Public Policy Objections in the Enforcement of Arbitral Awards in Turkey

Public policy is one of the most frequently invoked and most difficult objections in proceedings for the recognition and enforcement of foreign arbitral awards in Turkey.

A party that has lost an international arbitration may argue that giving the award legal effect in Turkey would violate fundamental principles of the Turkish legal order. The objection may concern the substance of the award, the procedure followed by the arbitral tribunal, the legality of the underlying transaction or the consequences that enforcement would create in Turkey.

However, public policy is not intended to provide an unsuccessful party with a general right of appeal against an arbitral award. Turkish courts dealing with recognition and enforcement should not reconsider the entire dispute, reassess every item of evidence or replace the tribunal’s interpretation of the contract with their own.

The relevant question is not whether the arbitral tribunal reached the same result that a Turkish court would have reached. The question is whether recognition or enforcement of the award would produce consequences that are fundamentally incompatible with the essential legal, constitutional, moral or economic principles protected by Turkish law.

The principal legal sources are the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and Turkish Law No. 5718 on Private International Law and International Civil Procedure, commonly referred to as MÖHUK.

Turkey applies the New York Convention subject to reciprocity and commercial reservations. The Convention therefore applies in Turkey, on the basis of reciprocity, to awards made in another contracting state and to disputes arising from relationships regarded as commercial under Turkish law.

This article explains the legal basis of the public policy defence, its narrow scope, the distinction between procedural and substantive public policy, the prohibition against a review of the merits, the circumstances that may justify refusal and the practical strategies available to award creditors and debtors in Turkey.

Legal Basis of the Public Policy Objection

Article V(2)(b) of the New York Convention provides that recognition and enforcement may be refused if the competent authority in the country where enforcement is sought finds that recognition or enforcement would be contrary to the public policy of that country.

This ground differs from most of the objections listed in Article V(1). The grounds in Article V(1), such as invalidity of the arbitration agreement, lack of proper notice or irregular constitution of the tribunal, are ordinarily raised and proved by the party resisting enforcement. Public policy and arbitrability may be examined by the enforcement court on its own motion.

Turkish domestic legislation contains a parallel rule. Article 62(1)(b) of MÖHUK provides that a Turkish court must refuse enforcement where the foreign arbitral award is contrary to general morality or public policy. The same provision separately recognises non-arbitrability as a refusal ground.

Article 63 of MÖHUK states that the recognition of foreign arbitral awards is subject to the same provisions governing enforcement. Public policy may therefore affect both:

• Enforcement, where compulsory execution is requested;
• Recognition, where the award is relied on as final evidence or as a basis for res judicata.

MÖHUK also preserves the priority of international treaties to which Turkey is a party. Therefore, where the New York Convention applies, it constitutes the principal international framework, while Turkish procedural law regulates matters such as the competent court, filing process and available remedies.

What Does Public Policy Mean under Turkish Law?

Public policy is not defined exhaustively in the New York Convention or MÖHUK. Its content is developed through judicial decisions, constitutional principles and legal doctrine.

The Turkish Court of Cassation has described public policy as the collection of institutions and rules that determine the political, social, economic, moral and legal foundations of society and protect its fundamental interests.

The concept may include:

• Fundamental constitutional values;
• Basic principles of justice;
• The right to a fair hearing;
• Fundamental rights and freedoms;
• General morality;
• Essential rules protecting the legal and economic order;
• Rules intended to prevent fraud, corruption and illegality;
• Principles that the Turkish legal system considers indispensable.

In a leading decision concerning the enforcement of a foreign arbitral award, the General Assembly of Civil Chambers of the Court of Cassation stated that recognition and enforcement require both the arbitrability of the dispute and compatibility of the award with Turkish public policy. The decision also explained that fundamental rules protecting public interests, morality and basic rights may require public policy intervention.

Public policy is not static. Its content may develop according to constitutional interpretation, legislation, social conditions, economic policies and internationally accepted principles. A matter that does not create a public policy concern in one period may be evaluated differently after a significant legislative or constitutional development.

Domestic Public Policy and International Public Policy

An important distinction must be made between domestic public policy and international public policy.

