I. Introduction
According to most scholars, public policy has three main functions in private international law. First, public policy addresses conflicts of law. In this context, public policy precludes the court from applying foreign law when it conflicts with fundamental values of the forum law’s main notions of morality and justice or outraged its sense of justice and decency[1] that forms the basis of its positive law[2]. In such a situation, national courts do not compare the provisions of foreign and forum law.
Second, public policy is applied to the recognition and enforcement of foreign court judgments and foreign arbitral awards.[3] In this context, the judge of the country where the recognition and enforcement is sought is not responsible to find whether the rule that was applied to the conflict violated the “public policy” of his State. The judge that decides on the recognition and enforcement must weight the implications of the court decision or award against his or her substantive or procedural public policy and may refuse recognition and enforcement on that ground. This means that even in a situation where the foreign court or arbitral tribunal applied to the merits the law of the State where recognition and enforcement is sought, the enforcing court may still has to reject recognition and enforcement based on public policy.[4]
Third, public policy is applied when annulling foreign and non-domestic awards that violate public policy under the law of the seat of arbitration.
This chapter focuses on the application of the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention or NYC) in regards to public policy. According to NYC Article V(2)(b), the enforcing court may reject, even sua sponte, recognition and enforcement of a foreign arbitral award if the competent authority in the country where recognition and enforcement is sought finds that “the recognition or enforcement of the award would be contrary to the public policy of that country.”[5] Article V(2)(b) introduces an intention to provide ultimate control to that State to decide whether it will allow a foreign arbitral award to have effects in its legal order and use its executive powers to enforce that award.[6] It has also been discussed that States must take into consideration the “transnational” notion of public policy under Article V(2)(b).
In addition, this chapter also reviews States practice regarding substantive (mostly fundamental aspects of the States’ economic regime) and procedural public policy in German, Swiss, and Turkish court decisions.
II. The Public Policy Exception in the New York Convention
A. Geneva Convention on the Execution of Foreign Arbitral Awards
Before the New York Convention was prepared and entered into force, there existed an international legal regime regarding the recognition and enforcement of foreign arbitral awards that was provided by the 1923 Geneva Protocol on Arbitration Clauses (the “Geneva Protocol”)[7] and the 1927 Geneva Convention on the Execution of Foreign Arbitral Awards (the “Geneva Convention”).[8]
According to Art. 1(e) of the Geneva Convention, to obtain such recognition and enforcement “the recognition or enforcement of the award is not contrary to the public policy or to the principles of the law of the country in which it is sought to be relied upon.”[9]
This formulation of the public policy ground can be regarded as a “precondition” for recognition and enforcement,[10] among others contained in this provision.[11] The reasons for refusal of a recognition and enforcement were also stipulated in articles 2 and 3.[12] According to the Geneva Convention, the judge who recognizes or enforces a foreign arbitral award must first examine those preconditions, and the burden of proof rests on the party applying for recognition and enforcement.
B. The ICC Draft Convention
At the Lisbon Congress in 1951, the International Chamber of Commerce (“ICC”) adopted a resolution adopting a new international system for the enforcement of arbitral awards. On 13 March 1953, the Committee on International Commercial Arbitration adopted the Report and Preliminary Draft Convention[13] on the “Enforcement of International Arbitral Awards” was adopted by (“Draft Convention”).
According to article IV(a) of the Draft Convention, the recognition and enforcement of the award shall be refused if the competent authority to whom application is made establishes that recognition and enforcement of the award would be contrary to public policy in the country in which it is sought to be relied upon.[14]
Comparing the Draft Convention with the 1927 Geneva Convention shows that the public policy exception was no longer deemed as a precondition for recognition or enforcement and this draft Convention, unlike the Geneva Convention, did not mention “the principles of the law of the country in which it is sought.”[15]
C. The Ad Hoc Committee of the UN Economic and Social Council
In 1954, the United Nations Economic and Social Council (ECOSOC) considered the ICC’s Draft Convention and established an Ad Hoc Committee[16] to study this matter and to report its conclusions to the Council. Ad Hoc Committee was also entitled to formulate its own proposed convention.[17]
During the Ad Hoc Committee’s meetings, the members focused on whether the term “public policy” is sufficient in an eventual treaty text, or if the words “principles of law” should also be added to “public policy.”[18] At the end of the meetings, the Committee prepared a draft convention for rejecting recognition and enforcement, the draft convention required that the award be “clearly incompatible” with public policy or with fundamental principles of the law (ordre public) of the country in which the award is sought to be relied upon.[19] This means that the Committee narrowly circumscribed the public policy by requiring “clear” incompatibility and thus limiting the application of this condition by detaching the “fundamental principles of the law of the country” from the “public policy” notion.[20] Secondly, the new draft granted States discretion that states may recognize/enforce the decision or not. So, in comparison with the prior treaties on arbitration, this Committee’s draft was more arbitration-friendly.[21]
