Comparative Analysis of the Role of Public Policy in the Nullity and Annulment of Arbitral Awards under Iranian and Turkish Law

Abstract

Arbitration is increasingly used as an alternative mechanism for resolving civil and commercial disputes in Iran and Turkey because of its flexibility, confidentiality, speed, and reliance on party autonomy. Nevertheless, arbitral autonomy is not absolute. Arbitral awards must remain compatible with the fundamental legal values of the state, including mandatory rules, public policy, good morals, arbitrability requirements, and basic procedural guarantees. This article comparatively examines the role of public policy in the nullity and annulment of arbitral awards under Iranian and Turkish law. It adopts a doctrinal and comparative method to analyse the legal foundations, scope, and consequences of judicial intervention where an award conflicts with public policy. The study finds that Iranian law regulates the invalidity of domestic arbitral awards principally through Article 489 of the Civil Procedure Code, particularly the ground concerning awards contrary to laws creating rights. Although this concept can protect mandatory norms and fundamental legal interests, its broad and uncertain scope may permit excessive judicial review of the merits. Iranian international commercial arbitration provides a more explicit basis for considering public policy and good morals. Turkish arbitration law, by contrast, expressly recognises public policy as a ground for annulment and more clearly separates it from other grounds, such as invalidity of the arbitration agreement, non-arbitrability, excess of authority, and procedural defects. The article argues that public policy should be interpreted restrictively in both legal systems. Judicial intervention is justified where an award involves manifest illegality, corruption, fraud, serious denial of due process, non-arbitrable subject matter, or a clear conflict with fundamental mandatory rules. However, public policy should not permit courts to reconsider evidence, reinterpret contracts, reassess damages, or correct ordinary legal errors. The study concludes that clearer legal distinctions and a consistent high threshold for public-policy review would strengthen arbitral finality while preserving judicial protection of fundamental legal values.