1 Legal framework

1.1 What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime – for example, does it govern oral arbitration agreements?

The arbitration rules and procedures in Turkey are regulated under Turkish Code of Civil Procedure numbered 6100 ("TCCP") and Turkish Code of International Arbitration numbered 4686 ("TCIA"). The legislator prefers to make a distinction between domestic and international arbitration and regulates the domestic arbitration under TCCP whereas regulates the international arbitration is regulated under a separate code named TCIA. However, the both legislations are in compliance with UNCITRAL Model Law.

There are some mandatory provisions regulated in TCIA and an arbitration agreement is only valid if it is in writing. (Please see requirements explained under answer 10.)

1.1 What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime – for example, does it govern oral arbitration agreements?

Turkish law distinguishes between domestic arbitration and international arbitration. Thus, arbitration rules and procedures are regulated under the Turkish Civil Procedure Code (6100) (TCPC) and the Turkish International Arbitration Code (4686) (TIAC).

Both the TCPC (Article 412/3) and the TIAC (Article 4) require that the arbitration agreement be executed in writing. The requirement of ‘written form' is defined very broadly under these provisions.

Law 805 on the Mandatory Use of the Turkish Language in Commercial Enterprises requires that an arbitration agreement be executed in Turkish if one party to the agreement is a Turkish company or citizen. Although this provision has received much criticism in Turkish doctrine, the Turkish Cassation Court nonetheless applies this rule and provides that arbitration agreements executed in a language other than Turkish shall be deemed void. Therefore, disputes between the parties will be handled before the Turkish courts, even though this does not reflect the parties' intention. Considering the jurisprudence of the Turkish courts, it is highly recommended that the arbitration agreement be executed in Turkish and English.

1.2 Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?

Yes, Turkish law differentiates between domestic and international arbitration. According to Article 407 of the TCPC, domestic arbitration rules and procedures regulated under the TCPC are applicable to arbitration proceedings which have no ‘foreign elements' pursuant to the TIAC and in which Turkey has been designated as the seat of arbitration.

According to Article 1 of the TIAC, the TIAC shall apply only:

  • to disputes with a foreign element and Turkey as the seat of arbitration; or
  • in the event that the TIAC is designated as the lex arbitri by the parties, the sole arbitrator or arbitral tribunal.

Arbitration proceedings shall be considered as international if they contain a ‘foreign element'. Article 2 of the TIAC, a foreign element' is defined as any of the following:

  • The parties have their domicile, habitual residence or place of business in different countries;
  • The parties have their domicile, habitual residence or place of business in different countries from:
    • the seat of arbitration, as determined in, or pursuant to, the arbitration agreement; or
    • a place where a substantial part of the obligations arising from the underlying contract is performed or a place where the dispute has the closest connection;
  • At least one of the shareholders of a company which is a party to the underlying contract that constitutes the basis for the arbitration agreement has brought foreign capital into Turkey in accordance with the laws on foreign investment, or a loan and/or guarantee agreement must be signed to execute the underlying contract; or
  • The underlying contract or the underlying legal relationship requires the movement of capital or goods from one country to another.

1.2 Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?

The Turkish legislator regulates domestic and international arbitration under different codes (Please see above under item 1) When relevant articles of TCCP and TCIA are analysed, "foreign element" is determinant whether a dispute has domestic or international characteristic. Pursuant to TCCP rules for arbitration, regulated between art.407-444, if the dispute does not contain foreign element as defined in TCIA and the seat of arbitration is designated as Turkey, the dispute considered as domestic and will be settled by the rules of TCCP whereas TCIA applies to a dispute which has a foreign element or where TCIA is chosen to be applied by the arbitrating parties or their sole arbitrator or arbitral tribunal.

As per art. 2 of TCIA, the following conditions are indicators for foreign element in a dispute and give a dispute international characteristic if;

  • The domicile, habitual residence or places of business of the parties to the arbitration agreement are in different countries;
  • The domicile, habitual residence or places of business of the parties to the arbitration agreement are in different countries than;
    • The place of arbitration designated in the arbitration agreement or determined pursuant to the arbitration agreement; OR
    • The place of performance of the substantial part of the obligations arising from the underlying contract or the place where the dispute has the closest connection;
  • At least one of the shareholders of the company party of the underlying contract constituting the basis of the arbitration agreement has brought foreign capital to Turkey pursuant to regulations for foreign capital encouragement or it is necessary to enter into credit and /or security contracts for the purpose of providing capital from abroad for the execution of this contract.
  • In case the underlying contract or the legal relationship constituting the basis of the arbitration agreement causes the movement of capital or goods from one country to another.

1.3 Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?

Both legislation regarding arbitration (TCCP and TCIA) are based on the UNCITRAL Model Law on International Commercial Arbitration.

1.3 Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?

Yes. Both the domestic arbitration and international arbitration provisions are in compliance with the UNCITRAL Model Law.

1.4 Are all provisions of the legislation in your jurisdiction mandatory?

No. In compliance with the UNCITRAL Model Law, party autonomy is essential in both domestic and international arbitration. Therefore, save for some limited exceptions, nearly all provisions with respect to arbitration in the TCPC and the TIAC can be qualified as non-mandatory.

1.4 Are all provisions of the legislation in your jurisdiction mandatory?

In general, TCIA aims party autonomy and give parties room to decide how to manage their arbitration procedure. Therefore, it is possible to say that all provisions of the TCIA is not mandatory.

1.5 Are there any current plans to amend the arbitration legislation in your jurisdiction?

There are no current plans to amend arbitration legislation in Turkey.

1.5 Are there any current plans to amend the arbitration legislation in your jurisdiction?

No.

1.6 Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?

