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While Turkey’s International Arbitration Law No. 4686 has long permitted Turkish courts to grant interim relief before or during arbitral proceedings, the law was silent as to whether this was permitted once a final award had been rendered by the arbitral tribunal but before it became enforceable by Turkish execution offices. A Turkish Court of Appeal has now made clear that courts can grant interim relief at any time before, during or after arbitral proceedings, before an award becomes enforceable by Turkish execution offices.

Background

Before an arbitral award had been finalized for execution, the prevailing party applied to a Turkish court for an interim attachment (ihtiyati haciz). The trial court dismissed the request, concluding that an arbitral award cannot be enforced by execution offices in Turkey prior to expiry of the period during which an award may be challenged or, where such a challenge has been made, prior to a final court decision upholding the award, thereby making it enforceable by Turkish execution offices.

The Court of Appeal[1] overruled the lower court’s decision, holding that the granting of an interim attachment and the enforcement of an arbitral award are two separate issues. The court explained that as a matter of law there is no obstacle to granting an interim attachment prior to a final court decision ordering enforcement of an arbitral award. In support of its reasoning, the court referred to Article 6 of the law, stating that if interim attachments can be requested before or during arbitral proceedings, there is no reason to bar requests once an award has been rendered.

According to Article 257 of Execution and Bankruptcy Law No. 2004, an interim attachment on a debtor’s assets can be granted with respect to unsecured receivables that are due and payable, or for receivables not yet due and payable where the debtor has no specific place of residence or has commenced actions to conceal or dissipate assets with the aim of avoiding payment. An interim attachment has the effect of freezing the debtors’ assets to ensure the satisfaction of the debt.

Conclusion

The decision is important in that it clarifies a party’s entitlement to seek an interim attachment before a final enforcement decision is rendered. The conditions required for interim attachments must, however, be shown to exist.

Although as a general rule Turkish court judgments are not binding on other cases, they are regarded as persuasive authority and we expect other courts to follow suit. Parties should therefore consider the advantages of seeking an interim attachment from Turkish courts at all stages — before, during and after arbitral proceedings — to ensure the swift and efficient collection of the amounts due.

[1] 6th Civil Division of the Court of Appeal, File No. 2014/3906, Decision No. 2014/4941, April 14, 2014.

Author

Ismail G. Esin is a partner in Esin Attorney Partnership. He is a member of the Istanbul Bar Association.

Author

Dr. Ozgun Celebi is an a member of the Dispute Resolution team at Baker & McKenzie in Istanbul. Dr. Ozgun Celebi focuses her practice on the resolution of commercial disputes through arbitration and litigation. She drafts agreements in various practice areas and advises companies on disputes arising out of contractual relationships. Ozgun Celebi can be reached at Ozgun.Celebi@esin.av.tr and +90 212 376 6411.

Author

Dogan Gultutan is a Senior Associate and Solicitor-Advocate (Higher Courts Civil Proceedings) in the London office of Baker McKenzie. He focuses his practice on the resolution of commercial disputes, particularly through arbitration and litigation. He also has experience in regulatory and investigatory matters. Dogan is dual qualified (England & Wales and Turkey) and has over eight years' experience before the English and Turkish courts and arbitral tribunals. Dogan Gultutan can be reached at Dogan.Gultutan@bakermckenzie.com and + 44 20 7919 1851.