enforcement and Bankruptcy Law and of Certain Laws”, which has been published in the Official Gazette No. 30361 dated 15 March 2018 and entered into force on the same day, (the “Law No. 7101”), amendments have been made in respect of the articles of the International Arbitration Law No. 4686 (the “IAL”) and the Code of Civil Procedure No. 6100 (the “CCP”) regulating the actions for annulment brought against arbitration awards as well as the courts in charge the procedures which are specified to be performed by courts in arbitration.

1. Amendments made in the IAL by the Law No. 7101


By the amendment made in Article 15 of the IAL by the Law No. 7101, the court in charge in actions for annulment to be brought against arbitration awards in the scope of the IAL has been determined as the regional court, instead of the civil court of first instance; and the competent court has been clarified by means of a reference to made to Article 3 of the IAL. In consequence of this amendment, the court which is competent to handle and in charge of handling the actions for annulment to be brought against the arbitration awards given within the scope of the IAL has been determined as;


a.
The Regional Court at the place where the competent civil court of first instance is located, where the opponent party is domiciled or has a residential address or a workplace in Turkey,

b. The Istanbul Regional Court, in case the opponent party is not domiciled or does not have a residential address or a workplace in Turkey,

In short, while, before the mentioned amendment, the civil courts of first instance, which are first-degree courts, were in charge of the cases for annulment to be brought against the arbitration awards within the scope of the IAL; after the relevant amendment, the regional courts, which are second-degree courts, have been put in charge to hear the actions for annulment, and it has been clarified that the competent court shall be determined as per the principles stipulated in Article 3 of the IAL.


Another change made in the IAL on the basis of the mentioned amendment is related to the determination of the legal remedy in terms of the decisions ruled in actions for annulment brought against the arbitration awards within the scope of the IAL. Before the relevant change, it was stated that the decisions passed by the civil courts of first instance in respect of the actions brought for the annulment of arbitration awards could be appealed, whereas revision of decisions could not be claimed for those decisions. However, the “revision of decision”, which was adopted as a legal remedy against court decisions in the abolished Code of Civil Procedure, has not been included in the new Code of Civil Procedure No. 6100. By the amendment in the IAL, it is stipulated that the decisions ruled by the Regional Courts in respect of the actions brought for the annulment of arbitration awards can be appealed. As the revision of the decision mechanism was abolished under the CCP, the expression stating that revision of decision cannot be claimed has been removed from the text and, thus, the consistency between these two laws have been maintained.


As the civil courts of first instance are no more in charge of handling the actions for annulment of arbitration awards within the scope of the IAL, the expression “actions for annulment” in the subparagraph (4) of paragraph 3 in Article 5 titled “the Establishment of Civil Courts” of the Law No. 5235 on the Establishment, Competency and Jurisdiction of First Degree Judicial Courts and Regional Courts has been removed from the text of the article; and consistency with such amendments in the IAL in respect of the courts in charge of actions for annulment has been maintained.


Furthermore, by the Law No. 7101, an additional article has been included in the IAL. The relevant article states that the competency and jurisdiction granted to the civil court of first instance by the IAL shall be exercised by the civil court of first instance or commercial court of first instance depending on the subject of the dispute.


In this respect, it is stipulated that, in arbitration proceedings within the scope of the IAL, the court in charge of the procedures other than the actions for annulment, such as the appointment of arbitrators, decision of precautionary injunction or precautionary attachment, application for refusal of the arbitrator, request for support of the court for the collection of evidences, request for extension of the arbitration period etc. shall be the civil court of first instance or the commercial court of first instance depending on the subject of the dispute.


The expression “subject of the dispute” used here is of great importance for the determination of the court in charge. Except for the action for annulment of the arbitration award, if the subject of arbitration in the scope of the IAL is related to the resolution of a commercial dispute, the court in charge will be the commercial court of first instance. For all other disputes, the court in charge will be the civil court of first instance. By the relevant amendment, the hesitation on whether the commercial courts of first instance are in charge of matters for which obtaining a court decision is possible in respect of the arbitration proceedings regarding commercial issues, has been eliminated.


2. Amendments Made to the IAL by the Law No. 7101 Regarding Arbitration Proceedings

In consequence of the amendments made to the IAL regarding the courts which have jurisdiction for and in charge of handling the actions for annulment of arbitration awards, the relevant provisions of the CCP have also been amended in order to ensure the consistency between the IAL and the CCP. In due course, it has been clearly stipulated that the actions for annulment to be brought against arbitration awards shall be heard by the regional court at the place of arbitration.


A further amendment has been made in the paragraph 1 of Article 410 of the CCP, which regulates the competent courts in charge of the procedures which are stipulated to be handled by the court during the arbitration proceedings.


Before the relevant amendment, the competent court in charge of the procedures stipulated to be handled by the court during the arbitration proceedings was the regional court at the place of arbitration, whereas, by the amendment, the competent court in charge has been determined as the civil court of first instance or commercial court of first instance at the place of arbitration depending on the subject. In cases where the place of arbitration is not determined, the competent court shall be the court at the place of the defendant’s domicile, residential address or workplace in Turkey. Similarly, in respect of the arbitration proceedings within the scope of the CCP, the courts in charge of handling the cases other than the actions for annulment shall be the commercial court of first instance if the subject of the arbitration proceeding is a commercial dispute, and shall be the civil court of first instance for other disputes.


Another change is that, in the second paragraph of Article 416 of the CCP, the expression “appeal cannot be sought” has been amended as “legal remedy cannot be sought” for the applications made against court decisions where the civil court of first instance appoints the arbitrator or the arbitral tribunal. A similar amendment has been made to paragraph 4 of Article 418 of the CCP, whereby it is stipulated that legal remedy cannot be sought against court decisions ruled in respect of claims for the refusal of the appointed arbitrator or the entire arbitral tribunal or a number of arbitrators eliminating the decision quorum.


By these amendments, besides the right of application to the Court of Appeal, the right of application to the Court of Cessation against the decisions ruled by the civil courts of first instance or commercial courts of first instance, depending on the subject of the dispute, has been precluded. Thus, it has been clarified that the decisions passed by the courts on these matters are final.


Consequently, within the framework of the amendments made by the Law No. 7101 in the IAL and the CCP, the courts in charge of handling the actions for annulment to be brought against arbitration awards have been explicitly determined as the regional courts, rather than the civil courts of first instance.


Before the amendments, the courts in charge of handling all procedures stated to be handled by courts during the arbitration proceedings, except for the actions for annulment of the arbitration awards, were the civil courts of first instance in respect of international arbitration proceedings and the regional courts in respect of local arbitration proceedings, whereas, as a result of the amendments made, the courts in charge of handling such procedures are now to be the civil courts of first instance or commercial courts of first instance depending on the subject of the dispute.


The information given in this memo are aimed only at providing information, and does not serve as a legal opinion under any circumstances







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