Setting Aside International Arbitral Awards under Turkish Law

International arbitration is widely preferred in cross-border commercial transactions because it offers neutrality, procedural flexibility, specialist decision-makers and broad international enforceability. The finality of an arbitral award is one of the principal advantages of arbitration. However, finality does not mean that every arbitral award is completely immune from judicial review.

Where an international arbitration is seated in Türkiye, a party may seek to set aside the resulting arbitral award under the limited grounds prescribed by the Turkish International Arbitration Law No. 4686, commonly referred to as the International Arbitration Law or the IAL.

Setting-aside proceedings are not an ordinary appeal. The competent Turkish court does not rehear the dispute, reassess every item of evidence or substitute its interpretation of the contract for that of the arbitral tribunal. Judicial review is limited to serious jurisdictional, procedural and public policy defects expressly identified by law.

This distinction is critical. A party cannot obtain annulment merely because it believes that the tribunal misunderstood the facts, interpreted the contract incorrectly, accepted the wrong expert opinion or reached an commercially unfavourable conclusion. The applicant must connect its objection to one or more of the statutory grounds contained in Article 15 of Law No. 4686.

This guide explains the legal framework, competent court, 30-day filing period, burden of proof, statutory annulment grounds, public policy review, partial setting aside, waiver, enforcement consequences and practical strategy for setting aside international arbitral awards under Turkish law.

What Does Setting Aside an Arbitral Award Mean?

Setting aside, also described as annulment or cancellation, is the process by which the competent court at the seat of arbitration invalidates an arbitral award in whole or, where legally possible, in part.

An annulment action differs from an appeal on the merits. In ordinary appellate litigation, a higher court may review the lower court’s interpretation of the facts and law. In setting-aside proceedings, judicial intervention is much narrower.

The court is principally concerned with whether:

• A valid arbitration agreement existed;
• The tribunal was properly constituted;
• The tribunal remained within its jurisdiction;
• The agreed or mandatory procedure was respected;
• The parties were treated equally;
• The award was issued within the permitted period;
• The dispute was legally capable of settlement by arbitration;
• Enforcement of the award would violate Turkish public policy.

Turkish judicial practice treats the setting-aside action as a limited form of review rather than a second examination of the merits. Complaints directed only at the tribunal’s assessment of facts, contractual interpretation or application of substantive law will not ordinarily justify annulment unless they also establish an independent statutory defect, such as excess of jurisdiction or a serious violation of public policy.

Legal Framework for Annulment of International Arbitral Awards in Türkiye

The principal legislation is Law No. 4686 on International Arbitration. The law applies to disputes containing a foreign element where the seat of arbitration is in Türkiye. It may also apply in certain circumstances where its provisions have been selected by the parties or the tribunal.

A foreign element may exist where the parties have places of business in different states, contractual obligations are substantially performed abroad, the transaction is most closely connected with another country, foreign capital or financing is involved, or the underlying legal relationship results in the movement of goods or capital between countries.

Law No. 4686 does not apply to disputes concerning rights in rem over immovable property situated in Türkiye or to disputes that are not subject to the parties’ free disposition.

Article 15 of Law No. 4686 provides that the only judicial remedy against an international arbitral award falling within its scope is an action for setting aside.

The statutory structure is broadly consistent with the approach adopted by the UNCITRAL Model Law on International Commercial Arbitration, under which an application for setting aside is the exclusive form of recourse against an award and is available only on specifically defined grounds.

Which Arbitral Awards May Be Set Aside in Türkiye?

As a general rule, Turkish setting-aside proceedings concern international arbitral awards rendered in arbitrations legally seated in Türkiye.

The legal seat is different from the physical location of a hearing. A tribunal seated in Istanbul may conduct hearings in London, Paris, Dubai or by video conference without changing the legal seat of arbitration. It is the juridical seat, rather than the hearing venue, that usually determines which national courts have supervisory authority over the arbitration.

