In Turkey, depending on the nature of an action, the fees of court proceedings are either a fixed fee or a percentage fee, which is calculated as a percentage of the amount sought by the party that initiates the action.

Article 3 of the Turkish Act On Fees (No.492) (Fees Act), provides that "when determining the filing fees to be paid regarding enforcement of arbitral awards, the nature of the arbitral awards should be taken into account; the same rule also applies to the enforcement of foreign arbitral awards."

Article 16 of the Fees Act provides that for "transactions that are subject to a fee according to its value, Tariff No.1 will be applicable."

Tariff No. 1, Section 3, of the Fees Act provides that the "case whose subject is about a certain value will be subject to a percentage fee, which is 5.94% of the value of the matter in dispute."

The underlying dispute between the parties arose under a sales contract, which the claimant successfully arbitrated in Korea pursuant to an arbitration clause in that contract. The claimant then initiated an action in the Turkish Court of First Instance for the recognition and enforcement of the foreign arbitral award.

The respondent sought the dismissal of the action, claiming that it was not present during the arbitration proceeding and that the arbitral award had not become binding.

The Court of First Instance rejected the respondent's claims and recognised the arbitral award. The court also awarded a "fixed" fee.

The respondent appealed to the Supreme Court. It argued that the court should have awarded a percentage fee, given that the arbitration was a simple debt collection matter. According to the respondent, the Court of First Instance's decision to award a fixed fee was contrary to law.

The Supreme Court allowed the appeal. It held that a percentage fee should have been applied to proceedings for the recognition and enforcement of the foreign arbitral award, which related to debt collection. It was contrary to Turkish law to award a fixed fee in such matters.

The percentage fee should be calculated according to the percentage (listed in Tariff No. 1, Section 3 of the Fees Act) of the amount of the award sought to be enforced on the date that the enforcement action was initiated.

Under the New York Convention, foreign and non-domestic arbitral awards should be enforced in the same way as domestic awards. Therefore, an award made outside Turkey, which is a signatory of the New York Convention, is enforced according to the applicable Turkish enforcement law.

The issue as to whether the enforcement of foreign arbitral awards should be subject to a fixed fee or a percentage fee is an important issue in Turkey, because the percentage fee is 5.94% of the amount awarded, whereas fixed fees are usually very insignificant amounts.

Prior to this case, there was inconsistency. Some Turkish courts in such actions have applied the percentage fee, while others have ordered fixed fees. More recently, the trend has been for Turkish courts to rule that percentage fees must apply.

This decision clarifies that a claimant who brings an action in Turkey seeking the recognition and enforcement of a foreign arbitral award should pay a percentage fee at the beginning of the proceedings. If the claimant is successful, it should obtain from the Turkish enforcing court a decision awarding it the reimbursement of the entire percentage fee, to be paid by the respondent, as well as legal fees, which can be awarded by the Turkish courts to the prevailing party.