Domestic public policy applies within the Turkish legal system and may restrict the parties’ freedom to contract or determine how Turkish courts resolve domestic disputes. International public policy is generally narrower. It determines whether a foreign judgment or arbitral award may be permitted to produce legal effects in Turkey.

Not every violation of a mandatory Turkish legal rule constitutes a violation of international public policy.

A foreign arbitral award should not be refused merely because:

• The tribunal applied foreign law;
• Foreign law differs from Turkish law;
• The tribunal reached a result unavailable in an ordinary Turkish lawsuit;
• A Turkish mandatory provision was not applied;
• The tribunal interpreted a Turkish statute incorrectly;
• Turkish procedural law was not followed.

The public policy analysis should focus on the legal consequences of recognising and enforcing the award in Turkey. The enforcement court should ask whether those consequences would be intolerable for the fundamental values of the Turkish legal system.

Turkish jurisprudence concerning recognition and enforcement generally emphasises that the mere application of rules different from Turkish substantive or procedural law does not justify refusal. Although some leading decisions concern foreign court judgments rather than arbitral awards, they reflect the broader principle that an enforcement court must not act as an appellate court over the foreign decision.

Public Policy Is an Exceptional Defence

Public policy should be interpreted restrictively because an excessively broad approach would undermine the purpose of international arbitration and the New York Convention.

The Convention was designed to prevent discrimination against foreign arbitral awards and to ensure that such awards are generally capable of recognition and enforcement in contracting states.

If every disagreement with the tribunal’s reasoning could be characterised as a public policy objection, the enforcement court would effectively become an appellate tribunal. This would defeat the parties’ agreement to resolve the dispute through arbitration and would weaken the finality of arbitral awards.

Accordingly, a public policy objection should identify a violation of a fundamental principle rather than an ordinary legal or factual error.

The difference may be expressed as follows:

An incorrect calculation of damages is ordinarily a merits issue. An award deliberately obtained through fraud may raise public policy concerns.

An incorrect interpretation of a contractual clause is ordinarily a merits issue. Enforcement of a contract requiring the commission of a criminal offence may raise public policy concerns.

A different procedural rule is ordinarily insufficient. A complete denial of the right to present a defence may engage procedural public policy.

Prohibition against Reviewing the Merits

The Turkish enforcement court should not conduct a full review of the merits of the arbitral award.

The court should not ordinarily reconsider:

• The interpretation of the contract;
• Witness credibility;
• The weight given to expert reports;
• The tribunal’s assessment of documentary evidence;
• The calculation of commercial loss;
• The selection of the applicable substantive rule;
• The tribunal’s interpretation of foreign law;
• Ordinary errors of fact or law.

The refusal grounds in Article V of the New York Convention and Article 62 of MÖHUK are limited. This structure indicates that an enforcement action is not intended to become a rehearing of the original commercial dispute.

However, a complete prohibition against examining any aspect of the underlying dispute would also be impractical. A court may sometimes need to examine the award, contract or procedural record to determine whether a genuine public policy violation exists.

The Court of Cassation has acknowledged that limited examination of matters connected with the merits may occasionally be necessary. For example, where it is alleged that the underlying contract was designed to evade customs or tax legislation, the court may need to examine the commercial relationship sufficiently to assess that allegation. The Court has emphasised that such an examination does not constitute a full technical review of the merits.

The distinction is therefore between:

• A limited examination necessary to determine whether a refusal ground exists; and
• A prohibited reconsideration of whether the tribunal’s final decision was legally or factually correct.

Substantive and Procedural Public Policy

Public policy objections may generally be divided into substantive and procedural categories.

Substantive Public Policy

Substantive public policy concerns the legal result created by the award.

An objection may arise where the award requires or validates conduct that is fundamentally illegal, immoral or incompatible with essential Turkish legal principles.

Potential examples include awards involving:

• Contracts concluded for an illegal purpose;
• Bribery or corruption;
• Fraudulent transactions;
• Evasion of tax or customs legislation;
• Criminal activity;
• Serious violations of competition law;
• Transactions intended to defeat creditors unlawfully;
• Obligations fundamentally incompatible with constitutional rights;
• Relief considered fundamentally punitive or confiscatory;
• Conduct contrary to basic standards of morality.

