The expansion and globalisation of cross-border investment and trade has led to increased and ever more complex relationships between businesses, investors, and States. As, inevitably, some of those relationships break down, parties need to consider (preferably at the outset of the relationship) the best means of resolving any disputes which may arise. In many cases, that will be arbitration.
Arbitration is a private, often voluntary dispute resolution process where the parties to a dispute agree in writing to submit the dispute for resolution to a neutral third party (the “Arbitrator”). The Arbitrator is chosen pursuant to the agreement of the parties.
The parties present proofs and arguments to the Arbitrator. The Arbitrator then determines the facts, decrees and outcome. Many commercial contracts contain arbitration clauses requiring the parties to resolve their disputes through arbitration instead of through court proceedings.
In an arbitration, the parties generally control the process. There is usually one arbitrator or a panel of three arbitrators. Often the arbitrator or arbitrators have special expertise appropriate for the subject matter of the dispute.
Dispute resolution process
This dispute resolution process is confidential and matters may be kept private. Because of its streamlined nature, arbitration can be faster and less expensive than court litigation if the parties properly tailor the process.
Arbitrations generally result in a final and binding resolution. The arbitration process only addresses those disputes which the arbitrator has been given the power to resolve. This authority can be given by contract, order from a court of competent jurisdiction or legislative mandate.
Advantages of Arbitration
Arbitration awards are more widely and readily enforceable than court judgments primarily as a result of the 1958 New York Convention, a multilateral treaty for the enforcement of arbitral awards to which over 150 states are party.
A party will often prefer not to submit to the jurisdiction of another party’s national courts. International arbitration can provide a neutral forum for dispute resolution.
Arbitration rules are streamlined, flexible, and far less complex than most national rules of civil procedure, making them better suited to parties from different jurisdictions.
Arbitrators with the appropriate experience
Arbitrators can be selected by the parties for their familiarity with relevant commercial practices, trade usages, and legal structures, and their ability to apply different national laws and deal with comparative law issues.
The parties to an arbitration can shape their dispute resolution process by, for example, selecting the governing law, the place of arbitration, many aspects of the arbitral procedure, and, of course, arbitrators whom they believe will ensure a fair hearing of their case.
Our lawyers have received many hours of training to serve as arbitrators and, as a result, are able to guide our clients and represent their interests as arbitration attorneys through the arbitration process. In addition, this training and knowledge also enables our attorneys to act as Arbitrators providing neutral arbitration services.
Bıçak Arbitrators are providing institutional arbitration services for both domestic and foreign parties. For an arbitration to be administered by our arbitrators, it is sufficient for the parties to agree that the disputes shall be settled by arbitrators of Bıçak Law. Arbitration is a well-established and widely used method of resolution of disputes outside the state courts in Turkey.
Bıçak arbitration is anticipated to fulfill the needs of commercial life by providing the resolution of the disputes in an expeditious, cost-effective, flexible, confidential and efficient way. Biçak arbitration ensures the resolution of disputes effectively and quickly.
Transactions between individuals and businesses include credit by a bank or store, property rentals, car leases, work involving independent contractors, and problems with wills, estates and trusts. Disagreements often arise between these parties. Until recent years, litigation has been the most common way to resolve these disputes.
Whether you are trying to collect money or defending against someone who is seeking to recover money, litigation is a no-win situation for all parties. In Turkey, businesses spend hundreds of millions of liras in attorney’s fees, in addition to related litigation costs, to pursue or defend against claims they have or which are brought against them.
In many instances, even the simplest litigation takes years to complete. Individuals are also faced with either pursuing claims they have against a business or otherwise have to respond or defend themselves for lawsuits filed against them. Most individuals can’t afford attorneys to represent them, let alone find the time to appear at court proceedings. Consequently, businesses very often get default judgments against individuals rather than resolutions to the claims.
In cases where the parties feel a settlement conference would be helpful, Bıçak Law offers arbitration, which are also handled telephonically or with a video conference. Best of all, disputes are resolved in a timely manner, usually within 30 days from the completed submissions or from the hearing date.
Simple & affordable
Outstanding claims and receivables can have a profound effect on the financial health of a business, and therefore expedient conflict resolution can be critically important to businesses of any size. Spending time on receivables takes resources away from generating more revenue. Many times, smaller business disputes go unresolved due to the costs and time associated with litigation. Arbitration of disputes with BL provides a simple, affordable solution to dispute resolution.