The Committee’s report and the draft convention were transmitted to the UN Member governments, non-UN Members, and non-governmental organizations asking for their comments. Japan and the USSR suggested the deletion of the terms “subject thereof.”[22] Australia, India and the United Kingdom objected to the word “fundamental.”[23] The International Law Association and the Société Belge d’Etude d’Expansion were also against using the expression “fundamental” in the draft.[24] According to these NGO’s, “of the subject matter thereof” and “or with fundamental principles of the law (ordre public)” are unnecessary because these words are already a part of “public policy.”[25] Using unnecessary words would make arbitration proceedings a weapon for unwilling debtors and carrying risks of unrecognizable arbitral awards.[26] On 6 March 1958, the UN Secretary General commented on the Draft Convention pointing out that “…compatibility with “public policy” was a sufficiently broad criterion and that the additional requirements of compatibility with fundamental principles of the law may give rise to difficulties of interpretation and open the question of a revision of the award as to its substance…”[27]
2. The New York Convention
A. Signing
In 1956, the ECOSOC convened a Conference of Plenipotentiaries to negotiate and conclude a convention on the recognition and enforcement of foreign arbitral awards, and to consider other possible measures for increasing the effectiveness of arbitration in the settlement of private law disputes.[28]
In accordance with the ECOSOC’s initiative, the Secretary-General invited to a Conference from 20 May to 10 June 1958 open to all UN Member States, non-UN Members which are members of any of the specialized agencies or Parties to the ICJ Statute, interested specialized agencies, The Hague Conference on Private International Law, the International Institute for Unification of Private Law (UNIDROIT), and interested inter-governmental and non-governmental organizations having consultative status with the council. The culmination of the Conference was the signing in New York, on 10 June 1958, of the NYC, which entered into force on 7 June 1959. [29]
B. Offense to Public Policy Generally
i. Meaning of “that country” in Art. V(2) of the NYC
According to NYC Art. V(2),
“Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:
(a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or
(b) The recognition or enforcement of the award would be contrary to the public policy of that country.”[30] (emphasis added)
The expression “that country” used in this text should be interpreted very narrowly. The court deciding recognition and enforcement of a foreign arbitral award cannot inquire into the public policy of the law applicable to the main contract, or of the law applicable to the arbitration agreement or the public policy of the law governing the arbitration procedure (lex arbitri), even if the parties choose as lex arbitri the law of the state where recognition and enforcement is sought.[31] even in other possible scenarios the judge deciding the recognition and enforcement of the award can only focus on the public policy of his/her own country[32].
ii. National Public Policy-International Public Policy-Transnational Public Policy
There are three types of public policy that may be considered in international commercial arbitration: National (domestic), international, and transnational. The notion of national public policy means that the very fundamental notions and postulates of morality and justice of that local system are applied to transactions or legal relationships in that jurisdiction.[33] These rules are designed to protect the public interests of the State where the legal acts and relationships take place.[34]
International public policy is a narrower concept than national public policy. [35] It consists of fundamental notions of morality and justice identified by the national governments and courts. International public policy is applied to disputes that have an international character. The International Law Association’s Committee on International Commercial Arbitration includes under international public policy the principles and rules recognized by a State, which, by their nature, may bar the recognition or enforcement of an arbitral award rendered in the context of international commercial arbitration when recognition or enforcement of the award would entail their violation on account either of the procedure pursuant to which it was rendered (procedural public policy) or its content (substantive international public policy).[36]
Transnational public policy is derived from the principles that are commonly recognized by political and legal systems around the world. This notion of public policy may be the result of a compromise about fundamental rules of natural law, principles of universal justice, jus cogens in public international law, and the general principles of morality accepted by what are referred to as civilized nations.[37] Dolinger defines transnational public policy as a “world public policy” that establishes universal principles, in various fields of international law and relations, to serve the higher interests of the world community, the common interests of mankind, above—and sometimes even adverse—to the interests of individual nations.[38] Some authors have compared transnational public policy with international public policy by stating that the basis of international public policy derives from the perceptions of the sovereign States, while transnational public policy expresses the common fundamental values of the world community and notions of the transnational public policy do not belong to one State.[39] In addition, public policy may also vary from time to time and State to State.[40]
III. The Application of Substantive Public Policy
Depending on the States’ fundamental attitudes and perceptions, public policy regarding substantive rights may vary widely, as shown by a comparative analysis of German, Swiss, and Turkish court decisions.
1. The Award’s Economic Impact
One of the most important tests for the “public policy” notion are the State’s economic considerations. In situations of economic nationalism, the arbitral awards that are brought for recognition and enforcement may be reviewed in light of their national economic impact. However, the use of the notion of “public policy” in such a context may rather be one of “national public policy”.
The most illustrating Turkish Court of Cassation decisions[41] on enforcement or annulment of foreign awards were related to the strict economic regime of the States. The Turkish Court of Cassation explained that the “…decision of the arbitrator diminished the income of the Turkish Treasury [and that this] is against the public interest and the mandatory rules of Turkish law therefore infringe the Turkish Public Policy…”[42]
Legal commentators criticized this decision arguing that the rules regarding the income of the Turkish Treasury should be characterized as mandatory rules and not be mixed up with the notion of international public policy.[43] The stretching of the public policy notion regarding the “tax cut” issues by the Turkish Courts was criticized by the distinguished lawyers of arbitration[44].