Turkey has been a signatory to the New York Convention since 12 February 1992. The following reservation was made by Turkey: "In accordance with the Article I, paragraph 3 of the Convention, the Republic of Turkey declares that it will apply the Convention on the basis of reciprocity, to the recognition and enforcement of awards made only in the territory of another contracting State. It further declares that it will apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under its national law."

Accordingly, the convention applies only to arbitration awards issued in another contracting state and to disputes qualified as commercial under Turkish law.

1.6 Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?

Turkey is a signatory to the New York Convention ("Convention") since 2 July 1992 and the Convention entered into force on 25 September 1992 in Turkey. Turkey made two reservations to the Convention: the reciprocity reservation and commercial reservation. Pursuant to these reservations, the Convention will be applied only for the awards granted in the territory of another contracting state and for the disputes regarded as commercial under Turkish law.

1.7 Is your jurisdiction a signatory to any other treaties relevant to arbitration?

Turkey is also a signatory to Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States and European Convention on International Commercial Arbitration.

1.7 Is your jurisdiction a signatory to any other treaties relevant to arbitration?

Yes. Turkey is a signatory to the following treaties with respect to arbitration:

  • the European Convention on International Commercial Arbitration (Geneva, 21 April 1961); and
  • the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States.

2 Arbitrability and restrictions on arbitration

2.1 How is it determined whether a dispute is arbitrable in your jurisdiction?

Article 408 of the Turkish Civil Procedure Code (TCPC) and Article 1/4 of the Turkish International Arbitration Code provide that disputes relating to in rem rights concerning immovables and to disputes that are not within the parties' disposal are not arbitrable. Accordingly, and further to the jurisprudence of the Turkish courts, disputes relating to criminal law, family law, employment law, consumer protection law, bankruptcy law and administrative law are not arbitrable. All other disputes which are not related to in rem rights concerning immovables and which are within the parties' disposal are arbitrable.

2.1 How is it determined whether a dispute is arbitrable in your jurisdiction?

As per art.1/4 of TCIA, "the Code shall not be applicable to the disputes relating to in rem rights of immoveable properties located in Turkey or the disputes that are not subject to the disposal of the parties" Therefore, the disputes which are not concerning the in rem rights of immovables or the disputes subject to the parties' disposal are arbitrable.

Since the commercial law issues are subject to the parties' disposal, it is possible to agree on arbitration for potential disputes. However, disputes arising from family law, criminal law, administrative law and bankruptcy cannot be settled by arbitration. The Turkish Supreme Code also limits the scope of the arbitration for employment and consumer claims.

2.2 Are there any restrictions on the choice of seat of arbitration for certain disputes?

Seat of arbitration may be chosen freely by the parties.

2.2 Are there any restrictions on the choice of seat of arbitration for certain disputes?

There are no restrictions on the choice of the seat of arbitration. Further to the principle of party autonomy, the parties are free to choose any seat. However, the parties to the arbitration agreement should consider the enforceability of the arbitration award with respect to the reservations made by Turkey in signing the New York Convention.

3 Arbitration agreement

3.1 What are the validity requirements for an arbitration agreement in your jurisdiction?

Under Turkish law, an arbitration agreement is valid if:

  • the (potential) dispute is determined or determinable;
  • the parties' intention to enter into an arbitration agreement is clear and explicit beyond doubt;
  • the (potential) dispute is qualified as arbitrable pursuant to Article 408 of the Turkish Civil Procedure Code (TCPC) and Article 1/4 of the Turkish International Arbitration Code (TIAC); and
  • the arbitration agreement is executed in written form. An arbitration agreement is deemed to be in writing if:
    • the arbitration agreement is included in an undersigned contract or in appendices to that contract which form part of the contract;
    • the arbitration agreement is stated in a letter, fax, email or other written communication; or
    • the existence of an arbitration agreement is claimed by the plaintiff in its memorial and the responding party does not object to this claim in its counter-memorial.

3.1 What are the validity requirements for an arbitration agreement in your jurisdiction?

Firstly, arbitration agreement has to be entered into regarding an arbitrable matter. (Please see answer 8) Secondly, as per art. 4/2, an arbitration agreement has to be in writing. The written form requirement shall be deemed fulfilled if;

  • the arbitration agreement bases on a written document signed by the parties or,
  • there is an exchange of letters, telex, telegrams or other means of telecommunication showing a record regarding the agreement or,
    • The existence of the arbitration agreement is alleged by the plaintiff in the petition but the respondent did not challenge this allegation by its reply petition.

In addition to these conditions, if an agreement refers to a document including arbitration agreement and this document is considered as a part of the agreement; an arbitration agreement between the parties is deemed valid.

Thirdly, the will of the parties must be explicit and must leave no room for any doubt regarding the arbitration agreement and a certain relationship or dispute has to be referenced in the arbitration agreement. Therefore, an arbitration clause stated as "all disputes between the parties shall be settled by arbitration" shall be deemed invalid.

3.2 Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements?

As per art. 4/1 of the TCIA, an arbitration agreement may be concluded either with a clause in the main agreement between the parties or with a separate arbitration agreement.

Pursuant to the separability of the arbitration agreement doctrine regulated under art. 4/4, it is not possible to challenge an arbitration agreement by claiming that the underlying agreement is invalid.

3.2 Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements?

Yes, both the TCPC and the TIAC include provisions on the separability of arbitration agreements.

Article 4/1 of the TIAC and Article 412/2 of the TCPC state that an arbitration agreement may be executed in the form of an arbitration clause in a contract or in the form of a separate agreement. Article 4/4 of the TIAC and Article 412/4 of the TCPC further provide that no objection may be made against the arbitration agreement on the grounds that the underlying contract is invalid.

