Fees With Regards To the Enforcement of Foreign Arbitral Awards

Contact: Ezgi Babur; Erdem & Erdem (Turkey)

The Judgment and writ fees to be charged in the enforcement of foreign arbitral awards are a problematic issue in practice. The situation has been thrown into further disarray and confusion while

International Jurisdiction Network Project (“UYAP”), imposes to charge a fixed fee for the foreign judgment, and Article 3 of the Act of Fees numbered 492 (“Act of Fees”) imposes to charge a fixed or proportional fee dependent upon the nature of the foreign arbitral awards, and that resulted with common inclination to conclude that a proportional fee is charged concerning the disputes which are subject to proportional fees.

 

General

In the determination of the fees to be charged with regards to enforcement of international arbitral awards, the distinguishing characteristic of the examination conducted in enforcement procedure are of importance. Therefore, the special features of enforcement procedure shall be examined below.

In the enforcement procedure, the judge shall not conduct an examination concerning the subject matter of the case, and only considers whether enforcement conditions and enforcement obstacles are met at present case. The relevant subject is entitled as the prohibition of “révision au fond” by the doctrine. In the event that, the enforcement judge examines the subject matter of the award, the parties’ preference in choosing arbitration rather than state courts to settle their dispute, will, without any doubt, be ignored. Therefore, the prohibition of “révision au fond” is one of the essential principles of the enforcement of foreign arbitral awards.

When the parties prefer that the disputes shall be settled by arbitration, the competence in this matter is granted to the arbitrator, not to courts. In the event that the substance or legality of awards pronounced by the arbitrators is examined by the enforcement judge, the preference of the parties as per the choice of arbitration as a dispute resolution process will be ignored.

Within this framework, the fees to be collected with regards to enforcement lawsuits shall be handled in light of our explanations above.

Relevant Provisions of the Act of Fees (Court Fees)

Fees to be charged with regards to enforcement of foreign arbitral awards are regulated under Article 3 of the Act of Fees. Pursuant to the first paragraph of the relevant article, a judgment and writ fee shall be charged in accordance with the nature of the award. Pursuant to the second paragraph of the relevant article, it is regulated that the same principle shall apply to fees with regards to arbitral awards and disputes that are compulsory to be settled by arbitration.

Judgment and writ fees are regulated under the Tariff No.1 attached to the Act of Fees. Pursuant to title III/1 of the relevant tariff which regulates proportional fees, in the event that “a decision is taken with regards to the lawsuits, a subject matter of which is a disputed sum”, a proportional fee of 59.4 per mille shall be charged over the sum which is subject to the dispute. The fixed fee is regulated under the title III/2 of the Tariff No.1. Pursuant to the relevant disposition, a fixed fee shall be charged for all cases except where it is indicated that the case is subject to a proportional fee.

As we mentioned above, Tariff No.1 clearly regulates that, in the event that “a decision is taken with regards to the lawsuits, subject matter of which is a disputed sum in between parties”, a proportional fee shall be charged. On the other hand, in enforcement lawsuits, there is not any decision taken with regards to the substance of the dispute, and the examination merely includes whether the conditions of enforcement are met or there exists any enforcement obstacles.

Moreover, in UYAP system, there is a common practice concerning the collection of fixed fees with regards to enforcement lawsuits, and the fee is calculated as a fixed fee by the court clerkship, and the treasury cash desk collects a fixed fee.

On the other hand, the doctrine and the precedents of the Court of Appeal are of the opinion that a proportional fee shall be charged in accordance with the nature of the award that will be enforced. Baki Kuru supports the view that the claimant of the enforcement lawsuit shall pay the application fee, one fourth of the proportional fee with regards to lawsuits which are subject to proportional fees, and with regards to the lawsuits which are subject to fixed fees, the fixed fee shall be paid by the claimant.

A decision of the Court of Appeal which makes reference to the said opinion is as follows:

“On the other hand, for lawsuits pertaining to the enforcement of foreign arbitral awards (like Turkish arbitral awards), judgment and writ fee shall be charged in accordance with the nature of the arbitral awards. In this case, the party requesting the enforcement of the arbitral award shall pay the application fee and proportional judgment and writ fee with regards to the cases which are subject to proportional fee (Prof. Dr. Baki Kuru, Hukuk Muhakemeleri Usulü, Altıncı Baskı, Cilt VI, 2001, sf. 6210, 6211). In the present case, it is inexact that a fixed fee is charged without taking into consideration the fact that a proportional fee should have been charged.” (Court of Appeal, 19th Civil Chamber, decision dated 15.9.2009 and numbered 2009/5703 E., 2009/8256 K.)

As is seen, the Court of Appeal decided that a proportional fee should have been charged instead of a fixed fee.

Conclusion

The common practice with regards to the fees of enforcement lawsuits is not yet entirely clear. According to UYAP system, a fixed fee is charged and at a later stage the defendant of the enforcement lawsuit may request the completion of the remainder, which is not a suitable practice. The examination that shall be made by the enforcement judge is enforcement conditions and obstacles, regardless of the value of the subject of lawsuit. Consequently, considering the fact that the subject matter of the case is not examined and the nature of the enforcement procedure, it will be relevant and appropriate practice to adopt the provision concerning the collection of a fixed fee with regards to enforcement lawsuits included in the Act of Fees.