A Comparison Between the ICC and ISTAC

Sep 25, 2017

The fully established and modern Istanbul Arbitration Center (“ISTAC”) on 20/01/2014 has paved way for a reliable institution consisting of necessary arbitration expertise, high service procedures and flexible low fee structures. Located in İstanbul, ISTAC serves as a great midpoint internationally for clients from both the East and West. The launch of the Fast Track Arbitration mechanism and the Emergency Arbitrator system should serve as time-saving and commence faster arbitration proceedings in favor of the clients.

The ISTAC Arbitration Rules are heavily influenced by the ICC Arbitration Rules in order to maintain a high standard along with high profile arbitration centers around the world. This notably means that the structure is the same except for provisions concerning Fast Track Arbitration. The fact that ISTAC is similar to the ICC Arbitration Rules, is a sign of commitment to maintain a high standard and abide by the rich arbitration culture worldwide. Furthermore, Turkey has the necessary legislative regulations of enforcement as Turkey’s International Arbitration Code dated 2001 was drafted in accordance with the UNCITRAL Model Law and is party to both the New York Convention and Geneva-European Convention.

Legal Framework

While domestic arbitrations are subject to the Turkish Civil Procedure Code (No. 6100), international arbitration on the other hand is subject to the Turkish International Arbitration Law No. 4686 (“TIAL”). TIAL is highly influenced by the UNCITRAL Model Law and has similar approach to important key principles, such as equality and autonomy of the parties and the impartiality and independency of arbitrators. TIAL only applies when the nature of the dispute contains foreign elements and where the dispute is seated in Turkey.

Application & Registration fee

The process of submitting the Request for Arbitration is an easy two-step process where the claimant files a form on ISTAC’s website and pays the registration fee. Compared to the ICC, ISTAC not only provides the claimant to submit a “Request for Arbitration” online, it also gives the claimant the opportunity to directly submit a “Statement of Claim” to the Secretariat without the submission of a Request for Arbitration. The registration fee is notably a fixed price at TRY 300, despite the disputable amount between the parties.

While ICC gives the parties the choice of choosing either a “Sole Arbitrator” or an “Arbitral Tribunal” of three, ISTAC provides party autonomy for the parties to agree on the number of arbitrators. If the parties should not agree on the number of arbitrators, the Board shall by taking in all relevant circumstances and facts into consideration, decide if the dispute is to be resolved by either a Sole Arbitrator or by an Arbitral Tribunal consisting of three arbitrators. ISTAC also provides access to arbitrators who are well-experienced in the field, thanks to its wide contact network.

Challenge of Arbitrators & Waiver

Similar to the ICC rules, ISTAC provides the opportunity to challenge an arbitrator. The request to challenge an arbitrator must be submitted within 30 days from the parties’ notification of either choice or appointment of arbitrator. Waiver must as well, be raised if any party has any objections against the proceedings of the arbitration.

Competitiveness on Costs

The benefit for parties to choose arbitration over litigation saves both time and money. Therefore, in order to attract market players, ISTAC has introduced a flexible and low-fee structure, compared to regional and international arbitration bodies in order to avoid high costs. ISTAC’s costs and fees can be reviewed in “Istanbul Arbitration Centre Rules on Costs and Fees Scales” (Appendix-3) in the ISTAC Arbitration Rules.

Fast-Track Arbitration

Unlike any other international arbitration institute, ISTAC has introduced a unique Fast Track System “ISTAC Fast-Track Arbitration Rules” (“Fast-Track Arbitration Rules of ISTAC”) in order to enhance a speedy arbitration procedure. Since commercial courts are notorious for their slow-phased pace, Fast-Track Arbitration Rules of ISTAC serve as a faster and efficient dispute resolution solution for parties to conclude their disputes with shortened and simplified procedural rules. The ICC has also introduced Fast-Track Arbitration Rules with the latest Rules of Arbitration of ICC entered into force on 1 March 2017, which is long after the establishment of ISTAC. The Fast-Track Arbitration Rules of the ICC apply automatically if the disputable amount exceeds USD 2,000,000.00.

According to the ISTAC Arbitration Rules, unless the parties agree otherwise, the Fast-Track Arbitration Rules of ISTAC apply automatically if the total claim amount is less than TRY 300,000. Nevertheless, the parties can still opt-in to the Fast-Track Arbitration Rules of ISTAC even if the amount exceeds. Another beneficial advantage of the Fast Track Arbitration Rules of ISTAC is the rendered award within 3 months, which is final, binding and enforceable upon the parties.

Emergency Arbitrator

ISTAC has also been following the international trend and has also introduced the “ISTAC Emergency Arbitrator Rules” (“ISTAC Emergency Rules”). In regards of costs, the party who applies for the appointment of the “Emergency Arbitrator” must pay the amount of TRY 30,000 for the Emergency Arbitrator, and TRY 10,000 for the administrative costs of ISTAC. If no payment is made, the Secretariat shall dismiss the application. Compared to the costs of ICC, the ISTAC Emergency Rules are more cost-worthy.

ISTAC Emergency rules consists of similar features with ICC. The appointment of an Emergency Arbitrator is done within two days after the application has been sent to the Secretariat. A procedural timeline is also established by the Emergency Arbitrator within two days following the appointment. However, compared to ICC where the Emergency Arbitrator executes the final decision (“Order”) within 15 days, ISTAC has a faster approach of rendering the decision within 7 days. The President of the Board may however, extend the time by a reasoned request from the Emergency Arbitrator. Finally, the Emergency Arbitrator’s decision is binding and the parties must comply with the decision without delay.

Conclusion: The Great Potential of ISTAC

The establishment of ISTAC will serve as a new centerpiece internationally for companies from both East and West. With the rise of commercial disputes internationally and the rapid growth of arbitration, it is believed that ISTAC will play a huge part in connecting the arbitration culture with its unique geographical location and has a great potential of becoming a reliable arbitration center in the dynamic realm of arbitration worldwide.

Av. Sabahat Elif İpek

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