3.3 Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties?

Pursuant to Article 425 of the TCPC and Article 9 of the TIAC, the arbitral tribunal shall determine the seat of arbitration if there is no agreement between the parties.

According to Article 10/C, the arbitral tribunal also shall determine the language of the arbitration if there is no agreement between the parties in this regard. In determining the seat and language of the arbitration, the arbitral tribunal shall consider the parties' intention and the specific characteristics of the dispute.

3.3 Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties?

As per art. 9/1 of the TCIA, the arbitral tribunal shall determine the seat/place of arbitration by taking into consideration the characteristics of the dispute if there is no agreement between the parties. In respect of the language which will be used in arbitral proceeding, the arbitral tribunal shall determine the language as per art. 10/C of the TCIA in the absence of an agreement.

4 Objections to jurisdiction

4.1 When must a party raise an objection to the jurisdiction of the tribunal and how can this objection be raised?

As per art. 7/H/2 of the TCIA, the objection to the jurisdiction of the tribunal must be raised by the submission of the first reply petition at latest.

4.1 When must a party raise an objection to the jurisdiction of the tribunal and how can this objection be raised?

According to Article 7/H of the Turkish International Arbitration Code (TIAC), an objection to the jurisdiction of the tribunal must be raised in the first reply memorial at the latest. The fact that the parties have appointed an arbitrator or participated in the process of nominating them does not waive their right to object to the jurisdiction of the arbitrator or the arbitral tribunal.

If the objection is not raised immediately, it shall not be effective. However, even in such cases, if the arbitrator or the arbitral tribunal decides that the delay is justified, they may accept a later objection. These rules are also stipulated in the same manner in Article 422 of the Turkish Civil Procedure Code (TCPC).

4.2 Can a tribunal rule on its own jurisdiction?

According to Article 7/H of the TIAC and Article 422 of the TCPC, the arbitral tribunal is empowered to rule on its own jurisdiction, as well as on objections regarding the existence or validity of the arbitration agreement. In doing so, the arbitration clause stipulated in the agreement is evaluated separately from the other clauses and provisions of the underlying contract. Pursuant to these articles, the arbitral tribunal will examine and rule on the objection to the jurisdiction as a preliminary question. If the objection is refused, the arbitral tribunal will proceed with the arbitration and render a decision on the dispute.

4.2 Can a tribunal rule on its own jurisdiction?

As per art. 7/H of the TCIA, the arbitral tribunal may rule on its own jurisdiction regarding the existence or validity of the arbitration agreement. This provision shows that TCIA explicitly recognizes the principle of "Kompetenz-Kompetenz".

4.3 Can a party apply to the courts of the seat for a ruling on the jurisdiction of the tribunal? In what circumstances?

As per art. 3/2 of the TCIA, court only intervenes for the conditions provided with the TCIA and there is not an explicit provision that the courts of the seat may rule regarding the jurisdiction of the tribunal.

However, if any of the parties commence a lawsuit before courts, the respondent may object the jurisdiction of the court as a preliminary objection asserting the arbitration agreement as per at. 5 of the TCIA. If the judge accepts the objection of the respondent., the lawsuit shall be dismissed. If any objection has not been raised, the court will have jurisdiction to hear the case between the parties.

Secondly, an arbitral award may be set aside by the competent regional courts of justice in case the arbitral tribunal unlawfully rule its own jurisdiction. Therefore, the competent regional courts of justice will have a say regarding the jurisdiction of tribunal at that stage.

4.3 Can a party apply to the courts of the seat for a ruling on the jurisdiction of the tribunal? In what circumstances?

According to Article 15 of the TIAC, the parties can take action only for the annulment of a ruling of the tribunal. To do so, they must apply to the competent regional court in terms of the location of the competent civil court of first instance. Lawsuits on annulment are heard primarily and immediately.

Article 15 also lists the circumstances in which the tribunal's rulings can be annulled, which include where the tribunal has ruled on:

  • its jurisdiction;
  • a matter that is outside the arbitration agreement; or
  • the dispute itself.

An action for annulment may be brought within 30 days of the date of notification of the decision, or a decision relating to its correction, interpretation or completion. This period starts to run from the date of the announcement of the tribunal's ruling. The filing of an action for annulment halts the enforcement of the tribunal's ruling. The parties can waive their right to take action for annulment.

The same provisions are also included in Article 439 of the TCPC. However, the TCPC uses different language with respect to the legal timeframe for bringing an action for annulment: under Article 439 of the TCPC, this is one month, rather than 30 days as under Article 15 of the TIAC.

5 The parties

5.1 Are there any restrictions on who can be a party to an arbitration agreement?

Under Turkish law, disputes arising from matters that are not within the parties' disposal are not arbitrable. For example, disputes involving administrative law, criminal law, bankruptcy law or family law are not arbitrable; instead, these matters are subject to the state's judgment, as indicated by Article 408 of Code 6100 and Article 1, paragraph 4 of the Turkish International Arbitration Code (TIAC). In addition, disputes arising from labour, consumer or property lease contracts are not arbitrable, in light of the principle of protection of the weaker party. Furthermore, in IP disputes, it is not possible to resort to arbitration against third parties who are not party to an arbitration agreement.

As the meaning of ‘disputes that are not within the parties' disposal' is open-ended and there is no definitive list in Turkish law of which disputes are arbitrable, arbitrability has also been the subject of Court of Cassation decisions. In some of these cases, the court decided that consumer disputes are not arbitrable and thus that consumers cannot be party to an arbitration agreement. In addition, where an arbitration agreement has been signed by proxy, the court has held that the relevant power must be provided by the proxy issuer in the form of a special proxy. Otherwise, the arbitration agreement shall be deemed invalid.

