215 / 521
assessed ex officio by arbitrators or local courts and that arbitration
agreements or arbitration clauses in other agreements executed by
unauthorized representatives (for example agents without specific
authority) should be deemed invalid.
In this regard, an arbitral award rendered under such arbitration
agreement may be annulled, or its enforcement may be refused. The
invalidity of the arbitration agreement, or incapacity, is among the rea-
sons specified under Art. V of the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (also known as the NewYork
Convention) for refusing recognition and enforcement of an award.
Under Turkish law, lack of authority is not the equivalent to a lack of
capacity, and it gives the principal the right not to be bound by an act
that is realized by an unauthorized representative. Nevertheless, a lack
of authority is regarded as incapacity in commercial arbitrations, and
within the scope of Art. V/1/a of the New York Convention.
Additionally, pursuant to Art. V/2/b of the New York Convention, the
recognition and enforcement of an award that would be in violation of
public policy may also be denied.
Nevertheless, a party who fails to assert any objection regarding
lack of authority throughout the arbitral proceedings, bringing the mat-
ter to the attention of the judges at the enforcement stage of an award,
may be deemed as an abuse of its rights. In fact, a Supreme Court 11
th
Civil Chamber ruling dated 09.04.2004 and no. 6774/3751 declared
such objection asserted for the first time at the enforcement stage to be
in violation of the good faith principle, and overruled the local court’s
enforcement decision
6
.
Moreover, there is an inclination towards the apparent authority
theory in the practice of arbitration. Accordingly, if a party created the
appearance of authority of its representative, leading the counter-party
to believe in such authority, such party may be bound by the arbitration
agreement of its unauthorized representative. In addition, it is argued
that the “public policy,” the violation of which is among the reasons to
refuse enforcement under the New York Convention, should be con-
ARBITRATION LAW
199
6
Supreme Court 11. Civil Chamber ruling dated 09.04.2004 and no. 6774/3751,
Nuray Ekşi
,
Milletlerarası Deniz Ticaret alanında “Incorporation” Yoluyla Yapılan Tahkim Anlaşmaları,
İstanbul 2010, p. 69, 70.