Turkey: Istanbul Arbitration Center Rules Of Arbitration

Introduction

The first step towards establishing an International Center of Finance in Istanbul was taken through a resolution of the Turkish Higher Planning Council1. One of the pillars of the Istanbul Finance Center and one of its priorities is the establishment of an independent and autonomous institutional arbitration center that is capable of competing internationally2. The Istanbul Arbitration Center ("ISTAC") is established in line with these objectives to provide services for institutional arbitration.3 This arbitration center is expected to be ahead of other arbitration institutions in matters such as speed and finalization of awards.

ISTAC Rules of Arbitration and Rules of Mediation ("ISTAC Rules of Arbitration" or "Rules") entered into force on 26 October 2015. The Rules comprise provisions that both reflect generally accepted practices in international arbitration, and provide solutions to the current needs of arbitration and mediation processes.

General Information

ISTAC is comprised of a national court, an international court (together, the "Court") and a secretariat ("Secretariat"). The structure and function of the Court and the Secretariat are governed by Appendix II of the ISTAC Rules of Arbitration. The Court shall manage the process of resolution of disputes by the sole arbitrator or the arbitral tribunal.

ISTAC Rules shall be applicable under two instances. The first instance is an agreement for disputes to be resolved pursuant to the ISTAC Rules of Arbitration. The second is for the parties to an ad hoc arbitration to foresee that the arbitrators are appointed by the Court. In the latter case, the Court shall act as the appointing authority.

Arbitral Proceedings

Commencing the Arbitration

In order for arbitration proceedings to commence, the claimant party shall submit to the Secretariat the arbitration agreement, the request for arbitration containing summary explanations, the relief sought, as well as a statement on matters, including the number and appointment of arbitrators, place and language of arbitration, and shall pay the filing fee. In case of any deficiency, the Secretariat shall grant the claimant party with a 15 day period. In the event of failure to correct the deficiencies within this period, the arbitration file shall be closed. The claimant may commence the arbitration proceedings by directly submitting a statement of claim in lieu of a request for arbitration.

The respondent party shall respond to the request for arbitration within 30 days. An additional period may be granted to submit the answer to the request for arbitration; nevertheless, the respondent party shall provide a statement on matters, such as the determination of arbitrators within the said 30 day period, nonetheless. A respondent may initiate a counter claim, together with the answer to the request for arbitration. In the event a counter claim is made, the respondent shall also pay a filing fee. In this case, the claimant to the initial arbitration shall submit an answer to the counter claim, either within the 30 day period, or, if an additional time is granted by the Secretariat upon request, within the specified time limit.

Arbitration Agreement and Competence-Competence

Any objection governing the existence, validity, content, scope and application of the arbitration agreement shall be raised, together with the answer to the request for arbitration. In the event such an objection is raised, or, in the absence of an answer to the request for arbitration, the matter shall be resolved by the unique arbitrator, or the arbitral tribunal. The sole arbitrator or the arbitral tribunal is also authorized to resolve on their competence.

Consolidation of Arbitrations

Upon the request of a party, and in the event certain conditions are met, multiple arbitrations filed under the ISTAC Arbitration Rules may be consolidated. In the event the parties to the arbitrations are not the same - in other words, in order to joinder additional parties, all parties concerned should consent to the consolidation of arbitrations. If the parties to the multiple arbitrations are the same, either the parties all parties concerned should reach a consensus for consolidation, or all claims in the arbitrations should arise from the same arbitration agreement, or if there are parties relying on different arbitration agreements, the disputes should relate to the same legal relationship and the arbitration agreements concerned should be compatible with each other.

Arbitrators

The parties shall freely determine the number of arbitrators. The Rules refer to one arbitrator as the "sole arbitrator", and to multiple arbitrators (who must be an uneven number of arbitrators) as the "arbitral tribunal/board". This article shall use the term arbitrator(s) to refer to both the sole arbitrator, and the arbitral tribunal.

