Arbitration seated in Turkey with a foreign element is governed by the International Arbitration Law (Law No. 4686). The arbitration agreement must be in writing, the only remedy against the award is an annulment action filed within 30 days before the regional court of appeal, and parties domiciled abroad may waive that action. Foreign awards are enforced by the civil courts under the New York Convention and Articles 60 to 63 of Law No. 5718.
Foreign investors and their Turkish counterparties increasingly prefer arbitration to litigation before the Turkish state courts, and for understandable reasons: the parties choose the arbitrators, the language, and the procedure, the proceedings are confidential, and the resulting award can be enforced in more than 170 countries under the New York Convention. Türkiye has a modern arbitration framework built on the UNCITRAL Model Law, a dedicated statute for arbitrations with a foreign element, a parallel regime for purely domestic cases, and its own institution, the Istanbul Arbitration Centre, ISTAC. The framework is sound, but it contains a number of features that differ from what a foreign party may expect, including a strict 30 day deadline for challenging an award, a one year time limit for the tribunal to decide, and specific rules on which disputes may not be arbitrated at all. This guide explains which law applies, what an enforceable arbitration clause must contain, how proceedings seated in Türkiye are conducted, how an award is challenged, how a foreign award is enforced, and how arbitration interacts with the mandatory mediation regime for commercial claims.
Quick Answer: Arbitration seated in Türkiye with a foreign element is governed by the International Arbitration Law, Law No. 4686, which is based on the UNCITRAL Model Law; arbitration seated in Türkiye without a foreign element is governed by Articles 407 to 444 of the Code of Civil Procedure, Law No. 6100. Under Article 4 of Law No. 4686, the arbitration agreement must be in writing, either as a clause in the main contract or as a separate agreement, and it may be concluded by an exchange of letters, electronic messages, or by reference to a document containing an arbitration clause. Disputes concerning rights in rem over immovable property in Türkiye, and disputes not at the free disposal of the parties, cannot be arbitrated. The only remedy against an award under Law No. 4686 is an action for annulment under Article 15, filed within 30 days of notification before the Regional Court of Appeal, on limited grounds that do not include errors in the application of the substantive law; filing the action automatically stays enforcement. Parties domiciled or habitually resident outside Türkiye may waive the annulment action, fully or for specific grounds. Foreign arbitral awards are enforced by the civil court of first instance under the 1958 New York Convention and Articles 60 to 63 of the Code on Private International and Procedural Law, Law No. 5718, without review of the merits.
Litigation before the Turkish commercial courts is conducted in Turkish, follows the Code of Civil Procedure, passes through two levels of appeal, and can take several years to reach a final judgment. A judgment of a Turkish court is readily enforceable within Türkiye, but its enforcement abroad depends on bilateral treaties or reciprocity with the country where the assets are located. Arbitration reverses several of these features: the parties select arbitrators with relevant expertise, agree on English or another language, shorten or adapt the procedure, keep the dispute out of the public record, and obtain an award that is enforceable in every state party to the New York Convention. For a cross border contract where the counterparty's assets may be in several jurisdictions, this portability of the award is often the decisive consideration.
The choice is not without trade offs. Arbitration is paid for by the parties, interim relief that binds third parties still requires the courts, and the limited grounds for challenging an award mean that a tribunal's error on the merits generally cannot be corrected. The decision to arbitrate, and the drafting of the clause that gives effect to it, should therefore be made at the contract stage with these consequences in mind.
Türkiye operates two parallel regimes for arbitration seated within its territory, and the first question in any case is which of them governs.
