arbitration - baker mckenzie...tarek f riad kosheri, rashed & riad law firm england & wales 164...

ArbitrationIn 60 jurisdictions worldwide

Contributing editorsGerhard Wegen and Stephan Wilske

2015

Arbitration 2015Contributing editors

Gerhard Wegen and Stephan WilskeGleiss Lutz

PublisherGideon [email protected]

SubscriptionsSophie [email protected]

Business development managers Alan [email protected]

Adam [email protected]

Dan [email protected]

Published by Law Business Research Ltd87 Lancaster Road London, W11 1QQ, UKTel: +44 20 3708 4199Fax: +44 20 7229 6910

© Law Business Research Ltd 2015No photocopying: copyright licences do not apply.First published 2006Tenth editionISSN 1750-9947

The information provided in this publication is general and may not apply in a specific situation. Legal advice should always be sought before taking any legal action based on the information provided. This information is not intended to create, nor does receipt of it constitute, a lawyer–client relationship. The publishers and authors accept no responsibility for any acts or omissions contained herein. Although the information provided is accurate as of January 2015, be advised that this is a developing area.

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CONTENTS

2 Getting the Deal Through – Arbitration 2015

Introduction 7Gerhard Wegen and Stephan WilskeGleiss Lutz

CEA 14Pablo Poza and Ana BlancoSpanish Court of Arbitration

CEAC 17Eckart Brödermann and Christine Heeg Chinese European Arbitration CentreThomas Weimann Chinese European Legal Association

CIETAC 22Shengchang Wang, Ning Fei and Fang ZhaoHui Zhong Law Firm

The DIFC-LCIA Arbitration Centre 25Gordon Blanke and Soraya Corm-BakhosBaker & McKenzie Habib Al Mulla

DIS 28Renate Dendorfer-DitgesHeussen Rechtsanwaltsgesellschaft mbH

HKIAC 32Paulo FohlinOdebjer Fohlin

ICC 35José Rosell and María Beatriz BurghettoHughes Hubbard & Reed LLP

The Polish Chamber of Commerce 40Justyna Szpara and Maciej ŁaszczukŁaszczuk & Partners

SCC 43Dan Engström and Cornel MarianStockholm Arbitration & Litigation Center (SALC) Advokatbyrå KB

The Swiss Chambers’ Arbitration Institution 46Philippe Bärtsch and Christopher BoogSchellenberg Wittmer Ltd

Angola 50Agostinho Pereira de Miranda, Cláudia Leonardo and Jayr FernandesMiranda Correia Amendoeira & Associados

Argentina 56Luis Alberto Erize, Hernán Martín Oriolo and Mariano Hernán BeicaAbeledo Gottheil Abogados SRL

Australia 63Tony Johnson and Henry WinterJohnson Winter & Slattery

Austria 70Klaus OblinOblin Melichar

Bahrain 76Adam VauseNorton Rose Fulbright (Middle East) LLP

Belarus 83Alexey Anischenko and Kirill LaptevSORAINEN

Belgium 89Johan Billiet Billiet & Co Cecile Oosterveen Association for International Arbitration

Brazil 98Hermes Marcelo Huck, Rogério Carmona Bianco and Fábio Peixinho Gomes CorrêaLilla, Huck, Otranto, Camargo Advogados

Chile 104Cristián Gandarillas and Gabriel del RíoAninat Schwencke y Cía

China 110Shengchang Wang, Ning Fei and Fang ZhaoHui Zhong Law Firm

Colombia 120Alberto Zuleta-Londoño, Juan Camilo Fandiño-Bravo and Juan Camilo Jiménez-ValenciaCárdenas & Cárdenas Abogados

Croatia 126Zoran Vukić, Iva Sunko and Ana PeharVukić & Partners, Ltd

Cyprus 133Andreas Erotocritou and Alexis Erotocritou AG Erotocritou LLC

Denmark 137Peter Lind Nielsen and Morten GrundahlBird & Bird Advokatpartnerselskab

Dominican Republic 145Fabiola Medina GarnesMedina Garrigó Attorneys at Law

Ecuador 152Rodrigo Jijón Letort, Juan Manuel Marchán and Juan Francisco GonzálezPérez Bustamante & Ponce

Egypt 159Tarek F RiadKosheri, Rashed & Riad Law Firm

England & Wales 164Adrian Jones, Gordon McAllister and Edward NormanCrowell & Moring LLP

www.gettingthedealthrough.com 3

CONTENTS

Equatorial Guinea 174Agostinho Pereira de Miranda and Cláudia LeonardoMiranda Correia Amendoeira & Associados

Estonia 179Carri Ginter and Maria PihlakSORAINEN

Finland 186Tom Vapaavuori and Juha OjalaBird & Bird Attorneys Ltd

France 193Thomas Bevilacqua and Ivan UrzhumovFoley Hoag LLP

Germany 202Stephan Wilske and Claudia KrapflGleiss Lutz

Ghana 209Kimathi Kuenyehia and Sarpong OdameKimathi & Partners, Corporate Attorneys

Greece 216Antonios D Tsavdaridis IK Rokas & Partners Law Firm

Hungary 222Chrysta BánBán, S Szabó & Partners

India 231Shreyas Jayasimha, Mysore Prasanna, Rajashree Rastogi and Spandana Ashwath Aarna Law

Indonesia 242Anangga W RoosdionoRoosdiono & Partners

Israel 248Eric S Sherby and Tali RosenSherby & Co, Advs

Italy 256Cecilia CarraraLegance – Avvocati Associati

Japan 261Shinji KusakabeAnderson Mōri & Tomotsune

Korea 270BC Yoon, Richard Menard and Liz Kyo-Hwa ChungKim & Chang

Lithuania 278Ramūnas Audzevičius and Rimantas DaujotasMotieka & Audzevičius

Malaysia 285Foo Joon LiangGan Partnership

Mexico 294Sergio Rodríguez Labastida and Mariana BeltránRodríguez Labastida Abogados

Morocco 301Azzedine Kettani Kettani Law Firm

Mozambique 309Agostinho Pereira de Miranda, Filipa Russo de Sá and Catarina Carvalho CunhaMiranda Correia Amendoeira & Associados

