Turkey Confirms the Collection of Fixed Court Fees for the Enforcement of Foreign Arbitral Awards
Berk Tuzuner,Ekinsu Cebi
On 15 July 2016, Turkish Parliament passed an omnibus bill, the Code Amending Related Codes for the Improvement of the Investment Environment No. 6728 (“2016 Amendment”). Among many things, the 2016 Amendment aimed to increase the use of arbitration in Turkey, but also resolved a longstanding discussion surrounding the type of court fees that are applicable to lawsuits relating to the enforcement of foreign arbitral awards.
In this article, we give a brief overview of the applicable court fees in Turkey (i.e., fixed and proportional court fees), and explain how the 2016 Amendment affects court fees collected in enforcement lawsuits.
General Overview on Fixed and Proportional Court Fees
As per Article 2 of the Code of Court Fees numbered 492 (“CCF”), judicial actions under the Tariff attached to the CCF are subject to court fees, this includes the filing of lawsuits.
As per the Tariff, if the nature of a dispute requires the court to examine and render a final judgement on its merits, and if the dispute relates to a monetary/monetarily convertible claim, proportional fees apply. The applicable proportional fee in this instance is equivalent to 6.831% of the total amount in dispute. As per Article 28 of the CCF, claimants pay 25% of the fee when filing the statement of claim, and the remaining 75% within one month of the service of the final judgement. On the other hand, declaratory judgements, are subject to a fixed court fee, equivalent to TRY 59.30.
As per Article 120 of Turkish Civil Procedural Code (“CPC”), plaintiffs must pay the court fees while filing their statement of claims. In instances where plaintiffs fail to pay court fees in full, courts usually grant a time extension for the collection of the fee. If a plaintiff has not paid the fee following an extension, courts will withdraw the case file from proceedings pursuant to Article 150 of CPC.
Court Fees for the Enforcement of Foreign Arbitral Awards –Proportional Court Fees Are No Longer Applicable
Article 36 of the 2016 Amendment removed the ambiguity as to whether courts should collect fixed or proportional court fees in enforcement lawsuits. Accordingly, the 2016 Amendment stipulates proportional fees are not applicable in arbitration cases. As such, it clarified that proportional fees are not applicable in arbitration related proceedings either (i.e., enforcement lawsuits).
The General Assembly of the Civil Chambers of the Court of Cassation also emphasized that the same fees will be applicable to both domestic arbitrations and foreign arbitral awards with the following words:
“Since it has been regulated that proportional fees will not be charged for the arbitral awards rendered in Turkey, it should be accepted that proportional fees will not be charged in enforcement cases of arbitral awards rendered abroad either. As the provision excludes application of proportional fees, a fixed fee shall be charged.”
Before the 2016 Amendment, the type of fee for the enforcement of a foreign arbitral award in Turkey was subject to different interpretations amongst the diverse chambers of the Court of Cassation.
In its decision dated 31 March 2016, the 16th Chamber of the Court of Cassation ruled that enforcement lawsuits were subject to proportional fees, as it found that the enforcement claims related to the collection of an existing receivable. The 15th and the 19th Chambers of the Court of Cassation adopted the same approach in their decisions dating back to 2015 and 2016.
On the other hand, the jurisprudence of the 11th Civil Chamber of the Court of Cassation, even before the 2016 Amendment, found in favor of fixed fees in cases seeking the enforcement of foreign court judgements. The 11th Chamber, in its judgements, relied on the prohibition of revision au fond, banning the courts from examining the merits of an arbitral award. The Chamber elaborated further that a mere review of a possible violation of Article V of the New York Convention is sufficient for an enforcement judgement, concluding that enforcement judgements are of declaratory character and should therefore be subject to a fixed fee.
Arbitration is becoming more costly as the complexity of international disputes and the number of actors involved increase. Consequently, in the majority of cases, plaintiffs have already borne large expenses during the arbitral proceedings and could be financially exhausted at the enforcement stage. Therefore, asking for a proportional court fee from a plaintiff casts a shadow on the effectiveness of arbitration.
With the 2016 Amendment, the Turkish judicial system took a significant step in enhancing its pro-arbitration position in the international arena. There is no doubt that this clarification has already attracted, and continues to attract, foreign investors, who are looking for cost-effective dispute resolution.