5.1 Are there any restrictions on who can be a party to an arbitration agreement?

There is no restriction in TCIA regarding the parties of the arbitration agreement. However, Turkish Supreme Court decides that consumer claims may not be arbitrable since the weak position of the party. Therefore, it is possible to say that consumers cannot be a party of an arbitration agreement.

5.2 Are the parties under any duties in relation to the arbitration?

Although there is not an explicit provision in TCIA, the arbitration procedure deems confidential in practice and parties under the obligation of confidentiality.

5.2 Are the parties under any duties in relation to the arbitration?

The parties are obliged to execute the arbitration agreement in accordance with the provisions of law. Pursuant to Article 4 of the Turkish International Arbitration Code (TIAC), the arbitration agreement must be in writing. In addition, the rights and powers of the parties under international arbitration rules and practice (eg, to appoint, reject or challenge the appointment of an arbitrator or the arbitral tribunal; to choose the substantive law, the applicable law and the place of the arbitration; and to decide on other procedural matters) are generally also applicable under Turkish law. However, one explicit obligation of the parties is stipulated in Article 10 of the TIAC and Article 397 of the Turkish Civil Procedure Code (TCPC), which provide that if one of the parties obtains an interim measure or interim injunction from the court, it must initiate arbitration case within 30 days under the TIAC and within two weeks under the TCPC. Otherwise, the interim measure or interim injunction will be lifted.

5.3 Are there any provisions of law which deal with multi-party disputes?

No explicit provision of the TIAC or the TCPC deals with multi-party disputes. However, in practice, multi-party disputes can be resolved in arbitration centres in Turkey. For example, the Istanbul Chamber of Commerce Centre of Arbitration and Mediation (ITOTAM) has implemented provisions to deal with multi-party disputes. According to Article 16 of the ITOTAM Arbitration Rules, where there are multiple parties – whether as claimant or as respondent – and where the dispute is to be referred to three arbitrators, the claimants must jointly nominate an arbitrator and the respondents must jointly nominate an arbitrator for confirmation by the arbitration court. In the absence of such a joint nomination, and where the parties are unable to agree to a method for the constitution of the arbitral tribunal, the Arbitration Court shall appoint each member of the arbitral tribunal and shall designate one of them to act as chairman. A similar provision is also included in Article 14 of the Istanbul Arbitration Centre (ISTAC) Arbitration Rules.

Although these provisions concern the appointment of the arbitrators, by extension, they can be used as an example to highlight the fact that Turkish law has no rules that prohibit multi-party disputes.

5.3 Are there any provisions of law which deal with multi-party disputes?

There is no provision dealing with multi-party disputes in TCIA. However, it is possible to agree on arbitration with multi-parties by following the core principles of the TCIA. In this case, the requirements for the arbitration agreement must be met by parties(explicit will of the parties, form requirement-please see the answer 10) and all parties has to be equally treated during the arbitration proceedings.

6 Applicable law issues

6.1 How is the law of the arbitration agreement determined in your jurisdiction?

As per art. 4/3 of the TCIA, it is possible that parties may choose the law applied to the arbitration agreement. In the absence of such agreement, the arbitration agreement shall be subject to the Turkish law.

6.1 How is the law of the arbitration agreement determined in your jurisdiction?

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.

6.2 Will the tribunal uphold a party agreement as to the substantive law of the dispute? Where the substantive law is unclear, how will the tribunal determine what it should be?

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.

6.2 Will the tribunal uphold a party agreement as to the substantive law of the dispute? Where the substantive law is unclear, how will the tribunal determine what it should be?

As per art. 12/C of TCIA, the tribunal shall settle the dispute in accordance with the provisions of the agreement and the law chosen by the parties. The commercial customs and practices of the applicable law are considered in the interpretation of the agreement between the parties if the law is unclear.

In the absence of the agreement regarding the substantive law applicable to the dispute, the law of the most connected country will be applicable to the dispute.

7 Consolidation and third parties

7.1 Does the law in your jurisdiction permit consolidation of separate arbitrations into a single arbitration proceeding? Are there any conditions which apply to consolidation?

Consolidation of separate arbitrations is not regulated under TCIA. However, it is possible to say that if both parties give consent for the consolidation, the arbitral tribunal may decide to consolidate separate arbitrations. In addition, if parties choose the application of the rules of İstanbul Arbitration Center or ICC ; it is possible to consolidate separate arbitrations.

7.1 Does the law in your jurisdiction permit consolidation of separate arbitrations into a single arbitration proceeding? Are there any conditions which apply to consolidation?

The Turkish Civil Procedure Code (TCPC) regulates the consolidation of separate cases into a single proceeding. However, it does not specify which procedure will be used to consolidate separate arbitration proceedings. Therefore, the provisions on the consolidation of separate cases of the TCPC shall be applied by analogy to the arbitration proceedings. First, the issue of consolidation may be decided by the parties in the arbitration agreement: the parties can decide on the procedure and the conditions for consolidation.

Article 166 of the TCPC further states that where related cases meet several conditions, those cases can be consolidated either on request or by decision of the court. In arbitration proceedings, the arbitrators cannot order consolidation without the consent of the parties. That said, if the parties agree to the consolidation of separate arbitrations into a single arbitration proceeding, the tribunal may render such decision with respect to the parties' intention.

Furthermore, institutional rules – such as those of the Istanbul Arbitration Centre (ISTAC) – also include relevant provisions with respect to the consolidation of separate arbitration proceedings. According to Article 11 of the ISTAC Arbitration Rules, proceedings may be consolidated at the request of the parties. If the parties to the arbitrations are different, all parties must agree to the consolidation. If the parties to the arbitrations are the same:

  • the parties must agree to consolidation;
  • the claims must be based on the same arbitration agreement; or
  • the disputes must be connected to the same legal relationship.