Netherlands 315Daniella StrikLinklaters LLP

Nigeria 321Dorothy Udeme UfotDorothy Ufot & Co

Pakistan 329Sajid Zahid and Mustafa AhmedOrr, Dignam & Co

Poland 335Justyna Szpara and Andrzej MaciejewskiŁaszczuk & Partners

Portugal 342Agostinho Pereira de Miranda and Sofia MartinsMiranda Correia Amendoeira & Associados

Qatar 349Jalal El Ahdab and Myriam EidGinestié Magellan Paley-Vincent in association with Ahdab Law Firm

Romania 356Cristiana-Irinel Stoica, Andrea Micu and Daniel Aragea Stoica & Asociaţii

Russia 364Ilya Nikiforov, Alexey Karchiomov and Svetlana PopovaEgorov, Puginsky, Afanasiev and Partners

Saudi Arabia 373Jalal El Ahdab and Myriam EidGinestié Magellan Paley-Vincent in association with Ahdab Law Firm

Scotland 382Brandon MaloneBrandon Malone & Company

Singapore 391Edmund Jerome Kronenburg and Tan Kok PengBraddell Brothers LLP

Slovakia 401Roman Prekop, Monika Simorova and Peter PethoBarger Prekop sro

Spain 409Alberto EcharriEcharri & Brindle, Abogados

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Sweden 417Simon ArvmyrenSandart & Partners

Switzerland 423Xavier Favre-Bulle, Harold Frey and Daniel DuranteLenz & Staehelin

Tanzania 430Wilbert Kapinga, Ofotsu A Tetteh-Kujorjie and Kamanga KapingaMkono & Co Advocates

Thailand 436Kornkieat Chunhakasikarn and John KingTilleke & Gibbins

Turkey 443Ismail G Esin and Dogan GultutanEsin Attorney Partnership

Ukraine 450Oleg Alyoshin and Yuriy DoboshVasil Kisil & Partners

United Arab Emirates 459Gordon Blanke and Soraya Corm-BakhosBaker & McKenzie Habib Al Mulla

United States 468Jack Thomas, Arlen Pyenson and Amal BouhabibCrowell & Moring LLP

Venezuela 475Fernando Peláez-Pier and José Gregorio Torrealba Hoet Pelaez Castillo & Duque

Vietnam 482Nguyen Manh Dzung, Le Quang Hung and Nguyen Ngoc MinhDzungsrt & Associates LLC

Esin Attorney Partnership TURKEY


TurkeyIsmail G Esin and Dogan GultutanEsin Attorney Partnership

Laws and institutions

1 Multilateral conventions relating to arbitration

Is your country a contracting state to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards? Since when has the Convention been in force? Were any declarations or notifications made under articles I, X and XI of the Convention? What other multilateral conventions relating to international commercial and investment arbitration is your country a party to?

Turkey acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) on 2 July 1992. The New York Convention entered into force in Turkey on 25 September 1992. Turkey has made two reservations. First, Turkey declared it will apply the Convention only if the award has been granted in a state that is a signatory to the New York Convention. Second, Turkey has limited the applicability of the New York Convention to conflicts arising from rela-tionships categorised as commercial under Turkish law.

Additionally, Turkey ratified the European Convention on International Commercial Arbitration of 1961, which entered into force in Turkey on 23 September 1991, and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965, which entered into force in Turkey on 27 May 1988. Turkey also acceded to the Energy Charter Treaty 1994, which entered into force on 6 February 2000, and the Convention Establishing the Multilateral Investment Guarantee Agency (MIGA), which entered into force on 27 May 1988.

2 Bilateral investment treaties

Do bilateral investment treaties exist with other countries?

Turkey has concluded many bilateral investment agreements; there are 87 that are in force. With regard to the inducement and protec-tion of reciprocal investments and economic cooperation, Turkey has entered into such agreements with: Afghanistan (19 July 2005); Albania (26 December 1996); Argentina (1 May 1995); Australia (29 June 2009); Austria (1 January 1992); Azerbaijan (13 May 2013); Bangladesh (21 June 1990); Belarus (20 February 1997); Belgium and Luxembourg (4 May 1990); Bosnia-Herzegovina (29 January 2002); Bulgaria (22 September 1997); China (20 August 1994); Croatia (21 April 1998); Cuba (23 October 1999); Czech Republic (18 March 2012); Denmark (1 August 1992); Egypt (31 July 2002); Estonia (29 April 1999); Ethiopia (10 March 2005); Finland (23 April 1995); France (3 August 2009); Georgia (28 July 1995); Germany (5 December 1965); Greece (24 November 2001); Hungary (21 February 1995); India (18 October 2007); Indonesia (28 September 1998); Iran (13 April 2005); Israel (27 August 1998); Italy (2 March 2004); Japan (12 March 1993); Jordan (23 January 2006); Kazakhstan (10 August 1995); Korea (4 June 1994); Kuwait (25 April 1992); Kyrgyzstan (31 October 1996); Latvia (3 March 1999); Lebanon (4 January 2006); Libya (22 April 2011); Lithuania (7 July 1997); Macedonia (27 October 1997); Malaysia (9 September 2000); Malta (14 July 2004); Moldova (16 May 1997); Mongolia (22 May 2000); Morocco (31 May 2004); Netherlands (1 November 1989); Oman (15 March 2010); Pakistan (3 September 1997); Philippines (18 March 2009); Poland (19 August 1994); Portugal (19 January 2004); Qatar (12 February 2008); Romania (8 July 2010); Russia (17 May 2000); Saudi Arabia (5 February 2010); Senegal (17 July 2012); Serbia (10 November 2003); Singapore, (27

March 2010); Slovakia (11 December 2013); Slovenia (19 June 2006); Spain (3 March 1998); Sweden (8 October 1998); Switzerland (21 February 1990); Syria (3 January 2006); Tajikistan (24 July 1998); Thailand (21 July 2010); Tunisia (28 April 1994); Turkmenistan (13 March 1997); Ukraine (21 May 1998); United Arab Emirates (24 July 2011); United Kingdom (22 October 1996); United States (18 May 1990); Uzbekistan (18 May 1995); and Yemen (31 March 2011).

3 Domestic arbitration law

What are the primary domestic sources of law relating to domestic and foreign arbitral proceedings, and recognition and enforcement of awards?

Domestic and international arbitral proceedings are governed by two sep-arate laws. Domestic arbitration is governed by the new Civil Procedure Law No. 6100 (CPL), adopted on 1 October 2011. International arbitral proceedings are governed by the International Arbitration Law No. 4686 (IAL), adopted on 5 July 2001.

