The Principle of Revision au Fond in Arbitration
Introduction
In the context of arbitration practice, the principle of revision au fond means that the courts can not examine the merits of a dispute when reviewing an arbitral award. This principle is most commonly encountered in set aside and enforcement proceedings. An arbitral award is evidence of the parties’ willingness to resolve their issues through arbitration, rather than through the courts. This is one of the reasons why an arbitral award may only be challenged through set aside proceedings, rather than through an appeal.[1]
Since arbitration proceedings are essentially dependent on the will of the parties, the grounds for set aside or enforcement should not be broad and the review of arbitral awards should be very limited. Otherwise, contrary to the will of the parties, a situation arises that undermines the basis of arbitration and prevents the arbitration from functioning. For this reason, the principle revision au fond which prevents the state courts from reviewing the arbitral award in terms of material and legal facts, is accepted in the world and Turkish law.
Under International Arbitration Law No. 4686 ("IAL"), a Turkish court may not rely on any grounds other than the grounds for set aside listed in Article 15 of the IAL for set aside proceedings. Similarly, it must only rely on Article 62 of the International Private and Procedural Law No. 5718 ("IPPL") and Article 5 of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention") for enforcement proceedings. An arbitral tribunal's misapplication of the law or its incorrect decision in a dispute[2] will not be grounds for set aside or for a refusal to enforce the award. Any other decision would be contrary to the law, as it would mean an evaluation of the merits. It is also clear from the provisions of Articles 55(2) and 56 of the IPPL that an enforcement judge should not evaluate the merits. This is also the opinion of the Court of Cassation.[3] In a recent decision of the Court of Cassation, the General Assembly of Civil Chambers of the Court of Cassation ("GACC") emphasized the practical relevance of the principle of revision au fond by stating that the enforcement judge does not have the right and authority to examine the content of the judgment, except for the conditions of enforcement, and that the acceptance of the contrary position would lead the enforcement judge to the conclusion that they have the duty of a high court.[4]
Set aside actions
The set aside action and the limited number of grounds for set aside are listed under Article 15 of the IAL as remedies against arbitral awards. The grounds for set aside are divided into two categories: the grounds that may be raised by the parties and the grounds to be taken into account ex officio by the judge. In a set aside proceeding, the judge should make a limited assessment of these grounds and should not go into the merits of the award. The the principle of revision au fond is an important feature that distinguishes arbitration from state proceedings and limits the court's supervisory power.[5]
The Court of Cassation has ruled that misapplication of substantive law alone will not constitute a ground for set aside, and in general, only procedural misapplications or omissions will lead to set aside.[6] Nevertheless, it should be noted that the Court of Cassation has tendency to the contrary. There are cases of set aside proceedings in which the Court of Cassation has evaluated the merits of the dispute, acted like the arbitrator and re-evaluated the facts and substantive law.[7] For example, in one of its decisions[8], the Court of Cassation reviewed an arbitral award rendered in accordance with the ICC Arbitration Rules regarding a concession agreement between the parties. According to the Court of Cassation, the arbitral tribunal decided to reduce the treasury share in a manner contrary to the real will of the parties, the Turkish legal rules and the purpose of the rules. The Court of Cassation stated that the consequences of the decision were contrary to the nature of the concession agreement and the purpose of the State to generate continuous revenue and found the decision contrary to the Turkish public policy.
In particular, there is a danger when the judge evaluates ex officio grounds, such as the decision being contrary to public policy or the principle of equality between the parties not being observed, may be interpreted broadly contrary to the principle of revision au fond.[9] Courts should adopt an approach in favor of arbitration when interpreting public policy, as this constitutes an exceptional intervention, and they should only apply this exception in cases of serious and grave violations of fundamental rights and freedoms. Reasons such as the fact that the arbitration proceedings were not conducted in accordance with the parties' agreements, or in the absence of such an agreement, that it was not in accordance with the procedural provisions of the IAL, and that this has an impact on the merits of the award, which will be taken into account if the parties raise such grounds, may also easily lead to a circumvention of the principle of revision au fond. In fact, with regard to this ground for set aside, some commentators have argued that it is inevitable for the courts to enter into the merits and therefore a violation of the principle of revision au fond will occur.[10] They have also contended that the limitation of the grounds to set asides is an approach that gives superiority to the will of the parties.[11]
Recognition and enforcement of arbitral awards
