What Is Arbitration?

Arbitration is an alternative dispute resolution (ADR) method in which parties agree to resolve their disputes outside of court, usually through a private and binding decision made by one or more arbitrators. The process is often faster, less formal, and more flexible than traditional litigation.

Legal Framework for Arbitration in Turkey

Domestic Arbitration

Domestic arbitration in Turkey is governed by the Turkish Code of Civil Procedure (Law No. 6100). This law applies to arbitration cases that do not contain a foreign element and provides clear guidelines on the appointment of arbitrators, arbitration procedures, and enforcement of arbitral awards.

International Arbitration

International arbitration is regulated by the International Arbitration Law of Turkey (Law No. 4686), which came into effect in 2001. It applies when there is a foreign element involved, such as a foreign party or cross-border transaction. This law is closely aligned with international standards, particularly the UNCITRAL Model Law, making Turkey an arbitration-friendly jurisdiction for foreign investors.

Key Arbitration Institutions in Turkey

Istanbul Arbitration Centre (ISTAC)

ISTAC is Turkey’s most prominent arbitration institution, offering modern rules and efficient administration. It provides both national and international arbitration services and has gained global recognition for its credibility and neutrality.

Union of Turkish Bars Arbitration Center

This center offers arbitration services primarily for legal professionals and commercial disputes within Turkey. It operates in accordance with domestic arbitration laws and is recognized by Turkish courts.

International Institutions

Many international parties also choose institutions such as the ICC (International Chamber of Commerce) or the LCIA (London Court of International Arbitration) when arbitrating disputes related to Turkey. These bodies provide additional neutrality and are especially favored in high-value or complex cases.

Key Features of Arbitration in Turkey

1. Arbitration Agreement

An arbitration agreement is the cornerstone of the process. In Turkey, it must be in writing and can be included either in the main contract (as an arbitration clause) or as a separate agreement. Turkish courts generally uphold the validity of arbitration agreements unless they are ambiguous or involve non-arbitrable matters.

2. Selection of Arbitrators

Parties are free to appoint one or more arbitrators, and there is no requirement for them to be Turkish nationals or lawyers. If parties cannot agree, the appointment is made by the competent court or arbitration institution.

3. Arbitral Procedure

Turkish arbitration laws grant flexibility in determining the procedural rules. Parties may choose institutional rules (such as ISTAC or ICC) or opt for ad hoc arbitration. The principles of equality, impartiality, and the right to be heard must always be observed.

4. Seat and Language of Arbitration

The seat of arbitration determines the applicable procedural law. Parties can choose Turkey or another country as the seat. Additionally, the language of arbitration can be freely determined by the parties, which is especially beneficial for international disputes.

Enforceability of Arbitral Awards in Turkey

Domestic Awards

Domestic arbitral awards are enforceable through a simplified court recognition process. Unless challenged within 30 days, the award becomes final and enforceable.

International Awards

Turkey is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958). This means that foreign arbitral awards are generally recognized and enforced in Turkey, subject to limited exceptions such as public policy violations or lack of due process.

Advantages of Arbitration in Turkey

1. Speed and Efficiency

Court litigation in Turkey can be time-consuming due to procedural complexities and caseloads. Arbitration offers a faster resolution, often concluding in 6–18 months depending on the case.

2. Confidentiality

Unlike court proceedings, arbitration is private. This confidentiality is particularly valuable for businesses that need to protect trade secrets or sensitive commercial information.

3. Expertise of Arbitrators

Parties can select arbitrators with specialized knowledge in the relevant field—whether it be construction, finance, energy, or international trade—ensuring a more informed and relevant decision.

4. Flexibility

Arbitration allows for tailored procedures, including digital hearings, language preferences, and procedural timelines, all of which are attractive for international companies.

5. International Enforceability

Thanks to Turkey’s membership in the New York Convention, awards made in Turkey are enforceable in over 160 countries and vice versa, providing significant value in cross-border transactions.

Challenges and Considerations

1. Cost

While arbitration can be cheaper than litigation in the long run, upfront costs (such as arbitrator fees, institutional charges, and legal representation) can be high. Parties should weigh this against the benefits of speed and enforceability.

2. Judicial Intervention

Although Turkish courts generally support arbitration, they can still intervene in certain stages—such as in the appointment of arbitrators, interim measures, and enforcement proceedings. However, courts are becoming increasingly arbitration-friendly.

3. Arbitrability Limitations

Some matters, such as criminal cases, family law disputes, and certain administrative issues, are not subject to arbitration under Turkish law. It’s crucial to assess whether a dispute is arbitrable before drafting an arbitration clause.

Recent Developments and Trends

Turkey has taken significant steps to promote arbitration. The government and legal community are working to position Istanbul as a regional arbitration hub. ISTAC’s increased visibility, integration of online dispute resolution, and enhanced international cooperation are indicators of Turkey’s commitment to modern arbitration practices.

Moreover, Turkish courts are showing greater deference to arbitration clauses and are less likely to interfere with arbitral awards unless there are compelling reasons. This is a positive trend that reinforces Turkey’s reputation as a reliable arbitration venue.

The Role of an Arbitration Lawyer in Turkey

Choosing the right arbitration lawyer in Turkey is critical to success. These professionals bring in-depth knowledge of Turkish and international legal principles. They work within esteemed institutions such as an Ankara law firm, ensuring tailored strategies for arbitration cases.

Whether you’re a multinational company or a foreign investor, finding the best lawyer in Turkey is essential for legal clarity. Legal advisors with a strong command of English are particularly valuable. An English speaking lawyer or English speaking lawyer in Turkey offers seamless communication and professional service.

Engaging with a legal advisor in Turkey ensures you are backed by expert knowledge in both domestic and international laws. These professionals often work at reputable institutions like an Ankara law office or a trusted lawyer in Turkey.

Benefits of International Arbitration in Turkey

International arbitration in Turkey has grown rapidly. With Turkey’s strategic location, legal reforms, and experienced arbitration panels, it is now a credible venue for resolving transnational disputes. Major corporations rely on a dedicated international law firm to manage cases effectively.

An experienced Ankara lawyer understands the local judicial culture and international expectations. Whether part of an Ankara law firm or independently practicing, they provide robust representation in arbitration and other legal services.

Choosing the Right Ankara Law Firm

A top-tier Ankara law firm combines local insight with global expertise. These firms often have teams of bilingual or multilingual professionals, making it easier for foreign clients to navigate the legal system with an English speaking lawyer in Turkey by their side.

From contract disputes to investment arbitration, a seasoned arbitration lawyer can guide you through each step of the process. Their deep familiarity with the intricacies of arbitration in Turkey ensures clients receive strategic advice and effective advocacy.

Whether you’re seeking expert legal counsel, navigating complex cross-border disputes, or entering commercial agreements, Turkey offers a robust platform for arbitration and legal representation. Partnering with a reputed lawyer in Turkey or an Ankara law office can make all the difference. Explore more about international arbitration in Turkey and secure your legal future today.

Turkey has become an attractive centre for foreign investors thanks to its geopolitical position, rapidly growing economy, and increasing volume of international trade. However, international trade and investment often bring legal disputes. Turkey offers a range of legal mechanisms to effectively address disputes for foreign investors and companies. In this article, we explore the main methods of dispute resolution in Turkey, including litigation, arbitration, and mediation, highlighting their advantages and disadvantages. Disputes are a common part of life, whether in business, property transactions, or personal matters. In Turkey, there are multiple mechanisms available to resolve disputes, both formal and informal. Below is an overview of the key dispute resolution options available in Turkey.

Dispute Resolution Mechanisms in Turkey

Being well-integrated into international trade and dispute resolution systems, Turkey provides various options for dispute resolution. These mechanisms include litigation, arbitration, mediation, and conciliation, each tailored to meet different needs.

Litigation: Court System in Turkey

Similar to major jurisdictions, litigation is the default dispute resolution mechanism in Turkey. Unless the parties agree otherwise, disputes are resolved through the state courts. Turkey’s legal system ensures justice is delivered through specialised courts, such as commercial, administrative, criminal, and civil courts. However, the court system is often criticised for lengthy processes and challenges such as language barriers, which can make it less appealing for foreign parties. Particularly in complex commercial disputes, alternatives to litigation may offer better solutions in terms of time and cost.

Arbitration in Turkey

Arbitration is a preferred method for resolving disputes without resorting to court. Conducted by neutral arbitrators, arbitration offers confidentiality, faster resolutions, and enforceable decisions that are recognised internationally. Turkey is a ‘pro-arbitration’ jurisdiction, with courts that actively support arbitration agreements and proceedings. This makes arbitration in Turkey a reliable choice for resolving international disputes efficiently.

Mediation in Turkey

Mediation enables parties to resolve disputes amicably under the guidance of a neutral mediator. In some types of commercial disputes, mediation is mandatory before filing a lawsuit in Turkey. Beyond mandatory mediation, parties can voluntarily opt for this method to resolve their issues without the formalities of litigation. Mediation is fast, cost-effective, and preserves relationships between parties.

Conciliation in Turkey

Conciliation involves parties negotiating directly to reach a mutual agreement. This approach provides time and cost advantages for those looking to avoid formal processes. However, since it is not legally binding, it relies heavily on the good faith of the parties involved.

Advantages and Disadvantages of Dispute Resolution Systems in Turkey

Litigation: Court System

Advantages:

• – Binding judgments are issued in accordance with the law.
• – Specialised courts handle complex legal disputes.
• – Decisions can be appealed, ensuring an additional layer of control.

Disadvantages:

• – Lengthy and costly processes.
• – Language barriers and procedural complexities for foreign parties.

Arbitration

Advantages:

• – Fast and flexible processes.
• – Ensures confidentiality, protecting commercial reputations.
• – Parties can select arbitrators.
• – Decisions are enforceable internationally under the New York Convention.

Disadvantages:

• – Potentially high costs, especially in international arbitration.
• – Limited grounds for challenging arbitral awards.

Mediation

Advantages:

• – Cost-effective and quick resolution process.
• – Facilitates amicable solutions between parties.
• – Serves as a mandatory pre-litigation step in certain disputes, streamlining court preparation.
• – Can be opted for voluntarily to avoid litigation altogether.

Disadvantages:

• – Non-binding outcomes require mutual agreement from the parties.
• – May be ineffective in cases of significant disagreement.

Conciliation

Advantages:

• – Allows disputes to be resolved informally, without entering formal processes.
• – Saves time and costs.
• – Maintains commercial relationships between parties.

