Turkey: Arbitrability Of The Competition Law Disputes

Introduction

Delictual character of the competition law disputes usually renders them inadequate for the arbitration since the parties could not foresee such an event and conclude an arbitration agreement before the arise of this event. However, in certain cases competition law disputes may result from a contractual relationship. When a contract has anticompetitive implications or when a preliminary question on competition law arise before the resolution of the principal dispute, the question may be considered within the scope of the arbitration agreement. In these cases, arbitrability of the competition law disputes must be assessed. On the international level, today the case law tends to give a positive answer to this question. However, Turkish doctrine is divided on the relevant issue, and there are no Court decisions explicitly prohibiting or allowing such practice. We will assess the arbitrability of the competition law disputes under the Turkish law, and enforcement of such arbitral awards; EU and US case law will also be taken into consideration which may have an impact on Turkish practice.

Arbitrability under US and EU Law

US Law

Arbitrability of the competition law disputes started to be discussed in 1970s in the United States. The American Safety1 decision implied that the competition law disputes are not suitable for the arbitration, and a claim under the competition law is not a private matter. However, on 1985, Mitsubishi2 case adopted a more liberal approach vis-à-vis international commercial arbitration and ruled that statutory rules may also be subject to arbitration when the dispute has an international character. The Supreme Court underlined that the national courts are entitled to refuse the enforcement of the arbitral award on the grounds of inconsistency with the public policy in accordance with the Art. V(2)(b) of the 1958 New York Convention on the Recognition and Enforcement of Arbitral Awards; therefore made a difference between the arbitrability of the competition law disputes and the enforcement of the relevant arbitral awards3. At the enforcement stage, another question is to determine to what extent the national courts may control the substance of the arbitral award. In Mitsubishi the Supreme Court stated4 that "while the efficacy of the arbitral process requires that substantive review at the award-enforcement stage remain minimal, it would not require intrusive inquiry to ascertain that the tribunal took cognizance of the antitrust claims and actually decided them." The so-called Second Look Doctrine raise the question of the control of the application of the competition rules by the arbitral tribunal, and the extent of such control is also discussed in the future decisions5. Mitsubishi case was a milestone for the question of arbitrability of the competition law disputes, and had a significant impact on international practice.

EU Law

Under the EU law, the arbitrability of the competition law disputes was accepted by the Eco Swiss6 case. However, the Court stated that EU competition law is part of the public policy of the EU member States, and arbitral tribunal shall apply ex officio the relevant rules even if it wasn't raise by any of the parties. Otherwise, contrariety to the EU competition law constitutes a ground for the refusal of the enforcement of the relevant arbitral award on the basis of inconsistency with the public policy. Additionally, national courts may refer to the European Court of Justice ("ECJ"), if necessary, in order to determine the inconsistency of the award with the EU competition law. In conformity with Eco Swiss and other relevant cases, the arbitrability of the competition disputes is accepted under the EU law, and arbitral awards may be refused to be enforced on grounds of inconsistency with the public policy in case they contradicts with the EU competition law. It should be noted that the courts should refuse the enforcement of the award when the objectives of the competition law is truly jeopardized, and should adopt a minimalist position regarding the control of the arbitral awards7.

A recent decision by the Madrid Court of Appeal8 may be a guide for the future practice in Turkish law. The Court concluded that the EU law or Spanish law doesn't preclude the arbitrability of the competition disputes as long as the relevant award applied the mandatory competition rules. Contrary to the Swiss law9 setting forth the arbitrability of the disputes having pecuniary nature, The Spanish law provides that disputes of which the subject matter is at free disposition of the parties are arbitrable. Therefore, competition law claims are deemed as at free disposition of the parties under certain jurisdictions. Accordingly, the decision of the Madrid Court of Appeal should be considered while determining the arbitrability under Turkish law since the Law No. 4686 on International Arbitration10 sets forth a similar provision on arbitrability and the Turkish competition law is substantially similar to the European competition law.

Arbitrability under the Turkish Law

As above mentioned, the Article 1/4 of the Law No. 4686 on International Arbitration provides that the disputes at the free disposition of the parties are arbitrable. Under the Turkish law the main discussion is the arbitrability of competition law disputes rather than the refusal of the enforcement of the arbitral awards on the bases of public policy. Similar to the American Safety decision, Turkish doctrine is doubtful about the arbitrability of the competition law disputes due its mandatory nature and Competition Authority's expertise on the issue. Scholars concentrate on the exclusive powers of the Competition Authority in order to determine the claims at free disposition of the parties. Accordingly, it is stated that the claims falling within the exclusive powers of the Competition Authority, such as implementation of administrative fines, are not arbitrable whereas the claims having a civil nature, such as compensation claims, deemed arbitrable11.