The IAL is applicable to disputes with a ‘foreign element’ and where the place (seat) of arbitration is Turkey. Article 2 of the IAL states that a foreign element exists if:• the domicile, permanent residence or place of business of the parties

are in different states;• the domicile, permanent residence or place of business of the parties

are in a state other than the place (seat) of arbitration stated in the arbi-tration agreement or the place (seat) of arbitration determined under the arbitration agreement; or in a state other than where the substan-tial portion of the underlying agreement is performed, or to where the subject matter of the dispute is closely connected;

• at least one of the companies’ shareholders, who is a party to the prin-cipal agreement underlying the arbitration agreement, has brought foreign capital to Turkey under the foreign capital encouragement regulations, or where it is necessary to enter into a loan or security agreement to provide foreign capital from abroad to implement the agreement; or

• the principal agreement or legal relationship underlying the arbitra-tion agreement causes the movement of capital or goods from one country to another.

The IAL applies also if the parties have agreed it should be applied by the arbitral tribunal or if the arbitral tribunal itself has determined that the arbitral proceedings should be conducted under the IAL.

There are two main laws regarding the recognition and enforcement of foreign arbitral awards: the Turkish International Private and Procedural Law No. 5718 (TPIL), which entered into force on 12 December 2007, and the New York Convention.

In addition, the Law Regarding Principles to be Adhered to Upon Resorting to Arbitration in Disputes Arising from Concession Stipulations and Agreements Regarding Public Services No. 4501, adopted on 22 January 2000, regulates disputes between the Republic of Turkey and pro-ject firms concerning build-operate-transfer projects.

© Law Business Research Ltd 2015

TURKEY Esin Attorney Partnership


4 Domestic arbitration and UNCITRAL

Is your domestic arbitration law based on the UNCITRAL Model Law? What are the major differences between your domestic arbitration law and the UNCITRAL Model Law?

The IAL and the CPL were modelled to a great extent on the UNCITRAL Model Law (Model Law). The main differences between the IAL and the CPL, on the one hand, and the Model Law, on the other, are:• unlike the Model Law, the IAL and the CPL provide that, unless oth-

erwise agreed by the parties, the award must be rendered within one year from the appointment of the sole arbitrator, where a sole arbitra-tor is agreed upon, or, where the tribunal consists of over one arbitra-tor, from the date the minutes of the meeting of the arbitral tribunal are drafted for the first time (articles 10(B) and 427, respectively). Upon expiry of this time limit, the arbitration agreement will cease to exist and a new arbitral tribunal can no longer be reconstituted; in this case, the claimant can take legal action only before the national courts. This time limit can be extended by party agreement or by the court upon application by one of the parties;

• contrary to the Model Law, article 4(3) of the IAL states that the arbi-tral tribunal, in determining the applicable law for determination of the arbitration agreement’s validity, must first determine whether the parties have agreed on the law applicable to the arbitration agreement. If they have, the arbitration agreement’s validity is determined in light of the law agreed upon. If such an agreement does not exist, Turkish law is applied when determining the validity of the arbitration agree-ment. The CPL does not contain such a provision because under the CPL the applicable law is assumed to be Turkish law;

• article 34(2) of the Model Law states that an application to set aside an award must be made within three months, whereas the CPL sets down a one month period for such an application, and the IAL a 30 day period (articles 439(4) and 15(4), respectively);

• article 16 of the Model Law states that if the arbitral tribunal rules as a preliminary question that it has jurisdiction, an application may be made by a party to the national court for the issue’s conclusive deter-mination. In contrast, the CPL and the IAL specify that the arbitral tribunal’s decision as to its jurisdiction cannot be appealed, and can only be raised as a ground for setting aside the award (articles 422(5) and 439(2)(ç) of the CPL and articles 7(H)(5) and 15(A)(2)(1)(d) of the IAL). Under Turkish law, a Turkish party’s waiver from right to appeal is invalid and cannot be asserted against the party waiving. However, no such restriction applies to foreign parties; and

• contrary to the Model Law, cost of arbitration provisions are in the IAL and not left for stipulation in the rules applicable to the arbitration proceedings (ie, articles 40 to 43 of the UNCITRAL Arbitration Rules). Further, according to article 43 of the UNCITRAL Arbitration Rules the arbitral tribunal, on its establishment, may request both parties deposit an equal amount as an advance for costs. The IAL, by contrast, provides that cost advances may only be requested from the claimant (article 16(C)(1)). Under the CPL, the provision on cost advances mir-rors that of the UNCITRAL Arbitration Rules (article 442(1)).

5 Mandatory provisions

What are the mandatory domestic arbitration law provisions on procedure from which parties may not deviate?

The IAL’s mandatory provisions relate to: • the application to the court for an order to extend the arbitration

period;• the IAL’s scope of application;• non-arbitrable disputes;• the procedure concerning preliminary objections to the court as to the

existence of the arbitration agreement; • interim measures; and• the fundamental principles of international arbitration, namely, equal

treatment and the right to present one’s case.

Similar, if not identical, provisions are contained in the CPL regarding domestic arbitration.

6 Substantive law

Is there any rule in your domestic arbitration law that provides the arbitral tribunal with guidance as to which substantive law to apply to the merits of the dispute?

For international arbitrations under the IAL, the arbitral tribunal must render an award in accordance with the law chosen by the parties. In the absence of an agreement to that effect between the parties, the arbitral tribunal will apply the law most closely connected to the dispute (article 12(C)).

The CPL does not have a provision dealing with the choice of applica-ble law. The CPL, dealing with domestic arbitration, assumes that Turkish law is the applicable law due to the fact that the general principle is that Turkish legal and natural persons cannot agree upon the application of the laws of another state to their agreement. The only exception to this is the existence of a foreign element, which will bring into play article 24 of the TPIL (the law applicable to the agreement). Turkish courts interpret the requirement of foreign elements widely and are reluctant to find that the applicable law clause is invalid.

7 Arbitral institutions

What are the most prominent arbitral institutions situated in your country?

The most prominent arbitral institution in Turkey is the Istanbul Chamber of Commerce (TICC) (www.ito.org.tr). Arbitration proceedings under the TICC are regulated under the Rules relating to Arbitration, Mediation and Expert-Determination (Istanbul Rules). In order to choose the TICC as the arbitral institution, at least one of the parties must be a member of the TICC, the Istanbul Chamber of Industry, the Istanbul Commodity Exchange or the Maritime Chamber of Commerce of either Istanbul or the Marmara region. If this condition is not met, the application may be accepted by the TICC board of directors, at its discretion.

Although the Istanbul Rules state that the arbitral proceedings are to be conducted in Turkish, if required, the arbitral tribunal is entitled to conduct the proceedings in another language.

The place of arbitration is Istanbul, where the TICC is based. The par-ties may determine the applicable law. The application fee is 66 Turkish lira (approx. US$30). The advance payment amount is determined by the board of directors on a case-by-case basis. One per cent of the amount in dispute is paid to each arbitrator as arbitrator fees.

However, the Istanbul Arbitration Centre (IAC) has been very recently established by legislation and will be operative as of January 2015 (see ‘Update and trends’). The IAC is expected to become the most prominent arbitral institution in Turkey once it is established and commences its operations.

Arbitration agreement

8 Arbitrability

Are there any types of disputes that are not arbitrable?

Disputes relating to rights in rem over immoveables in Turkey are non-arbi-trable (article 1(4) of the IAL; article 408 of the CPL). However, disputes arising from the commercial lease of immoveables are arbitrable. Disputes that cannot be subject to the parties’ will are non-arbitrable (article 1(4) of the IAL; article 408 of the CPL). Therefore, claims for the bankruptcy of an entity or disputes relating to family and employment law matters are non-arbitrable. In addition, arbitrators are not entitled to render an award concerning the registration of intellectual property rights with the relevant authorities. Further, the Court of Appeal has recently held that disputes arising from a company’s articles of association are not arbitrable.

The arbitrability of disputes arising from competition law remains unclear under Turkish law. In any event, arbitrators are not entitled to issue exemption declarations or impose public law sanctions under Turkish competition law.

9 Requirements

What formal and other requirements exist for an arbitration agreement?

An arbitration agreement must be in writing and the parties cannot agree otherwise (article 4 of the IAL; article 412 of the CPL). An agreement is deemed to be in writing under the IAL and under the CPL if it is:




• contained in a document signed by the parties; • made by an exchange of letters, telex, telegram, fax or other means of

telecommunication or in electronic form; or • made by way of an exchange of statements of claim and defence, in

which the existence of an arbitration agreement is alleged and not denied by the other party in its reply.

The reference in an agreement to a document containing an arbitration clause constitutes an arbitration agreement, provided that the agreement is in writing and the reference states that the clause is to be considered as part of the agreement.

10 Enforceability

In what circumstances is an arbitration agreement no longer enforceable?

An arbitration agreement will be unenforceable where the conditions specified for an arbitration agreement’s validity are not complied with (ie, the requirement that the agreement be evidenced in writing) or where the general principles of contract law deem the agreement null and void (ie, entered into because of fraudulent behaviour). Further, article 74 of the CPL provide that an attorney shall not execute an arbitration agreement unless specifically authorised by the client; thus, where no such authority is granted, the arbitration agreement will be unenforceable.

11 Third parties – bound by arbitration agreement

In which instances can third parties or non-signatories be bound by an arbitration agreement?

Courts do not extend the effectiveness of an agreement to third parties with an agency relationship. However, it is accepted that a third party will be bound by the arbitration agreement where a full succession (this extends to insolvency) or a partial succession occurs (ie, assignment).

12 Third parties – participation

Does your domestic arbitration law make any provisions with respect to third-party participation in arbitration, such as joinder or third-party notice?

The notification of a lawsuit by a party to another person or an entity exists as a matter of material Turkish law. The domestic procedural law also contains rules to that effect. However, relating to arbitration, no such rules exist nor are they recognised by the courts or by legal schol-ars. Therefore, the participation of third parties in arbitral proceedings depends upon approval by the parties to the arbitration, and the third party concerned. If such conditions are present, the third party may join arbitra-tion proceedings.

13 Groups of companies

Do courts and arbitral tribunals in your jurisdiction extend an arbitration agreement to non-signatory parent or subsidiary companies of a signatory company, provided that the non-signatory was somehow involved in the conclusion, performance or termination of the contract in dispute, under the ‘group of companies’ doctrine?

Although the Turkish Commercial Code No. 6102 contains provisions set-ting forth certain principles regarding the group of companies doctrine, the predominant view among Turkish legal scholars is that the ‘group of companies’ doctrine is not a recognised concept.

14 Multiparty arbitration agreements

What are the requirements for a valid multiparty arbitration agreement?

There are no legislative provisions or judicial decisions regarding multi-party arbitration agreements under Turkish law. However, bearing in mind the key objective of an arbitration agreement (that is, giving effect to the will of the parties), if the parties agree on multiparty arbitration and pro-vided that the principle of equal treatment is adhered to, a valid multiparty arbitration may be conducted.

Constitution of arbitral tribunal

15 Eligibility of arbitrators

Are there any restrictions as to who may act as an arbitrator? Would any contractually stipulated requirement for arbitrators based on nationality, religion or gender be recognised by the courts in your jurisdiction?

The parties are at liberty to appoint arbitrators and to determine the quali-fications for such arbitrators and are, therefore, not required to select arbi-trators from an ‘approved’ list. Issues such as those that were the subject matter of the English Supreme Court’s decision in Jivraj v Hashwani (2011) UKSC 40 will not arise in Turkey. However, under the Law on Judges and Prosecutors No. 2802, judges and prosecutors cannot participate in any kind of activity for private gain or take office for any public or private duties other than those specified in law. Retired judges, however, are not subject to these restrictions and may act as arbitrators.

16 Default appointment of arbitrators

Failing prior agreement of the parties, what is the default mechanism for the appointment of arbitrators?

Under the IAL, if the number of arbitrators has not been agreed upon by the parties, the arbitration panel will comprise three arbitrators. Each party appoints an arbitrator and the party-appointed arbitrators appoint the third arbitrator who serves as the chairperson.

If a party fails to give notice that it has selected its arbitrator within 30 days after receiving notice of the appointment of the other party’s arbi-trator, or should the arbitrators appointed by the parties fail to agree on the nomination of the third arbitrator, the competent court is to appoint on behalf of the parties or the party-appointed arbitrators, upon applica-tion by either party (article 7(A)-(B) of the IAL; articles 415–416 of the CPL containing similar provisions). It should be noted that there are different views as to the competent court regarding arbitration matters; some schol-ars argue that it is the commercial court of first instance whereas others argue that it is the civil court of first instance. However, the Court of Appeal decisions suggest that the competent court is the commercial court of first instance.

