Business Law Dersi 8. Ünite Sorularla Öğrenelim

Why do we need arbitration?

In an international commercial relationship, usually the parties are from different countries and different legal cultures, speaking different native languages. Contracting parties from one country are generally unwilling to submit to the national courts of the other party. There is often a distrust of foreign courts, and moreover a hesitation for their suitability for certain types of international contractual relationships. Therefore, arbitration, as an alternative dispute resolution method, flourished and bloomed for the resolution of international commercial disputes.

What are the significant legal consequences of the choice of the place of arbitration?

The choice of the place of arbitration has significant legal consequences. - It influences which law governs the arbitration procedure. Unless otherwise agreed upon by the parties, the legal provisions on arbitration of the place of arbitration are applied. - It determines which courts can exercise supervisory and supportive powers in relation to the arbitration. - It determines the competence and the procedure before the national courts to rule upon applications to set aside any arbitral award.

What happens if no application for setting aside of an arbitral award is made within the relevant time limit of thirty days, or denial of an application for setting aside becomes final and binding?

If no application for setting aside of an arbitral award is made within the relevant time limit of thirty days, or denial of an application for setting aside becomes final and binding, the party who wants the enforcement of the award may apply to the court of first instance to obtain a certificate for the enforceability of the award. This is called an exequator. No court charges are applicable to the issuance of an exequator. In granting an exequator, the court of first instance shall, on its own motion, review whether the subject matter of the dispute is capable of settlement by arbitration under Turkish law, or the award is in conflict with the public policy.

Why do we need mediation?

The Mediation Law is expected to reduce the workload of the judiciary and allow rapid, low-cost and effective resolution of civil law disputes as well as possible contribution to social peace.

Why can't a party to a labor dispute just ignore the mediation negotiations?

A party to a labor dispute may not just ignore the mediation negotiations even though he/ she is not willing to find a solution through mediation, because his/her non-attendance to the negotiations will be penalized at the end of the court proceedings.

Who has to sign the settlement agreement?

If the settlement agreement is signed only by the parties, that agreement needs an approval from the court in order to be enforced as a court judgment. A settlement agreement bearing the signatures of the parties, their lawyers and the mediator, may be enforced as a court judgment without any approval from a court.

What is Ad hoc arbitration?

Ad hoc arbitration: When parties are silent and have not selected an institutional arbitration, the arbitration will be ad hoc. While agreeing on ad hoc arbitration, the parties may agree on the arrangements for initiating the procedure, selecting the arbitrators, determining the procedural rules etc. Ad hoc arbitration is generally favored where the parties are unable to agree on the arbitration institution. When parties have opposing views as to which institution to choose, ad hoc arbitration is often the compromise. Another advantage of ad hoc arbitration is that it can be less expensive than institutional arbitration because fees of some institutions are very high.

What is Mediation?

According to Article 2/1/b of the Mediation Law, mediation is a dispute resolution method conducted voluntarily with the participation of an impartial and independent third person who has gone through a special training and who, by applying systematic techniques, is bringing the parties together to discuss and negotiate; ensuring mutual understanding between the parties and the development of a communication process in order for them to produce their own solutions, and who may suggest a resolution in case it becomes apparent that the parties may not find a mutual solution.

What are the effects of an arbitration agreement?

First, the arbitration agreement establishes an obligation to arbitrate between the parties. Second, an arbitration agreement vests the arbitrators with the necessary power to resolve those disputes that the parties agreed to entrust to the arbitral tribunal. Third, a valid arbitration agreement excludes the jurisdiction of national courts.

Who can be a Mediator?

According to Article 20 of the Mediation Law, only Turkish citizens, who are graduates of law faculties, and who possess at least five year experience in his/her profession, may be a mediator. The mediator shall also have full capacity, not be condemned due to an intentional crime, and finish the mediation training and pass the written exam to be conducted by the Ministry of Justice. In order to be a mediator, one has to be registered as a mediator in the relevant central registry. 

When was The Regulation on the Law on Mediation of Civil Law Disputes published? 

The Regulation on the Law on Mediation of Civil Law Disputes was published in the Official Gazette dated January 26, 2013 and entered into force on June 22, 2013.

In which circumstances is arbitration considered as "international"?

1. where the parties to the arbitration agreement have their domiciles or habitual residences or places of business in different States; 2. where one of the following is situated outside the State in which the parties have their domiciles or habitual residences or places of business; a. the place of arbitration, which is determined in, or pursuant to, the arbitration agreement; or b. a place where a substantial part of the obligations arising from the underlying contract is performed or a place where the dispute has the closest connection; 3. where a shareholder of the company which is a party to the underlying contract that constitutes the basis for the arbitration agreement has brought foreign capital into Turkey in accordance with the laws concerning the encouragement of foreign capital or where a loan and/or guarantee agreement needs to be signed for the execution of the underlying contract; 4. where, in accordance with the underlying contract or with the underlying legal relationship, the movement of capital or of goods shall be made from one country to another.

When was The Law on Mediation of Civil Law Disputes (“Mediation Law”) published in the Official Gazette?

The Law on Mediation of Civil Law Disputes (“Mediation Law”) was published in the Official Gazette dated June 22, 2012 and entered into force on June 22, 2013. 

How can an arbitral award set aside?