7.2 Does the law in your jurisdiction permit the joinder of additional parties to an arbitration which has already commenced?

There are no provisions on the joinder of additional parties to an arbitration under Turkish law. Therefore, the provisions of the TCPC shall be applied by analogy. As an arbitration agreement is binding on the parties only, third parties cannot be made subject to the arbitration agreement. Some authors suggest that, with the consent of the parties and the relevant third parties, the joinder of additional parties to an arbitration is possible. Also, in a decision of 8 November 1960, the Court of Cassation allowed the joinder of additional parties to an arbitration without specifying conditions in this regard. However, as there are no provisions on this issue under Turkish law, the possibility for joinder of additional parties to an arbitration must be assessed on a case-by-case basis.

7.2 Does the law in your jurisdiction permit the joinder of additional parties to an arbitration which has already commenced?

TCIA does not govern the joinder of the additional parties of the arbitration. However, if both parties give consent for the joinder of additional party, it is possible that the arbitral tribunal permits the joinder of additional parties. Moreover, if parties designate that the rules of ICC shall be applicable to the arbitration procedure, then it is possible to join an arbitration as per the requirements setup by ICC.

7.3 Does an arbitration agreement bind assignees or other third parties?

An arbitration agreement only binds the parties of the arbitration agreement. Therefore, non-signatories or third parties can not be bound by the arbitration agreement. In addition, interim measures or provisional seizures binding third parties also can not be rendered by the arbitral tribunal. However, in general it is recognized that a third party may be bind by arbitration in case the assignment of claim, transfer of the agreement and succession. In such case, third party's explicit will should also be analysed.

7.3 Does an arbitration agreement bind assignees or other third parties?

In general, an arbitration agreement binds only the parties to the arbitration agreement. There is no legal provision under Turkish law which directly states that an arbitration agreement does not bind third parties. However, Article 6 of the Turkish International Arbitration Code (TIAC) states that the arbitral tribunal shall not grant interim measures or interim attachments that must be enforced through execution offices or to be executed through other official authorities or that bind third parties. This indicates that arbitration proceedings should not affect or result in liabilities for third parties.

Also, in a decision of 7 November 1989, the 11th Civil Chamber of the Court of Cassation refused recognition of an arbitration award as the parties mentioned in the arbitration agreement and the parties in the ongoing case were different. The common view of doctrine suggests that arbitration is a discretionary proceeding and thus the principle of relativity of agreements will apply to the arbitration agreement. However, under Turkish law, third-party beneficiary contracts may be accepted as an exception, and this is also applicable to arbitration agreements. The doctrine states that if a third party agrees to the conditions of the arbitration agreement and will also benefit from the arbitration proceeding, then the arbitration agreement may bind that third party.

8 The tribunal

8.1 How is the tribunal appointed?

Article 416 of the Turkish Civil Procedure Code (TCPC) and Article 7 of the Turkish International Arbitration Code (TIAC) regulate the procedure for the appointment of the tribunal. Both laws have parallel provisions on the appointment of the tribunal. If the parties fail to decide on the procedure for the appointment of the tribunal, this will be carried out in accordance with the provisions of the law. If there is to be a single arbitrator and the parties fail to agree on the appointment, at the request of a party, the civil court of first instance will appoint the arbitrator. If the tribunal will be comprised of three arbitrators, each party will appoint one arbitrator and then the two arbitrators will decide on the third arbitrator. The third arbitrator will act as chairman. In a 24 April 2003 decision of the 19th Civil Chamber of the Court of Cassation (2003/1688-4438), it was held that the court may decide on the third arbitrator if the two arbitrators appointed by the parties cannot agree.

If there are more than three arbitrators, the above procedure will apply. If one party fails to appoint an arbitrator within one month of receipt of notification, or if the two appointed arbitrators fail to appoint the third arbitrator, the third arbitrator will be appointed by the civil court of first instance at the request of a party. If the parties breach the provisions in the agreement regarding the appointment of the tribunal, the arbitrators will be appointed by the civil court of first instance at the request of a third party.

8.1 How is the tribunal appointed?

Since the TCIA considers party autonomy in arbitration proceedings, parties may choose whom their arbitrators will be and they are free to decide the number of the arbitrators on the condition that this number must be odd. Failing such agreement, three arbitrators shall be appointed.

Unless otherwise agreed by the parties, the appointment must be done according to some principles required by the relevant article:

  • Only real persons can be appointed as arbitrators.
  • If a sole arbitrator will be appointed and the parties cannot reach an agreement on the arbitrator, the arbitrator shall be appointed by the civil court of first instance upon the request of a party.
  • If three arbitrators will be appointed, each party shall appoint its own arbitrator and these two arbitrators appoint a third arbitrator. In case a party fails to appoint its arbitrator within 30 days upon the service of the appointment notice from the other party or arbitrators chosen by the parties fail to appoint the third arbitrator within thirty days of their appointment; the arbitrator shall be appointed by the civil court of first instance upon the request of a party.

While analysing the request of the party, the court of first instance considers the principles of independency and impartiality of arbitrator and chooses an arbitrator having different nationality than the parties in case of appointment of the sole arbitrator and also if three arbitrators will be appointed, the court chooses two of the arbitrators having different nationality than the parties.

8.2 Are there any requirements as to the number or qualification of arbitrators in your jurisdiction?

Please see the answer 24 regarding the number of the arbitrators.