2. Bankruptcy
Another issue that has to do with the economic regime of the forum State are bankruptcy proceedings. The Oberlandesgericht Karlsruhe, in Germany, found that disputes regarding rights of an insolvency creditor were capable of being resolved by arbitration and that the award did not violate German public policy under Article V(2)(b) of the NYC by confirming insolvency claims which had previously been filed in the insolvency administrator’s list of claims but had thereafter been listed as contested.[45] The Oberlandesgericht noted that the Respondent had failed to recognize that public policy violations regarding international arbitration awards were to be assessed exclusively on the standard of international public policy and that, accordingly, a refusal of enforcement could be justified on public policy grounds only where the arbitral proceedings showed a grave defect that affected the basis of public and economic life in Germany. The court concluded that this was not the case for any of the public policy violations raised by the Respondent. While in this case the German court applied international public policy without any apparent difficulty to the award,[46] some scholars asserted that the notion of international public policy may not easily be circumscribed and may cause uncertainty and confusion from the perspective of the German legal system.[47]
In another decision of the Oberlandesgericht of Brandenburg, the court concluded that the party, who was responsible for breach of a sale contract according to the arbitral award rendered by the Court of International Arbitration in Kiev could not assert his state of bankruptcy in order to prevent the recognition/enforcement proceedings that commence against him in Germany [48]. The Oberlandesgericht further found that there were no grounds for refusal under NYC Art. V(2)(b)[49]. According to the Oberlandesgericht, for there to be a violation of public policy, the conclusion reached by applying foreign law should contrast in such a manner with the fundamental principles of German law and principles of justice contained therein as to appear completely unacceptable.[50]
3. Rules of Competition Law
Another aspect of the fundamental economic order of states is competition or antitrust law. On 21 July 2004, the Oberlandesgericht in Düsseldorf rendered a decision regarding the German and EU Competition Law. [51] In this decision the court came to the following conclusions: Firstly the court pointed out that, while the fundamental provisions of German competition law and the provisions of European competition law, which are directly effective in Germany, formed part of German public law applicable in the Federal Republic of Germany.[52] The court explained that an award violated German public policy when it went counter to fundamental principles of the legal, economic, and/or social order of the state in such an obvious and significant manner that the decision was unacceptable under basic national principles.[53] In court’s opinion, provisions which served merely a practical purpose, such as the form requirement under Section 34 of the German Law Against Restraints on Competition applicable at that time, were not part of public policy.[54] It clarified that the relevant time for assessing a violation of German public policy was at the time of enforcement, and not the time at which the award was rendered, or the parties had concluded the agreements in question.[55] Finally, the Oberlandesgericht rejected the argument that there had been any public policy violations, stating that the Respondent had failed to prove the facts on which its objection was based.[56]
On 8 March 2006, the Swiss Supreme Court rendered a decision that the refusal of application of European and Italian Competition Law by the arbitral tribunal did not impact the application of Art. 190.2(e) of the Swiss Private International Law Act.[57] According to the decision of the Swiss Supreme Court, the differences between the various competition regulations are not too obvious - particularly between Switzerland and the EU – to analyze whether their application or non-application infringe transnational or international public order.[58] In Switzerland, for public policy objections to be successful, it must be shown that the award violates the essential and widely recognized values which derived from the foundation of any legal order. According to the court, these values also exists very commonly in Switzerland. It covers both substantial and procedural public policy and Swiss courts exclusively refer to “international” or “transnational public policy”[59]. After, the source of public policy is framed by the Court, Court answers the main question that the extent of the differences of the different competition laws make it difficult to compose a universal principle among them. According to the Court it is unable to find a transnational rule, or a rule of international public policy here[60]. Landolt pointed out that, the Court devoted a column for the competition law legislators as to insufficient universality, and a criticism as to the impracticality of according public policy protection to competition law[61].