An award rendered in an arbitration seated outside Türkiye cannot ordinarily be annulled by a Turkish court. Such an award must generally be challenged before the competent authority at the foreign seat. When enforcement of that foreign award is later requested in Türkiye, the Turkish court may examine the limited refusal grounds applicable to recognition and enforcement.

This distinction reflects the international arbitration system established by the New York Convention. Article V of the Convention recognises that an award may be set aside or suspended by the competent authority of the country in which, or under the law of which, the award was made.

Accordingly, parties must first identify the legal seat before deciding whether to commence:

• A setting-aside action in Türkiye;
• A setting-aside action in another jurisdiction;
• An objection to recognition and enforcement in Türkiye;
• A combination of annulment and enforcement-related proceedings in different countries.

The Competent Court for a Setting-Aside Action

Following the amendments introduced by Law No. 7101 in 2018, an action to set aside an international arbitral award is filed directly before the territorially competent Regional Court of Appeal, known in Turkish as the Bölge Adliye Mahkemesi.

The Regional Court of Appeal acts as the court of first instance for the setting-aside action. This means that the action is not initially filed before an ordinary civil or commercial court.

The competent Regional Court of Appeal is determined by reference to the location of the first-instance court that would be competent under Article 3 of the International Arbitration Law. Under Article 3, territorial jurisdiction is generally connected to the respondent’s domicile, habitual residence or place of business in Türkiye. Where the respondent has no such location in Türkiye, the statutory framework refers to Istanbul.

Law No. 7101 amended Article 15 by providing that the setting-aside action must be filed before the Regional Court of Appeal having territorial jurisdiction over the location of the competent first-instance court. The same amendments also added Article 1 to Law No. 4686, under which the functions assigned to a civil court of first instance are exercised by either the civil or commercial court of first instance according to the subject matter of the dispute.

The setting-aside action must be heard with priority and urgency. Unless the Regional Court of Appeal decides otherwise, the application may be examined on the file without holding an oral hearing.

The judgment of the Regional Court of Appeal may be appealed before the Turkish Court of Cassation in accordance with the Code of Civil Procedure. The appellate review remains limited to the statutory annulment grounds and must also be handled with priority.

The 30-Day Time Limit

An action to set aside an international arbitral award must be filed within 30 days.

The period begins on the date when the arbitral award is notified to the party seeking annulment. Where a party has requested correction, interpretation or completion of the award, the period begins from notification of the relevant post-award decision.

Article 14 of Law No. 4686 allows a party, within 30 days following notification of the award, to request:

• Correction of computational, clerical or similar material errors;
• Interpretation of the whole or a specific part of the award;
• An additional award concerning a claim that was raised during the proceedings but omitted from the decision.

A correction, interpretation or additional award forms part of the original arbitral award. Article 15 correspondingly links the annulment period to notification of the award or the relevant correction, interpretation or completion decision.

The 30-day deadline must be treated strictly. A party considering annulment should not wait until the award has been translated, enforcement has begun or negotiations have failed. Counsel should immediately determine:

• The legally effective notification date;
• Whether a post-award application has been submitted;
• Whether the application affects the commencement of the annulment period;
• Which Regional Court of Appeal has jurisdiction;
• Which statutory grounds are supported by the record;
• Which documents require certified translation.

A disagreement with the award alone is not sufficient to preserve the deadline. The setting-aside action must be properly filed before the competent court within the statutory period.

Does Filing the Action Suspend Enforcement?

Under Article 15 of the International Arbitration Law, filing a setting-aside action automatically suspends enforcement of the arbitral award.

This is an important difference from legal systems in which annulment proceedings do not automatically stay enforcement and the losing party must separately request suspension.

The Turkish statutory framework further provides that, following the final rejection of the setting-aside action, the competent first-instance court may issue a document confirming that the award is enforceable. Where the annulment period has expired without an action or the parties have validly waived the right to seek annulment, an enforceability document may also be requested.

Even where no setting-aside action has been filed or the right has been waived, the court issuing the enforceability document must examine ex officio whether the dispute is arbitrable under Turkish law and whether the award conflicts with public policy.