BL strongly believes in the effectiveness of Alternative Dispute Resolution (ADR). As a result, it has formed an elite group that focuses on providing arbitration services to clients around Turkey and the world. This group’s mandate is to provide companies and governments with dispute settlement services, including conflict resolution strategies, pre-dispute negotiations, selection of arbitrators and case management. Members of the elite group are capable of representing cases before:
- Zurich Chamber of Commerce, Switzerland
- London Court of International Arbitration (LCIA), UK
- Hong Kong International Arbitration Center, Hong Kong
- Singapore International Arbitration Centre, Singapore
- International Court of Arbitration (ICC), Paris, France
- Netherlands Arbitration Institute, The Netherlands
- MPC Arbitration, European Union
- Court of Arbitration for Sport (CAS), Lausanne, Switzerland
- The Istanbul Arbitration Centre (ISTAC), Turkey
Foreign investors may beneit from domestic arbitration or international arbitration, to the extent there is an arbitration clause in their investment agreement. Domestic arbitration is governed by the Code of Civil Procedure, whereas for international arbitration, the parties may freely choose any institutional rules of arbitration, including without limitation the rules under the Turkish International Arbitration Law or the rules of the Istanbul Arbitration Centre.
If the seat of arbitration is in Turkey but the parties have not agreed on the applicability of any institutional rules of arbitration, the rules and principles set out in the Turkish International Arbitration Law shall apply, to the extent that there is a foreign element involved in the dispute.
In addition, Turkey continues to integrate mediation as an alternative dispute resolutionmethod. As per the law published on the Oicial Gazette dated 19 December 2018, a mandatory mediation process has been introduced for commercial cases to be heard as from 1 January 2019. Therefore, parties to a commercial dispute for monetary claims are now obliged to apply to a mediator before applying to the commercial courts.
Istanbul Arbitration Centre
Istanbul Arbitration Centre was established in 1 January 2015, as a part of the wider project to transform Istanbul into a global financial hub. Its rules and tarifs were published on its website on February 2016, and the centre has become fully operational with its specialized arbitrators, to serve its clients in Turkish, English, French and German languages.
It is important to note that the arbitration rules of the Istanbul Arbitration Centre have introduced new concepts to Turkish law, such as fast-track arbitration, procedural timetable and emergency arbitrator. Accordingly, where the economic value of the claims and the counterclaims does not exceed TRY 300,000, the dispute shall, unless otherwise agreed by the parties, be subject to the fast-track procedure. In this case, the dispute shall be settled by a
sole arbitrator within three (3) months. However, parties can also explicitly agree to the fast-track arbitration even in cases where the amount in dispute is above the threshold.
Further, in parallel with the rules of leading international arbitration institutions, the arbitration rules of the Istanbul Arbitration Centre provide a right to request the appointment of an emergency arbitrator. In this respect, unless the parties have agreed otherwise, they may, in cases of emergency, request to obtain an interim measure from the emergency arbitrator, before the transmission of the case to the sole arbitrator or arbitral tribunal.
Since Istanbul Arbitration Centre’s arbitral awards are final, binding and enforceable just like court decisions, and Turkey is a party to the New York Convention, Istanbul Arbitration Centre’s arbitral awards are enforceable not only in Turkey, but also in other countries that are party to the New York Convention.
Recognition & enforcement
Recognition and enforcement of foreign arbitral awards are subject to the provisions of Turkish International Arbitration Law and the New York Convention. Turkey has ratiied the New York Convention with two reservations: (i) any award which is granted must begiven in a state which is a member of the New York Convention; and (ii) the dispute must be commercial in nature as per Turkish law.
As arbitration is becoming more popular in Turkey, national courts are becoming increasingly familiar with the recognition and enforcement of arbitral awards in Turkey, however an award can only be recognised and enforced in Turkey if certain conditions which are allowed and typical under the New York Convention are met. In short, for the recognition and enforcement of a foreign arbitral award, there must be (i) reciprocity between Turkey and the country where the award was granted, (ii) no jurisdictional exclusivity under Turkish law due to the nature of the matter, and (iii) no violation of “public order”.
In addition, Turkey is also a contracting state to the ICSID Convention. Consequently, for disputes arising out of or relating to an investment, between the Turkish State and a national of another contracting state, the parties may also opt in for arbitration under ICSID. In such case, issues of recognition, enforcement and annulment of the ICSID award will be subject to the provisions of the ICSID Convention instead of the New York Convention.