Turkey: Arbitration

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This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in the Turkey including arbitration agreements, tribunals, proceedings as well as costs, awards and the hot topics concerning this country at present.

This Q&A is part of the global guide to Arbitration.

For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/arbitration/

  1. What legislation applies to arbitration in your country? Are there any mandatory laws?

    Domestic arbitration in Turkey is governed by the Code of Civil Procedure No. 6100, which entered into force in 2011. Code of Civil Procedure is applied to the disputes which have no foreign element; and the place of arbitration is agreed as Turkey. Besides, the International Arbitration Law no. 4686, which entered into force in 2001 is applied to the international arbitrations in Turkey which includes foreign elements and the place of arbitration is Turkey. Furthermore, the Law no. 4686 is applied to the disputes which the parties or arbitrator/arbitral tribunal agree on the application of this law to their dispute.

  2. Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?

    Turkey is a party to the New York Convention since 2 July 1992. There are two reservations to the general obligations of the Convention which are the “reciprocity” and the “commercial” reservations. Turkey will recognize and enforce only those arbitral awards made in other states that are signatories to the Convention and the scope of recognition and enforcement must have the commercial nature under Turkish law. Otherwise, it is possible to enforce the award according to the Turkish International Private Law No. 5718.

  3. What other arbitration-related treaties and conventions is your country a party to?

    Turkey is a party of the European Convention on International Commercial Arbitration dated 1961, (as of 23 September 1991), and the Washington Convention on the Settlement of Investment Disputes dated 1965 (as of 27 May 1988).

  4. Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?

    The International Arbitration Law and the relevant provisions of the Code of Civil Procedure (both as “Local Law”) are substantially based on the UNCITRAL Model Law (“Model Law”). The significant differences between the Local Law and the Model Law can be explained as below:

    • According to the Local Law, the award will be rendered within one year as of the appointment of the sole arbitrator; or, in case of the arbitrators are more than one, as of the first meeting minutes of the arbitral tribunal, unless otherwise agreed by the parties. This one year time period, can be extended with the mutual agreement of the parties or by the civil court once one of the parties apply on.
    • Although the Model Law states the arbitral tribunal will apply the law which it determines to be appropriate unless the parties do not designate the law; the International Arbitration Law states that, the validity of the arbitration agreement will be considered according to Turkish unless the parties designate the law to be applied to the arbitration agreement.
  5. Are there any impending plans to reform the arbitration laws in your country?

    The Istanbul Arbitration Center (“ISTAC”) was established under the Law no. 6570 (ISTAC Law) as of 1 January 2015. The ISTAC Rules include fast-track rules for arbitration and it is a new approach to finalize the commercial disputes in Turkey. Additionally, the Istanbul Chamber of Commerce Arbitration Center (“ITOTAM”) has amended its ITOTAM Arbitration Rules as of 14 April 2016 by providing emergency and expedited arbitration rules.

  6. What arbitral institutions (if any) exist in your country?

    ITOTAM, ISTAC, Turkish Union of Chambers and Commodity Exchanges Court of Arbitration, the Arbitration Centres of Ankara Chamber of Industry and İzmir Chamber of Commerce, Arbitration Centre of Turkish Bar Associations.

  7. What are the validity requirements for an arbitration agreement under the laws of your country?

    The major requirement for an arbitration agreement according to the Local Law, the arbitration agreement must be in written. Furthermore, Parties’ consent to solve the dispute through arbitration must be explicitly seen and avoid any kind of doubt. It can be an arbitration clause in the main agreement between the parties or a separate arbitration agreement. It must be a written document executed by the parties or a document mutually exchanged by the parties such as letter, telegram, telex or fax; or the defendant does not object to the existence of the arbitration agreement in case the claimant claim that there is an arbitration agreement in its claim statement. Besides, in case the arbitration agreement is signed by a representative, there must be a special authorization granted to the representative to execute the arbitration agreement.

  8. Are arbitration clauses considered separable from the main contract?

    Yes. The arbitration clauses considered separable from the main contract. Invalidity of the arbitration clause in the main contract, does not cause the invalidity of the whole contract; or, any invalid provision of the main contract does not harm the valid and explicit arbitration intention of the parties written in the contract.

  9. Can claims under more than one contract be brought in the one arbitral proceeding? Can an arbitral tribunal with its seat in your country consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?

    Turkish law does not specifically regulate the consolidation of the claims arising from different contracts in one arbitral proceeding; however, there is no restriction regarding this issue. In case the arbitration rules which will be applied to the dispute allows the consolidation, the claims arising from the different contracts can be consolidated. If the parties are unanimous to solve their separate disputes under one proceeding, there is no reason for rejection.