The Grounds for Setting Aside an International Arbitral Award

The grounds under Article 15 are exhaustive. They are divided into two categories:

1. Grounds that must be alleged and proved by the applicant;
2. Grounds that the Regional Court of Appeal examines on its own motion.

This distinction affects both litigation strategy and the burden of proof.

1. Incapacity of a Party or Invalidity of the Arbitration Agreement

An award may be set aside where a party to the arbitration agreement lacked legal capacity or the arbitration agreement was invalid under the law selected by the parties.

Where the parties have not selected a law specifically governing the arbitration agreement, its validity is examined under Turkish law.

This ground may arise where:

• A company representative lacked authority to conclude the arbitration agreement;
• A legal entity did not validly approve the arbitration clause;
• A natural person lacked capacity;
• The written-form requirement was not satisfied;
• The clause was optional or insufficiently certain;
• The clause referred to a non-existent institution in a manner that could not be interpreted or cured;
• The dispute did not fall within the legal relationship covered by the agreement.

Turkish law recognises the separability of an arbitration clause. The alleged invalidity, termination or rescission of the main contract does not automatically invalidate the arbitration agreement. A party seeking annulment must therefore identify a defect affecting the arbitration agreement itself rather than relying solely on an objection to the underlying contract.

2. Irregular Constitution of the Arbitral Tribunal

An award may be annulled where the appointment of the arbitrator or arbitral tribunal did not comply with the procedure agreed by the parties or, in the absence of an agreement, the procedure prescribed by Law No. 4686.

Potential irregularities include:

• Failure to follow the agreed institutional appointment procedure;
• Appointment of an arbitrator lacking mandatory contractual qualifications;
• Appointment by an unauthorised institution or person;
• Failure to respect an agreed three-member tribunal structure;
• Denial of a party’s equal right to participate in appointments;
• Continuation of proceedings despite a legally effective termination of an arbitrator’s mandate.

Not every technical defect will necessarily result in annulment. The applicant must show that the tribunal was constituted contrary to the binding procedure and must also address whether the objection was raised in due time.

A party that knew of an appointment defect but continued the arbitration without objection may face an argument that it waived its right to rely on the irregularity.

3. Failure to Render the Award Within the Arbitration Period

Unless the parties agree otherwise, Law No. 4686 provides a default period of one year for rendering an award on the merits.

In a sole-arbitrator case, the period generally begins when the arbitrator is appointed. In a multi-member tribunal, it generally begins when the minutes of the tribunal’s first meeting are drawn up.

The parties may extend the arbitration period by agreement. If they cannot agree, a party may request an extension from the competent court. Where the award is rendered after the applicable period has expired without a valid extension, the award may be set aside.

This ground makes accurate calculation of the arbitration period particularly important. Parties and tribunals should maintain clear records concerning:

• The starting date;
• Contractual extensions;
• Institutional extensions;
• Court-ordered extensions;
• Periods during which the time limit was suspended;
• The date on which the award was legally rendered.

The applicant must prove that the award was issued outside the legally applicable period.

4. An Unlawful Decision on Jurisdiction

The arbitral tribunal is authorised to rule on its own jurisdiction, including objections concerning the existence and validity of the arbitration agreement. This is the principle commonly known as competence-competence.

However, the tribunal’s decision on jurisdiction is not completely immune from judicial review. An award may be set aside where the tribunal unlawfully determined that it had or did not have jurisdiction.

Jurisdictional objections may concern:

• The existence of consent to arbitration;
• The validity of the arbitration agreement;
• Whether the applicant was a party to the agreement;
• Whether the dispute fell within the clause;
• Whether contractual preconditions to arbitration were satisfied;
• Whether the tribunal’s mandate had expired;
• Whether a non-signatory was properly included.

Under Law No. 4686, an objection that the tribunal lacks jurisdiction must generally be raised no later than the first statement of defence. An objection that the tribunal is exceeding its authority must be raised immediately. The tribunal may accept a late objection where the delay is justified.