Disadvantages:

• – Lacks official binding authority.
• – Heavily dependent on the goodwill and cooperation of the parties.

Court-Based Dispute Resolution (Litigation)

Litigation is the formal process of resolving disputes through the courts. The Turkish legal system is based on civil law, and disputes are typically heard in civil courts.

• Civil Courts: Handle most types of civil disputes, including property, contracts, family law, and inheritance issues.
• Commercial Courts: Deal with business-related disputes, including those between companies, contractual matters, and business partnerships.
• Administrative Courts: Handle disputes between individuals and government agencies or authorities.
• Criminal Courts: Deal with offenses under criminal law.

Steps in Litigation:

1. Filing a Lawsuit: The process begins with submitting a petition to the relevant court.
2. Court Hearings: After the case is filed, the court schedules hearings to review evidence and hear both parties.
3. Judgment: Once all evidence is presented, the court makes a decision, which can be appealed if one party is dissatisfied with the outcome.

Pros of Court-Based Dispute Resolution:

• Legal binding decisions enforced by the state.
• Suitable for complex cases that require detailed examination of evidence.
• Transparent and regulated by the Turkish legal system.

Cons of Court-Based Dispute Resolution:

• Can be time-consuming, sometimes taking years to reach a resolution.
• Expensive due to legal fees, court costs, and potential appeals.

Mediation

Mediation is a voluntary and non-binding method of dispute resolution where a neutral third party (the mediator) facilitates discussions between disputing parties to help them reach a mutually acceptable resolution. Mediation is often used in family, civil, and commercial disputes.

Advantages of Mediation:

• Faster and cheaper than litigation.
• Encourages parties to reach a mutually beneficial solution rather than imposing a judgment.
• Confidential process, protecting the privacy of both parties.

Legally Binding Mediation:

In Turkey, mandatory mediation is required for certain types of disputes, such as labor disputes and commercial cases. If mediation results in an agreement, it can be made legally binding by submitting it to the court.

Arbitration

Arbitration is a private and legally recognized method of dispute resolution where a third-party arbitrator makes a binding decision after reviewing the case. It is commonly used for commercial and international disputes.

Arbitration Process:

• The parties agree to appoint an arbitrator or a panel of arbitrators.
• Both parties present their arguments and evidence to the arbitrator.
• The arbitrator renders a final, binding decision, which is enforceable by law.

Advantages of Arbitration:

• Quicker than court proceedings.
• More private and confidential compared to litigation.
• The outcome is final, with limited scope for appeal.

Arbitration in Turkey:

Turkey is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, making arbitration rulings enforceable in most countries. Many businesses use arbitration for cross-border disputes.

Alternative Dispute Resolution (ADR) Methods

In addition to mediation and arbitration, there are several other alternative dispute resolution methods that can be used in Turkey:

• Conciliation: A less formal process than mediation, where the conciliator suggests possible solutions to the dispute.
• Negotiation: Parties directly communicate with each other to reach a settlement without the involvement of a third party.
• Expert Determination: Used primarily in technical disputes, an expert provides a binding decision on a specific matter.

Advantages of ADR Methods:

• Cost-effective and time-saving compared to litigation.
• Flexibility in the process and outcome, as parties can choose how to proceed.
• Preservation of relationships, as the process is more collaborative.

Dispute Resolution in Property Transactions

For real estate-related disputes, particularly for foreign buyers, Turkey provides both judicial and non-judicial options:

• Property Mediation: Common in property disputes such as title deed issues, contracts, or property boundaries.
• Land Registry: For certain property disputes, the Land Registry can play a role in resolving ownership conflicts.
• Civil Courts: Disputes related to property contracts or titles are generally handled in the civil courts.

International Dispute Resolution

For foreigners involved in disputes in Turkey (e.g., property buyers, investors), there are several international dispute resolution mechanisms:

• International Arbitration: Many international contracts with Turkish entities include an arbitration clause, allowing disputes to be resolved in international arbitration forums.
• International Mediation: Mediation services may be used for cross-border disputes where parties are from different countries.

For foreign investors and companies operating in Turkey, understanding the available dispute resolution mechanisms is crucial for effectively addressing legal challenges. Arbitration stands out as a fast, impartial, and internationally recognised solution, while litigation, mediation, and conciliation offer alternative pathways tailored to specific needs. Expert guidance ensures a seamless resolution process, safeguarding the interests of all parties involved.
If you require professional assistance with arbitration in Turkey, litigation in Turkey, or other dispute resolution methods, contact our expert lawyers for tailored solutions that protect your investments and business interests.

What are the 4 types of dispute resolution service in Turkey?  

In Turkey, there are four primary types of dispute resolution services:

1. Litigation (Court-Based Dispute Resolution)

• This is the formal legal process where disputes are resolved through the Turkish judicial system. The courts make binding decisions after reviewing evidence and hearing arguments from both parties. It is the most traditional form of dispute resolution.

2. Mediation

• Mediation involves a neutral third party (the mediator) helping the disputing parties to negotiate and find a mutually agreeable solution. It is a non-binding process, and in some cases, such as commercial disputes or labor cases, it may be mandatory before proceeding to court.

3. Arbitration

• In arbitration, an independent arbitrator (or panel) is appointed to resolve the dispute. The arbitrator’s decision is binding, and the process is generally faster and more private than litigation. Arbitration is commonly used in business, commercial, and international disputes.

4. Alternative Dispute Resolution (ADR)

• ADR encompasses methods like conciliation, negotiation, and expert determination. These are more flexible and informal processes designed to help parties resolve disputes outside of the courtroom. ADR methods can be quicker and more cost-effective than litigation and can help preserve relationships between the parties.

Each of these methods serves different types of disputes, offering various advantages depending on the nature of the issue at hand.

What is the meaning of dispute resolution service in Turkey?

Dispute resolution services in Turkey refer to the various methods and processes used to resolve conflicts or disagreements between individuals, businesses, or entities, without the need for prolonged court litigation. These services help parties find solutions to their disputes in a more efficient, cost-effective, and often faster manner. Dispute resolution can be formal or informal, depending on the method used.

Purpose and Importance of Dispute Resolution Services

• Efficiency: These services often offer faster resolutions than court proceedings.
• Cost-Effectiveness: They can be less expensive, as they avoid lengthy court trials and legal fees.
• Confidentiality: Methods like mediation and arbitration offer privacy, which is beneficial for sensitive issues.
• Preservation of Relationships: Dispute resolution methods like mediation help maintain relationships between parties, which is especially important in business and family disputes.

In Turkey, these services aim to provide more accessible and effective ways of resolving disputes, promoting peace, fairness, and the overall efficiency of the legal and business environment.

What is the most common dispute resolution?

• Mediation tends to be the most common and effective method for a wide range of disputes in Turkey, as it strikes a balance between legal formality and the desire for a fast, mutually agreeable solution.
• However, litigation remains common, especially for more serious or complex matters.
• For business and international disputes, arbitration is frequently chosen due to its efficiency and binding nature.

In summary, mediation is often the preferred starting point for many disputes due to its benefits, though litigation and arbitration continue to be common methods for more complex cases.

What is the importance of dispute resolution service for administrative cases?

Dispute resolution services play a crucial role in administrative cases, where the conflict typically arises between individuals or entities and government agencies. These cases often involve the interpretation and enforcement of laws, regulations, and administrative decisions. Here’s why dispute resolution is vital in such contexts:

1. Efficient and Timely Resolution

Administrative cases can often involve complex legal issues, but dispute resolution services—especially mediation and arbitration—help speed up the process compared to formal litigation. This efficiency is essential because administrative disputes can delay business operations, public services, or the enforcement of regulatory policies.

• Mediation and negotiation are especially useful in reaching timely agreements between the parties involved (e.g., government agencies and citizens or businesses).
• Arbitration provides an expedited and binding decision, which can be vital for resolving administrative conflicts faster than going through prolonged court procedures.

2. Reduces Overload on Courts

Administrative cases can sometimes crowd the court system, leading to backlogs and delays. By utilizing dispute resolution services like mediation and arbitration, administrative cases can be settled outside the courtroom, thereby reducing the burden on the judiciary.

• Courts are often overwhelmed with cases, and administrative disputes can clog up the system. Alternative methods free up judicial resources, allowing for quicker legal processes in general.

3. Preservation of Relationships

Administrative disputes often involve ongoing relationships between citizens, businesses, and government agencies. Dispute resolution methods such as mediation help preserve these relationships by fostering cooperation and understanding, rather than creating animosity that often arises in contentious court battles.

• In cases like tax disputes, environmental regulations, or zoning issues, parties who reach an amicable settlement are more likely to continue their working relationships in the future.

4. Cost-Effectiveness

Litigation can be expensive, especially in cases involving the government or complex regulations. Alternative dispute resolution services (ADR) like mediation and arbitration are generally more affordable, allowing individuals and businesses to resolve their cases without incurring significant legal costs.

• Mediation, for example, is much less costly than prolonged court proceedings, and arbitration may also save money compared to litigation while still providing a legally binding decision.

5. Greater Flexibility and Autonomy

Dispute resolution services offer more flexibility than traditional litigation, which often follows strict procedures. In administrative cases, parties can negotiate terms that better suit their interests or settle the issue based on a more practical, context-driven solution. This flexibility is crucial when dealing with regulatory or governmental matters.

• For example, in regulatory disputes, parties may reach a resolution that allows for compliance adjustments without resorting to heavy-handed government enforcement or punitive legal actions.

6. Fairness and Impartiality

In administrative cases, the involved government body or agency is often perceived as having more power than the individual or company involved. Using an independent mediator or arbitrator ensures that both parties have equal opportunities to present their case in a fair and impartial manner. This helps balance power dynamics, creating a more just and transparent process.

7. Compliance with Legal and Regulatory Frameworks

Administrative disputes often revolve around interpreting and applying laws, regulations, and policies. By using dispute resolution services, parties can reach solutions that comply with the legal and regulatory frameworks, ensuring that the dispute is resolved in accordance with existing laws and avoiding further legal challenges.

Frequently Asked Questions About  Dispute Resolution In Turkey

What is the significance of dispute resolution service for criminal cases?

Dispute resolution services in criminal cases, though not as commonly used as in civil or administrative cases, still hold significance in certain situations. These services can help in resolving issues, reducing the burden on the court system, and even providing rehabilitative solutions for offenders.

What is the concept of the enforcement and bankruptcy Law in Turkey in terms of dispute resolution service? 

