ARBITRATION AGREEMENT IN TURKISH LAW
Arbitration is an alternative method of dispute resolution in which the parties resolve their disputes through arbitrators. The arbitration proceeds faster and is more reliable In addition, the will of the parties has a higher priority
In order to resort to the arbitration method of solving issues, the parties may enter into an arbitration agreement.
In Turkish law, the arbitration agreement is governed by Article 412 of the Civil Procedure Code:
“An arbitration agreement is an agreement between the parties to submit all or part of a dispute that regarding a contractual or non-contractual legal relationship to an arbitrator or arbitral tribunal.”
Article 4 of the International Arbitration Act No. 7098 also defines what an arbitration agreement is
An arbitration agreement is an agreement between the parties to resolve all or some of the disputes arising out of or in connection with an existing legal relationship, whether arising out of the agreement or not, through arbitration. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
Under Turkish law, arbitration contracts must be created in writing. E-mail, correspondence and other written means are considered valid. The arbitration agreement may be drafted separately or the arbitration agreement may be appear as part of the main agreement. In fact, this moment is clearly stated in the New York Convention:
New York Convention 2/2
“2. The term “agreement in writing ” shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.
The most important issue concerning arbitration agreements is the will of the parties. The will of the parties must be clear and unequivocal. In this framework, the Supreme Court of the Republic of Turkey decided as follows:
“A statement of intent regarding the resolution of a dispute by an arbitrator or arbitral tribunal in an arbitration agreement or arbitration clause is a basic element of an arbitration agreement. (…) In order for an arbitration clause or agreement to be valid, the parties must clearly and accurately state in the arbitration agreement or clause in which they disclose their arbitration will in a manner that is not inconsistent and confusing. In order for an arbitration clause or arbitration agreement to be considered valid in the case law of our Chamber and the local Court of Cassation, it is recognized that records that eliminate or weaken the final will that the dispute be resolved by the arbitrator nullify the arbitration agreement or the terms of the arbitration agreement. ” HD., 22.06.2020 T., 2019/3450 E., 2020/1932 F
The arbitral tribunal and the courts cannot be dealing with the same case simultaneously. The authorised courts shall be declared null and void.
Another important issue concerning the arbitration agreements is that the person who will sign the arbitration must necessarily have the legal authority to do so. The reason for this is that the arbitration agreement is signed with special authority. This is regulated by Article 74 of the Civil Procedure Code of the Republic of Turkey:
Article 74 of the Code of Civil Procedure states: “If no clear authority is given, a lawyer … may not conclude arbitration agreements…”.
Some topics are not subject to arbitration in Turkish law. When drafting an arbitration agreement, it is necessary to pay attention to this moment. This issue is regulated by Article 408 of the Civil Procedure Code:
“Disputes arising out of real property rights or which are not subject to the will of both parties shall not be subject to arbitration.”
For example, a dispute involving a house in Turkey or an incident that is the subject of criminal cases cannot be the subject of an arbitration agreement. On the other hand, arbitration may be preferable in disputes (compensation, etc.) arising from contracts for the construction of a condominium, but not related to the transfer of property.
For a valid arbitration agreement in Turkish Law, it is necessary to carefully organize the above processes and, if possible, use ready-made arbitration clauses.