Finally, we could assert that this regime of applying public policy only in exceptional circumstances explains why the argument of a violation of public policy is only successful in extremely limited circumstances.[62]
IV. The Application of Procedural Public Policy
Procedural public policy guarantees the parties the right to an independent judgment on the facts and the law as submitted to the arbitral tribunal in a manner consistent with the applicable procedural law. Procedural public policy is violated when fundamental and generally recognized principles have been affected, which leads to an unbearable contradiction with the feeling of justice, such that the decision appears incompatible with the values recognized by law.[63]
1. The Right to a Fair Trial
The right to a fair trial consists, among other elements, of the impartiality and independence of the arbitrators. The First Instance Court of Akhisar in Turkey declined to enforce an ICC arbitral award according to NYC Art. V.2(b) since the plaintiff firm was a German firm and the sole arbitrator was from the German canton of Switzerland. However, this first instance decision was quashed by the Court of Cassation. According to the Court of Cassation, the relative relationship between the nationalities of the plaintiff and the arbitrator could not be regarded as a concrete proof of the infringement of the principle without focusing to other factors related with the impartiality of the arbitrators.[64]
Another example for infringement of the right to a fair trial is a fundamental failure in the arbitration procedure. The Istanbul Court of Appeals has found in a case that “…if the arbitral award breached the established standards of right to a fair trial, then there is a breach of the public order.”[65] For this reason, the Court decided to set aside an arbitral award with regard to a construction contract between the Siemens Industry and Trade Corp. and a Turkish company.[66] In that case, the arbitral tribunal had determined the facts assessing two technical expert opinions provided by the parties to the arbitration. However, these two expert opinions in fact had been prepared in accordance with the instructions and expectations of the parties, and therefore had very contradictory factual determinations. The Court of Appeals stated that it was the failure of the arbitral tribunal to establish the facts of the case under these quite different party-appointed expert opinions.[67] The Court of Appeals stated that the arbitral tribunal should have retained an expert committee composed of independent experts having sufficient knowledge and experience about the subject matter of the case, and that a detailed discovery should have conducted by this independent expert committee at the construction site. The Court of Appeals concluded that this failure directly infringed the parties’ right to a fair trial and necessitated the arbitral award to be quashed for the breach of public order.[68]
In this same case, the Court of Appeals also found another breach of public policy. One of the additional protocols to the contract between the parties had been prepared in English. The arbitral tribunal, which consisted of Turkish arbitrators, did not get an official Turkish translation of that protocol.[69] As per the Law No. 805 on the Use of Obligatory Turkish in Economic Institutions, transactions between the parties should be made in Turkish and the content of the contract should be translated and filed by a sworn translator in order to be able to read and understand the content of the contract by both parties and the court or arbitral tribunal.[70]
Swiss courts have also applied the principle of the independence or impartiality of the arbitral tribunal. At the same time, not every circumstance which may give the appearance of an arbitrator’s bias shall constitute a violation of public policy or other grounds as recognized in NYC Art. V.1, and entail the refusal of exequatur. According to the settled case law of the Swiss Federal Supreme Court, the recognition and enforcement of a decision under the public policy exception is only refused if it would violate the domestic sense of justice in an intolerable manner.[71]
2. Res Judicata and Conflict Between Court Decisions
Before a Turkish judge can recognize and enforce a foreign arbitral award, he or she must investigate whether there was any final decision by a Turkish judge. For example, “… according to Turkish law, the corporations could not take possession of their shares”. The same principle applies in German law. However, in both of these countries the implementation of this principle may differ in practice. Thus, the Turkish Court of Cassation stated “the probability that the decision of a foreign court will not be in comply with the conclusion which a Turkish court would have reached on the same matter cannot be the only reason to define it contrary to public policy…”[72]
Particularly important in this context is a Swiss case about res judicata, where the court state that “…by recognizing a foreign arbitral award, the Swiss judge grants to that award the same legal effects as a local judgment. A party who intends to raise a plea of res judicata before a Swiss court or arbitral tribunal must request the recognition of the foreign award as an incidental question.”[73]
V. Conclusions
The business sector has a preponderance of using arbitration as the method of choice of its dispute settlement, and the NYC is the leading tool for the recognition and enforcement of foreign arbitral awards. Like other treaties, its efficacy is largely dependent on its interpretation by the national courts of the various signatory countries. Public policy plays an important role in this process of international recognition and enforcement.
The NYC does not attempt to define public policy and leaves it to the discretion of the courts of the States parties. Some States have attempted to define this “public policy.” For example, Turkey in its latest unified decision briefly defined public policy. The review of some selected examples from European States allows to conclude that States progressively limit the scope of public policy. At the same time, this analysis shows that courts still have no uniform methodology to define the notion of public policy.
A few jurisdictions even still debate whether the “public policy” referred to in the NYC refers to “international public policy” or the “national public policy.” However, the consensus seems large that arbitral awards are subject to the scrutiny of international public policy, and not national public policy. In Switzerland, as well as sometimes in Turkey, courts also apply “transnational public policy.”
Finally, I would like to refer to the “description” to the words that gave rise to this book: “Economic crises, financial volatility, social transformations, and political instability around the world have created a favorable environment for economic nationalism and other movements that may prove disruptive of the global economic world order that arose after the Cold War. International commercial and investment arbitration are particularly sensitive to such trends.” – In order to prevent that public policy operates as the trigger of the weapon of economic nationalism, national courts must frame the “public policy notion” very carefully and restrictively.