In Turkey, Enforcement and Bankruptcy Law governs the procedures related to the enforcement of court decisions, the collection of debts, and the liquidation of assets when individuals or entities face financial distress. This legal framework plays a significant role in resolving disputes related to unpaid debts, insolvency, and other financial issues. Dispute resolution services in this context serve as mechanisms to settle conflicts efficiently and fairly, whether during the enforcement process or when dealing with bankruptcy proceedings.

What is the importance of dispute resolution service for divorce proceedings?

Divorce proceedings can often be emotionally and financially draining for both parties involved. In Turkey, as in many other countries, dispute resolution services play a crucial role in facilitating a more efficient, less adversarial, and fair process. These services, such as mediation and conciliation, offer significant benefits during divorce proceedings. Here’s why they are important:

1. Reducing Emotional Stress and Conflict

Divorce is often a highly emotional experience, especially when children, finances, and long-term relationships are involved. Traditional litigation can escalate conflict and create an environment of hostility, making it harder for both parties to move forward.

• Mediation and conciliation provide a neutral platform where both parties can express their concerns, needs, and desires in a more controlled and supportive environment. This reduces hostility and allows them to focus on resolving key issues rather than getting caught in emotional battles.
• Dispute resolution services ensure that both spouses are heard, and this can significantly ease the emotional burden of divorce, helping individuals to approach the process with more clarity and a sense of fairness.

2. Cost-Effectiveness

Traditional divorce litigation can be expensive, particularly when lengthy legal battles, multiple hearings, and appeals are involved. Court fees, lawyer fees, and other associated costs can quickly add up, leaving both parties financially strained.

• Mediation and other dispute resolution methods are often much less expensive compared to prolonged litigation. They offer an efficient way to resolve disputes over property division, child custody, and financial matters without incurring the high costs associated with court proceedings.
• The lower cost of dispute resolution services allows both parties to resolve their issues without the need for excessive legal expenses, making it a more financially sustainable option.

3. Faster Resolution

Divorce proceedings can drag on for months or even years in a courtroom, particularly when there are complicated issues like alimony, child custody, or property division. Dispute resolution services offer a much quicker alternative.

• Mediation allows couples to address and resolve issues in a matter of days or weeks, rather than waiting for court dates and engaging in a lengthy trial process.
• Arbitration can also expedite the process, as the arbitrator makes binding decisions, ensuring a final resolution is reached quickly and efficiently.

4. Customized Solutions

In traditional court proceedings, judges often rely on a one-size-fits-all approach when making decisions regarding asset division, child custody, and other matters. This can leave both parties dissatisfied if they feel their unique needs and circumstances have not been fully considered.

• Dispute resolution services like mediation give the spouses the flexibility to create customized agreements that better fit their needs, desires, and financial situations.
• In mediation, both parties can negotiate solutions that work for them, rather than accepting a ruling that may not suit their specific circumstances. This personalized approach can lead to more mutually agreeable outcomes.

5. Preserving Relationships (Especially When Children Are Involved)

When children are involved in a divorce, it is especially important to maintain a cooperative relationship between the parents. Traditional litigation can create lasting animosity and damage the ability to co-parent effectively.

• Mediation and conciliation can help parents navigate the complexities of child custody and visitation schedules in a way that preserves their relationship as co-parents.
• By encouraging open communication and understanding, dispute resolution services provide a platform for parents to develop a parenting plan that works for everyone, reducing the long-term emotional impact on children.

6. Protecting Privacy and Confidentiality

Divorce proceedings in court are public, and details of the case, including financial information, personal matters, and family issues, may be exposed to the public. This can cause embarrassment and harm to both parties involved.

• Dispute resolution services, especially mediation, offer a private and confidential environment where both spouses can discuss their issues without the fear of their personal information being disclosed to the public.
• Confidentiality is a key element in mediation, and it ensures that sensitive matters are handled with discretion, reducing the stress and stigma often associated with divorce proceedings.

7. Flexibility and Control

In court proceedings, the outcome is in the hands of the judge, and both parties must accept the ruling. This lack of control over the final decision can leave both spouses dissatisfied with the result.

• Mediation gives both parties a greater sense of control over the process and outcome, as they actively participate in the decision-making. This sense of ownership often leads to greater satisfaction with the final agreement.
• Conciliation services also allow both spouses to have a say in resolving their dispute, fostering a greater sense of fairness and collaboration.

8. Higher Rate of Compliance

Agreements reached through dispute resolution services like mediation tend to have higher compliance rates because both parties were actively involved in crafting the solutions. This often leads to greater satisfaction with the process and reduces the likelihood of future legal disputes.

• In contrast, court-imposed rulings may be perceived as less fair, leading one or both parties to resist compliance.
• When spouses feel that their concerns and needs were taken into account, they are more likely to adhere to the terms of the agreement, which is particularly important in matters like child custody, visitation, and alimony.

9. Preventing Further Legal Battles

While traditional divorce proceedings can result in an initial ruling, there may still be the potential for ongoing legal disputes, especially when one party feels dissatisfied with the judgment. Dispute resolution services often help to prevent future litigation by addressing issues comprehensively.

• Mediation helps to ensure that both parties reach an agreement on all relevant aspects of the divorce, reducing the chances of future disputes over issues such as alimony, asset division, and custody arrangements.

What is the role of Ongur Legal Consultancy for dispute resolution service?

Ongur Legal Consultancy english speaking lawyer  is a prominent law firm that offers comprehensive dispute resolution services in Turkey, aiming to assist clients in resolving conflicts efficiently and amicably. Their expertise spans various sectors, ensuring that individuals, companies, and foreign investors receive the best legal guidance and representation.

As it is widely acknowledged, arbitration has many advantages including being faster than state litigation proceedings, allowing the dispute to be resolved by experts, and providing confidentiality to the parties. In this sense, arbitration is deemed to be a preferable alternative dispute resolution method in Turkey. 

Where to find the regulations regarding arbitration in Turkish Law?

Other than substantial rules to be applied in commercial disputes, Turkey has also enacted legislation applicable to the procedural aspects of the arbitration proceedings. The procedural regulations are twofold: a special regime for domestic arbitration proceedings and a model-law based law for international arbitration cases. Turkey is also a party to the The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) the provisions of which are applied as law, in accordance with Article 90 of the Constitution of Turkish Republic.

The main laws regulating arbitration in Turkey are the Turkish Civil Procedure Code numbered 6100 and International Arbitration Law numbered 4686. As it is well known, the parties to an arbitration can determine the seat of arbitration and the applicable law to the arbitration proceedings in the arbitration agreement.

The Turkish Code of Civil Procedure applies in domestic arbitration proceedings, in the event that the seat of arbitration is chosen by the parties as Turkey, whereas the law to be applied to the legal procedure has not been specified in the relevant arbitration agreement. As for the International Arbitration Law numbered 4686, this law applies in cases where the arbitration has the nature of an “international arbitration”. It must however be noted that, even in arbitrations that are deemed international and thus subject to the International Arbitration Law numbered 4686, where there is no provision in this law, the Code of Civil Procedure also applies. 

The following explanations are for the cases in which the seat of arbitration is Turkey, where the parties have not chosen the law to be applied to the procedure of the arbitration proceeding.  

What type of disputes can be resolved by way of arbitration according to Turkish law?

Article 1 of the Law numbered 4686 regulates what types of international disputes can be resolved by way of arbitration in Turkey. Pursuant to the aforementioned article, all disputes are arbitrable in Turkey, except for disputes regarding rights in rem on immovable properties located in Turkey and those disputes that are not subject to the will of both parties, e.g. criminal law and family law disputes. 

That being the case, an important point to be emphasized here concerns disputes arising from public procurement processes. In this regard, although public procurement is within the scope of administrative law in Turkey and therefore is not subject to the wills of the parties, in Turkish law, public procurement contracts are subjected to private law provisions. Thus, it is acknowledged that disputes arising from such contracts can be resolved through arbitration.

Do Turkish courts interfere with arbitration proceedings?

Pursuant to Article 3 of the Law numbered 4686, Turkish courts can only intervene in accordance with the provisions of that law to disputes arising from international arbitration. Therefore, the intervention of domestic courts to international arbitration proceedings seated in Turkey is limited and their role is rather supportive. In this context, it can be stated that there is a “pro-arbitration tendency” in Turkey and in Turkish regulations regarding international arbitration.

How should an arbitration agreement be drafted in accordance with Turkish law?

According to International Arbitration Law numbered 4686, an Arbitration Agreement:

• may be concluded by way of an arbitration clause in the main contract or as a separate contract.
• must be made in writing. In order to fulfill this requirement, it is sufficient for the arbitration agreement to be in a written document signed by the parties, made by means of a letter, telegram, fax, telex, or transferred to the electronic environment by means of e-mail. 
• is valid if it is in accordance with the law chosen by the parties to be applied to the arbitration agreement, or if there is no such choice of law, the arbitration agreement is valid if it complies with Turkish law.
• is separate from the main contract. Therefore, no objection can be raised against the arbitration agreement by arguing that the main agreement is not valid.

How should the arbitrators’ selection be made according to Turkish law?

According to Article 7 of the Law numbered 4686, the parties to the dispute are free to determine the number of arbitrators, but an odd number of arbitrators must be chosen. If the number of arbitrators is not agreed upon by the parties, three arbitrators would be selected.

Further, unless otherwise agreed by the parties,

• only real persons can be selected as arbitrators,
• if a sole arbitrator is to be chosen and the parties cannot agree on the selection of the arbitrator, the arbitrator is selected by the Turkish Civil Court of First Instance upon the request of one of the parties,
• if three arbitrators are to be selected, each party chooses one arbitrator; and the two arbitrators selected in this way determine the third arbitrator. If one of the parties does not choose an arbitrator within thirty days from the receipt of the other party’s request in this matter, or if the two arbitrators chosen by the parties do not determine the third arbitrator within thirty days after their selection, the arbitrator is selected by the civil court of first instance upon the request of one of the parties. The third referee acts as the chairman of the arbitral tribunal.

 Can an interim injunction be requested in arbitration proceedings in Turkey?

According to Article 6 of International Arbitration Law, the parties may request an interim injunction from the Turkish courts, in order to secure their receivables before and during the arbitration proceedings. Also, unless otherwise agreed in the arbitration agreement, the parties may request from the arbitrator or the arbitral tribunal to grant an interim injunction. However, while the parties to the arbitration are bound by the arbitral tribunal’s decision to this effect, the arbitral tribunal does not have the powers to grant an interim injunction or a precautionary attachment decision that must be enforced by the enforcement bodies or fulfilled by other official authorities, or which binds third parties.