There is not a restriction regarding the qualifications of an arbitrator under TCIA. Therefore, arbitrators do not need to be lawyers or pursue a career related to law. There is also no restriction regarding the nationality of the arbitrators. Therefore, foreigners may be appointed as arbitrator in the arbitrations subject to TCIA. In addition, as mentioned above; unless otherwise agreed by the parties, only real persons shall be arbitrators.

8.2 Are there any requirements as to the number or qualification of arbitrators in your jurisdiction?

The parties are free to decide on the number of arbitrators. If they do not do so, then three arbitrators shall be appointed. Either way, there must be an odd number of arbitrators.

In general, there are no mandatory qualification requirements relating to the education or nationality of arbitrators. The parties are free to specify any qualification requirements in the arbitration agreement. The parties may generally choose the arbitrators who are most suitable within the context of the dispute. However, there is one exception: Article 416/1/d of the TCPC states that if there is more than one arbitrator, one arbitrator must be a lawyer with at least five years' seniority in his or her field.

Before accepting an appointment, an arbitrator should disclose any circumstances or conditions which might affect his or her impartiality and independence without delay.

8.3 Can an arbitrator be challenged in your jurisdiction? If so, on what basis? Are there any restrictions on the challenge of an arbitrator?

Articles 417 and 418 of the TCPC and Article 7 of the TIAC regulate the rules and procedures for the challenge of arbitrators. Both statutes indicate that the parties may freely decide on the procedure for challenging an arbitrator. Article 417 of the TCPC states that an arbitrator should disclose any circumstances and conditions that may give rise to justifiable doubts regarding his or her impartiality and independence without delay. The arbitrator may be challenged if:

  • he or she does not have the qualifications that the parties have specified;
  • he or she does not conduct the arbitration proceedings in the manner agreed by the parties; or
  • there is a legal basis for doubts regarding his or her impartiality or independence.

The procedure for challenging an arbitrator is regulated in Article 418 of the TCPC and Article 7/d of the TIAC. A party that intends to challenge an arbitrator must send a written statement to the tribunal regarding the reasons for the challenge within 30 days of the tribunal's constitution or within 30 days of learning of the circumstance giving rise to the challenge. Under Article 419 of the TCPC, the arbitrator should compensate the parties for any damage relating to his or her failure to perform his or her duties without a justified reason.

Article 420 of the TCPC further provides that an arbitrator's mandate will be terminated if:

  • he or she does not comply with his or her functions;
  • he or she fails to act without undue delay for other reasons;
  • he or she withdraws; or
  • the parties agree on his or her termination.

This issue is also addressed in the Istanbul Arbitration Centre (ISTAC) Arbitration Rules. According to Article 16/3 of the ISTAC rules, the party that receives the written statement of the opposing party must present its written reply within 15 days.

8.3 Can an arbitrator be challenged in your jurisdiction? If so, on what basis? Are there any restrictions on the challenge of an arbitrator?

There are three main bases that an arbitrator may be challenged as per art. 7 of TCIA. If:

  • the arbitrator does not have the qualifications agreed by the parties;
  • there is a reason to challenge as per the arbitration procedure agreed by the parties
  • there is a reasonable suspicion that the arbitrator is impartial.

The parties may agree the procedure in order to challenge of the arbitrator. Failing such agreement, the procedure regulated under art. 7 shall be applied.

As per TCIA art. 7, the challenge shall be filed within 30 days of starting from the appointment of the arbitrators or realizing the situation may give ground to challenge.

8.4 If a challenge is successful, how is the arbitrator replaced?

The rules of the appointment of the arbitrator can apply to replacement of arbitrator in the event of a challenge is successful as per art. 7/G of TCIA.

8.4 If a challenge is successful, how is the arbitrator replaced?

The arbitration is not suspended while the arbitrator is being replaced. However, the arbitration shall be terminated if the whole tribunal – or such part as would have a decision-making majority, where the arbitral tribunal is determined by name – is removed. According to Article 421 of the TCPC, the new arbitrator is appointed pursuant to the same rules as applied to his or her predecessor.

This procedure is also regulated in the TIAC. Under Article 7/G of the TIAC, where the mandate of an arbitrator is terminated for any reason, the replacement arbitrator will be appointed under the same rules as applied to his or her predecessor. However, according to the TIAC, if the arbitral tribunal is stated by name in the arbitration agreement, upon termination for any reason of the mandate of the whole tribunal or such part as would remove the decision-making majority, the arbitration shall be terminated.

8.5 What duties are imposed on arbitrators? Are these all imposed by legislation?

The arbitrators have a duty to conduct the arbitration proceedings, and to remain impartial and independent in conducting the proceedings. The arbitral tribunal must examine the testimony and evidence presented by the parties and render an award accordingly. The arbitrators' duties are regulated both in the legislation and in the arbitration agreement prepared and executed by the parties.

The arbitrators must follow the rules set out in the arbitration agreement between the parties, as long as these do not contravene mandatory provisions of the law of the seat. If there is no such agreement, the arbitrators will determine the rules of arbitration. According to the TCPC and the TIAC, the parties enjoy full autonomy to determine the rules and procedures of the arbitration. However, if the parties do not do so, the arbitrators shall decide on the procedure to be followed, pursuant to the provisions of the TIAC in international arbitration or the TCPC in domestic arbitration.

8.5 What duties are imposed on arbitrators? Are these all imposed by legislation?

The main duty of the arbitrator is to conduct arbitration proceedings and while performing his/her duty, an arbitrator shall be impartial and equally treat the parties. This duty is regulated detailed under TCIA. As well as impartiality, even if these are not broadly regulated under TCIA, it should be accepted that the arbitrator has duty to render an award in a reasonable time and based on applicable law and also an arbitrator should also take into consider to render a decision which will be enforceable.