The parties shall unanimously appoint the sole arbitrator. If an agreement cannot be reached, the Court shall appoint the sole arbitrator. For an arbitral tribunal to compose, each party shall elect one arbitrator who shall be charged with determining the third arbitrator. As is the case for the sole arbitrator, in the event the third arbitrator cannot be designated, it shall be appointed by the Court.

In both cases, the arbitrator(s) shall be, and are expected to remain throughout the arbitration proceedings, impartial and independent; otherwise, the rules applicable to the challenge and replacement of arbitrator(s) may be referred to and be applicable.

Arbitral Proceedings

The ISTAC Arbitration Rules regulates the principles and rules applicable to the proceedings under its Section IV entitled "Arbitral Proceedings". Some of the material principles and rules are summarized, below:

  • The parties to a dispute have a right to fair trial. The arbitrator(s) shall conduct the proceedings, fairly, impartially, with a view to ensure equality of the parties.
  • The proceedings shall be swiftly conducted with a view to cause minimal costs; hence, cost and time effectiveness is essential.
  • Unless agreed to the contrary, the arbitral proceedings shall be confidential.
  • Procedural matters not regulated under the Rules shall be subject to the rules agreed to by the parties, in the absence of which, to the rules determined by the arbitrator(s).
  • All parties to a proceeding shall act in compliance with the good faith principle.
  • Unless otherwise agreed upon, the place of arbitration shall be Istanbul.
  • The merits of the case shall be subject to the law designated by the parties. In the event that no such law applicable to the merits is specified, the arbitrator(s) shall apply the legal provisions they deem fit.
  • Unless agreed to the contrary by the parties, immediately following the submission of the request and the answer to the request for arbitration, the arbitrator(s) shall draft a terms of reference including information on, among others, the summary of claims and defenses of the parties, matters such as the language and place of arbitration, and identity and contact information of the arbitrator(s) and party representatives. The parties and the arbitrator(s) shall sign these terms of reference.
  • Together with the issuance of the terms of reference, a procedural timetable shall also be prepared and circulated to the parties and to the Secretariat.
  • Unless agreed to the contrary, and provided that it shall not result in a severe consequence, such as an unfair burden on the other party, the relief sought is subject to change and amendment throughout the arbitration proceedings.
  • The arbitrator(s) may resort to all methods deemed suitable to determine the facts, including examination of the parties, witnesses, and experts, appointment of experts, and on-site inspections. Similarly, the arbitrator(s) may request a hearing for the examination of witnesses, experts, and specialists.
  • In the event of urgent matters that cannot await the appointment of arbitrator(s), an application may be made to the Secretariat for legal interim measures under Appendix I of the Rules, which are the Istanbul Arbitration Center Emergency Arbitration Rules. Otherwise, unless agreed to the contrary, the arbitrator(s) shall be authorized to apply legal interim measures that they deem fit.

Completion of the Examination Phase and Award

The arbitrator(s) shall notify the parties and the Secretariat in writing, as soon as possible after the latter of the last hearing or the last round of written submissions that the examination phase is complete. As of this date, unless leave is granted by arbitrator(s) in exceptional circumstances, the parties may not provide additional claims, defenses or evidence.

A party having participated in the arbitration proceedings without raising any objections as to the Rules, conduct of arbitration proceedings, orders given by the arbitrator(s), or the composition or appointment of arbitrator(s), shall be deemed to have waived such objections.

In principle, the arbitrators shall render their award on the merits within six months starting from the approval of the terms of reference. The swift resolution of proceedings is a need that arose in the practice of arbitration, which also constitutes one of the objectives of the ISTAC. This matter will be raised again under our discussions, below, governing expedited arbitrations. Notwithstanding this, however, through the agreement of the parties, or the request of the arbitrator(s), or ex officio, the Court is authorized to grant extensions to this period.

The award shall, among others, contain the operative part and its justification. The award shall be transmitted to the Secretariat, who shall communicate the award to the parties, provided that the costs of arbitration are paid in its entirety. The arbitral award shall be binding on the parties.

Clerical or computational errors in the awards may be corrected by the arbitrator(s) at their own initiative within 30 days. The parties may request that the award is interpreted, or any clerical or computational errors in the award are corrected, within the same period. Likewise, they may apply to the Secretariat with the request of complementary awards for matters that have been raised during the proceedings which have not been resolved in the Award.