In what language is the arbitration proceeding conducted?

Pursuant to Article 10 of Law numbered 4686, arbitration proceedings may be conducted in Turkish or in the official language of one of the states recognized by the Republic of Turkey. The language or languages to be used in the proceedings are determined by the arbitrator or the arbitral tribunal unless agreed between the parties. Unless otherwise stipulated in the agreement of the parties or in the interim decision of the arbitrators on the subject, this language or languages shall be used in all written statements of the parties, in hearings, in the interim decisions of the arbitral tribunal, in the final decision and in written notifications.

The arbitrator or the arbitral tribunal may decide that the documents which the parties submit are to be presented together with their translation in the language or languages used in the arbitration proceedings.

Which arbitration centers are generally preferred in Turkey?

The main arbitration centers preferred for international arbitration processes in Turkey are Istanbul Arbitration Center (ISTAC), Istanbul Chamber of Commerce Arbitration and Mediation Center, and the Turkish Union of Chambers and Commodity Exchanges Court of Arbitration.

What must arbitral awards contain?

According to Article 14 of Law numbered 4686, the following must be contained in international arbitral awards issued in Turkey:

• Names and surnames, titles and addresses of the representatives and proxies of the parties,
• The legal reasons on which the decision is based, its justification, and the amount of compensation awarded in claims for compensation,
• The place of arbitration and the date of the decision,
• Names and surnames, signatures, and dissenting votes of the arbitrator or arbitral tribunal that has rendered the decision,
• That an action for annulment can be filed against the decision must be stated in the arbitral award. 

Is it possible to annul the arbitral awards in Turkish law?

Unlike court judgments, arbitral awards are not subject to appeal. According to Article 15 of Law numbered 4686, parties can only file a lawsuit for annulment of the arbitral awards. A finite number of grounds for annulment are listed in the law, as follows:

• Incapacity of one of the parties to the arbitration agreement,
• The invalidity of the arbitration agreement according to the law which the parties have chosen to govern the agreement, or Turkish law, if there is no such choice of law,
• Failure to comply with the procedure determined in the agreement of the parties or stipulated in the Law numbered 4686 with respect to the selection of the arbitrator or the arbitral tribunal,
• Failure to render the decision within the specified arbitration period,
• The decision of the arbitrator or arbitral tribunal being unlawfully authorized or unauthorized,
• The decision of the arbitrator or arbitral tribunal being on a matter other than the arbitration agreement or failing to decide on the entirety of the claims or exceeding of its authority,
• Arbitration proceedings are not conducted in accordance with the agreement of the parties in terms of the procedure or, in the absence of such agreement, in accordance with the provisions of the Law numbered 4686 and this having an effect on the merits of the decision,
• Failure to observe the principle of equality of the parties,
• Non-arbitrability of the dispute that is subject to the decision of the arbitral tribunal according to Turkish law.
• The arbitral award being contrary to the public policy of Turkey.

 An action for annulment can be filed within thirty days. This period starts to run from the date when the arbitral award or the correction, interpretation, or completion decision is notified to the parties. The filing of an action for annulment automatically suspends the execution of the arbitral award.

The parties may appeal against the decisions rendered regarding the rejection of the action for annulment of the arbitral award. 

How are arbitrator fees and legal fees determined in Turkey?

According to Article 16 of the Law numbered 4686, unless otherwise agreed by the parties, the fee of the arbitrators shall be agreed between the arbitrator or the arbitral tribunal and the parties, taking into account the amount of the claim, the nature of the dispute and the duration of the arbitration proceedings. The parties may also determine the fee of the arbitrator or arbitral tribunal by referring to internationally established rules or institutional arbitration rules. 

If an agreement cannot be reached between the parties and the arbitral tribunal on the determination of the fee, or if there is no provision in the arbitration agreement regarding the determination of the fee, or if the parties do not refer to the established international rules or institutional arbitration rules on this matter, the fee of the arbitrator or arbitral tribunal is determined according to the fee schedule annually prepared by the Ministry of Justice by way of taking the opinions of professional organizations in Turkey. 

The expenses of the arbitration proceedings are described in the decision of the arbitral tribunal. These expenses include the arbitrators’ fees, the travel expenses and other expenses of the arbitrators, the fees paid to the experts appointed by the arbitrator or the arbitral tribunal and the other persons whose assistance is sought, as well as the discovery expenses, the travel expenses of the witnesses to the extent approved by the arbitrator or the arbitral tribunal, and other expenses incurred by the arbitrator or the arbitral tribunal, the attorney’s fee awarded for the attorney of the winning party, the court fees for the applications to be made to the courts, and the notification expenses related to the arbitration proceedings.

The arbitrator or the arbitral tribunal may request the claimant to make an advance payment for the costs of the proceedings. If the advance is not paid within the time stipulated in the decision of the arbitrator or the arbitral tribunal, the arbitrator or the arbitral tribunal may suspend the proceedings. If the advance is paid within thirty days from the notification of the parties that the proceedings have been suspended, the proceedings will continue; otherwise, the arbitration proceedings will come to an end.

Unless the parties agree otherwise, according to Turkish law, litigation expenses are paid by the wrongful party. If both parties are partially right in the case, the court costs are shared equitably between the parties.

How are arbitral awards enforced in Turkey?

If the time required for filing an action for annulment has elapsed or the action for annulment has been rejected, the arbitration award will become final. In this case, the Turkish Civil Court of First Instance gives a document to the requesting party upon application, which states that the arbitral award is enforceable. Afterwards, the arbitral award may be enforced just like a court judgment.

Introduction

Incoterms are a series of pre-defined commercial terms that have been issued by the International Chamber of Commerce (ICC) relating to international commercial transactions[1] since 1930. Since then, the ICC tends to revise the rules within the first year of every decade.

The Incoterms usually consist of 3 letters which are aimed to primarily clarify the risks, costs, and tasks regarding international transportation and the delivery of goods. The main objective of Incoterms is rather to define respective obligations of the parties in an international sales contract than governing the contract itself. The rules simply set out the obligations which the seller and the buyer have to follow. “The Incoterms® rules describe the following terms as below:

Obligations: Who does what as between seller and buyer, e.g. who organizes carriage or insurance of the goods or who obtains shipping documents and export or import licenses;

Risk: Where and when the seller “delivers” the goods, in other words where risk transfers from seller to buyer; and,

Costs: Which party is responsible for which costs, for example, transport, packaging, loading or unloading costs, and checking or security-related costs.”[2]

The most recent Incoterms published this year (2020) is actually the ninth set of the terms issued by the ICC. It contains 11 rules, which are mainly the same as the earlier 2010 version, with the difference that the term DAT, “Delivered at Terminal” has been removed, and replaced by a term called DPU: “Delivered at Place Unloaded”. The rules are basically divided into two categories based on the delivery method: the rules regarding any type of transport, and the rules for sea and inland waterway transport.[3]

Rules

Incoterms for any type of transport

EXW-Ex Works (named place of delivery) provides that the seller makes goods available at its premises or a prior accepted place. This term might benefit the seller since it places the maximum obligations on the buyer, as in this method, the buyer undertakes the risks of delivering the goods to the final destination.

FCA-Free Carrier (named place of delivery) foresees that the seller delivers the goods to a place that the parties have reached an agreement upon, usually the seller’s premises.

•     CPT-Carriage Paid To (named place of destination) provides that the seller pays for the carriage of the goods till they arrive to the agreed place of destination.
•     CIP- Carriage and Insurance Paid to (named place of destination) is almost the same with CPT, the only difference being that, in CIP the seller is obliged to obtain necessary insurance for the goods throughout the transit.
•     DPU-Delivered At Place Unloaded (named place of destination) provides that the seller is obliged to cover the cost of the transport, which includes carriage, unloading, export fees and undertakes all risk until the goods arrive in the designated port or terminal.
•      DAP- Delivered At Place (named place of destination) foresees that the risk passes from the seller to buyer from the point of destination agreed upon in the delivery contract beforehand.
•      DDP- Delivered Duty Paid (named place of destination) provides that the seller undertakes the duty of customs; the risk and transportation duties are the same as DAP.

Incoterms for sea and inland waterway transports

•         FAS-Free Alongside Ship (named port of shipment): Under FAS, the seller delivers when the goods are placed alongside the buyer’s vessel at the named port of shipment. This creates a situation where the buyer has to bear all the costs and risks of loss or damage to the goods from that moment.
•         FOB-Free on Board (named port of shipment): This incoterm foresees the seller to arrange for export clearance and the buyer pays for the marine freight transportation, insurance, bill of lading fees and unloading and transportation costs from the arrival port to the designated destination. It can be said that FOB is the most widely used incoterm.
•         CFR- Cost and Freight (named port of destination): By agreeing on CFR delivery in a contract, the parties mainly agree on the seller paying the carriage of the goods up to the named port of destination. Risk passes to the buyer when the goods are loaded on board of the ship in the country of export.
•         CIF- Cost, Insurance & Freight (named port of destination): Although this incoterm is similar to CFR, with CIF the seller is required to obtain the insurance for goods through the transit phase. The seller is expected to turn over the necessary documents.[4]

INCOTERMS in Business

Since the INCOTERMS aren’t codified within the Turkish Code of Obligations, any Code of Obligation or in any statute, updating or modifying the term in specific cases is easier. Also knowing that these rules have been used for decades and are being revised every 10 years, one can assume that any kind of relevant dispute has already arisen and resolved in a way that makes commercial sense.

Additonaly, keeping in mind that the ICC’s main idea is to create a uniform commercial life, choosing the best INCOTERM term would provide nothing but benefits to both parties.[5] However selecting the best INCOTERM for the particular commercial relationship in terms of profitability and safety is still important, which might vary based on the parties’ positions and other factors.

Conclusion

With the ninth set of INCOTERMS that have been published by the ICC for the 2020s, grand changes are not in motion. Still, choosing the best INCOTERM that is best suited to a particular contract is an area that necessitates the assistance of a legal expert with knowledge of International Commercial Law.

For example if a commercial transaction is to take place between Turkey and Italy, what would be ideal is to find a lawyer who is knowledgeable with respect to the laws of both these countries. Otherwise, minor differences that tend to be ignored in the beginning of a commercial relationship might become major disputes later. As it is well known, however, preventing disputes from happening is the most efficient and affordable way of doing business. For more information please seek an expert lawyer on international contracts.

