Background
Until recently, Turkish courts had differing practices as to the amount of the court filing fee payable to enforce arbitral awards. Some court clerks required payment of a nominal fixed fee, whereas others required payment of a fee equal to a percentage of the claim. Consequently, a creditor wishing to enforce an arbitral award in Turkey was unable to predict the amount of the filing fee, which was largely up to the clerk to decide. This was not an insignificant issue: depending on the method used, for a USD 1 million award, the filing fee could be as little as USD 10 or as much as USD 16,000.
Under the Law on Fees No. 492, a party wishing to enforce an arbitral award in Turkish courts is required to pay a court filing fee equal to one-quarter of the “judgment and writ fee” (karar ve ilam harcı), including claims for enforcement of arbitral awards.[1] This fee is either a percentage of the disputed amount (6.831%), payable where the court is to consider the merits of the case and a monetary value can be attached to the claim, or a nominal fixed fee (~TRY 28 (~USD 10)). Since the Law on Fees does not make clear whether claims to enforce arbitral awards require an examination of the merits (despite a contrary intention expressed in arbitration law), uncertainty existed as to whether a percentage or fixed fee was payable. Three consistent Court of Appeal decisions have now resolved the issue.
Decisions
In each of the three decisions,[2] the Court of Appeal[3] held that claimants seeking to enforce an arbitral award must pay a filing fee equal to 6.831% of the amount sought, reversing lower court decisions where the fixed fee was charged. The appellate courts noted that the payment of court fees is an issue of public policy which the court must, therefore, consider on its own initiative.
Conclusion
These separate but consistent decisions over the past year have now settled an issue which had long been uncertain. Although appellate decisions are only persuasive, but not binding, authority, it is likely other courts will follow suit and require the payment of proportionate court costs prior to determining whether to order enforcement.
Please do not hesitate to contact our arbitration team if you have any questions about arbitration and enforcement of arbitral awards in Turkey.
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[1] Payment of the remaining three-quarters is determined following conclusion of the case.
[2] One on an ICC award and another on an International Cotton Association award; the details of the third case are unknown.
[3] 15th Civil Division of the Court of Appeal, File No. 2015/385, Decision No. 2015/1303, March 18, 2015; 15th Civil Division of the Court of Appeal, File No. 2015/1055, Decision No. 2015/1740, April 6, 2015; 19th Civil Division of the Court of Appeal, File No. 2014/11188, Decision No. 2015/8132, June 2, 2015.
