Arbitration in Turkey

Jan 26, 2016

In business, the problems may occur in many different ways such as the performance of the contract, the payments and others. Pursuing a lawsuit or following procedure in court takes a lot of time and also it is expensive, so for quicker (it usually takes from 6 to 12 months until the arbitration award is given) and cheaper (compared to court procedure fees) resolution of the problems among the Turkish companies, and between Turkish and foreign business partners, and also between foreign companies, it is suitable to proceed with the arbitration.

TOBB Arbitration Council is an arbitration body of the Union of Chambers and Commodity Exchanges of Turkey (TOBB) however it does not settle the disputes itself, but ensures the independent and competent arbitral tribunals settle the commercial and industrial disputes rapidly, trustfully and justly in accordance with the TOBB Arbitration Rules.

The proceedings are regulated by the TOBB Arbitration rules. For the companies willing to resolve their disputes in arbitration it is necessary to conclude separate agreement on arbitration in writing or, most commonly to put an arbitration clause in the agreement e.g. with wording: IN THE EVENT OF ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS CONTRACT SHALL BE SETTLED THROUGH ARBITRATION IN ACCORDANCE WITH THE TOBB ARBITRATION RULES. It is helpful to state whether the disputes shall be settled by a sole arbitrator or three arbitrators, the place, language of the arbitration and the applicable law to the dispute.

1. Commencement of the procedure

A party, who wishes to apply to the TOBB Arbitration, submits its request to the Chairmanship of the TOBB Arbitration Council (Secretariat, the Legal Advisor’s Office) containing: a) name, surname and title, citizenship, addresses and capacity of the Parties, b) an explanation of the subject of the request and the amount of the request, facts on which the request is based and explanations in relation to the dispute, and relevant evidences, c) Arbitration agreement and relevant documents, d) information about the choice and the number of the arbitrators, if the claimant needs to choose an arbitrator, then name of the arbitrator, e) explanations for the place and the language of the arbitration, and the applicable law, f) signature of the claimant or his representative. The request shall be issued in number of copies corresponding with number of arbitrators for example there are 3 arbitrators and 1 counterparty, the claimant shall submit the request in 5 copies.

The Secretariat issues acknowledgement of the request to the Claimant showing the date of the said request and sets a time period for payment of arbitration fees. The fees must be paid in advance.

1.1. The respondent shall answer with a petition within 30 days from the date of the notification of the arbitration request, however this period may be extended to 60 days. The response should contain following information: a) name, surname or title, citizenship, addresses and capacity of the Parties, b) an explanation of the subject of the answer, facts on which the answer is based and explanations in relation to the dispute, relevant evidences and documents, c) information about the choice and the number of the arbitrators, if the respondent needs to choose an arbitrator, then name of the arbitrator, d) explanations for the place and the language of the arbitration, and the applicable law, e) signature of the respondent or its representative and it may contain the counter claim as well. The response shall be issued in the same number of copies that the request.

1.2. The claimant shall answer to the response and the counter claim (if any) within 30 days from the date of the notification of the respondents answer and the counter claim.

1.3. The respondent shall answer within 30 days from the date of the notification of the claimant’s answers within the previous section.

2. Appointment of the arbitrator(s)

If the parties have agreed that the dispute shall be settled by a sole arbitrator, they shall nominate the arbitrator by mutual agreement and present this to the Council for confirmation. The Parties have 30 days to agree on nominating the sole arbitrator, if they fail to do so, the Council will appoint it within 7 days.

If the parties have agreed that the dispute shall be settled by three or more arbitrators; in this case the claimant in its request and the respondent in its answer shall nominate their arbitrator(s) and present this to the Council for conformation. The chairman of the arbitral tribunal shall be also decided by the parties, if they fail to do so, the Council will appoint it within 7 days.

If the parties cannot reach an agreement as to the number of arbitrators, the Council shall decide to appoint a sole arbitrator, unless the amount of the subject dispute or the nature of the case requires the appointment of three or more arbitrators, , if they fail to do so, the Council will appoint them within 7 days.

The arbitrator may be recusated if it does not have the qualities specified by the parties, if there is a recusation reason anticipated and accured within the arbitration procedure or righteous reasons to suspect of impartiality than, a new arbitrator shall be appointed.

3. Language of Arbitration

The arbitration hearing may be conducted in Turkish or another official language or languages of the countries that the Republic of Turkey recognizes. The language may be agreed by the parties or determined by the Arbitral Tribunal while taking into consideration the conditions and the circumstances. It may also decide on language of documents submitted.

4. Hearing

The Arbitral Tribunal may decide either to hear the case or to decide the case solely on the documents after investigating the file. The hearing may be requested by the parties unless they have agreed otherwise. The parties may appear before the arbitration hearing in person or through duly authorized representatives, and they may also receive assistance from their consultants. If any of the parties, although duly summoned, fails to appear without a valid excuse, the Arbitral Tribunal shall continue with the hearing.

After examining the file and taking the parties’ opinion, the Arbitral Tribunal may decide to call for an expert, reconnoiter or hear the witnesses the special experts. They can present their opinions in writing or verbally in the hearing where parties may ask questions.

5. Arbitration Award

The Arbitral Tribunal shall render its final Award within a year. This time limit shall start to run from the date of the last signature by the Arbitral Tribunal or by the parties of the Terms of Reference or the date of the approval of the Terms of Reference by the Council. When the Arbitral Tribunal is composed of three or more arbitrators, an Award shall be made by a unanimous or majority decision, and if there be no majority, the Award shall be rendered by the chairman of the Arbitral Tribunal alone. Award shall include the followings: a) names, Surnames, titles, capacities and the addresses of the parties or the representatives if there are any, b) reasons, c) subjection of matters, d) place of arbitration and the date of the Award, e) names, surnames, signatures and if there are any, the opposite votes of the arbitrators. Unless otherwise agreed differently, the Arbitral Tribunal may also make a partial Award.

The Arbitral Tribunal shall present the text of the Award to the Council before signing. The Council shall, then, examine the Award and the file and if it finds any procedural omissions, the council shall return it for corrections. If there are not any omissions within the file or if there are but corrected, then the Council shall approve the Award. Without the approval of the Council an Award is not legally effective and binding. By submitting the dispute to arbitration under the TOBB Arbitration Rules, the parties undertake to carry out any Award without delay.

If the parties reach a settlement after the file has been transmitted to the Arbitral Tribunal, the settlement shall be determined with the Award and the arbitration hearing shall end with that Award.

Once the Award has been made, the Secretariat shall notify the parties with a text of the Award signed by the arbitrators and approved by the Council, provided that the costs of the arbitration have been fully paid. Apart from the parties, no one else shall be issued with the original text of the Award.

11. Enforcement of The Arbitration Award

An arbitration award is enforceable as if it is a judgment of courts provided that the procedural conditions are complied with. Likewise, the Arbitral Awards may be appealed, similar to the court judgments.

Av. İdil Öztürk
26.01.2015

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