[1] INCOTERMS® 2020

[2] Ibid INCOTERMS® 2020

[3] https://2go.iccwbo.org/downloadable/customer/pdf/

[4] https://www.trade.gov/know-your-incoterms

[5] In Turkish: The Journal International Trade and Arbitration Law Year 2012/I 1p.  149

Introduction

Arbitration is often perceived as a process by which the parties seek monetary damages.[1] However, the number and variety of the remedies available for the parties in international arbitration are very broad, indeed.[2] In this context, in addition to the monetary compensation, an arbitral award may (and often does) also include “punitive damages and other penalties, specific performance and restitution, injunctions, declaratory relief, rectification, filling gaps and adaptation of contracts”^[3]

First of all, although the transactions in the international commercial arbitration and enforcement processes are being carried out confidentially and therefore it is not possible to provide a certain ratio; the studies carried out with the contribution of the arbitral institutions show that in “a great variety” of the cases, parties seek non-monetary reliefs.[4] Furthermore, according to the same studies, the arbitral tribunals are also not reluctant to grant such remedies as it will be illustrated below.[5]

Among these different options, in this paper, “the specific performance” remedy is evaluated and its common kinds are presented along with the factors that should be taken into account in ordering specific remedies.

Specific Performance

To begin with a brief definition of the concept, [6] with reference to the definition made by Samaa A.F. Haridi “specific performance” as a remedy can be defined as remedies ordering “(…) the (a) party (to) perform the obligations under the contract as required by the contract”[7]

In the practice of international arbitration; it is possible to observe that such remedies may be granted as the final determination or as interim measures.[8] In addition to that, it is also not rare to see that the specific performance remedy is granted along with the other types of remedies.

Common types of specific performance

As noted above, it is possible to mention a variety of non-monetary reliefs.[9] Being one of these remedies, “the specific performance” can also be held under some sub-divisions.

In this context, firstly, the specific performance may require a party to carry out certain acts and/or actions. Giving consent to a transfer, issuing power of attorney or handing over certain equipment[10] may be listed as some examples of such remedies.

For illustrating this type of specific performance remedy, it is possible to refer to some reported arbitral awards. For example, in one case reported by the ICC in which the “common law” applied, the Arbitral Tribunal ordered “the transfer of the Respondent’s 30% of the Participating Interest to the Claimants.”[11] Similarly in another ICC case, in which the “civil law” applied, the Respondent is ordered “to perform under the terms of the Agreement to enable the Claimant to sell, market, and distribute products covered by the Agreement” [12]

Secondly, the specific performance ordered by an arbitral tribunal can also be an “omission” which prohibits a party from carrying out certain actions. For example, cessation of acts breaching the contract,[13] not raising objections to certain procedures, not preventing certain acts would be examples of such “omissions”.

This type of remedy has also been widely applied by the different arbitral tribunals. To illustrate this type of remedy with the reported cases, it is possible to note that in a case reported by the ICC in which the “common law” applied to the merits of the Case, the Respondent was ordered to “cease any use of the trademark”[14]. Similarly, in a case reported by Vienna International Arbitral Centre, the Respondent was ordered “to refrain from transferring certain data to third parties without the consent”[15].

Factors and indications in ordering specific performance

In addition to the availability of specific performance as a remedy in international arbitration, the appropriate use of it also bears importance.[16] In this context, arbitral tribunals should evaluate a number of factors before ordering specific remedies.

The first of these factors is the agreement of the parties, which flows from the fact that arbitration is a consent-based process and the parties -save for some exceptions- are capable of agreeing on the powers of the arbitral tribunal. Accordingly, the parties may specify the remedies that may be ordered by the arbitral tribunal. Therefore, there is no doubt that the parties may exclude the “specific performance” remedy in the arbitration agreement.[17] In the absence of such agreement, the arbitral tribunal should apply the procedures available in applicable law.

The second factor that is relevant for the decision of specific performance is the applicable law. In this context, it should be taken into account that different legal systems have different regulations/applications for “specific performance”. It should be noted that every jurisdiction may bring different restrictions on the type of the specific performance remedy as well as the procedure for the adaptation of such remedies.

Herein the traditional differences between the common and civil law jurisdictions should also be emphasized.[18] More specifically, it is argued that in civil law jurisdictions specific performance is traditionally the primary remedy to be ordered upon the request of the Claimant, while in common law jurisdictions specific performance is often regarded as a secondary remedy to be applied in cases in which ordering damages would not be equitable.[19]

In addition to that specific regulations of “the law of the seat” and the “law of the jurisdiction parties will seek enforcement” would be relevant for an arbitral tribunal in ordering specific performance.

It is needles to note that the specific circumstances of the case would also be very important in deciding the specific performance.[20]

Conclusion

To conclude, it is possible to note that contrary to the common perception, in international arbitration alternative remedies to the monetary compensation is available. The existence of such remedies further contributes to the flexibility and efficiency of the arbitration process.

In this context, being one of these alternatives, “specific performance” should be regarded as an important tool in the “remedial armory of an arbitral tribunal”[21] which would enable the arbitral tribunal to reach a more equitable result.

However, it is vital for arbitral tribunals to evaluate the agreement of the parties, applicable law, and the specific circumstances of the case. Since ordering specific performance may not be suitable for the case and even more, applicable law may prohibit the arbitral tribunals to order such reliefs.

BIBLIOGRAPHY

Blackaby N and others, Redfern & Hunter On International Arbitration (6th edn, 2015)

Haridi AFS, ‘Remedies and Costs’ (Lecture in CIArb Diploma in International Arbitration, 2020)

Heider M, ‘International Arbitral Centre Of The Austrian Federal Economic Chamber (Vienna International Arbitral Centre))’, Performance as a Remedy: Non-Monetary Relief in International Arbitration: ASA Special Series No. 30 (1st edn, JurisNet 2011)

Hoellering M, ‘Remedies In Arbitration’ (1985) 20 The Forum (Section of Insurance, Negligence and Compensation Law, American Bar Association

Jones D, ‘Remedial Armoury Of An Arbitral Tribunal: The Extent To Which Tribunals Can Look Beyond The Parties Submissions’ Arbitration’ (2012) 78 Arbitration : the journal of the Chartered Institute of Arbitrators

Mazza F, ‘International Chamber Of Commerce (ICC)’, Performance as a Remedy: Non-Monetary Relief in International Arbitration: ASA Special Series No. 30 (1st edn, JurisNet 2011)

McKendrick E, and Maxwell I, ‘Specific Performance In International Arbitration’ (2013) 1 The Chinese Journal of Comparative Law

Moses M, The Principles And Practice Of International Commercial Arbitration (Cambridge University Press 2010)

Schneider M, ‘Non-Monetary Relief In International Arbitration: Principles And Arbitration Practice’, Performance as a Remedy: Non-Monetary Relief in International Arbitration: ASA Special Series No. 30 (1st edn, JurisNet 2011)

[1] Michael E. Schneider, ‘Non-Monetary Relief in International Arbitration: Principles and Arbitration Practice’, Performance as a Remedy: Non-Monetary Relief in International Arbitration: ASA Special Series No. 30 (1st edn, JurisNet 2011), p. 3.

[2] Michael F. Hoellering, ‘Remedies in Arbitration’ (1985) 20 The Forum (Section of Insurance, Negligence and Compensation Law, American Bar Association, p. 516.

[3] Nigel Blackaby and others, Redfern & Hunter on International Arbitration (6th edn, 2015), p. 515.

[4] Schneider (n 1) p. 16.

[5] ibid.

[6] However, it should also be noted herein that the definition of the “specific performance” term is subject to different views in different jurisdictions. This paper confines itself from presenting these discussions and provide an exhaustive definition on which there is a convergence.

[7] Samaa A.F. Haridi, ‘Remedies and Costs’ (Lecture in CIArb Diploma in International Arbitration, 2020)

[8] Schneider (n 1) p. 32.

Margaret L Moses, The Principles and Practice of International Commercial Arbitration (Cambridge University Press 2010), p. 187.

[9] Schneider (n 1) p. 7.

[10] ibid p. 14.

[11] Francesca Mazza, ‘International Chamber Of Commerce (ICC)’, Performance as a Remedy: Non-Monetary Relief in International Arbitration: ASA Special Series No. 30 (1st edn, JurisNet 2011), p. 144.

[12] ibid p. 147.

[13] Schneider (n 1) p. 14.

[14] Mazza (n 11) p. 146.

[15] Manfred Heider, ‘International Arbitral Centre of the Austrian Federal Economic Chamber (Vienna International Arbitral Centre))’, Performance as a Remedy: Non-Monetary Relief in International Arbitration: ASA Special Series No. 30 (1st edn, JurisNet 2011) p. 138.

[16] Blackaby and others (n 3) p. 519.

[17] ibid p. 515.

[18] This paper does not assert such a difference between çivil and common law systems. It is argued by some authors that both systems’ typical approach to specific performance is similar. See: E. McKendrick and I. Maxwell, ‘Specific Performance in International Arbitration’ (2013) 1 The Chinese Journal of Comparative Law

[19] E. McKendrick and I. Maxwell, ‘Specific Performance in International Arbitration’ (2013) 1 The Chinese Journal of Comparative Law, p. 200.

[20] Blackaby and others (n 3) p. 519.

[21] Doug Jones, ‘Remedial Armoury of an Arbitral Tribunal: The Extent to Which Tribunals Can Look Beyond The Parties Submissions’ Arbitration’ (2012) 78 Arbitration: the journal of the Chartered Institute of Arbitrators.

10 Nisan 1926 tarih ve 805 sayılı İktisadi Müesseselerde Mecburi Türkçe Kullanılması Hakkında Kanun, Türk şirketlerinin kendi aralarındaki ve belirli durumlarda yabancı şirketlerle yaptıkları sözleşmelerde Türkçe kullanımını zorunlu tutmaktadır. Bu durum günümüzde giderek tercih edilme oranı yükselen tahkim anlaşmalarında Türkçe’nin bir geçerlilik şartına dönüşmesine sebep olmakta ve doktrinde tartışılmaktadır. İstanbul Bölge Adliye Mahkemesi’nin Şubat 2020’de verdiği kararlarıyla konu bir kez daha gündeme gelmiştir.

Söz konusu kanunun ilk maddesi gereği “Türk tabiiyetindeki her nevi şirket ve müesseseler, Türkiye dahilindeki her nevi muamele, mukavele, muhabere, hesap ve defterlerini Türkçe tutmağa mecburdurlar”. Buna göre, Türk tabiiyetindeki her şirket ve müessesenin, buna şahıs şirketleri de dahil olmak üzere, Türkiye’de yapacakları tüm işlemleri, sözleşmeleri, iletişimleri ve tutacakları hesap ve defterleri Türkçe düzenlemeleri mecburidir.