  10. How is the law applicable to the substance determined?

    According to the Law no. 4686 (for international arbitrations), the arbitral tribunal will constitute the award pursuant to the provisions of the agreements and chosen law by the parties. Unless otherwise agreed, if the parties specify any law under the agreement, it is accepted as the substantial law directly, not the conflicts of law or procedural law provisions. In case there is no such designation under the agreement, the arbitral tribunal will apply the law which is belong to the state that has the closest relation to the dispute.

    According to Law no. 6100 (for domestic arbitrations), there is no provision regarding the designation of applicable law; since it is only applied to the disputes which have no foreign element.

  11. Are any types of dispute considered non-arbitrable? What is the approach used in determining whether or not a dispute is arbitrable?

    Principally, the disputes arising from the areas which the parties cannot dispose on them without constraint, are accepted as non-arbitrable. Likewise, the arbitration in Turkish law is seen as a continuation of the freedom of will and contract of the parties. Therefore, according to the Local Law, disputes in relation to the in rem rights of immovable properties located in Turkey or the disputes which are not subject to the parties’ wills are non-arbitrable. Despite the commercial disputes are arbitrable under Turkish law, the administrative, criminal, family, labor or bankruptcy law issues are considered as non-arbitrable. The Turkish local courts and the Court of Appeals are generally intended to apply Turkish laws to the disputes; and to consider the disputes in relation to the public order are non-arbitrable.

  12. In your country, are there any restrictions in the appointment of arbitrators?

    According to the Local Law, parties are free on the appointment of arbitrators. However, this number must be an odd number. Unless otherwise agreed by the parties, only the real persons can be appointed as the arbitrators. If the sole arbitrator will be appointed and the parties cannot reach a compromise, the court will appoint the arbitrator upon the request of one party. If three (or more) arbitrators will be appointed, each party appoints the arbitrators on the same number and the appointed arbitrators choose the other arbitrator. Unless one of the parties appoint the arbitrators or the appointed arbitrators choose the other arbitrator (within one month, according to the Law no. 6100 and 30 days according to Law no. 4686), the court will appoint the missing arbitrators. According to the Law no. 6100, if there will be an arbitral tribunal, at least one arbitrator must be a legal expert who has five year experience at least, in his/her own area.

  13. Are there any default requirements as to the selection of a tribunal?

    Unless otherwise agreed by the parties, only the real persons can be appointed as the arbitrators. According to the Law no. 4686, unless the parties designate the number of arbitrators, the arbitral tribunal will compromise of the three arbitrators. If the sole arbitrator will be appointed and the parties cannot reach a compromise, the court will appoint the arbitrator upon the request of one party. If three (or more) arbitrators will be appointed, each party appoints the arbitrators on the same number and the appointed arbitrators choose the other arbitrator. Unless one of the parties appoint the arbitrators or the appointed arbitrators choose the other arbitrator (within one month, according to the Law no. 6100 and 30 days according to Law no. 4686), the court will appoint the missing arbitrators. According to the Law no. 6100, if there will be an arbitral tribunal, at least one arbitrator must be a legal expert who has five year experience at least, in his/her own area.

    The decisions of the court regarding the appointment of the arbitrator(s) cannot be appealed. In case the parties are from different nations and the sole arbitrator will be appointed by the court, the court considers that the nation of the arbitrator will not be the same with one of the parties; and in case three arbitrators will be appointed, the court considers that the two of the arbitrators will not be the same nation with the one party. The procedure is the same for the appointment of the more arbitrators.

  14. Can the local courts intervene in the selection of arbitrators? If so, how?

    If the sole arbitrator will be appointed and the parties cannot reach a compromise, the court will appoint the arbitrator upon the request of one party. If three (or more) arbitrators will be appointed, each party appoints the arbitrators on the same number and the appointed arbitrators choose the other arbitrator. Unless one of the parties appoint the arbitrators or the appointed arbitrators choose the other arbitrator (within one month, according to the Law no. 6100 and 30 days according to Law no. 4686), the court will appoint the missing arbitrators. The decisions of the court regarding the appointment of the arbitrator(s) cannot be appealed. In case the parties are from different nations and the sole arbitrator will be appointed by the court, the court considers that the nation of the arbitrator will not be the same with one of the parties; and in case three arbitrators will be appointed, the court considers that the two of the arbitrators will not be the same nation with the one party. The procedure is the same for the appointment of the more arbitrators.

  15. Can the appointment of an arbitrator be challenged? Can an arbitrator be disqualified? What is the procedure for such challenge?