------------------------------------------------------------------------------------------------------------------
[1] As Scarman J has said in its decision in the Estate of Fuld, decd. (no. 3) Hartley and another v. Fuld and others [1968] P 675, … “It needs no analysis to support the assertion that the law which defines the nature and consequence of undue influence is part of the substantive law of wills. It is to be noted that the doctrine, as such, has no independent existence in German law, which, however, treats influence as one of the factors to be considered in determining whether the instrument expresses the free will of the testator, and provides that a transaction contra bonos mores is void. It follows that, since I must apply German substantive law as the law of the domicile, the English doctrine need not, in terms, be considered. It is not, however, to be thought that blind adherence to foreign law can ever be required of an English court. Whether the point be described in the language of public policy, “discretion,” or “the conscience of the court,” an English court will refuse to apply a law which outrages its sense of justice or decency. But before it exercises such power it must consider the relevant foreign law. The present case is a good illustration. German law contains no specific doctrine of undue influence – or, I might add, of knowledge and approval in its substantive aspect – but a review of its law of succession shows very plainly that it requires a valid will to be one which expresses the intentions of a free and capable testator. There can be no outrage in applying such a law in a case which prima facie calls for its application” …; GRUSIC, U./HEINZE, C./MERRETT, L./MILLS, A./GARCIA-CASTRILLON, C.O./TANG, Z.S./TRIMMINGS, K./WALKER, L.: Cheshire, North & Fawcett Private International Law-Edited by Paul Torremans, Ed.15, New York: OUP 2017, p.133
[2] TİRYAKİOĞLU, B.: Yabancı Mahkeme Kararlarının Tanınması ve Tenfizinde Kamu Düzenine Aykırılık, Yabancı Mahkeme ve Hakem Kararlarının Tanınması ve Tenfizinde Güncel Gelişmeler, Edt. Süheyla Balkar BOZKURT, Sempozyum 14 Ekim 2016, İstanbul: On iki Levha 2018, p.84
[3] GÖKYAYLA, C.D.: Yeniden Kamu Düzeni, Onuncu Yılında MOHUK Sempozyumu, Edts: Feriha Bilge TANRIBILIR/ Gülce Gümüşlü TUNÇAĞIL, Sempozyum 7-8 Aralik 2017, Ankara:Adalet Yayınevi 2018, p. 87.
[4] SANLI, C./ESEN, E./ATAMAN-FIGANMESE, I.: Milletlerarası Ozel Hukuk, Ed.6, Istanbul: Vedat Kitapcılik 2018, p. 74.
[5] Art. V.2(b) of the NYC.
[6] SHENOY, N.C., “Public Policy Under Article V(2)(B) of the New York Convention: Is There A Transnational Standard?”, Cardozo Journal of Conflict Resolution, 2018, Vol. XX, p. 77.
[7] Please find the text from: <https://www.trans-lex.org/511300/_/protocol-on-arbitration-clauses-signed-at-a-meeting-of-the-assembly-of-the-league-of-nations-held-on-the-twenty-fourth-day-of-september-nineteen-hundred-and-twenty-three/>, (12/20/2020)
[8] Please find the text from:<https://www.trans-lex.org/511400/_/convention-on-the-execution-of-foreign-arbitral-awards-signed-at-geneva-on-the-twenty-sixth-day-of-september-nineteen-hundred-and-twenty-seven/>,(12/20/2020)
[9] Art. 1(e) of the 1927 Geneva Convention.
[10] MAURER, A.G.: The Public Policy Exception under the New York Convention-History, Interpretation and Application, Revised Edition, New York 2013, p.13.
[11] …(a) That the award has been made in pursuance of a submission to arbitration which is valid under the law applicable thereto; (b) That the subject-matter of the award is capable of settlement by arbitration under the law of the country in which the award is sought to be relied upon; (c) That the award has been made by the Arbitral Tribunal provided for in the submission to arbitration or constituted in the manner agreed upon by the parties and in conformity with the law governing the arbitration procedure; (d) That the award has become final in the country in which it has been made, in the sense that it will not be considered as such if it is open to opposition, appel or pourvoi en cassation (in the countries where such forms of procedure exist) or if it is proved that any proceedings for the purpose of contesting the validity of the award are pending.
[12] See the 1927 Geneva Convention, Art. 2: Even if the conditions laid down in Article 1 hereof are fulfilled, recognition and enforcement of the award shall be refused if the Court is satisfied: (a) That the award has been annulled in the country in which it was made; (b) That the party against whom it is sought to use the award was not given notice of the arbitration proceedings in sufficient time to enable him to present his case; or that, being under a legal incapacity, he was not properly represented; (c) That the award does not deal with the differences contemplated by or fading within the terms of the submission to arbitration or that it contains decisions on matters beyond the scope of the submission to arbitration.
If the award has not covered all the questions submitted to the arbitral tribunal, the competent authority of the country where recognition or enforcement of the award is sought can, if it thinks fit, postpone such recognition or enforcement or grant it subject to such guarantee as that authority may decide.
Geneva Convention Article 3: If the party against whom the award has been made proves that, under the law governing the arbitration procedure, there is a ground, other than the grounds referred to in Article 1 (a) and (c), and Article 2 (b) and (c), entitling him to contest the validity of the award in a Court of Law, the Court may, if it thinks fit, either refuse recognition or enforcement of the award or adjourn the consideration thereof, giving such party a reasonable time within which to have the award annulled by the competent tribunal.
[13] Report and Preliminary Draft Convention adopted by the Commitee on International Commercial Arbitration at its meeting of 13 March 1953 reproduced in [The ICC International Court of Arbitration Bulletin Vol. 9/No.1 – May 1998], <http://www.newyorkconvention.org/travaux+preparatoires/history+1923+-+1958>, (10/12/2019)
[14] ..”When the refusal is based on considerations of public policy of the country where the award is relied upon, the competent authority will be in a position to refuse, ex officio, recognition or enforcement..”: Report and Preliminary Draft Convention adopted by the Commitee on International Commercial Arbitration at its meeting of 13 March 1953 reproduced in [The ICC International Court of Arbitration Bulletin Vol. 9/No.1 – May 1998], <http://www.newyorkconvention.org/travaux+preparatoires/history+1923+-+1958>, (10/12/2020)
[15] MAURER, p. 16.