Where the arbitral tribunal is to consist of a sole arbitrator, the arbi-trator (failing the parties’ agreement) will be appointed by the competent court upon either party’s application (article 7(B)(2) of the IAL; article 416(1)(b) of the CPL). In addition, article 7(B)(3) of the IAL stipulates that where the court appoints an arbitrator, the sole arbitrator shall not be of the same nationality of one of the parties where the parties are not of the same nationality. The rule applies equally to a case where the arbitral tri-bunal comprises of three arbitrators; two of the arbitrators shall not be of the same nationality of one of the parties where the parties are of different nationality.

17 Challenge and replacement of arbitrators

On what grounds and how can an arbitrator be challenged and replaced? Please discuss in particular the grounds for challenge and replacement, and the procedure, including challenge in court. Is there a tendency to apply or seek guidance from the IBA Guidelines on Conflicts of Interest in International Arbitration?

There are three main grounds for challenging an arbitrator under article 7 of the IAL (see article 417 of the CPL to the same effect):• the arbitrator does not possess the qualifications specified in the arbi-

tration agreement;• any reason specified by the parties as a ground for challenging an

arbitrator exists; or• there are justifiable reasons for a party to doubt the impartiality of the

arbitrator.

Under the IAL, the parties may determine the procedure for challenging an arbitrator. Failing such agreement, the party who intends to challenge an arbitrator must send a written statement to the other party, stating the reasons for the challenge, within 30 days of the arbitrator’s appointment or the constitution of the arbitral tribunal, or within 30 days from the date the party becomes aware of the circumstance(s) prompting the challenge (for domestic arbitrations, this period is two weeks under article 418(2) of




the CPL). The statement challenging one or more members of the arbitral tribunal may be submitted to the arbitral tribunal itself. If the challenge is dismissed, the challenging party may initiate a lawsuit before the compe-tent court requesting the setting aside of this decision and the removal of the arbitrators within 30 days of receipt of the arbitral tribunal’s decision (one month under article 418(3) of the CPL for domestic arbitrations). A challenge against the sole arbitrator, the tribunal or the arbitrators who constitute a decision-making majority of the panel may only be initiated before the competent court. The court decision is final and binding (see article 418(3) of the CPL to the same effect for domestic arbitrations).

For the replacement of arbitrators, article 7(G) of the IAL provides that the procedure used to appoint the arbitrator being replaced will apply to the appointment of the replacement arbitrator (see article 421 of the CPL to the same effect for domestic arbitrations).

18 Relationship between parties and arbitrators

What is the relationship between parties and arbitrators? Please elaborate on the contractual relationship between parties and arbitrators, neutrality of party-appointed arbitrators, remuneration and expenses of arbitrators.

The nature of the relationship between the parties and the arbitrators is not expressly defined by law. The majority of legal experts and judicial deci-sions suggest that an arbitration agreement establishes a proxy relation-ship between the parties and the arbitrators and, hence, it is subject to the provisions of the Code of Obligations No. 6098, as well as procedural rules. All arbitrators, including party-appointed arbitrators, must be, and remain, independent and impartial. Indeed, an arbitrator is under an obligation to declare any information that calls into question his or her independence or impartiality.

Parties may agree on the remuneration of the arbitrators. If no such agreement is reached, the arbitrators’ remuneration shall be determined under the fee tariff published annually by the Ministry of Justice.

19 Immunity of arbitrators from liability

To what extent are arbitrators immune from liability for their conduct in the course of the arbitration?

Under article 7(E) of the IAL, unless otherwise agreed, an arbitrator is under an obligation to compensate the parties for the loss caused as a result of his or her failure to carry out the duties entrusted to him or her, without a valid reason. This seems to cover not only an intentional breach of duty but also negligence (see article 419 of the CPL to the same effect for domestic arbitrations).

Jurisdiction and competence of arbitral tribunal

20 Court proceedings contrary to arbitration agreements

What is the procedure for disputes over jurisdiction if court proceedings are initiated despite an existing arbitration agreement, and what time limits exist for jurisdictional objections?

If a party applies to the court despite an arbitration agreement, the other party has the right to make an ‘arbitration objection’. This is a preliminary objection under the CPL, which must be raised no later than two weeks from the date the statement of claim is received (see articles 127 and 413 of the CPL). Article 5(1) of the IAL refers to the CPL and states that the provi-sions in the CPL relating to arbitration objections will apply. If the court is prima facie satisfied that an arbitration agreement exists, the case will be dismissed and will be referred to arbitration.

21 Jurisdiction of arbitral tribunal

What is the procedure for disputes over jurisdiction of the arbitral tribunal once arbitral proceedings have been initiated and what time limits exist for jurisdictional objections?

According to article 7 of the IAL (see article 422 of the CPL to the same effect), the principle of Kompetenz-Kompetenz is recognised under Turkish law. Hence, the arbitral tribunal has the authority to rule on its own jurisdiction. Unlike the Model Law, objections regarding the arbitral tribu-nal’s decision regarding its own jurisdiction may only be raised after the award is rendered, as a ground for setting aside the award. The objection

that the tribunal has no jurisdiction, however, is a preliminary challenge. Therefore, it must be raised before or with the first statement of defence. However, if the delay in raising the objection is justified, the tribunal may allow the delayed objection.

Arbitral proceedings

22 Place and language of arbitration

Failing prior agreement of the parties, what is the default mechanism for the place of arbitration and the language of the arbitral proceedings?

Under article 9(1) of the IAL, failing an agreement by the parties, the place of arbitration is determined by the arbitrator or the arbitral tribunal consid-ering the circumstances of the case (see also article 425 of the CPL to the same effect for domestic arbitrations).

Under article 10(C) of the IAL, if the parties have not agreed on the language to be used during the arbitral proceedings, the arbitrator or the arbitral tribunal will determine the language to be used. There is no such provision dealing with the language of arbitration under the CPL.

23 Commencement of arbitration

How are arbitral proceedings initiated?

