Court of Cassation decision

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Turkish Court of Cassation 11th Civil Chamber, File No.2018/6263, Decision No.2018/7408, 27.11.2018

The application for the setting aside of an arbitral award rendered over a dispute arising out of the non-payment of share price arising from a share purchase agreement, both due and undue on the date which the arbitral proceeding was initiated, was rejected by Turkish Court of Cassation. Below, you may find the considerations of the Turkish Court of Cassation about this recourse against the arbitral award.

The party who claims that the arbitrator was suppressed and lost his impartiality, should have asserted this argument during the arbitral proceedings before the rendering of a final award. Otherwise, if this claim has been raised for the first-time during setting aside proceedings, it would contradict the principles of good faith.

  • The faulty application of the substantial law is not a reason for setting aside. The application of the law of a foreign state does not contradict the principle of equality of parties.
  • In the case of the claimant started execution proceedings in accordance with the Turkish Code of Enforcement (TCE) for the debt subject to the arbitration agreement and Insolvency and the execution proceedings stayed because of the debtor’s objection to the execution in accordance with TCE Art. 66 the action for annulment of the debtor’s opposition under TCE Art. 67 shall be initiated in arbitration in accordance with arbitration agreement.
  • While deciding on an action for annulment of the debtor’s opposition, the arbitrators also have the power to order unjust objection compensation in accordance TCE Art. 67(3).
  • The arbitrators are not deemed to have gone beyond their power on the ground that they ruled over the collection of a receivable that becomes due after the arbitration has been launched.
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