Istac logo

June 2016

Changes Brought by ISTAC Arbitration Rules:
Fast Track Arbitration, Emergency Arbitrator, Procedural Timetable

The main purpose of Istanbul Arbitration Centre is to popularize the arbitration culture, to increase the use of arbitration clause, thereby to practice the use of low-cost, practical and confidential dispute resolution mechanisms as an habit. The existence of an arbitration centre in one of the most important trade centre is essential for the international trade. It is obvious that, with Istanbul Arbitration Centre Rules (“The Rules”), arbitration will expand in Turkey. With this work herein, we would like to shortly point out three systems arranged with The Rules; fast track arbitration, emergency arbitration and procedural timetable which simplify to arbitrate.

I. FAST TRACK ARBITRATION  
Fast track arbitration, is a method that can be applicable depending on the claim amount. The Fast Track Arbitration Rules is a simplified version of the Arbitration Rules. The purpose of the Fast Track Arbitration is to resolve the dispute with the shortest and the most effective method.
The Istanbul Arbitration Centre Fast Track Arbitration Rules (“Fast Track Arbitration Rules”) which are appendixed to The Rules consist of nine articles.
Unless otherwise agreed by the parties, Fast Track Arbitration Rules shall apply to disputes where, as at the date of commencement of the arbitration, the total sum of the claims, do not exceed TRY 300.000-. The parties may also agree that the Fast Track Arbitration Rules shall apply where the amount in dispute exceeds this sum. If the claims and any counterclaims exceed this amount, which is indicated in the Article 1 of the Rules, the parties may agree to apply the Fast Track Arbitration Rules. Where the sum of the claims does not exceed TRY 300.000- upon a request of one of the parties, the Board, according to the facts and circumstances, may decide not to apply the Fast Track Arbitration Rules.
 Within 15 days of the Secretariat’s notification of the statement of claim, the Respondent shall submit its statement of defence and, if any counter claims along with their annexes to the Secretariat.
Unless otherwise agreed by the parties, all disputes subject to the Fast Track Arbitration Rules shall be resolved by a Sole Arbitrator. Within 15 days of notification of the claimant’s statement of claim by the Secretariat to the respondent, the parties shall choose together a Sole arbitrator. If the parties fail to agree on the Sole Arbitrator, the Board shall appoint the Sole Arbitrator.
The party raising an objection with respect to the application of the Fast Track Arbitration Rules prior to the choice or appointment of the Sole Arbitrator, shall submit its objection to the Secretariat within 5 days of the notice to commence arbitration having been served on them. The Board shall make its decision on such an objection.
During the Fast Track Arbitration Proceeding, The Sole Arbitrator can render a decision based on the documents submitted to the file without the need to conduct an oral hearing, unless it is necessary.
Fast Track arbitration awards are subject to enforcement by enforcement offices in the same way as court decisions. The arbitral awards made under Istanbul Arbitration Centre Fast Tack Arbitration Rules can be immediately enforced without being appealed.
 The Fast Track Arbitration Rules provides a low-cost, predictable, simply applicable dispute resolution mechanism during the arbitration comparing to state courts.