8.6 What powers does an arbitrator have in relation to: (a) procedure, including evidence; (b) interim relief; (c) parties which do not comply with its orders; (d) issuing partial final awards; (e) the remedies it can grant in a final award and (f) interest?

  1. procedure, including evidence?

    As per art. 11 of the TCIA, the arbitrator may decide to hold oral hearings.

    As per art. 12 of TCIA, the arbitrator may decide to

    • appoint an expert regarding the issues determined by the arbitrator
    • require parties to make necessary explanations to the expert and provide relevant information and documents
    • rule on inspection of goods or other property.
  • interim relief?

    As per art. 6 of TCIA, arbitral tribunal is competent to order interim measure during arbitration proceedings upon request of one of the parties.

  • parties which do not comply with its orders?

    There is not an explicit provision regulating a sanction in case any of the parties does not comply with its orders.

  • issuing partial final awards?

    Unless otherwise agreed, the arbitral tribunal may grant partial awards as per art. 14 of TCIA.

  • the remedies it can grant in a final award?

    There is not an explicit provision regulating or limiting the scope of the remedies in a final award.

  • interest?

    There is not an explicit provision regulating the interest. Parties may decide the interest applied to the subject matter of the dispute.

  • 8.6 What powers does an arbitrator have in relation to: (a) procedure, including evidence; (b) interim relief; (c) parties which do not comply with its orders; (d) issuing partial final awards; (e) the remedies it can grant in a final award and (f) interest?

    (a) Procedure, including evidence?

    The TCPC and TIAC have similar provisions regarding the powers of the arbitrators during the arbitration proceedings. The arbitrators should primarily follow the arbitration agreement agreed between the parties. Some procedural powers of the arbitrators are regulated in Articles 11 and 12 of the TIAC and Article 429 of the TCPC. According to Article 11 of the TIAC and Article 429 of the TCPC, the arbitrators may decide whether to hold hearings for the presentation of evidence or for oral agreement. If the parties have decided that no hearings shall be held, the arbitrators shall decide on hearings only at the request of a party. The arbitrators must also announce the dates of any site inspections, expert examinations or hearings, and the meetings of the arbitral tribunal for the purpose of examining other evidence.

    Moreover, Article 12 of the TIAC and Article 431 of TCPC regulate the appointment of experts and the collection of evidence. The arbitrators may:

    • appoint experts on specific issues to be determined by the arbitrators;
    • require a party to give provide the expert with any relevant information or produce or provide access to any related information or documents; and
    • rule on the inspection of goods or other property.

    At the request of a party or if the arbitrators consider it necessary, the expert shall participate in a hearing after delivering his or her (written or oral) report to testify on the points at issue, unless otherwise agreed by the parties.

    Regarding the collection of evidence, the parties must provide the evidence within the timeframe specified by the arbitrators. In collecting evidence, the arbitrators may seek assistance from the competent court of first instance.

    (b) Interim relief?

    According to Article 6 of the TIAC and Article 412 of the TCPC, the arbitrators may order an interim measure of protection or interim attachment at the request of a party, unless otherwise agreed by the parties. The arbitrators may require any party to provide an appropriate guarantee in connection with such measure or attachment. Any decision of a court with respect to interim measures of protection or interim attachments that was issued at the request of a party prior to the commencement of arbitration or during the arbitral proceedings shall automatically cease to have effect once the arbitrators' decision becomes enforceable or if the arbitrators reject the case in their decision. Article 6, paragraph 2 of the TIAC states that the arbitrators shall not grant interim measures or interim attachments that are required to be enforced through execution officers or other official authorities, or that bind third parties.

    Article 31 of the ISTAC Arbitration Rules provides that, unless otherwise agreed by the parties, the arbitrators may grant appropriate interim measures at the request of a party. The arbitrators may require the party to provide an appropriate guarantee before granting the interim measure. The parties may also apply to court interim measures; however, this situation shall not affect the powers of the arbitrators and is not incompatible with the arbitration agreement.

    (c) Parties which do not comply with its orders?

    There are no express provisions in Turkish arbitration law regarding the arbitrators' powers where parties do not comply with their orders. However, Article 6 of TIAC, which sets out provisions on provisional measures and preliminary relief, states that: "if one of the parties does not comply with the provisional measure or preliminary relief order given by the arbitrator or the arbitral tribunal, the opposing party may request the relevant court's help in issuing provisional measure/preliminary relief order." The parties' right to apply to court for assistance is limited to matters of provisional measures and/or preliminary relief; and the arbitrators have no further powers in relation to parties that do not comply with their orders.

    (d) Issuing partial final awards?

    Under Turkish law, the arbitrators' powers are stipulated under both the TIAC and the arbitration provisions of the TCPC. Article 436 of the TCPC and Article 14/A/5 of the TIAC state that: "Unless agreed otherwise, an arbitrator or an arbitral tribunal may issue partial awards." Thus, the arbitrators are empowered by law to issue partial awards.

    (e) The remedies it can grant in a final award?

    The remedies that arbitrators may grant in a final award are not explicitly listed under Turkish law. Instead, it may be inferred from Article 436 of the TCPC that the arbitrators are not restricted to issuing final awards. Article 436(1 (ç) provides that: "In the awards of arbitrators, the rights and obligations imposed on the parties and the arbitration costs are shown expressly and determinately under list numbers."

    The word ‘obligation' used in this article is a heteronym of the word debt' in Turkish; but unlike the word ‘debt', it has a much wider meaning than it has in English. Therefore, it may be understood from the article that the arbitrators may grant anything as a right or obligation to a party. The only limitation here is the public order.

    (f) Interest?

    There is no express clause on the arbitrators' powers in relation to interest. However, it may be concluded that if the arbitrators grant rights and impose obligations on the parties, then they can also award interest where this is requested, as per the general provisions of the law of obligations and according to the Turkish Interest Law and Law of Obligations.

