Nearly a Decade On - The Perception of International Arbitration Law by Turkish Courts

Abstract

AT THE end of the 1980s, Turkey chose to be an active participant in the global commercial field and decided to promote foreign investment. During the 1990s, the increase of investments in infrastructure projects through build-operate-transfer or build-own-operate models made arbitration a more desirable way to resolve disputes. By the late 1990s, arbitration had become more well-known and popular in Turkey. Accordingly, several constitutional and legal reforms were put in place to encourage the development and spread of arbitration.1 However, there was a major deficiency in the Turkish legal system which hindered the progress of arbitration, namely the lack of a modern codification of international arbitration law. There were a number of reasons for the deficiency. First, the Code of Civil Procedure2 (CCP) was outdated and contained restrictive provisions on international arbitration. Secondly, the practice of the Court of Appeal in respect of the application of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 19583 (‘New York Convention’) had significantly limited the development of arbitration in Turkey. The court interpreted the ‘public policy’ concept widely as a ground for refusal of enforcement of an arbitral award under the New York Convention by not taking into account the international character of the dispute at stake.4 However, a change in policy was prompted by Turkey’s need to attract foreign investors5 and the fact that the international commercial community and the foreign investors preferred resolution of disputes through international arbitration.6 Also, the Turkish legislature wished to attract international arbitrations to Turkey.7 Accordingly, the legislature, as a measure of reform in the field of international arbitration, adopted the International Arbitration Law8 (IAL) on 5 July 2001. The IAL is a contemporary codification which was prepared on the basis of the …