II. EMERGENCY ARBITRATOR 
The Emergency Arbitrator Rules, which is the Appendix 1 of The Rules, aim to control the costs during arbitration, in order to get shorten the time and to have an effective arbitration. Under urgent conditions, the parties may desire to obtain interim measures, where there is a risk to wait for the establishment of arbitral tribunal. In such case, except for the cases where the parties have agreed in writing that the Emergency Arbitrator Rules shall not be applicable, the parties may apply to the Secretariat for the appointment of an Emergency Arbitrator before the transmission of the file to the Sole Arbitrator or Arbitral Tribunal pursuant to Article 18 of the Rules.
The application of the Emergency Arbitrator Rules shall not prevent the parties from requesting from the courts an interim measure of protection, prior to or, after the application for the appointment of an Emergency Arbitrator. This situation is not incompatible with the arbitration agreement, nor will it constitute a waiver of the arbitration agreement, or from the right to make an application to the Emergency Arbitrator.
The requirement of the submit a Request of Arbitration, Statement of Claim, Answer to the Request for Arbitration, or Statement of Defence is not applicable for the party requesting the appointment of an Emergency Arbitrator.
The President of the Board shall discharge the Emergency Arbitrator from her/his duty if the party making the application has not submitted a Request of Arbitration or Statement of Claim within 15 days of the Secretariat’s receipt of the Application.
The President of the Board appoints the Emergency Arbitrator within 2 working days from the Secretariat’s receipt of the Application.
The place of the interim measures proceedings shall be the seat of the arbitration if the parties have agreed upon one. Otherwise, the place of the interim measures proceedings shall be Istanbul. The Emergency Arbitrator may conduct meetings at any location deemed to be appropriate.
The Emergency Arbitrator, taking into account the nature and circumstances of the Application, shall grant interim measures deemed to be appropriate. The Emergency Arbitrator, taking into account the nature of the circumstances of the Application, shall grant interim measures deemed to be appropriate.  The Emergency Arbitrator may require an appropriate security in order to grant interim measures.
The Emergency Arbitrator can render a decision based on the documents submitted to the file without the need to conduct an oral hearing, unless it is necessary.
The Emergency Arbitrator shall make the decision within, at least, 7 days of receipt of the file. The President of the Board may extend this time limit upon the Emergency Arbitrator’s reasoned request, or, in cases deemed to be appropriate, upon the President of the Board’s own initiative.
The Emergency Arbitrator’s decisions are binding on the parties. The parties undertake to comply within the decision without any delay.
The decision granted by the Emergency Arbitrator ceases to be binding upon the parties with the termination of the Emergency Arbitrator’s duty by the President of the Board, the acceptance of a challenge against the Emergency Arbitrator pursuant to Article 4 of the Emergency Arbitrator Rules, unless the Sole Arbitrator or Arbitral Tribunal expressly decide otherwise, the making of the arbitral tribunal award, the termination of the arbitration pursuant to Article 39 of the Rules.

III. PROCEDURAL TIMETABLE  
Another method, which is enacted in Rules and simplifies the arbitration proceeding for the parties and the arbitrators, and controls the costs during arbitration is procedural timetable.
Accordingly, during the drawing of the terms of reference, the Sole Arbitrator or Arbitral Tribunal shall establish a procedural timetable and transmit it to the parties and the Secretariat, after consulting with the parties, particularly establish the date of the submission of pleadings, the date of the hearing and dates of the other procedural issues it deems appropriate. In cases where it deemed necessary, the Sole Arbitrator or Arbitral Tribunal, in consultation with the parties, may modify the dates and time limits stated in the procedural timetable.
To limit and control the time in advance during the arbitration proceeding, will make the arbitration proceeding predictable. This method shall simplify the arbitration proceeding especially for the party or the parties, which is a party to an arbitration for the first time.
With the abovementioned reasons, The Rules conduct many systems in order to practice arbitration with fast, affordable and in accordance with the international standards. The application of Fast Track Arbitration, Emergency Arbitrator, and procedural timetable, arbitration will be shortly prevalent for Turkey.
By Att. Gül Yanık, LL.M.

How to Add the ISTAC Arbitration Clause in the Contracts?

If the parties want to resolve the disputes arising from the agreement signed by the parties, they should add an arbitration clause in their contract or form another arbitration agreement.
As other arbitration institutions require, the parties should reach an agreement in order to resolve disputes in Istanbul Arbitration Centre (ISTAC). Article 2 of the ISTAC Arbitration and Mediation Rules (ISTAC Rules) specifies the “Scope of Application” of the ISTAC Rules. As per this article, ISTAC Rules will be applied if the parties agreed to resolve the disputes according to the ISTAC Arbitration Rules.

Article 2(2) of the ISTAC Rules allows parties to easily authorise Istanbul Arbitration Centre in their agreements. According to this article, it is sufficient for parties to write “ITM”, “ISTAC” in order to authorise Istanbul Arbitration Centre to resolve the disputes. In other words, in the event that the parties only write “ISTAC” in their agreement, the disputes will be resolved according to the Rules of Istanbul Arbitration Centre.

In order to provide convenience, Istanbul Arbitration Centre drafted a sample arbitration clause. The sample arbitration clause which could also be found on the website of ISTAC is:
“All the disputes arising from and related to this agreement shall be resolved in the arbitration, according to the Istanbul Arbitration Centre Rules and the award will be binding and final.”

