Because it is faster, more flexible and less expensive more and more people are choosing alternative dispute resolution methods over classic court litigation procedure. Legislator also promote the alternative dispute resolution methods to ease the burden of the courts.

Over the last 20-years Turkish Legislator expanse the coverage zone of the arbitrable disputes to attract and encourage the international investors.

In this respect, Turkish Legislator regulates the special arbitration procedure for the insurance related disputes.

The arbitration for the insurance disputes was regulated for the first time with Insurance Law No. 5684 dated 03.06.2007 ("IL"). Approximately 2 months later, the Regulation on Insurance Arbitration was published for the fine adjustment.

It is called "semi-obligatory arbitration method" by the doctrine; for the reason that the applicant has the option whether to appeal the arbitration institution or to apply directly to the court without resorting to arbitration, the insurance company have to respect the chosen method.

Arbitration Procedure for Insurance Related Disputes

The insurance arbitration system, designed in the IL, bases on the principle of voluntary participation of insurance companies.

According to this voluntarily participation principle, an Insurance Arbitration Commission decided to be founded with the aim of solving the disputes arising from the insurance contracts through arbitration procedure.

As per to the Article 30 of the IL, any dispute arising from an insurance contract with an insurance company that is member of the Insurance Arbitration System can be resolved thorough insurance arbitration even though the insurance contract does not contain any arbitration provision.  

Besides that, disputes arising from insurance policies that are relating to compulsory insurances can be solved through arbitration, irrespective of whether the insurance company is a member of the Insurance Arbitration System or not.

It should be noted that disputes related to the insurance law can also be resolved directly by the courts. The insurance arbitration system is an opportunity for the consumer, not an obligation.

Who Can Apply to The Insurance Arbitration

The Insurance Law stated that the policy holder or the people who benefit from the insurance contract have right to apply to the Insurance Arbitration Commission. Thus, just like the standard procedure of insurance disputes being able to apply to the Insurance Arbitration Commission is not only recognized for the policy holder but also for the beneficiaries of the insurance contract.

The Condition of Application to the Insurance Company

The Insurance Law stipulates that the party who have a dispute with an insurance company, must have made the necessary dispute-related applications to the insurance company and must have documented that the claim is partially or completely denied.

Advantages of the Insurance Arbitration System

According to the Code of Civil Procedure No. 6100, unless the parties agrees on otherwise, the arbitration court must decide on the merits of the disputes within one year; if the case will be solved by one arbitrator from the date of the arbitrator is appointed; or; from the date of first meeting of the arbitration committee if the case will be handled by more than one arbitrators.

However, in the insurance arbitration system, this period is set to 4 months. If the tribunal will be unsuccessful in resolving the dispute within this given period according to the system prescribed by the IL, the dispute will be settled by the competent courts. It must be noted that the 4-months period can be extended by written consent of the parties.

To encourage the parties to resolve the disputes through the Arbitration Method, the attorney fees, application fees and other expanses has been determined to be fairly lower than the standard litigation procedure.

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.