Introduction
Welcome to the inaugural issue of Esin Dispute Quarterly. As we embrace the midyear warmth and reflect on the first half of 2024, we are excited to introduce a comprehensive resource that merges the rich histories of the Esin Litigation Quarterly and Arbitration Quarterly. In this landmark August edition, we delve into the transformative rulings of the Constitutional Court and Court of Cassation, offering in-depth analyses and perspectives. We also explore the most important breakthroughs and emerging themes that occurred in the international arbitration field in the last few months. Furthermore, we expand our horizons to include significant developments in dispute resolution worldwide.
Join us as we embark on this new journey with Esin Dispute Quarterly, your essential guide to the evolving world of legal disputes.
1. Significant court decisions of 2024
1.1 The Constitutional Court annuls provisions of the Law on Mediation in Civil Disputes imposing an unfair burden on non-attending parties.1
The Constitutional Court of the Republic of Türkiye ("Constitutional Court") recently made a significant ruling (file no. 2023/160, decision no. 2024/77) ("Decision"), published in the Official Gazette on 18 April 2024. The Constitutional Court found that certain provisions of the Law on Mediation in Civil Disputes ("Mediation Law") violates fundamental rights and freedoms, specifically the right to property and the liberty to seek legal redress.
Under the Mediation Law, a party who fails to attend the initial mediation meeting without a valid reason is held accountable for all trial costs, even if this party wins the lawsuit partially or entirely. Furthermore, no attorney fees will be awarded to the party who failed to attend the meeting without a valid reason.
The Çorum Consumer Court, hearing a case related to these provisions, deemed them unconstitutional and sought their annulment before the Constitutional Court. After reviewing the case, the Constitutional Court annulled the contested provisions.
The Constitutional Court noted that in disputes where mediation is a prerequisite for litigation, parties can implicitly reject settlement by not attending the mediation meeting. This way, they may directly seek to resolve the dispute in court. The Constitutional Court argued that holding a party liable for all trial costs, even if this party has won the lawsuit, places an undue restriction on the right to be heard.
The Constitutional Court also emphasized that the trial costs and attorney fees, which the non-attending party is held responsible for, are subsumed under the meaning of the property as per the constitutional right to property. The Constitutional Court further highlighted that the freedom to seek legal redress is a fundamental right and a crucial guarantee for the protection and exercise of fundamental rights and freedoms.
In essence, the Constitutional Court established that holding the party, who did not attend the mediation meeting but won the case, fully liable for trial costs and dismissing their right to attorney fees imposes an excessive burden on individuals. This disrupts the fair balance between public interest and individual rights to property and access to justice. As a result, the Constitutional Court annulled the contested provisions.
This annulment will take effect nine months after its publication in the Official Gazette (i.e. 18 January 2025).
1.2 Court of Cassation overturns its stance on the improper service in execution proceedings under Article 150/I of the Execution and Bankruptcy Law (the "EBL")2
In a recent ruling by the 12th Civil Chamber of the Court of Cassation, a debtor involved in mortgage foreclosure proceedings based on court judgment initiated by a creditor argued that the notices for account closure and debt repayment were not correctly delivered to the addresses listed in the loan agreement. The debtor also contended that the original documents or certified copies supporting the claim were not submitted to the execution office. Consequently, the debtor sought the cancellation of the execution order and the termination of the execution proceedings.
The First Instance Court accepted the debtor's argument, ruling that the objection is linked to public order and thus subject to complaint for an indefinite period of time. However, the Regional Court reversed the First Instance Court's decision, stating that the debtor's objection is merely based on an improper service and is subject to complaint for a limited period of time. Since the debtor missed the complaint period that is limited, the Regional Court decided that the complaint should not be accepted and that the execution proceedings should continue. The Court of Cassation revoked the Regional Court's decision. It noted that the debtor's complaint that the notices were not served in accordance with the method stipulated in the law constitutes an illegal complaint in the foreclosure of mortgages initiated based on a court judgment. Therefore, it should be subject to a complaint for an indefinite period of time under Article 16/2 of the EBL.
Previously, the approach adopted by the Court of Cassation was that if the notices were not served per the law, the complaint for such service was subject to a limited period of time. With the abovementioned, the Court of Cassation has changed its previous stance on the issue. The Court of Cassation stated that since service is a prerequisite for mortgage foreclosure proceedings initiated based on a court judgment under Article 150/I of the EBL, such a complaint should be subject to an indefinite period for filing. In conclusion, the Court of
Cassation ruled that the notices were not served in accordance with the method stipulated in the law and overturned the Regional Court's decision.
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Footnotes
1. The decision can be accessed here.
2. The decision can be accessed here.
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