Although this sample arbitration clause was published in order to provide convenience, parties are not bound with this clause. Parties can modify the clause in their way. The essential point is the clarity of the desire of the parties to resolve the disputes before Istanbul Arbitration Centre.
Parties may state the number of arbitrators, the place and language of arbitration and applicable law to the disputes in their arbitration clause. As these issues may be stated by the parties in their arbitration clause, they may not be stated to be determined by the ISTAC Rules. On the other hand, especially the statement of the place and language of arbitration and applicable law by the parties in the agreement will prevent the problems during the arbitration. The statement of the rules not to be applied in arbitration will be useful as the statement of the issues to be applied.

As per Article 1 of the Istanbul Arbitration Centre Fast Track Arbitration Rules, “Unless otherwise agreed by the parties, Istanbul Arbitration Centre Fast Track Arbitration Rules (Fast Track Arbitration Rules) shall be applied if the total amount of the claims and counterclaims (if there are) is below TRY 300.000.” Therefore if the parties do not want to apply Fast Track Arbitration Rules, they should state this in their arbitration clause. Besides, the parties can agree on application of the Fast Track Arbitration Rules for the disputes that the amount of the claims and counterclaims is above TRY 300.000. In order to do this, writing “ISTAC Fact Track Arbitration Rules shall be applied” is sufficient.

As per Article 1 of the Istanbul Arbitration Centre Emergency Arbitrator Rules “Except for cases where the parties have agreed in writing that the Emergency Arbitrator Rules shall not be applicable, the Rules shall apply to applications that are made to the Secretariat for the appointment of an Emergency Arbitrator before the transmission of the file to the Sole Arbitrator or Arbitral Tribunal pursuant to Article 18 of the Istanbul Arbitration Centre Arbitration Rules.” Therefore if the parties do not prefer application of the Emergency Arbitrator Rules, they should state this clearly.

Regarding the modification of arbitration clause, it is helpful to abstain from long and complicated arbitration clauses. In some cases, these complicated and open to comment arbitration clauses are declared invalid. For example, in the event that the arbitrator or arbitrators stated namely, the validity of the arbitration clause will be questionable if the arbitrator or arbitrators died of are in a position that the performance of the duty is impossible. Therefore the suggestion is to draft a clear, explicit and unhesitant arbitration clause.
One of the essential issues during the drafting arbitration clause is to state the arbitration desire “without any hesitation”. In the event that the parties drafted their agreement as “Istanbul Arbitration Centre or Istanbul Courts”, since the arbitration desire is not “clear” and “unhesitant” this arbitration clause will be invalid.

Independent from the party being legal or natural person, the principal desire of the parties is to reach justice fast, cheap and confidingly. When the parties add ISTAC Arbitration Clause in their agreement, Istanbul Arbitration Centre provides fast, confidential, qualified proceeding which is cheaper than the local courts.
By Att. Selda Taşyürek

4th Annual GAR Live Istanbul: Introducing the ISTAC Rules

We are proud to announce that the 4th Annual GAR Live Istanbul-Introducing the ISTAC Rules will be held on 24 June 2016 at Shangri-La Bosphorus Hotel, Istanbul.

During this prestigious event, the ISTAC Arbitration Rules will be discussed by professionals, including ISTAC International Board Members Dr. Hamid Gharavi, Prof. Dr. Bernard Honatiou and Prof. Dr. Ziya Akıncı. 

For further information & registration, please visit GAR web site

HOT TOPICS TURKEY: Filling Fees to Enforce Arbitral Awards & Compulsory Mediation for Labour Disputes

I. Filling Fees for the Enforcement of Foreign Arbitral Awards
In order for the foreign arbitral awards to be enforced, the party desiring to enforce the award in Turkey shall bring the arbitral award before the court. In lack of special provisions for the amount or calculation method for the enforcement of foreign arbitral awards, such final and binding decisions will be subject to the Law of Fees numbered 492 and dated 2 July 1964.
 