Bu zorunluluk, Türk şirketlerin, Türkiye içinde etki doğuracak bir iş için, yabancı şirket ve müesseselerle yapacakları işlem, sözleşme, iletişim ve tutacakları hesap ve defterleri de kapsamakta ancak, bir Türk şirketin yurt dışında yapacağı bir sözleşmeyi, bu sözleşmenin hüküm ve sonuçları Türkiye’de doğsa dahi kapsamamaktadır. Keza, Türk tabiiyetindeki şirket ve müesseselerin yurt dışındaki şube ve kuruluşlarıyla yapacakları işlemleri veya yurt dışında yapacakları başkaca işlemleri kapsamamaktadır.

Kanun ikinci maddesinde, “Ecnebi Şirket ve müesseseler için bu mecburiyet Türkiye müessesatı ile ve Türkiye tebaasından olan efrat ile muhabere, muamele ve temaslarına ve devair ve memurini Devletten birine ibraz mecburiyetinde bulundukları evrak ve defterlerine hasredilmiştir” demekle söz konusu zorunluluğun Türkiye’de bulunan yabancı şirketler için kapsamını düzenlemiştir.

Buna göre, söz konusu Türkçe kullanımı zorunluluğu işbu yabancı şirketler için Türk resmi makamları nezdinde sunacakları evrak ve defterlerle sınırlandırılmıştır. Ancak, söz konusu yabancı şirketlerin Türk tabiiyetindeki şirketler ve Türk vatandaşları ile yapacakları işlem, iletişim ve temaslar için yine Türkçe kullanımı zorunludur. Bu zorunluluk Türkiye sınırları içinde olsa dahi yabancı şirketlerin kendi aralarındaki işlemler veya iç yazışmaları için aranmamakta fakat, bu çeşit evrakın Türk makamlarına sunulması durumunda Türkçe olması zorunluluğu bulunmaktadır.

Bunlara ek olarak Kanun’un üçüncü maddesi, yabancı şirketlerin Türkçe ile birlikte başka bir dilde de evrak hazırlayabileceklerini ancak imzaların Türkçe evrakın altına atılması gerektiğini, fakat “imza diğer lisanla yazılmış kısım veya nüshanın altına mevzu olsa dahi Türkçesi muteberdir” diyerek Türkçe belgenin geçerli kabul edileceğini düzenlemiştir.

Zaman içinde Yargıtay, 805 sayılı Kanun’a dayanarak pek çok karara imza atmıştır. Bunlardan 11. Hukuk Dairesi’nin 2009/2051 E. ve 2009/5292 K. sayılı 4.05.2009 tarihli kararında bir yanın gerçek kişi öteki yanın Türkiye’deki bir banka olduğu olayda taraflar arasında bankanın Bahreyn’deki şubesine para transferi için vadeli/spot alım satım işlemleri sözleşmesinin İngilizce olarak düzenlenmesinin 805 sayılı Kanun’un birinci maddesine aykırı olduğu ve aynı kanunun dördüncü maddesi gereği bu belgeye mahkeme karşısında dayanılamayacağı hüküm altına alınmıştır. Yine, Yargıtay 13. Hukuk Dairesi’nin 2003/3773 E. ve 2003/8176 K. sayılı 23.06.2003 tarihli kararında aynı kanunun birinci maddesine atıfla taraflar arasındaki kayıt ve defterlerin Türkçe tutulması zorunluluğuna dikkat çekilmiştir.

805 sayılı Kanun’un uygulaması bu kararlar ışığında gelişmekteyken söz konusu hükümlerin iki tarafın da Türk tabiiyetindeki müesseseler olduğu ve taraflardan birinin yabancı bir şirket olduğu durumlarda tahkim anlaşmalarına etkisi son zamanlarda irdelenmiş ve tartışma konusu olmuştur. Bu bağlamda, İstanbul Bölge Adliye Mahkemesi’nin 12. Hukuk Dairesince aynı tarihte verilmiş iki güncel kararın incelenmesi, yasanın tahkim anlaşmalarına etkisini anlayabilmek için önem arz etmektedir.

İstanbul Bölge Adliye Mahkemesi’nin 12. Hukuk Dairesi önüne getirilen 2019/2389 E. sayılı dosyada her iki tarafın da Türk tabiiyetine tabi bir şirket olduğu çarterparti anlaşmasında yer alan yabancı dilde yazılmış bir tahkim şartının geçerliliği sorgulanmıştır. Buna göre, ilk derece mahkemesi söz konusu tahkim şartını geçerli kabul edip davalı tarafın tahkim ilk itirazını yerinde bularak yargılamayı sonlandırmış, davacı taraf tahkim şartının geçerli olmadığı yönündeki itirazıyla istinaf yargı yoluna başvurmuştur.

İstanbul BAM 12. Hukuk Dairesi 13.02.2020 tarihli ve 2020/189 K. sayılı kararında “Ancak çaterpartinin her iki yanının da Türk tabiiyetindeki şirketler olduğu anlaşılmaktadır” diyerek 805 sayılı Kanun’un birinci maddesine atıf yapmış ve bu madde uyarınca Türk şirketlerinin Türkiye’de akdettikleri sözleşmelerde Türkçe’nin kullanımının zorunlu olduğu, bu zorunluluğa uyulmamasının aynı kanunun dördüncü maddesi gereği sözleşmeyi geçersiz kılacağını belirtmiştir. Bu dayanakla, “çarterpartinin her iki yanı Türk uyruklu olduğu halde yabancı dilde düzenlenmesi nedeniyle geçersiz bulunduğundan” tahkim ilk itirazının reddedilmesi ve yargılamaya devam edilmesi gerektiği yönünde karar vererek ilk derece mahkemesinin kararını bozmuştur.

Yine aynı maddeyle ilgili olarak, İstanbul Bölge Adliye Mahkemesi’nin 12. Hukuk Dairesi önüne getirilen 2020/19 E. sayılı dosyada davacı taraf 805 sayılı Kanun’un birinci maddesine atıfla bir tarafın Türk tabiiyetinde bir şirket diğer tarafın yabancı bir şirket olduğu olayda taraflar arasında yabancı dilde yapılan tahkim anlaşmasının hükümsüz olduğunu öne sürmüş ve diğer yanın tahkim ilk itirazının reddini talep etmiştir.

İstanbul Bölge Adliye Mahkemesi’nin 12. Hukuk Dairesi, 13.02.2020 tarih ve 2020/19 K. sayılı kararında söz konusu kanunun birinci ve ikinci maddelerinde yer alan düzenlemeler arasındaki farka dikkat çekerek taraflardan birinin yabancı olduğu olayda tahkim şartını içeren sözleşmenin 805 sayılı Kanun’un birinci maddesi kapsamında olmayacağı sonucuna varmış ve talebi reddederek tahkim ilk itirazını yerinde bulmuştur.

Aynı hukuk dairesi tarafından verilmiş iki farklı kararın ilkinde her iki taraf Türk tabiiyetinde şirketler olduğundan tahkim anlaşmasının Türkçe yapılmış olması geçerlilik şartı olarak aranmış, ikincide taraflardan biri yabancı bir şirketse tahkim anlaşmasının yabancı dilde olması yasaya aykırı bulunmamıştır.

Söz konusu ilk karar kanunun gerekliliği olarak yorumlanmakla, ikinci kararın tahkim dostu bir yaklaşım oluşturduğu yorumları yapılmıştır. Ancak, dikkat edilmesi gereken söz konusu ikinci kararda davacı yanın tahkim ilk itirazının reddi için dayanak olarak 805 sayılı Kanun’un birinci maddesini öne sürmüş olması ve 12. Hukuk Dairesi’nin bu madde çerçevesinde taraflardan birinin yabancı olduğu sözleşmelerin madde kapsamında olmayacağına hükmetmiş olmasıdır. Öyle ki, mahkeme karar metninde 805 sayılı Kanun’un birinci ve ikinci maddesini kıyaslamış olup eğer davacı yan talebine dayanak olarak Türk şirketler ve yabancı şirketler arasındaki belgelerin diline ilişkin ikinci maddeyi öne sürmüş olsaydı farklı bir karar çıkıp çıkmayacağı tartışılmaktadır.

UNCITRAL Arbitration Rules, following the recognition of arbitral tribunals’ competence to grant interim measures, and it can be deducted from its definition in Article 26 that an interim measure, just like its equivalent in the domestic litigation, can be ordered by an arbitral tribunal before the final decision on the case.

Accordingly, such an order of interim measures can ask a party of the dispute to maintain the status quo or restore it until a final decision is given, take necessary action to prevent any current or imminent harm or prejudice to the arbitral process, or refrain from taking such action which may be the cause of harm, provide preserving assets from which an award may be satisfied, or preserve evidence material relevant for the dispute resolution.

As of late 1990s and early 2000s, there has been an outstanding increase in the number of parties who seek interim measures from arbitral tribunals. In time, this increasing trend has found its place in the rules of other arbitral institutions, as well.

Arbitration Rules of ICC has regulated conservatory and interim measures under its Article 28 as “Unless the parties have otherwise agreed, as soon as the file has been transmitted to it, the arbitral tribunal may, at the request of a party, order any interim or conservatory measure it deems appropriate”.

This regulation in the ICC Rules was one of the latest additions in the trend as interim measures competence of arbitral tribunals were added into the rules of LCIA in 2014 and SIAC in 2016. These rules also recognize interim measures ordered by national courts for a case whose merits are being made subject of arbitration at a later stage.

For conditions that have to be satisfied in order to request an interim measure from an arbitral tribunal, the UNCITRAL Model Law (Article 17A) asks from the party requesting such measure to show that there exists a harm which outweighs possible harm that the other party may endure if the measure is granted and that harm may not be adequately reparable if the measure is not ordered. Further, there has to be a reasonable possibility indicating that the party requesting for such measures will succeed at the end of the arbitral process.

Urgency factor of interim measures led to regulations on ‘emergency arbitrators’. This was the case in Kompozit LLC v. Republic of Moldova (SCC Arb. EA 2016/095, 2016) where the claimant requested an emergency award for interim measures and for this request the Stockholm Chamber of Commerce appointed an emergency arbitrator. Such procedure is also regulated under the arbitration rules of international institutions, as Article 29 of the ICC Rules sets an example by expressing that “A party that needs urgent interim or conservatory measures that cannot await the constitution of an arbitral tribunal (“Emergency Measures”) may make an application for such measures…”.

The decision given by an emergency arbitrator also takes the form of an order with which parties undertake to comply however, the arbitral tribunal is not bound by this decision. This procedure is further regulated in Article 9B of the LCIA Rules of 2014 and also in Rule 30 and Schedule 1 of the SIAC.

What is still debatable about the interim measures ordered by an arbitral tribunal is their enforceability. It is safe to state that there is yet no international agreement regulating the enforcement of interim measures ordered by an arbitral body. In this absence, enforcement of such measures is generally handled by bilateral treaties among states and in some cases, by the regulations of national laws.

While the New York Convention is considered as a ground to claim enforcement of such orders on interim measures, the text of the New York Convention does not include any reference to interim or conservatory measures within its scope of application. UNCITRAL Model Law (Article 17H), on the other hand, regulates that “An interim measure issued by an arbitral tribunal shall be recognized as binding and, unless otherwise provided by the arbitral tribunal, enforced upon application to the competent court, irrespective of the country in which it was issued”.

The situation in Turkey is regulated both under the Turkish International Arbitration Law No. 4686 of 21 June 2001 and the Arbitration Rules of the Istanbul Arbitration Centre (ISTAC). As in line with the rules of international bodies, the Turkish International Arbitration Law (Article 6) does not find it incompatible with an arbitration agreement when a party of the dispute requests interim measures from a court, before or during the arbitration proceedings.

As it recognizes the competence of the arbitral tribunal to issue orders on “interim measures of protection or an interim attachment during arbitral proceedings” upon the request of a party. However, it underlines that the arbitral tribunal shall not issue such orders “that are required to be enforced through execution offices or to be executed through other official authorities or that bind third parties”.

The Turkish law allows the party which requested the interim measure to apply to a competent court for assistance when the other party fails to comply with those interim measures. While the Turkish law reserves the rights of parties to issue their requests in accordance with the Turkish Code of Civil Procedure and the Turkish Code of Execution, it also emphasizes that any such decision given by a national court ceases to have effect where an arbitral decision becomes enforceable or where the arbitral tribunal rejects to hear the case in its decision.

ISTAC Arbitration and Mediation Rules (Article 31), on the other hand, allows a party of a dispute to apply to its Secretariat in order to initiate the Emergency Arbitrator Procedure, as regulated within the Annex I of the ISTAC Rules, when the situation is so urgent that that party cannot wait for the sole arbitrator or the arbitral tribunal to begin its duty.

However, it also recognizes the competence of the sole arbitrator or the arbitral tribunal to issue orders on interim measures, upon the request of a party. ISTAC Rules, just like the Turkish International Arbitration Law recognizes the right of parties to apply to a national court for interim measures and does not consider it as incompatible with or as waiver of the arbitration agreement.

Law, as well as all other disciplines, could not stay immune from adopting itself to the world-wide technological evolution and digital transformation. Global effects of the Covid-19 pandemic fostered this adaptation by moving legal processes into online platforms. Arbitration is one of these legal processes that is affected from the Covid-19 pandemic and adopted itself into technological developments. Below is an overview of arbitration hearings and how they are conducted online in today’s world.

Arbitration, as a dispute resolution mechanism, sets an alternative to litigation before domestic judiciary. It is conducted through an arbitral tribunal that consists of a single arbitrator or a panel of arbitrators who are appointed by the parties of the dispute or an international mechanism. As this brings a neutrality element to arbitration, parties of a legal relationship may agree to solve any dispute arising among them as regards to this relationship through the way of arbitration.

Such an agreement between the parties can be formed before or after the occurrence of a dispute. Along with agreeing on arbitration as the dispute resolution method, parties are also free to determine the rules applicable to the arbitration proceedings and the seat of arbitration. It is this emphasis on the will of the parties to freely determine the applicable law and the seat of arbitration that allows them to agree also on the conduct of arbitration hearings online.

Conducting arbitration hearings online became essential, especially for international arbitration, with the restrictions introduced globally due to the Covid-19 pandemic. UNCITRAL Rules requires a foreign element within the contract between parties of a dispute in order to categorize an arbitration as international. This foreign element can be satisfied, inter alia, with a difference on the nationalities of parties or the location of seats of businesses.

As parties of an international arbitration tend to agree on a third country as the seat of arbitration, for neutrality purposes, restrictions, such as those on travel, caused by the Covid-19 pandemic. Since these restrictions make it unbearable for parties that choose a third state as the seat of arbitration to attend hearings, it has become inevitable to have online hearings and adapt regulations on arbitration accordingly.

Some examples from the regulations made by arbitration institutions to allow conducting hearings online are as follows:

Istanbul Arbitration Center (ISTAC)

ISTAC in Turkey published “Online Hearing Rules and Procedures” for the online arbitration process. According to Article 2 of the Rules and Procedures, “At the request of any party or in cases where the Sole Arbitrator or the Arbitral Tribunal deems appropriate, hearings or meetings may be conducted through video conference or teleconference.” In accordance with these rules and procedures, a sole arbitrator or a panel of arbitrators, by taking the opinions of the parties, can determine the software of the online hearing, confidentiality and security measures, and other issues before conducting the hearing.

Then, the sole arbitrator or the panel prepares the technical infrastructure for the online hearing and shares it with the parties. In this case, submissions of documents can be done electronically upon the permission received from the sole arbitrator or the panel. Likewise, the sole arbitrator or the panel can also decide to record the audio of the hearing with the permission of the parties and then to transcript them into written records, at the expense of the parties.

Hong Kong International Arbitration Center (HKIAC)

HKIAC gives importance to the online arbitration system and has published a guideline for virtual hearings. The parties can choose the online procedure by filling out the online virtual hearing inquiry form or contacting directly to the arbitration center. HKIAC provides an IP-based video conference system that can support up to eight different locations, a Cloud-based video conference system that is compatible with all major video conference platforms, and flexible pricing options. And for the audio conference, it provides high-speed connection to more than 80 countries and supports up to 30 lines.

International Centre for Settlement of Investment Disputes (ICSID)

ICSID is another institute that provides services for online arbitration as “available in ad-hoc proceedings under UNCITRAL and other non-ICSID sets of rules at competitive rates”. ICSID, additionally, provides dedicated support, high-definition audio and video, real-time document display, virtual chat function, World Bank Group’s stringent security, virtual court stenographer. ICSID uses Cisco’s Webex platform for online hearings.

It is clear from these observations that the requirements of our age and changes in technology are affecting legal processes while arbitral institutions are adapting themselves according to these developments. It still however, needs further steps as there is need for more guidelines on online arbitration, together with more available platforms for virtual hearings.

Introduction

The use and popularity of international commercial arbitration in Turkey has been increasing since the 2000s due to the increase in the globalization of trade and cross-border disputes involving Turkish businesses. This development has been accompanied by significant changes in Turkish legislation that reflect pro-arbitration policies endorsed by Turkey. Today, many complex and cross-border disputes relating to key industries such as energy, telecommunications, IT, infrastructure, intellectual property and construction, where one of the parties is Turkish, are routinely referred to international arbitration. Following a brief overview of this mechanism, we examine the developing relationship between Turkey and international commercial arbitration below.

Arbitration: Private International Commercial Dispute Resolution

Arbitration, as is well known, is a dispute resolution process, based on a private agreement between the parties, whereby one or more independent individuals are called upon to resolve a certain dispute in a final and binding manner, by applying the law that is chosen by the parties.

Advantages of Arbitration over Litigation

The perceived advantages of arbitration makes it the preferred means for international commercial dispute resolution. These advantages may be listed as follows:

Flexibility:

One of the essential characteristics of the arbitration process is the use of flexible procedures.  In contrast to national courts that are bound by rigid procedural rules, arbitration tribunals can decide on the organization of proceedings by taking into account the parties’ wishes and their underlying dispute for a fair and cost-efficient resolution of the dispute. The party autonomy principle underlies the whole arbitral process. It is the agreement of the parties that establishes the jurisdiction of the arbitrators, that determines the extent of their powers, the procedure, the seat and the language of the arbitral process, and the law applicable to the merits of the dispute.

The law that is applicable to the merits of an international dispute may be the law of a state, or legal principles not connected to any state’s legal order. One may add to the above that arbitral institutions are demand-driven and can respond more quickly to the changing needs of businesses, as we see in the innovative measures taken by arbitration institutions such as ICC, CAM and the Turkish international arbitration center, ISTAC during the Covid-19 pandemic.

Confidentiality:

Although there is no legally-enforceable guarantee of confidentiality in international arbitration, arbitral proceedings are, in principle, confidential. This confidentiality may extend to the very existence of the arbitration itself. Therefore, it is substantially more likely to produce a non-public process than national court litigation.

Neutrality:

Neutrality is a major concern for claimants in international litigation. Even where the judge is perfectly impartial, having to pursue a case according to the procedure and rules of the counterparty’s jurisdiction creates an additional challenge for foreign parties. This is what the parties can avoid by choosing arbitration, where they are provided with a neutral forum for dispute resolution, with the opportunity to present their cases to an objective and impartial tribunal.

Expertise:

In commercial arbitration, the parties have the ability to choose arbitrators having the required expertise, which is better suited for resolving complex technical, scientific or industrial disputes than resorting to court litigation, where judges, who may have little or no experience in the relevant fields, are randomly assigned to cases.

Ease of Enforcement:

1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, coupled with the policy around the world towards favorable treatment of international commercial arbitration awards makes it much easier for an arbitral award to be enforced in another country than court judgments. The arbitration laws of a large number of countries based on the UNCITRAL Model Law on International Commercial Arbitration provide for ready enforcement of arbitration agreements, court assistance with the conduct of arbitral proceedings and less court interference with arbitral proceedings.

Arbitration and Turkey

Previously, the use of arbitration was limited in Turkey. Although Turkey has been a signatory to the New York Convention, the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), the European Convention on International Commercial Arbitration and many bilateral investment treaties that foresaw international arbitration for dispute resolution, no distinction was initially made between domestic and international arbitrations.

Following the enactment of the Turkish International Private and Procedural Law, the conditions for the recognition and enforcement of foreign arbitral awards were aligned with Article V of the New York Convention, however, in practice, parties still faced strict and complicated procedures.

History of Arbitration in Turkey

The first major shift in Turkey’s approach towards arbitration was reached when the constitutional amendment in 1999 made it possible for concession contracts to contain arbitration clauses. This amendment allowed inserting international arbitration clauses into public infrastructure agreements entered into between foreign investors and the Turkish state.