| Question | International Arbitration Law, Law No. 4686 | Code of Civil Procedure, Law No. 6100 |
|---|---|---|
| Applies to | Disputes with a foreign element where the seat is Türkiye, or where the parties or the tribunal chose this law | Arbitration seated in Türkiye without a foreign element |
| Model | UNCITRAL Model Law of 1985 | UNCITRAL Model Law, adapted for domestic cases |
| Remedy against the award | Annulment action only, Article 15 | Annulment action only, Article 439 |
| Court for annulment | Regional Court of Appeal | Regional Court of Appeal of the seat |
| Time limit | 30 days from notification | One month from notification |
| Effect of filing | Enforcement of the award is stayed automatically | No automatic stay; a stay requires security |
| Time limit for the award | One year unless otherwise agreed | One year unless otherwise agreed |
Article 2 of Law No. 4686 defines the foreign element broadly, and most contracts involving a foreign investor or counterparty fall within it. A foreign element exists where the parties to the arbitration agreement have their domicile, habitual residence, or place of business in different states; where the seat of arbitration, the place where a substantial part of the obligations is to be performed, or the place with which the subject matter is most closely connected is in a state other than that of the parties' domicile or place of business; where at least one shareholder of a company party to the agreement has brought foreign capital into Türkiye under the foreign investment legislation, or where a loan or guarantee agreement must be concluded abroad to perform the contract; or where the underlying contract or legal relationship involves the movement of capital or goods from one country to another. Because the shareholder test is included, a Turkish company with a foreign shareholder contracting with another Turkish company may find that its arbitration is international under Law No. 4686 even though both parties are Turkish.
Article 1 of Law No. 4686 excludes two categories from its scope: disputes concerning rights in rem over immovable property located in Türkiye, such as ownership, mortgages, and servitudes, and disputes that are not at the free disposal of the parties, which in practice covers matters of personal status, family law, insolvency, criminal law, and most administrative matters. Article 408 of the Code of Civil Procedure contains the same exclusions for domestic arbitration. A contractual dispute arising from a real estate transaction, for example a claim for damages for breach of a sale and purchase agreement, remains arbitrable; a claim seeking the registration or cancellation of title does not. Employment disputes and consumer disputes are also treated as non-arbitrable in practice because of the protective legislation governing them.
Article 4 of Law No. 4686 requires the arbitration agreement to be in writing. The requirement is satisfied by a document signed by the parties, by an exchange of letters, telegrams, faxes, or electronic messages, or by a reference in the main contract to a document containing an arbitration clause, provided the reference makes the clause part of the contract. The agreement is also deemed concluded where one party asserts the existence of a written arbitration agreement in its statement of claim and the other party does not object in its statement of defence. Article 4 further provides that the arbitration agreement is independent of the main contract, so that the invalidity of the contract does not by itself invalidate the clause, and that the validity of the agreement is governed by the law chosen by the parties or, failing a choice, by Turkish law.
Most disputes about arbitration clauses arise from vague or internally inconsistent drafting rather than from the absence of a clause. A clause that leaves the parties a choice between arbitration and the courts, or that names an institution that does not exist, or that provides for a seat in one city and an institution in another without explaining the relationship, invites a jurisdictional fight before the merits are ever reached. The Court of Cassation has repeatedly held that the intention to arbitrate must be clear and unequivocal, and that a clause allowing recourse to the courts as an alternative is invalid as an arbitration agreement. An effective clause should state, at a minimum, that all disputes arising out of or in connection with the contract will be finally resolved by arbitration to the exclusion of the courts; the seat of arbitration, which determines the procedural law and the court competent to hear an annulment action; the institution and its rules, such as ISTAC, the International Chamber of Commerce, or the Istanbul Chamber of Commerce Arbitration Centre, or a statement that the arbitration is ad hoc; the number of arbitrators and the method of their appointment; the language of the proceedings; and the law governing the substance of the contract.
Under Article 10 of Law No. 4686, the proceedings may be conducted in Turkish or in any official language of a state recognised by Türkiye, so English, German, Arabic, or Russian proceedings seated in Istanbul are permitted. Where the parties have not chosen a language, the tribunal determines it. The law governing the substance of the dispute may be chosen freely under Article 12, and in the absence of a choice the tribunal applies the law with which the dispute is most closely connected. Our guide to the contracts a company needs in Türkiye covers the commercial side of drafting into which the arbitration clause must fit.
A point of particular importance in Türkiye is that the authority to conclude an arbitration agreement on behalf of another is a special authority under Article 504 of the Code of Obligations and Article 74 of the Code of Civil Procedure. A representative acting under a general power of attorney that does not expressly include the power to agree to arbitration cannot bind the principal, and the clause may be held invalid for that reason. The same applies to company signatories whose authority is limited by the signature circular. Where a contract is signed by a representative, the power of attorney or signature circular should be checked for an express arbitration power before the clause is relied upon.
ISTAC was established by Law No. 6570, published in the Official Gazette on 29 November 2014, as an independent arbitration and mediation institution based in Istanbul with its own legal personality. It administers both international and domestic cases under its own arbitration rules, which have applied since 26 October 2015, and it also offers mediation rules, emergency arbitrator provisions, and a fast track procedure for lower value disputes. The rules are available in Turkish and English, the administrative fees and arbitrator fees are set by a published schedule that is generally lower than those of the major European institutions, and the secretariat is accustomed to dealing with foreign parties and counsel.
Choosing ISTAC is a matter of cost, language, and convenience rather than a legal requirement. Parties remain entirely free to select the International Chamber of Commerce, the London Court of International Arbitration, the Swiss Arbitration Centre, or any other institution, or to agree on ad hoc arbitration under the UNCITRAL Arbitration Rules, with the seat in Türkiye or elsewhere. Where a Turkish seat is chosen for reasons of enforcement against Turkish assets, ISTAC offers a locally administered option; where the counterparty is a Turkish public entity, a Turkish seat and institution may also be a practical necessity.
Under Article 7 of Law No. 4686, the parties are free to agree on the number of arbitrators provided the number is odd; failing agreement, three arbitrators are appointed. Where the parties have not agreed on a procedure, each party appoints one arbitrator and the two appointees select the presiding arbitrator; if a party fails to appoint within 30 days of a request, or the two arbitrators cannot agree within 30 days, the appointment is made by the civil court of first instance on the application of a party. A sole arbitrator, where agreed, must be a legal professional, and in a three member tribunal at least the presiding arbitrator must be. Arbitrators may be challenged for lack of independence or impartiality under Article 7, and the challenge is decided first by the tribunal and then, on application, by the court.
Asking a Turkish court for an interim injunction, ihtiyati tedbir, or a precautionary attachment, ihtiyati haciz, before or during the arbitration does not breach the arbitration agreement under Article 6 of Law No. 4686. Unless the parties have agreed otherwise, the tribunal itself may also order interim measures and require security for them, but the tribunal cannot order measures that must be enforced through the enforcement offices or other public authorities, or that bind third parties such as banks or the land registry. In those cases the party must apply to the court, which may grant the measure on the basis of the tribunal's decision. Where a court grants an interim measure before the arbitration is commenced, the applicant must commence the arbitration within two weeks or the measure lapses automatically.
Under Article 10 of Law No. 4686, unless the parties have agreed otherwise, the tribunal must render its award on the merits within one year from the appointment of the sole arbitrator or, in a three member tribunal, from the date of the first meeting of the tribunal. The period may be extended by agreement of the parties or, where they cannot agree, by the civil court of first instance on the application of one of them. An award rendered after the expiry of the arbitration period is open to annulment on that ground alone, so the parties and the tribunal must monitor the period carefully and apply for an extension in good time where the case cannot be concluded within it. Institutional rules such as those of ISTAC contain their own time limits and extension mechanisms that operate alongside the statutory rule.
Under Article 7 of Law No. 4686, the tribunal rules on its own jurisdiction, including on objections concerning the existence or validity of the arbitration agreement. An objection that the tribunal lacks jurisdiction must be raised no later than the statement of defence, and an objection that the tribunal is exceeding its authority must be raised as soon as the matter is raised in the proceedings. A party that fails to object in time loses the right to rely on the point in a later annulment action, subject to the court's power to raise non-arbitrability and public policy of its own motion.
An award under Law No. 4686 cannot be appealed on the merits. The only remedy is an action for annulment, iptal davası, under Article 15, filed within 30 days from the notification of the award or, where a request for correction, interpretation, or an additional award has been made, from the notification of the decision on that request. The action is heard by the Regional Court of Appeal with jurisdiction over the seat, is given priority, and is decided on the file unless the court decides to hold a hearing. Filing the action automatically stays the enforcement of the award, which is a significant difference from domestic arbitration under the Code of Civil Procedure, where a stay must be requested and secured.
The grounds are limited and closely follow Article 34 of the UNCITRAL Model Law. The applicant must prove one of the following: that a party to the arbitration agreement lacked capacity, or that the agreement is invalid under the law chosen by the parties or, failing a choice, under Turkish law; that the tribunal was not constituted in accordance with the parties' agreement or the law; that the award was not rendered within the arbitration period; that the tribunal unlawfully found that it had or lacked jurisdiction; that the tribunal decided on a matter outside the scope of the arbitration agreement, failed to decide the whole of the claim, or exceeded its authority; that the proceedings were not conducted in accordance with the parties' agreement or, failing agreement, with Law No. 4686, and this affected the substance of the award; or that the parties were not treated equally. In addition, the court annuls the award on its own motion if it finds that the subject matter was not arbitrable under Turkish law or that the award is contrary to public policy. A wrong application of the substantive law, an error in assessing the evidence, or a conclusion the court would not have reached itself is not a ground for annulment.
Where the ground affects only part of the award, and that part can be separated from the rest, the court may annul the award in part. Where the award is annulled because of a defect in the constitution of the tribunal or the conduct of the proceedings, the parties may, unless they agree otherwise, appoint a new tribunal and arbitrate the dispute again; where the award is annulled because the arbitration agreement is invalid or the dispute is not arbitrable, the parties are left to the courts. The decision of the Regional Court of Appeal on the annulment action may itself be appealed to the Court of Cassation under the general rules of the Code of Civil Procedure.
Article 15 contains a provision that has no equivalent in the domestic regime: parties whose domicile or habitual residence is outside Türkiye may waive the right to bring an annulment action, in whole or in respect of specific grounds, by an express statement in the arbitration agreement or by a later written agreement. The waiver is available only where both parties are outside Türkiye and only where it is express; a general statement that the award is final and binding is not sufficient. For a foreign investor, a waiver can make an award final and enforceable abroad more quickly, but it also removes the only safeguard against a defective award, and the decision should be taken deliberately at the drafting stage rather than by default.
Türkiye has been a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards since 1992, with the two reservations permitted by the Convention: it applies the Convention only to awards made in the territory of another contracting state, and only to disputes considered commercial under Turkish law. Because the Convention is a treaty with the force of law under Article 90 of the Constitution, it takes precedence over the domestic rules in Articles 60 to 63 of the Code on Private International and Procedural Law, Law No. 5718, which apply to the procedure and to awards from non-contracting states.
Under Article 60 of Law No. 5718, the application is made to the civil court of first instance agreed in writing by the parties or, failing agreement, to the court of the domicile in Türkiye of the party against whom the award was made, then of that party's residence, and then of the place where the assets subject to enforcement are located. Where the dispute is commercial, the commercial court of first instance sits as the competent court in practice. Article 61 requires the applicant to file the original or a certified copy of the arbitration agreement and of the award, with sworn Turkish translations, and the Convention's requirements in Article IV are to the same effect. The procedure follows the simplified rules applicable to the enforcement of foreign judgments, and the court decides after hearing the respondent.
Article 62 of Law No. 5718, mirroring Article V of the Convention, sets out the exhaustive grounds on which enforcement may be refused: the absence of an arbitration agreement or an arbitration clause in the main contract; an award contrary to morality or public policy; a dispute that is not arbitrable under Turkish law; a party not duly represented before the tribunal and not subsequently ratifying the proceedings; a party not properly notified of the appointment of the arbitrators or otherwise deprived of the opportunity to present its case; an arbitration agreement invalid under the law chosen by the parties or, failing a choice, under the law of the place where the award was made; a tribunal or procedure contrary to the parties' agreement or, failing agreement, to the law of the place of arbitration; an award on matters outside the scope of the arbitration agreement, which may be enforced in part where the matters can be separated; or an award that has not yet become final or enforceable, or has been set aside by the competent authority of the place where it was made.
The enforcement court does not re-examine the merits of the dispute, and the Court of Cassation has consistently reversed decisions in which lower courts strayed into assessing whether the tribunal decided correctly. For most of the refusal grounds the burden of proof lies on the party resisting enforcement, with only non-arbitrability and public policy examined by the court of its own motion. Public policy is interpreted narrowly, as a breach of the fundamental values of the Turkish legal order rather than any departure from mandatory Turkish rules, and the mere fact that a Turkish court would have decided differently is not a public policy ground. Once enforcement is granted and the decision is final, the award is enforced through the enforcement offices in the same way as a Turkish judgment. A foreign court judgment, as opposed to an arbitral award, is enforced under Articles 50 to 59 of Law No. 5718; our guide to enforcing foreign judgments in Türkiye covers that procedure.
Since 1 January 2019, commercial money claims in Türkiye must go through mediation before a lawsuit can be filed in court, under Article 5/A of the Commercial Code, Law No. 6102, and the condition has since been extended to a number of other categories. See our guide to mandatory mediation in commercial disputes for the current scope. The mandatory mediation requirement is a condition for filing a lawsuit in the state courts; it does not apply to the commencement of arbitration under a valid arbitration agreement, and a party is not required to attempt mediation before filing a request for arbitration. Where the parties wish to include a negotiation or mediation step before arbitration, the clause should say so expressly and should set a clear time limit after which either party may proceed to arbitration, since an open ended obligation to negotiate can itself become a source of dispute about whether the tribunal has jurisdiction.
Yes. Arbitration seated in Türkiye is governed by the International Arbitration Law, Law No. 4686, or by the Code of Civil Procedure, and Türkiye has been a party to the New York Convention since 1992.
Law No. 4686 if the dispute has a foreign element as defined in its Article 2, which includes parties in different states and companies with foreign capital; otherwise Articles 407 to 444 of the Code of Civil Procedure.
It must be in writing, but a signature is not the only way: an exchange of letters or electronic messages, a reference to a document containing an arbitration clause, or an unopposed assertion of the agreement in the statement of claim all suffice under Article 4.
Yes. Article 10 of Law No. 4686 allows the proceedings to be conducted in Turkish or in any official language of a state recognised by Türkiye.
Under Law No. 4686, the annulment action must be filed within 30 days from notification of the award before the Regional Court of Appeal. For domestic arbitration under the Code of Civil Procedure the limit is one month.
No. A wrong application of the substantive law or a wrong assessment of the evidence is not a ground for annulment; the grounds are limited to procedural and jurisdictional defects, non-arbitrability, and public policy.
Under Law No. 4686, yes, enforcement is stayed automatically. Under the Code of Civil Procedure there is no automatic stay and the applicant must provide security to obtain one.
Yes. Parties domiciled or habitually resident outside Türkiye may waive the annulment action in whole or for specific grounds, by an express statement in the arbitration agreement or a later written agreement.
Yes. A final or binding foreign award is enforced by the civil court of first instance under the New York Convention and Articles 60 to 63 of Law No. 5718. The court does not review the merits and may refuse only on the limited grounds listed.
Disputes concerning rights in rem over immovable property in Türkiye, such as ownership or mortgage rights, are excluded from arbitration. Contractual claims arising from a property transaction, such as damages for breach, remain arbitrable.
The Istanbul Arbitration Centre, an independent institution established by Law No. 6570 in 2014 that administers international and domestic arbitrations and mediations under its own rules, in force since October 2015.
No. Parties may choose any institution, such as the ICC or the LCIA, or agree on ad hoc arbitration, with a Turkish seat.
One year from the appointment of the sole arbitrator or the first meeting of the tribunal, unless the parties agreed otherwise. The period may be extended by agreement or by the civil court of first instance.
Yes. Applying to the court for an interim injunction or precautionary attachment does not breach the arbitration agreement under Article 6, and the court's assistance is necessary for measures binding third parties.
No. Mandatory mediation under Article 5/A of the Commercial Code is a condition for filing a lawsuit in court, not for commencing arbitration under a valid arbitration agreement.
Only if the power of attorney expressly includes the authority to agree to arbitration, which is a special authority under Turkish law. A clause signed without that express power may be held invalid.
Arbitration in Türkiye rests on a framework that foreign parties will largely recognise: a Model Law based statute for international cases, a single annulment remedy on limited grounds, and enforcement of foreign awards under the New York Convention without review of the merits. The points at which the Turkish regime departs from expectations are specific and manageable if they are known in advance: the broad definition of the foreign element that pulls many Turkish contracts into Law No. 4686, the 30 day deadline for annulment, the one year limit for the award, the exclusion of real property rights in rem, the special authority required to sign an arbitration clause, and the option for foreign parties to waive the annulment action altogether. Most of the difficulties seen in practice arise not from the law but from clauses drafted without attention to these points, and they are best addressed when the contract is written rather than when the dispute arises.
We draft and review arbitration clauses in shareholder, distribution, construction, and investment contracts, represent clients in ISTAC and ad hoc proceedings, and handle annulment actions and the enforcement of foreign awards before the Turkish courts. See our corporate and partnership law service and our page for investors in Türkiye. For advice on a specific clause, a pending arbitration, or an award to be challenged or enforced, our legal team can review the position and set out the steps available under the current law.