The fact that a contract violates a mandatory rule is not necessarily sufficient. The court must evaluate the nature, purpose and importance of the rule and the consequences that enforcement would create in Turkey.

Procedural Public Policy

Procedural public policy protects the fundamental fairness of the arbitral process.

Potential violations may include:

• Complete denial of notice;
• Denial of a meaningful opportunity to present a claim or defence;
• Serious inequality between the parties;
• Fraud affecting the arbitration;
• Corruption involving an arbitrator;
• Undisclosed conflicts of interest of exceptional seriousness;
• Reliance on decisive evidence that was deliberately withheld from the opposing party;
• A decision rendered through a fundamentally unfair procedure.

Some procedural complaints are separately regulated under Article V(1) of the Convention and Article 62 of MÖHUK. For example, lack of notice and inability to present a defence have their own refusal grounds. A respondent should rely on the most specific available ground rather than using public policy as a general substitute.

Fraud, Corruption and Illegality

Fraud and corruption are among the clearest areas in which public policy may prevent enforcement.

An award may be challenged where there is credible evidence that:

• The underlying contract was obtained through bribery;
• The award gives effect to a corrupt transaction;
• Evidence was fabricated;
• Documents were forged;
• The arbitration was manipulated through fraudulent conduct;
• An arbitrator was bribed;
• A party concealed decisive facts through intentional deception.

The Court of Cassation has indicated that awards obtained through fraudulent documents or concerning transactions structured to evade foreign trade, customs or tax rules may be incompatible with Turkish public policy.

Nevertheless, an allegation of fraud must be supported by concrete evidence. A party should not be allowed to reopen factual issues that were already fully considered by the tribunal merely by relabelling its original defence as a public policy objection.

The enforcement court may consider:

• Whether the alleged fraud was raised during arbitration;
• Whether the evidence was available at the time;
• Whether the tribunal examined the allegation;
• Whether new and credible evidence has emerged;
• Whether the alleged misconduct affected the operative result;
• Whether enforcement itself would legitimise illegal conduct.

Tax, Customs and Foreign Trade Rules

Tax and customs disputes are particularly sensitive because they may involve the sovereign financial interests of the state.

The Court of Cassation has recognised that an award enforcing a claim based on conduct designed to evade tax, customs or foreign trade legislation may trigger public policy intervention. It has also accepted that limited examination of the underlying transaction may be necessary to determine whether the allegation is genuine.

However, the mere fact that an award has tax consequences does not automatically make enforcement contrary to public policy.

The enforcement court should distinguish between:

• An ordinary contractual dispute that incidentally affects tax liabilities; and
• A transaction intentionally structured to conceal income, evade tax, circumvent customs controls or validate a fraudulent arrangement.

An enforcement court should not calculate tax liability as if it were a tax tribunal unless such an examination is indispensable to evaluating the public policy objection.

Fundamental Rights and the Right to Be Heard

An arbitral award rendered through a process that fundamentally violates the right to be heard may conflict with procedural public policy.

The right to be heard generally requires that each party receive:

• Proper notice of the arbitration;
• A reasonable opportunity to appoint or participate in the appointment of arbitrators;
• Access to the opposing party’s material submissions;
• A reasonable opportunity to submit evidence;
• An opportunity to respond to decisive evidence and arguments;
• Equal procedural treatment.

The right to be heard does not give a party an unlimited right to submit documents whenever it chooses. Arbitrators may set deadlines, reject irrelevant evidence, limit repetitive submissions and manage hearings efficiently.

A violation should be regarded as fundamental only where the party was deprived of a meaningful opportunity to participate and the defect was capable of affecting the result.

A party that received notice but deliberately refused to participate cannot ordinarily rely on its own absence as a public policy objection.

Awards without Detailed Reasons

The absence of detailed reasons does not necessarily make a foreign decision contrary to Turkish public policy.

The Turkish Court of Cassation’s Grand General Assembly of Jurisprudential Unification has held, in the context of foreign court judgments, that the mere absence of reasoning does not by itself constitute a public policy violation preventing enforcement.

The decision is not a universal rule for every arbitral award because the law governing the arbitration or the parties’ agreement may independently require reasons. Nevertheless, it illustrates the restrictive approach to public policy: differences between foreign and Turkish procedural models should not automatically prevent enforcement.