In the event the parties reach a settlement during the arbitration proceedings, upon the request of the parties and acceptance of the arbitrator(s), the settlement can be made in the form of an award.

The retraction of arbitration, settlement of parties, lack of necessity or impossibility to continue proceedings, failure to pay the advance for costs of arbitration, or the arbitral award shall end the arbitration proceedings.

Costs

Arbitration costs and advance fees are subject to detailed provisions under the Rules. Special emphasis is made to payment of fees, costs and advance payments in the commencement of the arbitration and the termination of proceedings.

In principle, the parties shall equally bear the costs of arbitration proceedings. However, if an advance payment is not duly made, the proceedings shall be suspended, and the parties shall be so notified. If one of the parties fails to pay their share of advance payments, the other party may pay the necessary advance amount. The arbitral award shall be rendered to comprise the decision governing the costs of arbitration.

Expedited Arbitral Proceedings

One of the most prominent aspects of the ISTAC and the Rules is the emphasis made with respect to time effectiveness. Pursuant to the ISTAC rules on Expedited Arbitration, unless agreed to otherwise by the parties, total claims that do not exceed TRL 300,000 on the date of initiation of arbitration are subject to the rules on expedited arbitration proceedings.

The claimant shall directly submit its statement of claim and its appendices to the Secretariat in the initiation of arbitration. The respondent shall provide its statement of defense and its appendices within 15 days from receipt of documents related to the arbitration.

In principle, a sole arbitrator shall resolve disputes under expedited arbitrations. Unless agreed to the contrary, the parties shall jointly appoint the arbitrator, and upon the failure of which, the Court shall designate the sole arbitrator. A party objecting to the appointment of the sole arbitrator, or to the application of expedited arbitration rules to the current proceedings even prior to the appointment of the arbitrator, shall raise this objection with the Secretariat within a period of 5 days.

The expedited arbitration aims to shorten the duration of the arbitration proceedings as a whole, and not just the time periods in which the parties are subject to. Therefore, the expedited arbitration rules state that the sole arbitrator shall render his/her award within 3 months from delivery of the arbitration file to himself/herself. In fact, the award shall not be rendered later than one month commencing from the later date of the submission of the final written statement or the completion of the hearing.

Conclusion

The ISTAC Rules of Arbitration, which entered into force on October 2015, determines the scope of arbitration proceedings that will be conducted within the ISTAC. These Rules, which adopt the generally accepted practices and rules in international arbitration, are a set of rules easily acceptable to parties participating in an international arbitration.

In addition to complying with the present generally accepted practices, the ISTAC Rules of Arbitration also aim to cover the needs that arise in practice. The most important example of this is the aim of the Rules to conclude a dispute in the shortest time period possible. This is especially the predominant feature foreseen in the rules applicable to expedited arbitrations for claims that do not exceed TRL 300,000, and which require disputes to be resolved under an award, latest, within three months. The special emphasis made to time and cost-effectiveness in the Rules aims to resolve disputes swiftly, and with minimal costs.

The ISTAC Rules of Arbitration serve to establish an institutional arbitration that is independent, autonomous, and which is capable of competing internationally.

Footnotes

1. Resolution dated 29 September 2009 and no. 2009/31, published in the Official Gazette dated 2 October 2009 and No. 27364. See Newsletter article "Will Istanbul Become A Center For International Arbitration?" dated November 2009 http://www.erdem-erdem.com/en/articles/will-istanbul-become-a-center-for-international-arbitration/ (accessed on January 30, 2016).

2. See http://www.ifm.gov.tr/Shared%20Documents/Strategy%20and%20Action%20Plan%20for%20IFC%20Istanbul.pdf (accessed on January 30, 2016).

3. See http://www.ifm.gov.tr/Shared%20Documents/Strategy%20and%20Action%20Plan%20for%20IFC%20Istanbul.pdf (accessed on January 30, 2016).

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Erdem & Erdem Law
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Erdem & Erdem Law
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions