The Directive on the Arbitral Tribunal for Customer Disputes of the Turkish Capital Markets Association (the "Association") (the "Directive")1 brought about new developments for the settlement of disputes. The scope of the Directive is to settle disputes arising in capital market transactions (other than stock exchange transactions).

According to the Directive, the applicant must first apply to the relevant member to settle the dispute within five years starting from the date of the last transaction or activity pertaining to the dispute, before applying to the arbitral tribunal. The members are required to establish a dispute application system on their websites and to inform their customers through their websites that any dispute arising in capital market transactions (other than stock exchange transactions) may be settled by way of application to the arbitral tribunal of the Association. The member in receipt of a notification regarding a dispute from another member shall provide its negative or positive response within thirty days of receipt of such notification.

The members have the option to then apply to the arbitral tribunal of the Association within sixty days, starting from the date of receipt of the negative or partially positive response from the relevant member, or within thirty days where no response has been given.

Such applications will be finalised by the arbitral tribunal within ninety days starting from the receipt of the application. This period may be prolonged for an additional thirty days by the arbitral tribunal if required following assessment. The decision of the arbitral tribunal has the same effect against the member as the decision of the Association. The parties to the dispute have, however, the option to appeal against the decision of the arbitral tribunal to the Capital Markets Board (the "Board") within ten days following the receipt of such decision.

If the decision of the arbitral tribunal is not appealed by the parties within ten days, the decision of the arbitral tribunal or, in the case of an appeal, the decision of the Board is final and the parties are required to act in accordance with such decision. Although the judicial remedy is possible after the decision of the arbitral tribunal, the member shall implement the decision of the arbitral tribunal within ten days as of the receipt of the decision provided that the amount of the dispute is lower than the upper limit referred to in article 6 of the Regulation on Consumer Arbitral Tribunals published in the Official Gazette numbered 29188 and dated 27 November 2014.

The newly introduced arbitral tribunal mechanism is an alternative dispute resolution mechanism in order to follow a more cost and time efficient as well as simplified procedure. Although we expect this new mechanism to be widely preferred by capital markets players, it remains to be seen whether the possibility of an appeal both at the Board and judicial levels cuts through the gist of it.


1 The Directive is numbered 34 and has been published on 19 August 2016.

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