    Local Law specifies the disqualification/challenging provisions of the arbitrators. The arbitrators can be challenged, in case (i) the arbitrator does not have the required qualifications agreed by the parties or (ii) there is a reason for challenge under the arbitration procedure agreed by the parties or (iii) there are justifiable reasons for questioning the impartiality of the arbitrator. Parties are free to determine the challenging procedure of the arbitrator. The relevant party may submit its written request to the other party regarding the challenge within thirty days as of the date that they become aware on the challenge reason (thirty days period is for international arbitrations regulated under the Law no. 4686, this period is two weeks for the domestic arbitrations regulated under the Law no. 6100). The relevant party submits its challenging request and its justification to the arbitral tribunal (for one or more arbitrators). In case this request is rejected, the relevant party applies to the court within thirty days (one month for the Law no. 6100) in order to request to cancel this decision or decide on the challenging request. In case the request is for challenging the sole arbitrator or the arbitral tribunal or the majority of the arbitral tribunal, it can only be claimed before the court; and the court decision is final and cannot be appealed. The same procedure on the appointment of the previous arbitrator is applied for the new one to be appointed.

  16. Are arbitrators immune from liability?

    The relationship between the parties and the arbitrators are contractual. This contract is made once the arbitrators accept the appointment. Therefore, the liability of the arbitrators can be assessed according to the general provisions of the obligations law. The arbitrators must consider their duty of care. Local Law states that, unless otherwise agreed, the arbitrator is obliged to compensate the parties’ damage arising from his/her failure to fulfill his/her duties without a valid reason.

  17. Is the principle of competence-competence recognised in your country? What is the approach of local courts towards a party commencing arbitration in apparent breach of an arbitration agreement?

    The principle of competence-competence is recognised in Turkish law. The arbitral tribunal may decide on its own authority including the objections regarding the existence or validity of the arbitration agreement. During this decision, arbitration clause is assessed separately from the other provisions of the agreement. The arbitration agreement does not become invalid automatically, in case the sole arbitrator or the arbitral tribunal decides on the invalidity of the main agreement.

  18. How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods of which the parties should be aware?

    Unless otherwise agreed by the Parties, the arbitration proceeding commences by submitting the request to the court or the person, institution or organization for the appointment of the arbitrators according to the agreement; or if the parties will appoint their arbitrators, by appointing the arbitrator(s) of the claimant and notify the counterparty to appoint its own arbitrator(s); or, if the names of the arbitrators are specified under the agreement, by receiving the request for resolving the dispute through arbitration by the counterparty. If one party has the preliminary injunction or provisional seizure decision given by the court, this party has to initiate the arbitral proceeding within thirty days (two weeks according to the Law No. 6100). Otherwise the interim measure or provisional seizure will be automatically removed. Unless otherwise agreed by the Parties, the award will be constituted within one year by the sole arbitrator or the arbitral tribunal as of the appointment of the sole arbitrator or the first meeting minutes of the arbitral tribunal. The period of the arbitral proceeding can be extended by the mutual agreement of the parties or by the court with the application of the one party in case there is no compromise. The court decision is final and cannot be appealed in this regard.

  19. What is the applicable law (and prevailing practice) where a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate? Can they order third parties to participate in arbitration proceedings?

    In case the respondent does not submit its response, the proceeding continues without considering this as the acceptance of the case or cognizance of the allegations of the claimant. In case one of the parties do not attend the hearing without a valid reason or abstain from submitting its evidences; the sole arbitrator or the arbitral tribunal can continue the proceeding and decide by considering the available evidences in the file. The local courts cannot compel the parties to arbitrate or order third parties to arbitration proceeding.

  20. In what instances can third parties or non-signatories be bound by an arbitration agreement or award (e.g. by joinder)?

    Third parties or non-signatories cannot be bound by the arbitration agreement. Also, according to the Law No. 4686, the arbitral tribunal cannot decide on the interim measures or provisional seizures that are binding third parties.

  21. What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?

    Either party is able to request for the interim measure or provisional seizure prior to the arbitral proceeding or during the arbitral proceeding from the court and the court can decide on such interim measure or provisional seizure. According to the Law no. 6100, unless the arbitral tribunal cannot act effectively, the application to the court is subject to the approval of the arbitral tribunal or the written agreement between the parties.

    Unless otherwise agreed, the sole arbitrator or the arbitral tribunal can decide on the interim measure or provisional seizure upon request of the one party by requesting appropriate warranties from the requesting party. According to the Law no. 4686, the sole arbitrator or the arbitral tribunal cannot decide on the interim measures or provisional seizures that will be carried out by the enforcement bodies or the official authorities, besides they cannot decide on such measures which will be bound the third parties. Either party may apply to the court with the request of interim measures or provisional seizures in case the relevant party does not fulfill the award on the interim measure or provisional seizure constituted by the arbitral tribunal. The interim measure or provisional seizure constituted by the court prior to or during the arbitral proceeding will be removed once the award becomes enforceable or the rejection of the arbitral proceeding by the sole arbitrator or the arbitral tribunal.

  22. Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?

    According to the Law No. 4686, parties submit their evidences within the period specified by the sole arbitrator or the arbitral tribunal. The sole arbitrator or the arbitral tribunal can apply to the court for the collection of the evidences. Under this circumstance, the court will apply the provisions of the Law no. 6100. According to the Law no. 6100, etiher party may apply to the court for the collection of the evidences with the approval of the sole arbitrator or the arbitral tribunal.

  23. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?

    Legal Profession Act No. 1136 regulates the ethical standards the attorneys are subject to. These ethical standards are also applied for the attorneys during the dispute resolution through the arbitration.

  24. How are the costs of arbitration proceedings estimated and allocated?

    Unless otherwise agreed by the parties, the fees of the arbitrators will be decided between the parties and the arbitral tribunal by considering the amount on the arbitration proceeding, specifications of the dispute and the term of the proceeding. The parties may also refer to the established rules or institutional arbitration rules for the arbitrators’ fees. If there is no compromise between the parties or no provision in the agreement or no referral to the institutional rules, the arbitrators’ fees will be determined according to the fee tariffs published in the Official Gazette each year (separately for the domestic and the international arbitrations).

    Unless otherwise agreed by the parties, the arbitral tribunal may request the advance payment from the parties equally (in international arbitrations, this advance payment can only be requested from the claimant). At the end of the proceeding, the costs of arbitration are sentenced to the unfair party, unless otherwise agreed by the parties.

  25. Can interest be included on the principal claim and costs incurred?

    Parties may agree on the interests. Under Turkish law, the interests will be added to the costs if there is no compromise between the parties.

  26. Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?

    The arbitral tribunal cannot grant remedies on the matters which are not requested by the parties and not in the compliance with the arbitration agreement. Additionally, punitive damages are not recognised under Turkish law and any arbitral award which includes punitive damages will be against the public order and will be result in the cancellation of the award.

  27. What legal requirements are there in your country for the recognition of an award?

    Since Turkey is a party to the New York Convention with the two reservations to the general obligations of the Convention which are the “reciprocity” and the “commercial” reservations; Turkey will recognize and enforce the arbitral awards made in other states that are signatories to the Convention and the scope of recognition and enforcement must have the commercial nature under Turkish law. Otherwise, it is possible to enforce the award according to the Turkish International Private Law No. 5718. According to the Law No. 5718, the awards can be recognised if (i) the judgment must have been given on matters not falling within the exclusive jurisdiction of the Turkish courts or, in condition of being contested by the defendant, the judgment must not have been given by a state court which has accepted himself competent even if there is not a real relation between the court and the subject or the parties of the dispute, (ii) the award is not clearly be contrary to public order and (iii) the person against whom enforcement is requested was not duly summoned pursuant to the laws of that foreign state or to the court that has given the judgment, or was not represented before that court, or the court decree was not pronounced in his/her absence or by a default judgment in a manner contrary to these laws, and the person has not objected to the exequatur based on the foregoing grounds before the Turkish court.

  28. Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?

    The arbitration proceedings and awards cannot be appealed in local courts; however it is possible to initiate a cancellation action against the arbitral award in local court within one month (thirty days for international arbitrations). An arbitral award only can be cancelled on the existence of these conditions; (i) a party of the arbitration agreement was under incapacity; or the arbitration agreement is invalid; (ii) the constitution of arbitral tribunal is not in accordance with the parties' agreement, or, with the applicable law; (iii) the arbitral award is not constituted within the term of arbitration; (iv) the arbitral tribunal unlawfully found itself competent or incompetent; (v) the arbitral tribunal decided on another issue which is not subject to the arbitration agreement or did not decide on the whole request or exceeded its own authority; (vi) the arbitral proceedings are not in compliance with the parties' agreement with respect to the procedure, or, to the applicable law in case of no agreement provided that such non-compliance affected the substance of the award; (vii) the parties are not treated with equality; (viii) the award is contrary to public order, or (ix) the subject matter of the dispute is not appropriate to be resolve through arbitration under Turkish law.

  29. Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?

    According to the Law No. 4686, the parties may partially or wholly waive their right to file a cancellation action against the award. Additionally, parties which are abroad may waive their rights to file a cancellation action by adding a clear declaration to the agreement or make a further written agreement regarding the waiver.

  30. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

    The Local Law allows that the Turkish state or the state entities to enter into arbitration agreements with other parties in case the matter is appropriate for arbitration. They become a party to an international arbitration. Although Turkish courts enforces the award against a state or state entity, only the commercial assets of the states can be enforced. The assets of the state cannot be seizure under Turkish Law.

  31. Are there rules or restrictions on third-party funders in your country?

    No specific regulation or restriction concerning third-party funding in arbitration is regulated under Turkish law.

  32. Is there a concept in your country providing for class-action or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?

    There is no concept in relation to the class-action or group arbitration under Turkish law, although Turkish law allows multiparty lawsuits and the “collective lawsuit” through litigation. The collective lawsuit allows that the associations and other legal entities may initiate a lawsuit to protect their members’ or the society’s - that they represent – right on behalf of themselves to determine the relevants’ rights or remove the unlawful circumstances.

  33. Is diversity in the choice of arbitrators (e.g. gender, age, origin) actively promoted in your country? If so, how?

    Parties are free to appoint their arbitrators according to the Local Law and there is no intention regarding the arbitrators’ gender, age, origin etc. However, in case the parties are from different nations and the sole arbitrator will be appointed by the court, the court considers that the nation of the arbitrator will not be the same with one of the parties; and in case three arbitrators will be appointed, the court considers that the two of the arbitrators will not be the same nation with the one party. The procedure is the same for the appointment of the more arbitrators. Also, according to the Law no. 6100, if there will be an arbitral tribunal, at least one arbitrator must be a legal expert who has five year experience at least, in his/her own area.

  34. Is emergency arbitrator relief available in your country? Is this actively used?

    ISTAC has Emergency Arbitrator Rules (“Emergency Rules”) which are applied to the applications that are made to ISTAC 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 ISTAC Arbitration Rules. Emergency Rules are applied to the parties who are either signatories to the arbitration agreement taken as the basis for an application for the appointment of an emergency arbitrator, or successors of such parties. ISTAC’s emergency arbitrator is appointed within two days as of receiving the application by the Secretariat and the arbitrator constitutes its award within seven days as of the appointment. Furthermore, ITOTAM has also the Emergency Rules according to Article 30 of the ITOTAM Arbitration Rules. ITOTAM’s emergency arbitrator is appointed within two days as of the application and the arbitrator constitutes its award within fifteen days as of the appointment. Both Emergency Rules are the recent regulations under Turkish law.

  35. Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?

    There is no specific regulation or intention by arbitral institutions to promote transparency in arbitration.

  36. Are efforts being made by arbitration institutions or local courts to impose strict deadlines for the rendering of awards?

    According to the Article 33 of the ISTAC Arbitration Rules with the title of “Time Limit for the Award”, the sole arbitrator or arbitral tribunal shall render the award on the merits of the dispute, within 6 months from the date upon which the completion of the signatures on the terms of reference or, the date of notification to the sole arbitrator or arbitral tribunal by the Secretariat of the approval of the terms of reference. If the parties agreed not to draw up a terms of reference, the time limit for the award shall begin to run from the date of the submission of the procedural timetable to the Secretariat. The board, using the procedural timetable as a base, may extend the time limit on its own initiative. The time limit for the award may be extended, upon the agreement of the parties; if the parties fail to agree, the board may extend the time limit upon the sole arbitrator or arbitral tribunal’s request or in cases where it deems necessary on its own initiative.

  37. Have steps been taken in your country to publish reasoned decisions on arbitrator challenges and provide more insight into the drivers behind arbitrator selection by institutions?

    There is no specific step that was taken to publish reasoned decisions on arbitrator challenges or provide more insight into the drivers behind arbitrator selection by institutions.

  38. Are there arbitral laws or arbitration institutional rules in your country providing for simplified procedures for claims under a certain value?

    Unless otherwise agreed by the parties, the ISTAC Fast Track Arbitration Rules (“Fast Track Arbitration Rules”) are applied to the disputes where, as at the date of commencement of the arbitration, the total sum of the claims, and any counterclaims, do not exceed TRY 300.000. The parties may also agree that the Fast Track Arbitration Rules are applied where the amount in dispute exceeds this sum. Unless otherwise agreed by the parties, in cases where both the claims and any counterclaims exceed the sum of TRY 300.000 in the course of the arbitration proceedings, the Fast Track Arbitration Rules are still applied. 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.