Where the arbitration agreement or applicable rules expressly require a reasoned award, failure to provide reasons may instead be examined under other refusal grounds, such as failure to follow the agreed procedure.

A lack of reasons may become relevant to public policy only in exceptional circumstances, particularly where it prevents the court from determining whether enforcement would validate an illegal or fundamentally unfair result.

Excessive Interest and Compound Interest

Awards granting interest at a rate or through a calculation method unfamiliar to Turkish law may lead to public policy objections.

However, a difference between the interest awarded and the interest that a Turkish court would have applied is not automatically sufficient for refusal.

The court may need to consider:

• The law governing the contract;
• The agreed contractual interest rate;
• The commercial nature of the transaction;
• The currencies involved;
• The duration of non-payment;
• Whether the interest is compensatory or punitive;
• Whether the result is manifestly excessive;
• Whether enforcement would violate a fundamental prohibition.

An unusually high interest rate may raise a public policy concern where its economic effect is oppressive, confiscatory or fundamentally incompatible with Turkish concepts of justice and morality.

Nevertheless, public policy should not be used merely to replace the tribunal’s interest calculation with the rate ordinarily applied by Turkish courts.

Turkish legal scholarship has identified excessive interest, compound interest, punitive damages and disproportionate arbitration costs as important issues requiring case-specific public policy analysis rather than automatic refusal.

Punitive Damages

Punitive damages are designed primarily to punish and deter wrongful conduct rather than merely compensate actual loss.

Because traditional Turkish private law generally focuses on compensation rather than punishment through civil damages, an award containing punitive damages may face a public policy objection.

However, it should not be assumed that every award including a punitive element must be refused in full.

The Turkish court should examine:

• The legal character of the awarded amount;
• The relationship between actual harm and the award;
• Whether the amount is compensatory, punitive or mixed;
• The seriousness of the underlying misconduct;
• Whether enforcement would produce an intolerable or confiscatory result;
• Whether the punitive component can be separated from the compensatory part.

Where a distinct punitive component is considered incompatible with Turkish public policy, partial enforcement of the compensatory portion may be considered if the relevant amounts are separable.

There is no basis for treating the label used by the foreign tribunal as conclusive. The court should examine the legal and economic function of the relief.

Arbitration Costs and Legal Fees

A foreign arbitral award may require the losing party to pay substantial institutional fees, arbitrator fees, expert costs and legal fees.

The amount may be considerably higher than litigation costs ordinarily awarded in Turkish courts. This difference alone should not constitute a public policy violation.

International arbitration often involves specialist counsel, multiple arbitrators, extensive expert evidence, translations and cross-border hearings. Cost allocation is also commonly governed by institutional rules and the tribunal’s discretion.

A public policy issue may arise only in exceptional circumstances, such as where:

• The amount is manifestly disproportionate;
• The cost award is punitive rather than compensatory;
• The losing party had no opportunity to contest the costs;
• The award is based on fictitious or fraudulent expenses;
• Enforcement would produce a result fundamentally incompatible with access to justice.

The court should avoid reassessing every invoice or deciding what fee arrangement would have been appropriate. The inquiry must remain focused on fundamental incompatibility rather than ordinary reasonableness.

Competition Law and Mandatory Economic Rules

Competition law may engage public policy where enforcement would validate conduct that seriously restricts competition or violates essential market rules.

Potential issues may include:

• Market-sharing agreements;
• Price-fixing;
• Bid-rigging;
• Abuse of a dominant position;
• Unlawful non-compete arrangements;
• Agreements designed to circumvent regulatory controls.

However, the existence of a mandatory competition rule does not automatically make the dispute non-arbitrable or the award unenforceable.

The enforcement court should determine whether the consequence of enforcement would directly sustain or require a serious violation of fundamental competition policy.

A tribunal’s ordinary interpretation of competition legislation should not be reopened merely because the respondent argues that the tribunal applied the law incorrectly.

Public Policy and Arbitrability

Public policy and arbitrability are separate refusal grounds, although they may overlap.