An arbitral award may be set aside where the party making the application furnishes proof that: 1. a party to the arbitration agreement was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under Turkish law; 2. the composition of the arbitral tribunal is not in accordance with the parties’ agreement, or, failing such agreement with the Law; 3. the arbitral award is not rendered within the term of arbitration; 4. the arbitral tribunal unlawfully found itself competent or incompetent; 5. the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration; 6. the arbitral proceedings are not in compliance with the parties’ agreement as to the procedure, or, failing such agreement, with the Law provided that such non-compliance affected the substance of the award; 7. the parties are not treated with equality An arbitral award may be set aside where the court, on its own motion or upon request of the claimant, finds that: 1. the subject matter of the dispute is not capable of settlement by arbitration under Turkish law; or 2. the award is in conflict with the public policy.

What are the forms of arbitration?

There are two basic forms of arbitration: ad hoc and institutional. The parties must choose which form they prefer while selecting arbitration.

What are the advantages of arbitration?

Neutrality: Parties to an international contract usually come from different countries and so the national court of one party will be a foreign court for the other party. The court will have its own formalities, and its own rules and procedures developed to deal with domestic matters, not for international disputes. The court will also have its own language. On the other hand, a reference to arbitration means that the dispute will be determined in a neutral place of arbitration, rather than on the home ground of one party or the other. Each party will be given an opportunity to participate in the selection of the arbitrators who will be independent and impartial. - Expert arbitrators: Particularly for disputes that are relevant with special sectors, parties are able to select arbitrators with expert knowledge on that sector. - Flexibility: Provided that the parties are treated fairly, an arbitral proceeding may be tailored to meet the specific requirements of the dispute, rather than conducted in accordance with fixed national procedural law rules usually unfamiliar to one or both of the parties. - Confidentiality: The privacy of arbitral proceedings and the confidentiality that surrounds the process are a powerful attraction to companies and institutions that may become involved in legal proceedings. There may be trade secrets or competitive practices to protect, or there may be a reluctance to have details of a commercial dispute being the subject of adverse publicity. - Expedition: Arbitration is quicker than national courts, especially those with a heavy burden of workload. - Enforcement: At the end of the arbitration, the arbitral tribunal will issue its decision in the form of an award. The outcome of the arbitral process will be a binding decision and not just a recommendation that the parties are free to accept or reject as they please. In its international enforceability, an award also differs from the court judgment, since the international treaties that govern the enforcement of an arbitral award have much greater international acceptance than do treaties for the reciprocal enforcement of judgments.

What is arbitration?

Arbitration is a specially established mechanism for the final and binding determination of disputes, concerning a contractual or other relationship, by independent arbitrators, in accordance with rules chosen by the parties.

What is Institutional arbitration?

Institutional arbitration: There are a large number of arbitration institutions. These institutions aim to provide arbitration services in order to assist with the conduct of the arbitration. These institutions have their own arbitration rules. Institutional arbitration is where parties prefer to enjoy the arbitration services provided by an institution, and choose to submit their disputes to an arbitration procedure under the rules of that institution. An advantage of institutional arbitration is the image behind the name of the institution. Especially in some countries where the courts or the laws are not arbitration-friendly, parties consider it beneficial when seeking to enforce an award that carries the name of an internationally respected institution. Another advantage of institutional arbitration is that, there is often an authority to apply for assistance. For example, if the parties cannot agree upon the name of the arbitrator, the institution helps with the resolution of this problem; hence, the parties do not have to resort to national courts whose decision will take longer to obtain. There are many international arbitration institutions. Some of the oldest and most professional ones may be listed as follows: International Chamber of Commerce International Court of Arbitration, London Court of International Arbitration, American Arbitration Association, Arbitration Institute of the Stockholm Chamber of Commerce. There are also arbitration institutions located in Turkey that provide international arbitration services. To illustrate: Union of Chambers and Commodity Exchanges of Turkey Arbitration Council, Istanbul Chamber of Commerce Arbitration Center, Istanbul Arbitration Centre.

What does the arbitration cost include?

The arbitral tribunal shall state the costs of arbitration in its arbitral award. The costs comprise of: 1. the fees of the arbitrators; 2. the arbitrators’ travel and other expenses; 3. the fees paid to the experts, and to the other persons whose assistance is sought and who are, collectively, appointed by the arbitral tribunal, and the costs for the site inspection; 4. the witnesses’ travel and other expenses to the extent approved by the arbitral tribunal; 5. if he/she is represented by a lawyer, the successful party’s attorney fees; 6. the charges to be made for the applications, when necessary, to the courts; 7. the notification expenses with respect to the arbitral proceedings (Article 16B).

What is an Arbitration Agreement?

The arbitration agreement is an agreement whereby two or more parties agree that a dispute which has arisen or may arise between them in connection with a particular legal relationship will finally be settled by one or more arbitrators.

What are the requirements of a valid arbitration agreement?

clause.” A valid arbitration agreement is subject to the following four requirements:

- The arbitration agreement must meet the requirements as to its form provided by the relevant law.

- The arbitration agreement must clearly indicate the parties’ consent to submit to arbitration certain disputes which have arisen or which may arise between them in respect of a defined legal relationship.

- It is required that the subject matter of the dispute can be validly submitted to arbitration.

- The parties to an arbitration agreement must have capacity to enter into an arbitration agreement on their own behalf; and/or the parties must be capable of entering into an arbitration agreement in the name and on behalf of another person or entity.

What is the definition of "arbitration agreement" in the Turkish International Arbitration Law?

Article 4/I of the Turkish International Arbitration Law defines an arbitration agreement as follows: “Arbitration agreement is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.”

When was The Turkish International Arbitration Law published?

The Turkish International Arbitration Law was published in the Official Gazette on June 21, 2001 and entered into force on July 5, 2001.