Failure to raise a jurisdictional objection in time may materially weaken a later setting-aside application.

5. The Tribunal Decided Matters Outside the Arbitration Agreement, Failed to Decide All Claims or Exceeded Its Authority

Article 15 allows annulment where the tribunal:

• Decided a matter outside the arbitration agreement;
• Failed to decide the entirety of a submitted claim;
• Exceeded the authority granted to it.

This ground protects the limits of party consent. Arbitrators derive their adjudicative authority from the arbitration agreement, the parties’ claims and the procedural framework governing the proceedings.

Examples may include:

• Granting a remedy that was never requested;
• Deciding a dispute arising from a separate contract not covered by the clause;
• Imposing obligations on a non-party;
• Determining rights belonging to a third party;
• Awarding relief beyond the scope of the submission;
• Omitting a properly submitted and unresolved claim;
• Deciding an issue expressly excluded from arbitration.

The court must distinguish between an excess of jurisdiction and a mere error in interpreting the parties’ requests. The setting-aside action cannot be used to convert every disagreement about the scope of relief into a jurisdictional challenge.

Where decisions falling within the arbitration agreement can be separated from those outside it, Article 15 expressly permits annulment only of the separable part dealing with matters outside the arbitration agreement.

6. Failure to Follow the Agreed or Statutory Procedure

An award may be set aside where the arbitral proceedings were not conducted in accordance with the procedure agreed by the parties or, where there was no such agreement, in accordance with Law No. 4686.

However, Article 15 imposes an additional requirement: the procedural irregularity must have affected the substance of the award.

This is not a mechanism for challenging every minor administrative or procedural error. The applicant must establish both:

1. A violation of the binding procedural framework; and
2. A material connection between that violation and the outcome of the case.

Potential examples include:

• Refusal to hold a hearing despite an applicable right to one;
• Failure to notify a party of a hearing or expert examination;
• Reliance on evidence not disclosed to the other party;
• Failure to apply a mandatory agreed procedure;
• Closing the proceedings before a party could respond to material new evidence;
• Disregarding an agreed rule governing appointment, submissions or decision-making.

By contrast, a tribunal’s discretionary refusal to appoint an expert, accept late evidence or order broad document production will not automatically amount to a procedural violation. The court must avoid reconsidering procedural decisions merely because another decision could have been made.

7. Violation of Equality Between the Parties

Law No. 4686 requires the parties to be treated equally and to receive an opportunity to present their claims and defences.

An award may therefore be annulled where the equality principle was not respected.

This ground is closely connected to the right to be heard and procedural fairness. Examples may include:

• Allowing one party to make submissions while denying the other an equivalent opportunity;
• Communicating with one party without disclosure to the other;
• Applying materially different procedural deadlines without justification;
• Accepting decisive evidence from one side while preventing the other from responding;
• Excluding a party from a material stage of the proceedings;
• Denying a party reasonable notice of the hearing.

The equality principle does not require identical treatment in every factual circumstance. Tribunals retain authority to manage proceedings, sanction non-compliance and reject late or irrelevant material. Annulment requires a genuine imbalance affecting the fairness of the process.

8. Non-Arbitrability under Turkish Law

The Regional Court of Appeal must examine arbitrability on its own motion.

An award may be annulled if the dispute is not capable of settlement by arbitration under Turkish law.

Law No. 4686 expressly excludes disputes concerning rights in rem over immovable property situated in Türkiye and disputes that are not subject to the parties’ free disposition.

Arbitrability may become an issue in disputes involving:

• Rights in rem over Turkish immovable property;
• Criminal liability;
• Certain family law and personal status matters;
• Matters subject to exclusive regulatory authority;
• Rights that parties cannot legally waive, settle or dispose of.

A dispute is not non-arbitrable merely because mandatory rules apply. Many commercial disputes involving mandatory legal provisions remain arbitrable. The decisive question is whether Turkish law permits the parties to dispose freely of the substantive right in dispute.