With the adoption of the International Arbitration Act based on UNCITRAL Model Law on International Commercial Arbitration in 2001 and the regulation of domestic arbitration in the Turkish Procedural Code, Turkey endorsed a contemporary system of domestic and international arbitration, according to which arbitrations with their seat in Turkey and that contain a “foreign element” as specified in the law fall under the scope of the International Arbitration Act.

Legal Framework

According to this legal framework, all disputes that do not concern the in rem rights of immovables or the disputes subject to the parties’ disposal are arbitrable. While this means that disputes arising from family law, criminal law, administrative law, employment and consumer claims and bankruptcy cannot be settled by arbitration, commercial matters are resolvable by way of arbitration. In the case of international arbitrations that are covered by the International Arbitration Act, courts are allowed very limited grounds to interfere with the awards and they are under a general obligation of expediency and support.

Another significant step in Turkey’s consistent move towards becoming a truly arbitration-friendly jurisdiction was taken in 2015 with the establishment of ISTAC as Turkey’s international arbitration institution by Law No. 6570, to handle the resolution of both domestic and international disputes through arbitration or an alternative dispute resolution method. ISTAC rules contain provisions familiar to international arbitration practitioners, including modern instruments such as rules on emergency arbitration and fast-track arbitration for smaller claims.

ISTAC

Since its establishment, ISTAC has been showing steady progress in becoming an international center for handling arbitration cases with parties from different jurisdictions. The Center is also promoted by the Turkish government as part of arbitration friendly policies and regulations, according to which all public authorities should contemplate including arbitration clauses that refer to ISTAC in their domestic and international agreements and, within the scope of Public Procurement Law, in disputes with a foreign element, they have a choice of referring disputes to arbitration under ISTAC Rules or the provisions of the International Arbitration Act instead of national courts.

SUMMARY

As a result of all the pro-arbitration efforts outlined above, Turkey is now an arbitration friendly jurisdiction with a modern international arbitration law on par with other major jurisdictions. The advantages of arbitration as a dispute resolution method for the cross-border operations of Turkish businesses and state institutions alike also induce Turkish parties in key industries to choose arbitration for dealing with their disputes. It must also be mentioned that Turkey’s unique location and its close commercial and historical ties with both Eastern and Western countries present a great opportunity for Turkey to become a significant arbitration hub for international business.

Needless to say, when doing business in Turkey it is very important to receive the best legal services possible to ensure long-term business relationships. Lawyers that are well acquainted with key industries with a good understanding of the local business culture and an extensive experience in handling international arbitration cases can provide the most efficient legal assistance in every step of commercial transactions, from contract negotiations to dispute avoidance to dispute resolution.

Introduction

Arbitration is a private dispute resolution mechanism by an independent and impartial arbitrator based on the parties’ consent and backed by an international system of enforcement supported by States. International arbitration has become the principal method of resolving disputes between states, individuals, and corporations in almost every aspect of international trade, commerce, and investment.

With its widespread importance in the present world where commercial life demands a quick and timely resolution of disputes, international arbitration is overwhelmingly preferred by businesses due to its perceived qualities, such as speed, confidentiality, procedural flexibility, expertise and ease of enforcement.  In international arbitration, parties can determine the number of arbitrators of the tribunal, the procedure for selecting arbitrators, the place of arbitration, the applicable law, and the tribunal’s powers. Moreover, arbitration provides businesses with access to a system for adjudicating disputes that are largely similar irrespective of where the dispute may arise.

If the parties choose to resolve their commercial disputes by way of arbitration, this will remove the courts’ jurisdiction and the case must be decided by arbitrators.

Our firm has significant experience in international arbitration and other forms of alternative dispute resolution. Our attorneys act as counsel in high–value arbitrations before[sd1]  leading arbitration institutions, including the ICC and Milan Chamber of Arbitration. We have a dedicated team with specific expertise to meet our clients’ expectations and handle complex matters before international tribunals. 

Arbitration and Turkish Law

Turkey has a modern arbitration legislation and a signatory to the 1958 UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), which is applicable in Turkey since 1992. Thus, the recognition and enforcement of arbitration awards rendered outside Turkey are subject to the New York Convention.

International Arbitration Code No. 4686: If the dispute subject to arbitration involves a foreign element and the seat of arbitration is Turkey, then this arbitration is governed by the International Arbitration Code No. 4686, which is based on the UNCITRAL Model Law and some provisions of the Swiss Private International Law.

Foreign Element: According to the International Arbitration Code, for an arbitration to be international and thus be subject to the provisions of the Code, it has to involve a foreign element; which is deemed to be present when:

• The parties to the arbitration agreement have their domiciles or habitual residences or places of business in different States,
• The seat of arbitration, the place where the substantial performance of the contract is to take place or where the dispute has the closest connection is outside the State in which the parties have their domiciles, habitual residences or places of business,
• A shareholder of a company that is a party to the arbitration agreement has brought foreign capital into Turkey, or, for the execution of the underlying contract, a loan agreement has to be concluded for obtaining foreign capital,
• As per the underlying legal relationship, capital or goods must be moved from one country to another.

Arbitrability under International Arbitration Code: Pursuant to Article 1 of the Code, disputes relating to rights in rem concerning immovable properties located in Turkey and disputes that are not within the parties’ disposal are not suitable for arbitration. Disputes that are not within the parties’ disposal include disputes relating to family law, administrative law, criminal law, bankruptcy law and, to a large extent, employment law.

Appointment of Arbitrators under the International Arbitration Code: The Code contains default provisions as regards the appointment of arbitrators, in the event that the parties fail to decide on their arbitrators. And it should be reminded again that the Code is applicable for cases which have their seat in Turkey.

According to the Code, if the number of arbitrators is not determined, the tribunal shall consist of three arbitrators. If the parties cannot agree on the sole arbitrator, the appointment shall be done by the civil court of the first instance upon the request of one of the parties.

In case of a three arbitrator tribunal, each party shall appoint their arbitrators, who will then determine the third arbitrator to act as a chair. If one party does not appoint its arbitrator within the envisaged 30 days upon notification of the arbitration or the two arbitrators fail to agree on the third arbitrator, then the relevant civil court of the first instance is to make the appointments upon request of a party.

Validity of Arbitration Agreements in Turkey

According to the International Arbitration Code, the validity of the arbitration agreement is subject to the law agreed by the parties or, if there is no such law, to Turkish law. There are a few issues particular to Turkish law and the practice of the courts relating to the validity of arbitration agreements in setting aside or recognition and enforcement proceedings.

(i) Language of the Arbitration Agreement: According to the Law regarding Mandatory Use of Turkish in Economic Establishments, foreign companies must execute their contracts in Turkish when contracting with a Turkish company. Otherwise, there is a risk that the contract which entails the arbitration clause will not be taken into consideration to the benefit of the company. Therefore, in drafting contracts with an arbitration clause involving a Turkish company, it is advisable to draft in both Turkish and the foreign language.

(ii) Form of the underlying contract: If the underlying contract featuring the arbitration clause is subject to an official form (notarisation, transactions before land registry or trade registry) under Turkish law, such as contracts for the sale of immovable properties, motor vehicles, ships or aircraft, share sale agreements for limited companies and movable pledge agreements, then this form must be complied with to ensure the validity of the agreement to arbitrate.

(iii) Clear intention to arbitrate: To ensure the validity of the arbitration agreement, parties must draft their arbitration agreements or clauses carefully, so as to avoid any uncertainty regarding their intention to arbitrate. This is because, departing from the increasing tendency of many jurisdictions that favour upholding arbitration clauses even when they are unclear, the Turkish Court of Cassation consistently decides that the intention to arbitrate must be explicit, absolute, and certain.

Setting Aside of Arbitral Awards in Turkey

The losing party of an arbitral award, wishing to resist its execution in Turkey may apply to the regional courts of appeal in the place where the civil courts of the first instance who were competent to decide on claims relating to e.g. the validity of arbitration agreement, appointment and the challenge of arbitrators and collecting evidence are located, within 30 days from the notification of the award under the International Arbitration Code. The application for setting aside suspends the execution of the arbitral award, however, the applicant must deposit security.

It is a well-established principle of international arbitration law that there should be no review of the merits of the case during recognition and enforcement proceedings. In line with this principle, the Turkish Court of Cassation explicitly acknowledges the prohibition on the review of the merits. In addition, challenges to arbitral awards based on public policy are very rarely allowed.

Decisions of the regional courts of appeal on setting aside are subject to appeal under the Code of Civil Procedure.

Recognition and Enforcement of Arbitral Awards in Turkey

Turkey is a signatory to the New York Convention. Thus, arbitral awards rendered outside Turkey are to be recognized and enforced through the Convention, to the extent that the State where the award was rendered is also a signatory to the Convention. Where the New York Convention is not applicable due to the reservation mentioned, foreign arbitration awards are recognized and enforced under the International Private and Procedural Law No. 5718, whose provisions are very similar to the New York Convention.

The party wishing to have a foreign arbitral award recognized or enforced in Turkey must apply to the civil courts of the first instance with the original or certified copies of the arbitration agreement and the finalised award, together with their certified (notarised) Turkish translations.

It is a well-established principle of international arbitration law that there should be no review of the merits of the case during recognition and enforcement proceedings. In line with this principle, the Turkish Court of Cassation explicitly acknowledges the prohibition on the review of the merits. In addition, challenges to arbitral awards based on public policy are very rarely allowed.

After the court decides that the award is enforceable, the winning party can initiate execution proceedings based on the arbitral award.

General Procedures regarding ADR in Turkey

While the main Alternative Dispute Resolution in Turkey is arbitration, mediation is also becoming increasingly popular. Turkey continues to integrate mediation as an alternative dispute resolution method. From 1 January 2019, a mandatory mediation process has been introduced for monetary claims in commercial disputes as a prerequisite to applying to the commercial courts. This was following the introduction of a mandatory mediation mechanism for certain employment disputes from 1 January 2018.

Pursuant to the Law on Labor Courts and the Turkish Commercial Code, failure to mediate these disputes prior to litigation will result in the underlying cases’ rejection by the courts. The legislation governing mediation procedures is the Law on Mediation in Legal Disputes No. 6325. According to this Law, parties in a dispute can initiate mediation before or during legal proceedings. In addition, as per the Civil Procedural Code, judges have to encourage parties to settle disputes by way of mediation before initiating a lawsuit.