Answer ... In general, the parties are free to determine the law to be applied the arbitration agreement (ie, the law of the seat). If the parties have not determined the law of the arbitration agreement, the validity of the arbitration agreement shall be determined in accordance with the law of the place where the tribunal’s decision is rendered. In accordance with Turkish law, in order for an arbitration agreement to be valid:

• the intention to arbitrate must be explicitly stated;
• the arbitration agreement must be in writing and concern an arbitrable issue; and
• the dispute must be explicitly stated in the agreement.

If there is an invalid arbitration agreement, the dispute must be resolved in the courts of the state. This is a constitutional necessity under Turkish law, as Article 9 of the Turkish Constitution states that the judicial power shall be exercised by independent courts in the name of the Turkish nation. Moreover, Article 4/3 of the Turkish International Arbitration Code (TIAC) stipulates that the law chosen by the parties shall be primarily used to determine the validity of the arbitration agreement; if the parties have not chosen a law, Turkish law shall apply. In applying Turkish law to the arbitration agreement, as is understood from the wording of the provision, the rules on conflict of laws shall not be considered.

Answer ... Pursuant to Article 12/C of the TIAC, the arbitrator or the arbitral tribunal will decide according to the provisions in the agreement between the parties and the legal rules that the parties have chosen to apply to the merits of the dispute. In interpreting and deciding on the provisions of the agreement, relevant commercial customs and commercial practices will also be considered. Unless otherwise stated, the choice of law of a particular state means that the substantive law of that state has been chosen, not the rules on conflict of laws or the procedural rules of that state.

If the parties have not chosen the rules of law to be applied to the merits of the dispute, the arbitrator or the arbitral tribunal shall decide according to the substantive law rules of the state which is deemed to have the closest connection to the dispute.