The conflict arises between whether Article 3 of the Law of Fees imposes a fixed fee or a proportional fee depending on the nature or amount of the foreign arbitral award. Pursuant to Article 3 of the Law of Fees, the writ fee shall be charged in accordance with the nature of the dispute and the same shall apply for the enforcement of foreign arbitral awards. This brings the question of whether a fixed fee or a proportional fee is to be charged by the court for the enforcement. Both sides can be found in the appellate court decisions as well as scholarly writings. Accordingly, please see below for some appellate court decisions on the unclear problematic:
  • Court of Appeals, 15th Civil Chamber, E. 2015/3849, K. 2015/4786, 15 October 2015
The dispute before the court was whether the lower court’s decision of rejection of the lawsuit relying on the arbitration clause in the agreement between the parties and the proportional fee charged by the court. The 15th Civil Chamber ruled for the approval of the decision of the lower court while correcting the fee paid and ruled that the amount exceeding the fixed fee and received as the proportional fee shall be returned to the party.
  • Court of Appeals, 11th Civil Chamber, E. 2015/3987, K. 2015/10984, 26 October 2015
The dispute before the court was the enforcement of an arbitral award given by the Russian Federation Arbitration Tribunal. The 11th Civil Chamber held that the dispute was rejected by the lower court reasoning that the proportional fee was not deposited. However, in accordance with the precedence of the Court of Appeals, the enforcement cases are subject to a fixed fee. The 11th Civil Chamber ruled the decision of the lower court to be revised.
  • Court of Appeals, 15th Civil Chamber, E. 2015/5033, K. 2015/691, 12 February 2015
The dispute before the court was enforcement of a foreign arbitral award. The 15th Civil Chamber held that since the dispute is regarding the collection of receivables between the parties, it is subject to proportional fee. The 15th Civil Chamber, therefore held that a period of time shall be granted in order to complete the fee over the fixed fee paid up to the proportional amount to be calculated.
  • Court of Appeals, 15th Civil Chamber, E. 2015/385, K. 2015/1303, 18 March 2015
The dispute before the court was the enforcement of a foreign arbitral award rendered by the arbitral tribunal constituted under the ICC. The 15th Civil Chamber decided for the revision of the lower court’s decision, reasoning that enforcement of foreign arbitral awards is subject to proportional fees and the lower court’s proceedings without the proportional is completely paid is against the law.
  • Court of Appeals, 11th Civil Chamber, E. 2015/1353, K. 2015/6701, 11 May 2015
The dispute before the court is the enforcement of the arbitral award rendered by the Sofia Trade Industry Chamber Arbitral Tribunal. The 11th Civil Chamber held that since the enforcement lawsuits do not carry the character of action for performance but they are of declaratory lawsuits, the fee shall not be calculated proportionately but shall be fixed.
  • Court of Appeals, 19th Civil Chamber, E. 2015/11188, K. 2015/8132, 2 June 2015
The dispute before the court was the enforcement of the foreign arbitral award rendered by the arbitral tribunal constituted under the International Cotton Union. The lower court subjected the lawsuit to a fixed fee, however, the 19th Civil Chamber reversed the decision reasoning that since the dispute is regarding the collection of receivables between the parties, it is subject to proportional fee.
 
II. Compulsory Mediation for Labour Disputes 
The concept of mediation as an alternative dispute resolution method came into effect in Turkey for civil disputes with the Law on Mediation in Civil Disputes numbered 6325 and dated 7 June 2012. The law came into force a year later following its publication on the Official Gazette, on 22 June 2013. A regulation was also enacted and published on the Official Gazette numbered 28540 and dated 26 January 2013.
 
The law and the regulation stipulate the principles of mediation and procedure to be followed, however, is not the only piece of legislation discussed. Pieces of mediation can be found in different instruments of legislation as it is in the Draft Law of Labor Courts. In Article 3 of the draft law, mediation is defined as the mandatory dispute resolution method in disputes regarding the workers’ receivables and reemployment lawsuits based on the law, individual employment agreements or labor agreements.
 
The draft law is yet to come into force in Turkey, and has been sent to state institutions and organizations for their review. For more information on mediation and developments in the process of enactment of legislation, please see the website of Head of Department of Mediation of Legal Affairs General Directorate of the Ministry of Justice.
By Fulya Görer
ISTANBUL ARBITRATION CENTRE
TOBB Plaza Harman Sok. No: 10 K: 6 
Esentepe Şişli İstanbul / Turkey
Phone: +90 850 622 50 30 
Fax: +90 850 622 50 33 
info@istac.org.tr
LinkedIn
Facebook
Twitter
Website
This newsletter is provided for information purposes only. 
If you do not want to receive this newsletter please click here.