9. Conflict with Turkish Public Policy

Public policy is one of the most frequently invoked and most misunderstood annulment grounds.

The Regional Court of Appeal must examine public policy ex officio. Nevertheless, the concept should be applied narrowly. It is not intended to create a general appeal on the interpretation of Turkish law.

An award may conflict with Turkish public policy where its recognition within the Turkish legal order would produce a result fundamentally incompatible with:

• Basic principles of justice;
• Fundamental constitutional values;
• Essential procedural guarantees;
• Good morals;
• Fundamental rights and freedoms;
• Core principles protecting the legal and economic order;
• Mandatory rules possessing a strong public policy character.

A simple error of law does not necessarily amount to a public policy violation. Likewise, an incorrect evaluation of evidence, an unfavourable contractual interpretation or a dispute over damages calculation should not be recharacterised as public policy merely to obtain merits review.

Turkish judicial practice emphasises that public policy review protects the fundamental legal and social order rather than enabling a full reconsideration of the arbitral decision.

Can an Award Be Partially Set Aside?

Yes, in certain circumstances.

Article 15 expressly provides for partial setting aside where the tribunal decided matters outside the arbitration agreement and the decisions falling outside the agreement can be separated from those properly submitted to arbitration.

In that situation, only the separable portion exceeding the tribunal’s jurisdiction may be annulled. The remaining portion may continue to have legal effect.

Partial annulment promotes proportionality and finality. It prevents the entire award from being destroyed because of a defect affecting only an independent part.

A party seeking partial setting aside should clearly identify:

• The specific operative paragraph challenged;
• The jurisdictional defect affecting that paragraph;
• Why the paragraph can be separated from the remainder;
• Why the valid parts can continue to operate independently.

Can the Right to Seek Setting Aside Be Waived?

Law No. 4686 permits parties whose domiciles or habitual residences are outside Türkiye to waive the right to seek setting aside in whole or in relation to specified statutory grounds.

The waiver must be express. It may be included in the arbitration agreement or concluded later in writing.

A general statement that the award is “final and binding” should not automatically be assumed to constitute a complete waiver of annulment rights. A carefully drafted waiver should identify:

• The parties making the waiver;
• Whether the waiver is total or partial;
• The statutory grounds covered;
• The governing law;
• The time at which the waiver becomes effective.

Even where the parties have waived annulment, arbitrability and public policy remain relevant when an enforceability document is requested because the court must examine those matters ex officio.

What Happens After an Award Is Set Aside?

The consequences depend on the ground for annulment and whether the award is set aside entirely or partially.

Article 15 permits the parties, unless they have agreed otherwise, to appoint arbitrators and determine a new arbitration period following annulment based on certain grounds, including irregular tribunal constitution, jurisdictional defects, excess of authority, procedural violations, breach of equality and public policy.

The parties may appoint new arbitrators or, where legally appropriate, reappoint the former arbitrators.

However, restarting arbitration is not appropriate in every case. For example, where the arbitration agreement itself is invalid or the dispute is non-arbitrable, there may be no valid basis for renewed arbitration.

Before commencing a second arbitration, the parties should determine:

• Why the first award was annulled;
• Whether the arbitration agreement remains effective;
• Whether the same claims may be resubmitted;
• Whether limitation periods create a risk;
• Whether new arbitrators should be appointed;
• Whether evidence from the first arbitration may be reused;
• Whether the new tribunal is bound by any findings.

Difference Between Setting Aside and Refusal of Enforcement

Setting aside and resisting enforcement are distinct remedies.

A setting-aside action is brought before the competent court exercising supervisory jurisdiction over the arbitration. It seeks to invalidate the award itself.

An enforcement objection is raised before the court in the country where recognition or execution is requested. It seeks to prevent the award from producing enforceable effects in that jurisdiction.

An award that has been set aside at the seat may face refusal of enforcement abroad under Article V(1)(e) of the New York Convention. Conversely, refusal of enforcement in one country does not necessarily annul the award or prevent enforcement in another jurisdiction.