Under Article V(2)(a) of the New York Convention and Article 62(1)(c) of MÖHUK, enforcement may be refused if the dispute is not capable of settlement by arbitration under Turkish law. MÖHUK separately requires refusal where the award violates morality or public policy.

Arbitrability asks whether the subject matter may legally be decided by arbitrators.

Public policy asks whether the consequences of recognising or enforcing the particular award are acceptable within the Turkish legal order.

A dispute may be arbitrable but still produce an award contrary to public policy. Conversely, an award may appear substantively fair but concern a matter reserved exclusively for public authorities or state courts.

The court should identify clearly which objection it is applying rather than merging the two concepts without analysis.

Public Policy Must Be Assessed at the Enforcement Stage

The relevant public policy is Turkish public policy at the time recognition or enforcement is considered.

The court should focus on the effect that enforcement would produce in Turkey. It is not sufficient to establish that:

• The award violates the public policy of another country;
• The award would not have been rendered under Turkish law;
• The tribunal applied a foreign rule unknown to Turkish law;
• The award conflicts with a non-fundamental domestic provision.

The principal question is whether allowing the award to operate in Turkey would seriously damage the fundamental legal, constitutional, moral or economic values protected by Turkish law.

This approach also means that a change in Turkish legislation occurring after the award may become relevant where the new rule expresses a fundamental and immediately applicable public policy.

Who Bears the Burden of Proof?

Under MÖHUK Article 62(2), the burden of proving several refusal grounds—including lack of representation, lack of notice, invalidity of the arbitration agreement, procedural irregularity, excess of jurisdiction and lack of binding effect—belongs to the party resisting enforcement. The statutory allocation does not list public policy among those grounds because the court may examine public policy on its own motion.

In practice, however, a respondent relying on public policy should present concrete facts, documents and legal arguments.

The respondent should identify:

• The fundamental principle allegedly violated;
• The part of the award creating the violation;
• The consequences enforcement would produce;
• The supporting evidence;
• Why the objection is not merely a disagreement with the merits;
• Whether partial enforcement would still be possible.

General statements that the award is “unfair,” “unlawful” or “contrary to Turkish law” are unlikely to be persuasive.

The award creditor should demonstrate that the objection attempts to reopen the merits or relies only on differences between Turkish and foreign law.

Partial Enforcement

Public policy concerns may affect only one part of an arbitral award.

An award may separately address:

• Principal compensation;
• Interest;
• Punitive damages;
• Contractual penalties;
• Costs;
• Different contracts;
• Different parties;
• Several independent claims.

Where the objection concerns a separable part, the court should consider whether the remainder may be recognised and enforced.

MÖHUK expressly recognises partial refusal where an award exceeds the scope of the arbitration agreement. The principle of separability also supports partial enforcement where the lawful and unlawful portions can operate independently.

For example, if a Turkish court considers a distinct punitive component contrary to public policy but finds the compensatory damages enforceable, it may be appropriate to enforce only the compensatory part, provided the operative provisions are sufficiently separable.

An award creditor should include a request for partial enforcement as an alternative where a particular component may be controversial.

Practical Strategy for the Award Creditor

A party seeking enforcement in Turkey should anticipate possible public policy objections before filing.

The creditor should review:

• The arbitration agreement;
• The procedural history;
• Notices and delivery records;
• The tribunal’s treatment of each party;
• The award’s reasoning;
• The governing law;
• The nature of the underlying transaction;
• Interest and cost calculations;
• Potential tax, customs or regulatory issues;
• Allegations of fraud or corruption;
• The enforceability of each operative provision.

The enforcement petition should explain why the New York Convention applies and why the award does not violate Turkish public policy.

Where the award involves an unfamiliar remedy, the creditor should explain its function rather than assume that the Turkish court will interpret it correctly from its foreign-law label.

The creditor should also distinguish between an alleged violation of a mandatory Turkish provision and a genuine violation of fundamental public policy.

Practical Strategy for the Party Resisting Enforcement

A respondent should avoid presenting the enforcement court with a repetition of its unsuccessful arbitration defence.

An effective public policy objection should:

1. Identify a fundamental Turkish legal principle;
2. Explain how enforcement would violate that principle;
3. Connect the objection to a specific operative part of the award;
4. Provide documentary or legal evidence;
5. Demonstrate that the objection does not require a prohibited rehearing of the merits;
6. Address whether partial enforcement is possible.

