The Regulations on Tenders to Purchase of Goods, Service Procurement, Consulting Service Procurement, Construction Works and Application of Framework Agreement (the ''Regulation'') have been significantly amended by the Official Gazette dated 30th December 2017 and repeated number 30286.
With the amendment to the Regulations, the Contracting Authority has been given the right to choose between arbitration and Turkish Courts as a dispute settlement method in case of a dispute between parties during the execution of the contract. In this way, arbitration method has been made possible for the parties if the Contracting Authority chooses arbitration method while preparing the standard contract.
During the preparation of the standard contract, The Contracting Authority may determine the clause "Resolution of Disputes'' as follows:
1. IN CASE TURKISH COURTS ARE PREFERRED:
The rule that courts and enforcement offices where the Contracting Authority is located shall have jurisdiction will remain in effect.
2. IN CASE ARBITRATION IS PREFERRED (Two Different Situation have been regulated):
a) For all other cases except the situations where domiciles or habitual residences or places of business of the parties are in different states, which is regulated in subparagraph 1 of paragraph 1 of Article 2 of International Arbitration Law numbered 4686; Except the situations that the Contracting Authority has authority to ex officio act and decide, all disputes arising from the contract will be settled by the rules of Istanbul Arbitration Center ("ISTAC") and the decision of ISTAC is to be deemed in final. Place of arbitration will be chosen as Istanbul or the place where the Contracting Authority is located. The language of arbitration will be Turkish, Turkish law will be applicable law and the arbitration committee is to be composed of 3 arbitrators.
The standard contract regulates that, even after applying for the arbitration, in case the work has already started, the contractor is obliged to continue the work and follow the rules to be taken by the Contracting Authority with regard to execution of the work.
b) For cases where domiciles or habitual residences or places of business of the parties are in different states, which is regulated in subparagraph 2 of paragraph 1 of Article 2 of International Arbitration Law numbered 4686; The Contracting Authority may choose as international arbitration method either the arbitration rules of ISTAC or the rules of International Arbitration Law numbered 4686.
In case ISTAC is chosen by the Contracting Authority, rules listed above in paragraph (a) will be also applied.
If the Contracting Authority chooses international arbitration method for dispute resolution, all disputes arising from execution of the standard contract will be settled in accordance with the International Arbitration Law dated 21st June 2001 and numbered 4686, except the situations that the Contracting Authority has authority to ex officio act and decide. In that case, arbitration committee will be composed of 3 arbitrators, each party will choose one arbitrator and the chosen arbitrators will determine the third arbitrator. If one of the parties does not choose an arbitrator within thirty days from the receipt of request sent by the other party through Notary Public or the arbitrators chosen by the parties cannot determine the third arbitrator within thirty days after they were chosen, upon request of one of the parties, both the second and the third arbitrator will be chosen by the Civil Court of First Instance where the Contracting Authority is located. President of the arbitrator committee is to be the third arbitrator. Applicable law for dispute resolution and language of the arbitration will be determined by the Contracting Authority. The place of arbitration will either be Istanbul or the place where the Contracting Authority is located and the competent court for the proceedings related to the arbitration will be the Civil Court of First Instance where the Contracting Authority is located.
Similarly, in case the work has already started, the contractor is obliged to continue the work and follow the rules to be taken by the Contracting Authority with regard to execution of the work, even after appealing to the arbitration.
In accordance with the Regulation, these amendments will enter into force 20 days after the publication of the Official Gazette. For the tenders which are announced before the effective date of the Regulation, provisions of the Regulation in force when the tender announcement was made will be valid.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.