[16] ECOSOC Res. 520 (VII).
[17] Report of the Commitee on the Enforcement of International Arbitral Awards, United Nations Economic and Social Council, U.N. Doc. E/AC. 42/4Rev 1,
<http://www.newyorkconvention.org/travaux+preparatoires/history+1923+-+1958>, (11/12/2020).
[18]MAUER, p. 18ff.
[19] Report of the Committee on the Enforcement of International Arbitral Awards, United Nations Economic and Social, U.N. Doc. E/2704, Annex, at 2;MAUER, p. 24-25.
[20] MAUER, p. 25.
[21] MAUER, p. 16.
[22] This view was coming from the opinion that some subject matters had direct relation with the “public policy and “subject-matters” concerning public policy must be regarded as an arbitration barrier adopted for many years in a wide geography. The basis of this thought lied in the distrust of the arbitration institution. Over the past two decades, this approach has changed rapidly, and the impact of public order on arbitrability has shrunk: HUYSAL B.: Milletlerarasi Ticarî Tahkimde Tahkime Elverislilik, İstanbul: Vedat Kitapcilik 2010, p.155.Sometimes, public policy limit applied not the whole subject matter but a particular dispute: PARK, W.W.: Determining an Arbitrator’s Jurisdiction: Timing and Finality in American Law, Nevada Law Journal, 2007, Vol. VIII, Issue 1, p.151, fn.65.
[23] MAURER, p .25.
[24] MAURER, p. 28-29.
[25] MAURER, p. 29.
[26] U.N. DOC. E/2822, Annex II, p.20 et seq.
[27] MAURER, p.31.
[28] ECOSOC Res. 604 (XXI), adopted on 3 May 1956.
[29] Final Act and Convention on the Recognition and Enforcement of Foreign Arbitral Awards, U.N. DOC. E/CONF.26/8/Rev.1, at 3.
<http://www.newyorkconvention.org/travaux+preparatoires/history+1923+-+1958>,(11/12/2020)
[30] Art. V(2) of the NYC.
[31]MAURER, p.54.
[32]BERMANN, G. A.: Recognition and Enforcement of Foreign Arbitral Awards: The Interpretation and Application of the New York Convention by National Courts, Ed. George A. Bermann, Recognition and Enforcement of Foreign Arbitral Awards: The Interpretation and Application of the New York Convention by National Courts, Springer International Publishing 2017, p.59
[33] BERMANN, p. 63; SHENOY, p. 80; LALIVE, P.: Transnational (or Truly International) Public Policy and International Arbitration, in Comparative Arbitration Practice And Public Policy in Arbitration, ICCA Congress Series 1986, Vol. III, p. 258.
[34] FRY, J.D.: Desordre Public International under the New York Convention: Wither Truly International Public Policy, Chinese Journal of International Law, 2009, Vol. VIII, p. 86.
[35] PARK, W.W.: The Specificity of International Arbitration: The Case for FAA Reform, Vanderbilt Journal of Transnational Law, 2003, Vol. XXXVI, p. 1272 sn. 138.
[36] MAYER, P/SHEPPARD, A.: Final Report on Public Policy as a Bar to Enforcement of International Arbitral Awards, Arbitration International, 2003, Vol. XIX, p. 253.
[37] LALIVE, p. 307.
[38] DOLINGER, J.: World Public Policy: Real International Public Policy in the Conflict of Laws, Texas International Law Journal, Spring 1982, Vol. XVII, N.2, p. 172.
[39] BUCHANAN, M.A.: Public Policy and International Commercial Arbitration, American Business Law Journal, Fall 1988, Vol. XXVI, N. 3, p. 514. Some commentators divide the public policy into two part if the notions of public policy emanate from the sovereign states than it is called national public policy consists of domestic and international public policy and if the notions are emanated from supranational sources than it is called supranational public policy divided into transnational, regional and truly international public policy: FRY, p. 86-89.
[40] Even the member States of European Union are free to determine the public policy conception, as we can see at the ECJ decision in Krombach v. Bamberski case that the limits of the “unstable” and “varianted time to time” public policy conceptions are required to review: Judgment of the Court of 28 March 2000. - Dieter Krombach v André Bamberski, European Court Reports 2000, p. I-01935.
[41] Turkish Court of Cassation, 13th Civil Chamber, File No: 2012/8426, Decision No: 2012/10349 D.17.04.2012, Turkish Court of Cassation, 13th Civil Chamber, File No: 2013/16287, Decision No: 2016/5292, D.23.02.2016: TARMAN, Z.D: Yabanci Mahkeme ve Hakem Kararlarinin Turkiye’de Tenfizinde Karsilasilan Sorunlara Iliskin Bazı Tespitler, Public and Private International Law Bulletin, 2017, Vol.37, N.2, p.1005. In his new edition Born also introduced a Turkish Court of Cassation decision of Judgment of 16 March 2017, Decision No.2017/3322 which the …”Turkish Court of Cassation has similarly refused recognition of awards on the basis that “the reduction in an income of the State would clearly violate the economic balance and public policy”….Born, located this decision under the category of national and political interests and criticized that this kind of decisions could not be consistent with the basic objectives of the New York Convention and the international arbitral process. The only legitimate issue to non-recognize an arbitral award is the legal rules and principles. Non-recognition of foreign awards based upon national foreign policy (and may be economic) interests are contrary to the basic essence of the New York Convention: BORN, G.: International Commercial Arbitration Vol III International Arbitral Awards, Ed.3, Wolters Kluwer: Alphen aan den Rijn 2021, p.4041.