Article 5 of the New York Convention regulates the grounds of refusal of enforcement in a very similar manner to the grounds for set aside. Here, the grounds of refusal are divided as those to be proved by the party against whom enforcement is sought and those that the court must take into account ex officio. The enforcement judge may only make an assessment limited to the grounds listed in the article, and may not enter into the merits of the dispute due to the principle of revision au fond.[12] One of the grounds for the refusal of enforcement that must be raised by the party requesting enforcement is the violation of the right to be heard as set forth in Article 5/b of the New York Convention. In order to establish the right of defense, which is an extension of the right to be heard, the parties must have been duly informed of the selection of the arbitrators and the arbitration proceedings, and then the parties must have been provided with the appropriate opportunity to exercise their rights of claim and defense. It would be contrary to the principle of revision au fond to evaluate whether the arbitral award is correct or not. In one of its decisions, the Court of Cassation emphasized that it cannot be concluded that the defendant's rights of defense, and therefore public policy, have been violated, and that the judge cannot examine the merits of the arbitral awards due to the principle of revision au fond.[13] In another decision, the Court of Cassation stated that the objection that there was no expert examination during the arbitration, which could have lead to an assessment of the correctness of the arbitral award, will not be taken into account in the enforcement proceedings.[14]
Violation of the right to be heard is also closely related to the ex officio examinaiton, which is contravention of public policy.[15] Turkish courts have ruled that contravention of public policy is an exception to principle of revision au fond.[16] According to the Court of Cassation, the court must examine the merits when the claim of public policy is raised.[17] However, it would be appropriate to be aware that the assessment of public policy does not mean that the court may enter into the merits and that this prohibition applies to all kinds of enforcement (or set aside) grounds. Commentators have come to different opinions on this issue. According to one view, since the award must be clearly contrary to public policy in order for the enforcement request to be rejected, the contravention of public policy should be determined according to the legal consequences that will arise in the event of the enforcement of the award.[18] According to another view, the content of the award should be examined in order to determine the contravention of public policy.[19] Accordingly, in order for the enforcement judge to apply for a public order intervention and enter into the merits of the case, the party claiming breach of public policy must clearly and concretely justify which public order has been violated in its submission.[20] This is because the principle of revision au fond should not prevent the court from reviewing the content of the judgment due to the nature of some enforcement grounds such as public policy. In this case, since the court's review of the content of the judgment does not mean checking whether the applicable law has been applied correctly, there is no violation of the principles of revision au fond in the technical sense. However, the court may not examine the substantive and legal aspects of the award beyond the limits of the principle.
Conclusion
The principle of revision au fond, which is applicable in set aside and enforcement proceedings, expresses the superiority given to the parties' will to resolve the dispute before an arbitral tribunal. In the event that the merits of the arbitral awards are reviewed by the state courts, the essence of arbitration would be undermined and the system would become dysfunctional. In set aside and enforcement proceedings, state courts should make an assessment limited to the grounds for set aside and enforcement and should not go beyond this limit. There are important decisions of the Court of Cassation in which the Court of Cassation evaluates the principle especially in the context of public policy, which is both a ground for set aside and a ground for refusal of enforcement. Nevertheless, in some decisions which have been criticized by scholars the Court of Cassation evaluated the merits of the dispute and re-evaluated the substantive law.
- Erdem, H. Ercüment: Milletlerarası Ticaret Hukuku, On İki Levha Yayıncılık 2020, s. 656.
- 15. HD, 15.11.2007, 2007/3708 E. 2007/7216 K.
- Akıncı, Ziya: Milletlerarası Tahkim, Vedat Kitapçılık 2020, s. 553; 11. HD, 16.06.2022, 2020/7985 E. 2022/4932 K.
- HGK, 03.06.2021, 2017/52 E. 2021/671 K.; 11. HD, 24.02.2022, 2020/2115 E. 2022/1276 K.
- Şanlı, Cemal/Esen, Emre/Ataman-Figanmeşe, İnci: Milletlerarası Özel Hukuk, Vedat Kitapçılık 2020, s. 701-702.
- Perçin, Gizem Ersen: “MTK Tahkiminde İptal Davalarına İlişkin Bir Değerlendirme”, Public and Private International Law Bulletin, 40/2, 2020, s. 1056-1057; 11. HD, 27.11.2018, 2018/3262 E. 2018/7408 K.
- Şanlı/Esen/Ataman-Figanmeşe, s. 701-702, dn. 64; 13 HD, 13.11.2012, 2011/19737 E. 2012/25406 K.; 13 HD, 17.04.2012, 2012/8425 E. 2012/10348 K.
- 13 HD, 17.04.2012, E. 2012/8426.
- Angın, Berfu Beysülen: Milletlerarası Tahkimde Hakem Kararının İptal Sebepleri, Doktora Tezi, İstanbul, 2019, s. 18.
- Perçin, s. 1078-1079; Angın, s. 122.
- Perçin, s. 1078-1079.
- Erdem, s. 689.
- 11. HD, 16.06.2022, 2020/7985 E. 2022/4932 K.
- Akıncı, s. 577; 11 HD, 06.10.2016, 2016/725 E. 2016/7777 K.
- Erdem, Mehveş: “Tenfiz Engeli Olarak Kamu Düzeni”, Hukuk Postası, 2021.
- İstanbul 7. Asliye Ticaret Mahkemesi, 19.07.2018, 2016/887 E. 2018/855 K.
- Yargıtay 11. HD, 19.10.2007, 2007/10205 E. 2007/13081 K.
- Aygül, Musa: “Yabancı Mahkeme Kararlarının Tanınması Ve Tenfizi Davalarında Bazı Usul Hukuku Problemleri”, Public and Private International Law Bulletin, 31/2, 2011, s. 104-105.
- Aygül, s. 104.
- Erdem, s. 720.
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