The question of determination of the inconsistency of the contracts with competition law remains discussible. Some scholars state that prior to rule on compensation claims, the arbitral tribunal should refer the question of validity of the contract under the competition law to the Competition Authority; therefore, the parties should submit the question to the Competition Authority, and the arbitral tribunal should rule in accordance with the decision of the Competition Authority12. However, it this method is not in accordance with the EU practice, and also may attenuate the principle of confidentiality of the arbitration13. In the Eco Swiss, the ECJ stated that arbitral tribunals are not entitled to request preliminary ruling on the EU competition law from ECJ; a request of preliminary ruling is only possible at the stage of enforcement of the arbitral awards by the national courts14. For these reasons, some states that arbitral tribunal is entitled to determine the validity of a contract under the competition law for the purpose of ruling on compensation15.

Furthermore, the ex officio application of the competition by the arbitral tribunals is also discussed by the scholars. Some scholars states that due to the statutory character of the competition law, the arbitral tribunal should assess whether the relevant contract has anticompetitive implications or impacts16. Therefore, any concerns on the arbitrability of the competition law disputes on the basis of statutory character of the competition law will be dismissed. It should be noted that the arbitral tribunal's ruling doesn't affect the Competition Authority's power to initiate an investigation and take measures within the scope of its exclusive powers.

Conclusion

Today the case law of EU and US tends to give a positive answer to the question of arbitrability of the competition law disputes. As Turkish Courts haven't ruled on this question yet, the issue is widely discussed by the Turkish scholars. Certain scholars answers in favor of the international arbitration in conformity with the international trends. Article 1/4 shouldn't be deemed as an obstacle before the arbitrability of the competition law disputes considering that other European States having similar provisions in their relevant legislation already ruled in favor of the arbitrability of the competition law disputes. Additionally, arbitral tribunal's power to rule on the preliminary questions on the validity of a contract under Turkish competition law is also admitted by certain scholars, which is in conformity with the international practice. Although the question of control of the arbitral award hasn't raised yet in Turkish law, a possible dispute should be resolved in accordance with the EU case law, and Second Look Doctrine should be taken into consideration.

Footnotes

[1] American Safety Equip. Corp. v. J.P. Maguire, 391 F.2d 821 (2d Cir. 1968) (international.westlaw.com Access Date: 04.12.2015).

[2] Mitsubishi Motors v. Soler Chrysler-Plymouth, 473 U.S. 614 (1985) (international.westlaw.com Access Date: 04.12.2015).

[3] Mitsubishi Motors, 638.

[4] Mitsubishi Motors, 638.

[5] Didem Uluç, Rekabet Hukukunda Tahkim Uygulamaları, Rekabet Kurumu Uzmanlık Tezleri Serisi No:132, Ankara 2012, p. 19.

Please see: http://www.rekabet.gov.tr/File/?path=ROOT%2F1%2FDocuments%2FUzmanl%25c4%25b1k%2BTezi%2F10didemulucmiz.pdf (Access Date: 04.12.2015).

[6] Eco Swiss v. Benetton International, European Court of Justice, C-126/97 (1999)

Please see: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A61997CJ0126 (Access Date: 04.12.2015)

[7] OECD, Arbitration and Competition, related to a hearing on Arbitration and Competition, Working Party No.3 meeting of 26 October 2010, p. 13.

Please see: http://www.oecd.org/competition/abuse/49294392.pdf (Access Date: 04.12.2015)

[8] Auto no. 147/2013, of 18 October 2013.

[9] Article 177 of Loi fédérale sur le Droit International Privé (Federal Statue on International Private Law).

Please see: https://www.admin.ch/opc/fr/classified-compilation/19870312/index.html

For English text please see: https://www.swissarbitration.org/sa/download/IPRG_english.pdf (Access Date: 04.12.2015)

[10] Law No. 4686 on International Arbitration entered into force through its publication on the Official Gazette dated 05.07.2011 and numbered 24453.

[11] Burak Huysal, Milletlerarası Ticari Tahkimde Tahkime Elverişlilik, İstanbul 2010, p.121-122.

[12] Uluç, p. 55-57.

[13] Pelin Güven, Rekabet Hukuku Ders Kitabı, Ankara 2009, p. 451.

[14] Eco Swiss, 40.

[15] Huysal, s. 122.

[16] Güven, p. 448-449; Huysal, p. 124-126.

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