The commencement of arbitral proceedings must be made in accordance with the applicable rules. The IAL and the CPL only provide that a written statement must be submitted to commence arbitral proceedings (articles 10(D) and 428, respectively). Thus, if arbitration proceedings are to be conducted in accordance with the Rules of Arbitration of the International Chamber of Commerce (Rules), the Rules will have to be adhered to for the commencement of arbitration. Under the Istanbul Rules, a party wishing to submit its dispute to arbitration must first pay the application fee and then file the request for arbitration with the arbitration office. The office, upon receipt of the request for arbitration, will send a copy of the request to the other party. If the other party consents to arbitration, it must do so in writing within five days of receiving the notice.

24 Hearing

Is a hearing required and what rules apply?

In line with the IAL, the CPL and the Istanbul Rules, a hearing is not man-datory. A party, however, may request a hearing from the tribunal, in which case the arbitral tribunal must conduct a hearing, unless there is an agree-ment to the contrary. If a party fails to attend a hearing, the arbitral tribunal may nevertheless proceed and render an award.

25 Evidence

By what rules is the arbitral tribunal bound in establishing the facts of the case? What types of evidence are admitted and how is the taking of evidence conducted?

In general, parties may decide on the procedure for taking evidence. They may refer to a domestic procedural law or to institutional rules while doing so. The IBA Rules on the Taking of Evidence in International Commercial Arbitration are used by arbitral tribunals as a guide. Not all aspects of tak-ing evidence are specified in the IAL. However, there are some notable provisions. For example, unless otherwise agreed upon by the parties, a party or the arbitral tribunal may request, if it deems it appropriate, that the expert attends the hearing after the submission of his or her written report, and questions may be directed to the expert during the hearing. Further, the arbitral tribunal may conduct field inspections at its own discretion or upon request (see article 12 of the IAL and article 431 of the CPL).

26 Court involvement

In what instances can the arbitral tribunal request assistance from a court and in what instances may courts intervene?

Intervention by the courts is possible only in certain cases permitted by the IAL (and the CPL for domestic arbitrations). The IAL permits judicial intervention in relation to:• certain matters relating to the appointment or challenge of arbitrators;• the granting of interim injunctions and interim attachments by the

court and ordering compliance with such orders issued by the arbitral tribunal;




• the extension of the time limit for the rendering of the award; and• assistance in gathering evidence (upon request for assistance by the

arbitral tribunal).

27 Confidentiality

Is confidentiality ensured?

There are no provisions in the IAL regarding confidentiality of arbitral proceedings. This issue is usually dealt with by the arbitration rules. For example, article 24(3) of the Istanbul Rules explicitly provide for the con-fidentiality of the arbitral proceedings unless otherwise agreed by the par-ties. However, hearings will be open to the public where court assistance or intervention is required.

Interim measures and sanctioning powers

28 Interim measures by the courts

What interim measures may be ordered by courts before and after arbitration proceedings have been initiated?

The IAL states that, before and after the commencement of the arbitral proceedings, either party may apply for the granting of an interim measure from the competent court, and that such an application does not constitute a breach of the arbitration agreement (article 6). If the application is made before the commencement of arbitration, the party making the application must initiate the arbitration proceedings within 30 days of the granting of the interim measure. Otherwise, the interim measure will cease to have effect (article 10(A)(2)). The arbitral tribunal is also authorised to order interim measures. There is no exclusivity for the courts or the arbitral tri-bunal on this matter.

The CPL differs to the IAL on some aspects. First, party agreement or arbitral tribunal’s permission is required for an application to the court to be made for an interim measure or the determination of evidence, unless it appears from the facts that the arbitral tribunal or another person/body authorised by the parties will not act promptly and effectively (article 414(3)). Second, the period within which arbitration proceedings must be commenced is two weeks (article 426(2)).

29 Interim measures by an emergency arbitrator

Does your domestic arbitration law or do the rules of the domestic arbitration institutions mentioned above provide for an emergency arbitrator prior to the constitution of the arbitral tribunal?

The CPL, the IAL and the Istanbul Rules do not contain an emergency arbitrator provision.

30 Interim measures by the arbitral tribunal

What interim measures may the arbitral tribunal order after it is constituted? In which instances can security for costs be ordered by an arbitral tribunal?

An arbitral tribunal may grant interim measures upon application by either party (article 6(2) of the IAL; article 414(1) of the CPL). However, an arbi-tral tribunal may not grant interim measures that are exclusively within the control of governmental institutions. Further, the arbitral tribunal cannot issue orders to be binding on governmental institutions or grant an interim measure against third parties. In summary, interim measures granted by the arbitral tribunal are not enforceable before the courts and are not bind-ing upon official authorities or third parties.

Under the IAL, the tribunal may ask the claimant to pay security for costs (article 16(C) ). If an order is made for the payment of an amount as security for costs, and the claimant fails to pay, the arbitral tribunal may stay the proceedings for up to 30 days until payment is made. If the pay-ment is not made within the 30 day period, the arbitral proceedings will come to an end (article 16(C)(1) and (2)). The security for costs under the CPL is to be paid in equal proportions by both parties, and if the parties fail to pay, the arbitral tribunal may stay the proceedings for up to one month until payment is made. If payment is not made within the one month period, arbitral proceedings will come to an end (article 422(1)-(2)).

31 Sanctioning powers of the arbitral tribunal

Pursuant to your domestic arbitration law or the rules of the domestic arbitration institutions mentioned above, is the arbitral tribunal competent to order sanctions against parties or their counsel who use ‘guerrilla tactics’ in arbitration?

There are no specific provisions in the IAL, the CPL or the Istanbul Rules equipping the arbitral tribunal with the competence to order sanctions against parties or their counsel who use ‘guerrilla tactics’ in arbitration. To do so, the arbitral tribunal would need to rely on general provisions contained in the laws. For instance, an arbitral tribunal may, if it deems appropriate, ren-der an interim measure to refrain a party from employing ‘guerrilla tactics’ and the relevant party may seek the court’s assistance in the event of non-compliance (article 6(3) of the IAL and article 414(2) of the CPL).

Awards

32 Decisions by the arbitral tribunal

Failing party agreement, is it sufficient if decisions by the arbitral tribunal are made by a majority of all its members or is a unanimous vote required? What are the consequences for the award if an arbitrator dissents?