Where fraud, corruption or illegality is alleged, the respondent should explain when the evidence became available and whether the issue was raised before the tribunal.

Where procedural unfairness is alleged, the respondent should produce notices, procedural orders, correspondence and rejected applications demonstrating the actual denial of a meaningful opportunity to be heard.

Public policy should not be used as an umbrella objection covering every possible complaint.

Frequently Asked Questions

Can a foreign arbitral award be refused merely because it conflicts with Turkish law?

No. A difference from Turkish substantive or procedural law is not sufficient by itself. The consequences of enforcement must violate a fundamental principle of Turkish public policy.

Does the Turkish court review the merits of the arbitral award?

The court should not conduct a full merits review. It may examine limited aspects of the underlying dispute only where necessary to determine whether a statutory refusal ground genuinely exists.

Can the court examine public policy without an objection from the respondent?

Yes. Public policy and arbitrability may be examined by the Turkish enforcement court on its own motion.

Is the failure to apply a mandatory Turkish rule automatically contrary to public policy?

No. Not every mandatory rule belongs to international public policy. The court must evaluate the importance of the rule and the consequences of enforcing the award.

Can fraud prevent enforcement?

Yes. An award obtained through fraudulent documents, corruption or deliberate deception may be contrary to Turkish public policy if the allegation is supported by credible evidence.

Are foreign punitive damages automatically unenforceable?

Not necessarily. The court should examine the nature, amount and consequences of the award. A distinct and fundamentally incompatible punitive component may be refused, while a separable compensatory component may remain enforceable.

Can high interest constitute a public policy violation?

Only in exceptional circumstances. A rate different from Turkish interest rates is not sufficient by itself. The result must be manifestly excessive or fundamentally incompatible with Turkish legal principles.

Does the absence of detailed reasons prevent enforcement?

Not automatically. Turkish jurisprudence concerning foreign judgments establishes that the mere absence of reasons does not by itself constitute a public policy violation. The arbitration agreement and applicable procedural law must nevertheless be examined separately.

Can only part of an award be enforced?

Yes. Where the problematic portion is separable, the Turkish court may consider recognition or enforcement of the remaining part.

Is a public policy objection the same as an arbitrability objection?

No. Arbitrability concerns whether the subject matter may be resolved by arbitration. Public policy concerns whether recognition or enforcement of the particular award would be fundamentally unacceptable in Turkey.

Conclusion

Public policy is an essential safeguard in the recognition and enforcement of foreign arbitral awards in Turkey, but it is also an exceptional refusal ground.

The Turkish court must protect fundamental constitutional, legal, moral and economic principles without converting the enforcement action into a general appeal against the arbitral award.

The fact that foreign law differs from Turkish law, that the tribunal interpreted the contract differently from a Turkish court or that the award provides a remedy unfamiliar to Turkish practice does not automatically justify refusal.

Public policy intervention is more likely where enforcement would legitimise fraud, corruption, serious illegality, evasion of essential tax or customs rules, a fundamental denial of the right to be heard or another result intolerable to the basic values of the Turkish legal system.

Even in such cases, the court should examine whether the objection affects the entire award or only a separable portion. Partial enforcement may preserve the valid part of the tribunal’s decision while preventing enforcement of the provision that creates the public policy conflict.

For the award creditor, successful enforcement requires early identification of potential public policy concerns, careful preparation of certified documents and a clear explanation of why the respondent’s objections amount to an impermissible merits review.

For the party resisting enforcement, success requires more than alleging that the award is incorrect or unfair. The objection must identify a fundamental Turkish principle, establish the consequences of enforcement and be supported by specific evidence.

Public policy should therefore operate as a protective shield for the fundamental values of the Turkish legal order, not as a broad instrument for unsuccessful parties to relitigate disputes that they agreed to resolve through international arbitration.

Legal Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Public policy analysis depends on the arbitration agreement, applicable law, procedural history, contents of the award and consequences of enforcement in Turkey. Case-specific legal advice should be obtained before commencing or opposing recognition and enforcement proceedings.