[42] As it is prescribed in the Court Decision, ...”in a marketing and distribution strategy, GSM operators have their own preferences to sell below the specified tariff to their distributors, and this will not change the price of the GSM service reflected on the subscribers, in other words, it will not create a difference in the final gross sales as a result of the GSM service. However, while the gross sales figure and subscribers' fee for using GSM service have not changed, the Treasury share may be under-calculated due to the discounts applied by the operator. This situation constitutes fraud against the concession agreement and the law on which it is based, and against the mandatory rules of Turkish law and public interest and public order:13th Civil Chamber, File No: 2012/8426, Decision No: 2012/10349 D.17.04.2012, http://www.kazanci.com/kho2/ibb/giris.html,>,(1/5/2021)
[43] GÖKYAYLA, C.D.: Yeniden Kamu Düzeni, Onuncu Yılında MÖHUK Sempozyumu 7-8 Aralik 2017(Ed: TANRIBİLİR, F.B./GÜMÜŞLÜ TUNÇAĞIL, G), Adalet Yayınevi: Ankara 2018, p. 92.” Violation of a mandatory rule of Turkish Law does not necessarily amount to violation of Turkish public policy”: GÖKYAYLA. C.D.: The Turkish Supreme Court’s Approach to Recognition and Enforcement of Foreign Arbitral Awards under the New York Convention, Zeitschrift für Schiedsverfahren German Arbitration Journal (SchiedsVZ), November/Dezember 2020, 18.Jahrgang-Heft 6, p.276
[44] ERKAN, A.B.: Turkish Courts’ Approach to Public Policy as a Ground for Refusal of Enforcement of Foreign Arbitral Awards, Turkish Law Blog, 2019, < https://turkishlawblog.com/read/article/132/turkish-courts-approach-to-public-policy-as-a-ground-for-refusal-of-enforcement-of-foreign-arbitral-awards>, (1/5/2021)
[45] Germany / 04 January 2012 / Germany, Oberlandesgericht Karlsruhe / 9 Sch 02/ 09, <https://newyorkconvention1958.org/index.php?lvl=notice_display&id=1305>, (12/20/2020)
[46] German courts have already been aware of the distinction between domestic public order and international public order. According to one of the ancient Federal Supreme Court Decision of Germany, domestic public order is the mandatory rules of the law which is not at the disposal of the parties but will be legally effective. On the other hand, international public order comprises the part of this mandatorily applicable law which will successfully function by discarding the applicable foreign law that has a conflict with this mandatorily applicable law: MAURER, p.108
[47] SOLOMON, D.: Interpretation and Application of the New York Convention in Germany, Ed. George A. Bermann, Recognition and Enforcement of Foreign Arbitral Awards: The Interpretation and Application of the New York Convention by National Courts, Springer International Publishing 2017, p.366. EGBGB Art 6 prescribed the term …which is manifestly incompatible with the fundamental principles of German Law. This provision must take into consideration when the foreign law is discarded. This must be disregarded when the question is to recognize or enforce the arbitral awards.
[48] The Oberlandesgericht (Higher Regional Court) Brandenburg enforced the award, due to the fact that the enforcement proceedings were unaffected by the Buyer's bankruptcy, because the declaration of enforceability of a foreign arbitral award was not an executory measure but rather a preliminary measure having no executory effect: Germany / 02 September 1999 / Oberlandesgericht Brandenburg / 8 Sch 01/99, BB, Beilage 6 zu Heft 31/2001, S.21, Yearbook Comm. Arb’n XXIX (2004), S.7697 <https://newyorkconvention1958.org/index.php?lvl=notice_display&id=245>, (12/20/2020).
[49] Court declared that there was no violation of German public policy in this case, because the German substantive public policy would not be violated even when a German court ruling on the dispute, would have reached a different conclusion based on German mandatory rules of law.
[50] Bremen Landgericht rendered a decision on 20 January 1983 said that “declaration of the bankrupt after commencement of arbitration did not infringe the public policy even this declaration coming from the German company”: BORN, Vol III, p.4034, fn. 1710.
[51] Germany / 21 July 2004 / Oberlandesgericht Düsseldorf / 6 Sch(Kart) 01/02, Yearbook Comm. Arb’n XXXII (2007), S.315 ff< https://newyorkconvention1958.org/index.php?lvl=notice_display&id=1317>, (12/21/2020).(OLG Düsseldorf-21 July 2004)
[52] OLG Düsseldorf-21 July 2004, p.7.
[53] OLG Düsseldorf-21 July 2004, p.6.
[54] OLG Düsseldorf-21 July 2004, p.9.
[55] OLG Düsseldorf-21 July 2004, p.2.