For this reason, an international strategy may require parallel analysis of:

• Annulment proceedings at the seat;
• Enforcement proceedings where assets are located;
• Possible requests to suspend foreign enforcement;
• The effect of an annulment judgment in other countries.

Practical Checklist for a Setting-Aside Application

Before filing an action in Türkiye, counsel should review:

• The arbitration agreement;
• The seat of arbitration;
• The law governing the arbitration agreement;
• The applicable institutional rules;
• The tribunal appointment record;
• Jurisdictional objections raised during arbitration;
• Procedural orders;
• Hearing notices;
• Transcripts and correspondence;
• Claims and relief requested;
• The operative part of the award;
• The reasoning of the award;
• The award notification date;
• Correction, interpretation or completion requests;
• The arbitration time limit and extensions;
• Potential public policy and arbitrability issues;
• The location of assets and enforcement activity.

The application should identify each statutory ground separately and connect it to specific documents from the arbitration record. Broad assertions that the award is “unlawful,” “unfair” or “incorrect” are unlikely to succeed without a precise statutory basis.

Frequently Asked Questions

Can an arbitral award be set aside because the tribunal applied Turkish law incorrectly?

Not ordinarily. Incorrect application or interpretation of substantive law is generally a merits issue. Annulment requires one of the limited grounds under Article 15, such as excess of jurisdiction, procedural unfairness, non-arbitrability or public policy.

Which court hears an international arbitration annulment case in Türkiye?

The action is filed directly before the territorially competent Regional Court of Appeal, acting as the court of first instance. The court’s judgment may be appealed before the Court of Cassation.

How long does a party have to file the action?

The statutory period is 30 days from notification of the award or the relevant correction, interpretation or additional award decision.

Does filing the case stop enforcement?

Yes. Under Article 15, filing the setting-aside action automatically suspends enforcement of the award.

Can a Turkish court set aside an award made in another country?

Ordinarily, no. An award seated abroad must generally be challenged before the competent authority at the foreign seat. A Turkish court may instead examine objections when recognition or enforcement is requested in Türkiye.

Can only part of an award be annulled?

Yes. Where the tribunal decided matters outside the arbitration agreement and those matters can be separated from the valid portions, the court may annul only the separable excess portion.

Can the parties waive their right to seek annulment?

Parties domiciled or habitually resident outside Türkiye may expressly waive the right in whole or in relation to selected grounds, subject to the conditions of Article 15. Public policy and arbitrability may still be examined during the enforceability process.

Conclusion

Setting aside international arbitral awards under Turkish law is an exceptional and narrowly defined remedy.

The action is not intended to give the unsuccessful party a second opportunity to argue the merits. The Regional Court of Appeal does not sit as an ordinary appellate tribunal over the arbitrators. Its review is confined to the statutory grounds in Article 15 of Law No. 4686.

A successful application generally requires proof of a serious defect concerning the arbitration agreement, tribunal constitution, jurisdiction, arbitration period, procedural compliance or equality of the parties. The court must additionally examine arbitrability and public policy on its own motion.

The 30-day filing period, direct jurisdiction of the Regional Court of Appeal and automatic suspension of enforcement make early strategic assessment essential. Parties should analyse the award and procedural record immediately after notification and distinguish genuine annulment grounds from objections directed merely at the merits.

For businesses involved in arbitration seated in Türkiye, the best protection begins before a dispute arises. A clear arbitration agreement, workable appointment procedure, properly defined seat, realistic arbitration period and careful procedural record can substantially reduce the risk of annulment.

Once an award is rendered, however, any party considering a challenge must act quickly, identify the correct statutory grounds and prepare an evidence-based application that respects the limited nature of judicial review.

Legal Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. The availability and consequences of setting-aside proceedings depend on the arbitration agreement, seat, applicable rules, procedural history, notification date and specific contents of the award. Legal advice should be obtained promptly after notification of an arbitral award.