Unless otherwise agreed by the parties, an arbitral award is rendered by majority decision. If the parties or other members of the tribunal authorise, the chairperson may resolve certain issues relating to procedure on his or her own (ie, arbitration costs, requests for time extensions) (article 13(A) of the IAL; for domestic arbitration, see article 433 of the CPL to the same effect).

33 Dissenting opinions

How does your domestic arbitration law deal with dissenting opinions?

If there are arbitrators with dissenting opinions, the award must include the dissenting opinion and the signature of the dissenting arbitrator. In practice, some arbitrators who dissent refrain from signing the award. The failure of a dissenting arbitrator to sign an award does not affect the award’s validity (article 14(A)(4) of the IAL; for domestic arbitration, see article 436 of the CPL to the same effect).

34 Form and content requirements

What form and content requirements exist for an award?

In line with article 14 of the IAL (see article 436 of the CPL for domestic arbitrations), the award must include the following:• the name, title and address of the parties, their agents or attorneys (if

any);• the legal grounds and the reasoning for the award and the amount of

compensation, provided that such a claim has been made;• the place (seat) of arbitration and the date of the award;• the names, signatures and the dissenting votes of the arbitrators; and• the fact that the award may be challenged to have it set aside.

35 Time limit for award

Does the award have to be rendered within a certain time limit under your domestic arbitration law or under the rules of the domestic arbitration institutions mentioned above?

Under article 10(B) of the IAL, unless there is an agreement to the con-trary, the time limit within which the arbitral award must be rendered is one year from the sole arbitrator’s appointment, or in the event of an arbi-tral tribunal comprising over one arbitrator, from the date the arbitral tri-bunal’s meeting minutes are first drafted (see article 427 of the CPL and article 30(1) of the Istanbul Rules to the same effect). A party may request the competent court to extend this period. Extension can also be effected by way of the parties’ agreement to that effect.

36 Date of award

For what time limits is the date of the award decisive and for what time limits is the date of delivery of the award decisive?

The tribunal is required to notify the parties of the rendering of the award in order for the award to become final, so that the parties can challenge the




award if required. A request to set aside the award can be made within 30 days of the notification of the award to the parties, and this time limit can-not be altered by the parties by agreement (article 15(A)(4) of the IAL; see also article 439(4) of the CPL where a one month period is specified). In such a case, the delivery (notification) of the award is decisive.

37 Types of awards

What types of awards are possible and what types of relief may the arbitral tribunal grant?

The form and content requirements of an award under the IAL are the same as in the Model Law. The tribunal may grant not only final awards, but also partial awards (article 14(A)(2); see also article 436(2) of the CPL to the same effect). It is not clear, however, whether a tribunal may grant a consent order.

38 Termination of proceedings

By what other means than an award can proceedings be terminated?

Under article 13(B) of the IAL (see article 435 of the CPL for domestic arbitrations), apart from the rendering of a final arbitral award, arbitral proceedings may be terminated in the following instances:• the claimant withdraws its claim, excluding where the defendant

objects and the arbitral tribunal determines that the defendant has a legal benefit in the conclusive resolution of the dispute;

• the parties mutually agree to terminate the proceedings;• the arbitral tribunal deems it unnecessary or impossible to continue

the arbitral proceedings;• the request to extend the arbitration period (one year, unless the

parties have agreed on a different period, or the extended period) is denied by the court;

• the decision is not rendered with unanimity despite the parties’ agree-ment to that effect;

• the arbitral proceedings cannot be continued due to a party having lost its capacity to act as a party; or

• the claimant fails to pay the advance on costs, despite the decision of the arbitral tribunal to that effect.

39 Cost allocation and recovery

How are the costs of the arbitral proceedings allocated in awards?

Unless the parties agree otherwise, the party against whom the award is rendered will bear all costs of the arbitral proceedings. If the award ren-dered is in favour of both parties, the costs will be allocated among the parties in proportion to the extent their claims have been validated by the arbitral tribunal. All administrative fees, attorneys’ fees, in-house fees and costs, etc, are recoverable (article 16(D) of the IAL; see also, article 442(4) of the CPL to the same effect).

40 Interest

May interest be awarded for principal claims and for costs and at what rate?

Although the IAL and the CPL contain no express provision relating to interest on either the costs of arbitration or principal claims, there are no legal obstacles against the awarding of interest. The tribunal must deter-mine whether and what interest a party is liable to pay by considering the law applicable to the dispute and the contract.

Proceedings subsequent to issuance of award

41 Interpretation and correction of awards

Does the arbitral tribunal have the power to correct or interpret an award on its own or at the parties’ initiative? What time limits apply?

In line with article 14(B) of the IAL (see article 437 of the CPL for domes-tic arbitrations), the tribunal may interpret, correct or complete the award upon application or on its own initiative. A request for the correction of material errors relating to calculations, typing and other similar errors, interpreting all or parts of the award or determination of issues raised during the arbitral proceedings but not determined upon by the arbitral

tribunal must be made to the arbitral tribunal within 30 days of being noti-fied of the award. The interpretation or correction by the arbitral tribunal without an application by either of the parties is also subject to the 30-day time limit.

42 Challenge of awards

How and on what grounds can awards be challenged and set aside?

The only way to challenge an award under the IAL is an action to set aside the award before the relevant competent court, within 30 days of the issu-ance of the award. The grounds for such an action are listed in article 15 of the IAL (see article 439 of the CPL for domestic arbitration). There are two types of grounds set out: • grounds that must be considered by the court ex officio:

• the non-arbitrability of the dispute under Turkish law; and• the award being contrary to public policy.

• grounds that must be advanced and established by the party applying to set aside:• invalidity of the arbitration agreement under the applicable law

or, absent an applicable law, under Turkish law, or the legal inca-pacity of one of the parties;

• non-compliance with the procedure agreed upon by the parties or determined in the IAL to appoint the arbitrators;

• the failure of the arbitral tribunal to decide within the specified time limit;

• the unlawful determination by the arbitral tribunal as to its jurisdiction;

• the failure of the arbitral tribunal to decide on every claim raised during the proceedings or the rendering of an award outside the scope of the arbitration agreement;

• failing to abide by the applicable procedural rules agreed upon by the parties or determined in the IAL, affecting the outcome of the decision regarding the merits of the case; or

• non-compliance with the principle of equal treatment between the parties.

43 Levels of appeal

How many levels of appeal are there? How long does it generally take until a challenge is decided at each level? Approximately what costs are incurred at each level? How are costs apportioned among the parties?

Under the IAL, a party must challenge the award before the competent court to have the award set aside, within 30 days of being notified of the award (article 15(A)(1)). An appeal can then be brought before the Court of Appeal against the decision of the first instance court. The Court of Appeal will decide in an urgent manner, and the decision will be final and bind-ing. Our estimate is that a set-aside action should be concluded within one and a half to two years and the appeal stage within one to one and a half years. Generally, nominal fixed application fees are applicable to set aside applications and appeals. Attorneys’ fees with respect to court proceedings will only be awarded if it does not exceed the maximum specified in the fee tariff published annually by the Ministry of Justice. The losing party will bear the costs of the case at each level.

In relation to domestic arbitration, the application to have the award set aside must be made to the district court (article 410(1) of the CPL). An appeal can then be brought before the Court of Appeal against the decision of the district court (article 410(1) of the CPL). However, district courts have not yet commenced operation, and the system foreseen under the IAL will apply in the interim.

44 Recognition and enforcement

What requirements exist for recognition and enforcement of domestic and foreign awards, what grounds exist for refusing recognition and enforcement, and what is the procedure?

Bearing in mind that Turkey is a party to the New York Convention, the grounds for refusing recognition and enforcement listed in the New York Convention should be applied lex specialis. In theory, the New York Convention should apply where the foreign arbitral award falls within its scope. However, the TPIL sets forth almost the same grounds that will apply where the New York Convention does not apply. In any case, the




procedural rules for an application for the recognition and enforcement of arbitral awards are in the TPIL. In relation to the enforcement of domestic arbitral awards, the provisions of the IAL and the CPL will apply.

Until recently, case law suggested that courts had a tendency to over-look the New York Convention and avoid recognising and enforcing foreign arbitral awards. However, recent Court of Appeal decisions demonstrate that courts are becoming more and more responsive in applying the New York Convention and enforcing foreign arbitral awards.

45 Enforcement of foreign awards

What is the attitude of domestic courts to the enforcement of foreign awards set aside by the courts at the place of arbitration?

An award set aside by the court at the place (seat) of arbitration will not be enforced in Turkey, both under the New York Convention and the TPIL (article V(1)(e) and article 62(1)(h), respectively).

46 Cost of enforcement

What costs are incurred in enforcing awards?

An application fee and a quarter of the decision announcement fee must be paid to enforce a foreign arbitral award. The application fee is 25.20 Turkish lira (approx US$11); the decision announcement fee is 68.31 per thousand of the amount concerned (see article 21 of the Code of Fees No. 492 and Tariff No. 1). The remainder of the decision announcement fee is paid by the defendant, as well as the one quarter already paid by the claimant, if the request to enforce is accepted. If the request is dismissed, however, the quarter of the decision announcement fee is returned to the claimant.

Further, the payment of stamp duty will be requested by the notary public when the award is being translated into Turkish.

Other

47 Judicial system influence

What dominant features of your judicial system might exert an influence on an arbitrator from your country?

Arbitration proceedings in Turkey are likely to be influenced by the follow-ing features of the Turkish judicial system:• there is likely to be a lack of the effective use of the cross-examination

tool since cross-examination is new to practitioners in Turkey;• written submissions are likely to be shorter than those submitted by

practitioners from other jurisdictions in light of the tendency of practi-tioners to submit short written statements to courts; and

• US-style disclosure of evidence does not exist in the Turkish judicial system, and this is likely to be the case where the arbitration proceed-ings are being conducted by an arbitral tribunal that comprises arbitra-tors who are of Turkish nationality.

48 Professional or ethical rules applicable to counsel

Are specific professional or ethical rules applicable to counsel in international arbitration in your country? Does best practice in your country reflect (or contradict) the IBA Guidelines on Party Representation in International Arbitration?

There are no specific professional or ethical rules applicable to counsel in international arbitration in Turkey. However, there are certain duties and obligations set forth in the Attorneyship Law No. 1136 (Attorneyship Law) and the Professional Rules of the Union of Turkish Bar Associations (Professional Rules) that are applicable to attorneys registered with a bar association in Turkey. These rules are considered applicable to conduct in international arbitration. Article 34 of the Attorneyship Law provides that attorneys are obligated to perform their duties with utmost care, honesty and honour, in compliance with professional rules of conduct determined by the Union of Turkish Bar Associations. In fact, article 4 of the Rules of Profession provide that an attorney must not act in any manner that would harm his or her professional reputation. This obligation applies to personal life as well as professional life.

49 Regulation of activities

What particularities exist in your jurisdiction that a foreign practitioner should be aware of?

Turkey requires visas for the citizens of many foreign countries. Visa exemption applies to nationals of certain countries. An updated list of the countries whose nationals are exempt from visa can be found at the fol-lowing website in the English language: www.mfa.gov.tr/visa-information-for-foreigners.en.mfa. Attorneys who are not a member of a bar in Turkey are entitled to represent their clients in arbitration proceedings in Turkey, but they cannot represent their clients before the Turkish courts.

Update and trends

With the aim of making Istanbul one of the global centres of arbitration, the Law on the Istanbul Arbitration Centre (LIAC), published in the Official Gazette on 29 November 2014, foresees the establishment of the IAC. The LIAC is to enter into force on 1 January 2015. The structure foreseen for the IAC is as follows: a general assembly (25 members); a board of directors (five members selected from the general assembly (four reserves)); a board of advisers (15 members); a general secretary; a board of auditors (maximum three members (one reserve)); and national and international courts of arbitration (three members each, in addition to the chair person of the board of directors and the general secretary). The IAC general assembly will convene for the first time within four months of the entry into force of the LIAC (1 May 2015, the latest). It is hoped that the establishment of the IAC will promote the use of arbitration in Turkey and make Istanbul a global centre of arbitration.

With regards to investment arbitrations concerning Turkey, there is currently one pending investment arbitration initiated against Turkey (unofficial source). It was commenced against Turkey on 7 March 2014 before the Stockholm Chamber of Commerce, with the disputed amount being €2.5 billion.

Ismail G Esin [email protected] Dogan Gultutan [email protected]

Ebulula Mardin Cad. Gül Sok. No. 2Maya Park Tower 2Akatlar – Beşiktaş34335 IstanbulTurkey

Tel: +90 212 376 64 00Fax: +90 212 376 64 64www.esin.av.tr


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