[56] OLG Düsseldorf-21 July 2004, p.15.
[57] This article regulates the conditions of actions to the annulment of the arbitral awards that the seat is in Switzerland. For the recognition and enforcement of the arbitral awards we must look for the Article 194 Private International Law Act of Switzerland, "The recognition and enforcement of a foreign arbitral award is governed by the New York Convention of June 10, 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
[58] Judgment of 8 March 2006, 4P.278/2005 published in ASA Bulletin, 2006, Issue.3, p.521.
[59] ASA Bulletin, p. 529.
[60] ASA Bulletin, p.530.
[61] LANDOLT, P.: Judgment of the Swiss Supreme Court of 8 March 2006 – A Commentary, European Business Law Review, 2008, Vol. XIX, Issue 1, p.131
[62] BRUNSCHWEILER, A/GIROUD, S/HONDIUS, D: Enforcement of Foreign Judgments and Arbitral Awards in Switzerland: Cracking One of the World’s Safe Boxes, NYSBA International Law Practicum, 2018, Vol. 31, N. 2 p.84.
[63] Swiss Courts gave good examples relating to international public policy: BONOMI, A/REYMOND-ENIAEVA, E.: Interpretation and Application of the New York Convention in Switzerland, Ed. George A. Bermann, Recognition and Enforcement of Foreign Arbitral Awards: The Interpretation and Application of the New York Convention by National Courts, Springer International Publishing 2017, p.936. Swiss courts also detailed the procedural public policy in their decisions: … “Public policy is breached when the recognition or enforcement of a foreign award would intolerably undermine the Swiss concept of justice. A foreign award may be incompatible with the Swiss legal order not only because of its material content, but due to the proceedings leading to it. Judgement of 8 December 2003, 4P.173/2003 /ech/Swiss Supreme Court,
< https://arbitrationlaw.com/sites/default/files/free_pdfs/a_v_b_and_c_4p.173-2003.pdf>, (12/20/2020)
[64] Turkish Court of Cassation, 11th Civil Chamber, File No: 2015/11441, Decision No: 2016/8701. According to some of the scholars this decision could not be regarded within the context of fair trial but the general understanding of the Turkish public morality: RUHI, A.C.: Milletlerarası Özel Hukukta Kamu Düzeni Müdahalesi, İstanbul: On İki Levha 2019, p. 88.
[65] Turkish Court of Appeal, 15th Civil Chamber, File No: 2018/6, Decision No: 2018/7, D: 20.11.2018, <vatandas.uyap.gov.tr>, (12/20/2020), p.15 (Turkish Court of Appeal, 15th Civil Chamber Decision)
[66] Turkish Court of Appeal, 15th Civil Chamber Decision, p.2.
[67] Turkish Court of Appeal, 15th Civil Chamber Decision, p.15.
[68] Turkish Court of Appeal, 15th Civil Chamber Decision, p.16.
[69] Turkish Court of Appeal, 15th Civil Chamber Decision, p.15.
[70] Turkish Court of Appeal, 15th Civil Chamber Decision, p.15.
[71] Tribunal Federal, 4A_374/2014, arret du 26 Février 2015
< http://relevancy.bger.ch/php/aza/http/index.php?lang=fr&type=show_document&highlight_docid=aza://26-02-2015-4A_374-2014> (12/15/2020)
[72] Turkish Court of Cassation, 11th Civil Chamber, File No: 2016/13601, Decision No: 2018/2276: https://www.hukukmedeniyeti.org/karar/1398930/yargitay-11-hukuk-dairesi-e-2016-13601-k-2018-2276/(20/12/2020); for the comments, RUHI, p.101.
[73] In decision 4A_374/2014, the Swiss Supreme Court considered an application to set aside a Court of Arbitration for Sport (CAS) award for violation of the principle of res judicata. According to the Swiss Supreme Court. …” the Conciliation and Conflict Resolution Committee- (CCRC) award of October 6, 2011, whilst being res judicata according to Mexican law, is contrary to Swiss public policy, so that its recognition must be refused pursuant to Art. V(2)(b) of the New York Convention. Therefore, the PSC single judge (and the CAS after him) did not violate public procedural policy within the meaning of Art. 190(2)(e) Act of Swiss Private International Law (PILA) when addressing the coaches’ claim notwithstanding the 2011 CCRC Decision. The Appellant’s argument fails in this respect. In an alternate argument based on Art. 190(2)(b) PILA, the Appellant claims that the CAS wrongly accepted jurisdiction. However, the Appellant submits this argument only because, in its view, it was not clear whether res judicata is a matter of admissibility or of jurisdiction. As to the rest, it develops its argument on the assumption that the 2011 CCRC Decision was res judicata and could be invoked against the Respondents. Yet, it has just been shown that the Decision, even if it is an award having res judicata effect considering Mexican law, cannot be recognized in Switzerland. Therefore, the inferences the Appellant seeks to draw from the point of view of the jurisdiction of the CAS are deprived of any basis” …. http://www.swissarbitrationdecisions.com/sites/default/files/26%20fevrier%202015%204A%20374%202014.pdf, (12/22/2020)
Türkçe