The parties were both shareholders in a Turkish limited liability company whose bylaws contained an arbitration agreement. The Applicant initiated arbitration proceedings at the Arbitral Commission of the Istanbul Chamber of Commerce, which issued an award in its favor. Shortly before the issuance of the award, the Respondent had filed an action at the local court of Istanbul requesting the court to declare that the arbitral tribunal lacked jurisdiction. Both the local court and the Court of Cassation dismissed the Respondent’s action. The Respondent also sought annulment of the arbitral award on the grounds that the arbitral tribunal had rendered its decision without awaiting the outcome of the decision of the state courts, which was granted by the Turkish Court of Cassation. The Applicant then initiated new arbitration proceedings requesting that the Respondent be ordered to make payment in accordance with the first award. The newly constituted arbitral tribunal issued a second award in the Applicant’s favor. The Respondent’s application to annul the second award was rejected by the Turkish Court of Cassation. The Applicant sought enforcement of the second award in Germany, which the Respondent opposed arguing that: (i) it was not given an opportunity to present its case under Article V(1)(b) NYC; (ii) that pursuant to Article V(1)(c) NYC the dispute was not covered under the arbitration agreement as the arbitration agreement applied only to disputes involving the company Atlanata Tuerkiye Ltd. Sireketi and the arbitral tribunal had misinterpreted the arbitration agreement; (iii) that under Article V(1)(d) NYC, the arbitral proceedings did not comply with the provisions of the Turkish Code of Civil Procedure which was the law of the country in which the arbitration is seated ; and (iv) that the recognition and enforcement of the arbitral award violated German public policy (Article V(2)(b) NYC).
The Hanseatisches Oberlandesgericht (Higher Regional Court) Bremen granted leave to enforce the second arbitral award. It found that the formal requirements under Article IV NYC had been met. It then addressed the grounds for refusal of enforcement that the Respondent had raised. The Hanseatisches Oberlandesgericht held that the Respondent´s right to present its case under Article V(1)(b) NYC had not been violated since it had been given the opportunity to present, and indeed had presented, its defenses in both the first and second arbitral proceedings. To the extent that the arbitral tribunal had disregarded any defenses raised by the Respondent, this could merely be relevant under the aspect of a potential violation of the right to be heard (under Article V(2)(b) NYC). The Oberlandesgericht also rejected the Respondent’s defense under Article V(1)(c) NYC. It held that disputes regarding the present company were covered under the arbitration agreement because the company was not a different enterprise but had merely changed its name. In addition, it rejected the Respondent’s argument that the Turkish courts had misinterpreted the arbitration agreement holding that under the principle of automatic recognition of foreign courts the German courts were bound by the decision of the Turkish courts, which had conclusively confirmed the jurisdiction of the arbitral tribunal. With respect to the Respondent´s allegations under Article V(1)(d) NYC that the arbitral tribunal did not decide in accordance with the Turkish Code of Civil Procedure, the Hanseatisches Oberlandesgericht stated that by agreeing on the Arbitral Commission of the Istanbul Chamber of Commerce and Industry, the parties also agreed on the application of its Arbitration Rules and that the arbitral tribunal had conducted its proceedings in compliance with such rules. The Hanseatisches Oberlandesgericht further dismissed the Respondent´s argument that the enforcement of the award violated German public policy under Article V(2)(b) NYC because the arbitral tribunal had allegedly not considered certain arguments and evidence submitted by the Respondent. It stated that a violation of due process could only have occurred in the case where the relevant evidence could have influenced the outcome of the proceedings. Moreover, it clarified that German international public policy was violated only when the “decision of the foreign arbitral tribunal was rendered in proceedings that were to such an extent at odds with basic principles of German procedural law, that in the German legal system the decision cannot be deemed to have been rendered in proper legal proceedings because of a grave defect that affects the principles of public and economic life”. It further noted that, since international arbitral tribunals are composed of arbitrators with different domestic legal backgrounds, the requirements regarding the extent to which an arbitral award discusses the respective parties’ arguments as well as regarding the overall reasoning of the decision were lower and only needed to meet the more lenient requirements of German international public policy. Moreover, the Hanseatisches Oberlandesgericht also rejected the Respondent’s argument that the arbitral tribunal had wrongly concluded that the Applicant’s claims were not time-barred. It reasoned that it could only assess whether an arbitral award had correctly applied the substantive law if it were determinative of whether the recognition of the arbitral award violated public policy. However, it found, that there was no ground to assume a violation of public policy in the present circumstances since that would mean that the application of the relevant Turkish substantive law was in such stark contrast to the fundamental principles of German law and the perceptions of justice contained therein that it would be intolerable under domestic standards.