Tem-Ağu 2019

Turkey in international arbitration area

(Attn. Güniz Çiçek)

Arbitration means resolving the disputes between parties as final by the experts in that field rather than state courts in general terms. Also, it responds to the needs of the business life, relatively faster than state courts, specialized, flexible, effective, and least-cost judicial remedy. The arbitration awards determined by arbitration are executed by enforcement offices as in court orders. Also, arbitration, different from the state judicial system, is not public. Therefore, it is not possible that third persons who are not related to this dispute to get information about the cause and details.

Especially in international agreements, the parties may not completely trust the other party’s legal system. Therefore, it is important for the parties that solving the disputes by an internationally accredited institution and within international rules. That is why it is commonly observed that in international agreements that depending on the agreement content it was preferred internationally accepted arbitration institutions and rules. Because the arbitration is a fairer and more trustworthy option for both parties.

Another advantage of arbitration is that it enables the dispute to be solved by experts. As is known, disputes are solved by authorized and competent courts instate trials. Under normal circumstances, it is not possible for either of the parties to choose the court or judge that will solve the dispute. On the contrary, in arbitration, the parties can determine a person or persons who are knowledgeable, expert, and experienced in the field of dispute subject as the arbitrator, in the local or international arena.

On the other hand, it was always discussed whether the arbitration is an expensive judicial remedy or not. In general, arbitration is a least-cost solution in bigger disputes compared to state courts, while it is a more expensive judicial remedy in smaller disputes, again compared to state trials. But again, even though the litigation costs of arbitration seem like it is higher than the general courts, it is considered a more economical solution in many times because it finalizes the dispute in a shorter time and it is more suitable for the speed and developments in business life and the expectations of the parties.

Legislations Regarding International Arbitration

Turkey has fit to the speed and efficacy of international trade and rendered its local legislation to be applicable for international arbitration. In this scope, Turkey has signed many international agreements regarding arbitration and put many laws into action.

Our laws in force regarding the international arbitration; International Arbitration Act numbered 4686, Code in Relation to the Rules to be Followed while Referring Disputes Arising from Concession Licenses and Agreements related to Public Service to Arbitration numbered 4686, Code of Civil Procedure numbered 6100, Law on Istanbul Arbitration Center.

The following are the main International Agreements about Arbitration that Turkey is One of the Parties; New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards dated June 10, 1958, Geneva-European Convention on International Commercial Arbitration dated April 21, 1961, Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID), Washington Convention on the Settlement of Investment Disputes.

On the other hand, Turkey has understood the importance of arbitration in the national or international area earlier than many countries and within this scope, arbitration centers such as Istanbul Arbitration Center (ISTAC) and Istanbul Chamber of Commerce Arbitration and Mediation Center (ITOTAM) have come into effect.

With being part of New York, European International Commercial Arbitration, and Washington Convention on the Settlement of Investment Disputes and also the international agreements are statutory as pursuant to the Constitution, and lastly the International Arbitration Act that is prepared according to UNCITRAL Model Ordinance becoming law in 2001, Turkey offers faster solution in solving the commercial disputes and getting more attractive for foreign investors.

Another important issue in the arbitration trials is the arbitration place. Arbitration trials that are held in places where anyone can easily access largely decreases the expenses. In this respect, Turkey has a potential of being an international arbitration center in the near future with its geographical location between the east and the west and understanding the two cultures and its modern legal system.

In order to appeal to arbitration in a dispute, an arbitration agreement has to be signed between the parties or arbitration clause should be included for solving the disputes in any agreement between them. An arbitration agreement must be in written form. According to article 4 of the International Arbitration Act, an agreement that made with the methods such as corresponding fax, in the electronic environment or telegram other than signature is also valid. This matter is reflected in Supreme Court decisions as well. Another important point is that the arbitration clause must be express, explicit, and certain. The phrases that can mean different things should be used in dispute solution method between the parties. Otherwise, the arbitration clause will become void.

On the other hand, not every dispute is a case for arbitration. The matters that cannot make an appeal to arbitration vary, but they are mostly the areas that are concerning public interest or the arbitration way is forbidden by law. When determining the arbitration clause, the parties firstly determine whether the agreement subject is applicable to arbitration or not, which system that the arbitration   is sufficient, the applicable rules, and the arbitration place by considering the subject of the agreement and the qualification and quantity of the possible disputes. Therefore, when preparing the agreement, working with expert attorneys and creating an arbitration clause and determining the articles will always provide a big advantage to the parties.

Some of international agreements on arbitration that turkey is one of the parties are as below:

  • New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards dated June 10, 1958
  • Geneva-European Convention on International Commercial Arbitration dated April 21, 1961
  • Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID)
  • Washington Convention on the Settlement of Investment Disputes