    8.7 How may a tribunal seated in your jurisdiction proceed if a party does not participate in the arbitration?

    Article 11 of the TIAC distinguishes between how the arbitrators proceed where a party loses its status as a party and where a party does not attend the arbitration proceedings. The former will not be discussed here; as regards the latter, Article 11(C) provides as follows:

    In case one of the parties does not participate in the proceedings, below mentioned provisions will be applied;

    1. If the claimant does not submit its request for arbitration on its time without showing a valid reason, the arbitrator or the arbitral tribunal shall end the arbitration proceedings.
    2. If the request for arbitration is not suitable for the article 10 (D) (1), and the deficiency is not eliminated in the period given by the arbitrator or the arbitral tribunal, the arbitrator or the arbitral tribunal shall end the arbitration proceedings.
    3. If the respondent does not submit its reply memorial, this matter shall not be considered as the acceptance of the claimant's claims and the proceedings shall be continued.
    4. If one of the parties does not participate the hearings without showing a valid reason, or avoids submitting its evidence; the arbitrator or the arbitral tribunal shall continue the arbitration proceedings and may issue an award as per the existing evidence."

    The same provision is included in Article 430 of the TCPC, under the title of "Non-participation to proceedings of a party".

    8.7 How may a tribunal seated in your jurisdiction proceed if a party does not participate in the arbitration?

    In that case, tribunal seated proceed depends on the which party (claimant or respondent) does not participate and whether there is a valid reason to not to participate.

    If the claimant fails to well-timed communicate his statement of claim, the arbitral tribunal will terminate the proceedings whilst If the respondent fails, the tribunal will continue the proceedings. However, the continuation does not mean that acceptance of the claimant's allegations.

    The statement of claim has to be proper to the Article 10(D). If it is not, the arbitral tribunal will state a period to reclaim. Within this period, if the statement cannot be reclaimed the proceedings will be terminated by the tribunal.

    If any party fails on attending hearing or producing evidence without a valid reason, the tribunal can maintain the proceedings and also can grant an award according to available evidences.

    8.8 Are arbitrators immune from liability?

    Unless otherwise agreed, the arbitrators are liable to compensate any damages arising from the failure to perform his/her duties without a valid reason as per art. 7/E of TCIA. In addition, since the relationship between the parties and the arbitrator is a contractual relationship; arbitrators are under the duties arising from the Code of Obligations also.

    8.8 Are arbitrators immune from liability?

    This issue is regulated under both the TIAC and the TCPC. The provisions on the liability of arbitrators are very similar, and both laws state that the arbitrators will be liable for their actions.

    Articles 7(E) and (F) of the TIAC set out the liabilities of arbitrators with regard to their appointment, termination and competence:

    Article 7 Appointment, challenge, and liability of arbitral tribunal, termination of its duties and its competence

    (…)

    E) Unless otherwise agreed by the parties, an arbitrator who accepts his office shall be responsible to indemnify any damages that are related to the failure of the arbitrator to perform his duties without a justifiable reason.

    F) If an arbitrator becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay, if he withdraws from his office, or if the parties agree on the termination, his mandate shall be terminated.

    If a controversy remains concerning any ground with respect to the arbitrator's withdrawal from the office, any party may request the court to decide on the termination of the arbitrator's mandate. The decision [of the court] shall be final.

    The arbitrator's withdrawal from his office or the acceptance of the other party of the termination of the arbitrator's mandate does not imply acceptance of the validity of any ground concerning the challenge.

    The same provisions are set out in Articles 419 and 420 of the TCPC, under the title of "The liability of the arbitrators".

    9 The role of the court during an arbitration

    9.1 Will the court in your jurisdiction stay proceedings and refer parties to arbitration if there is an arbitration agreement?

    Both the Turkish International Arbitration Code and the Turkish Civil Procedure Code (TCPC) stipulate that courts may support the arbitrators on matters which are expressly stipulated in the relevant section of these laws.

    Under Article 413 of the TCPC, if the parties object to court proceedings on the basis of an arbitration agreement, the court will accept this objection and reject the case at hand on procedural grounds as long as the arbitration agreement is valid, effective and applicable. Therefore, if the party in the court proceedings raises the arbitration objection and states that the dispute cannot be heard before the courts because it is subject to arbitration, the court will initially test the arbitration agreement and then decide on the admissibility of the arbitration objection.

    On the other hand, if the parties mutually consent to arbitration during the court proceedings, the case file shall be sent to the arbitrators by the relevant court (Article 412 of the TCPC).

    9.1 Will the court in your jurisdiction stay proceedings and refer parties to arbitration if there is an arbitration agreement?

    If there is an arbitration agreement between the parties and a party maintains an action before the court about a matter that is the subject of this agreement, other party can make an objection as to arbitration as a preliminary objection in the reply petition. This objection's validity is liable to the provisions which is about to the preliminary objection of the TCCP.

    9.2 Does the court in your jurisdiction have any powers in relation to an arbitration seated in your jurisdiction and/or seated outside your jurisdiction? What are these powers? Under what conditions are these powers exercised?

    As per TCIA, Courts have powers to appoint arbitrators in certain cases (please see answer 24) and hear appeals for the dismissal regarding the challenge request of arbitrator or hear challenges of the arbitrators in certain cases, order interim measure and execute the interim measure decision of the tribunal upon request, set aside an arbitral award, decide on the jurisdiction of the arbitral tribunal if court proceedings commence and extend the term of arbitration. These powers are applicable if the arbitration seated in Turkey.

    As per art. 1/3, in case an arbitration seated outside Turkey; art. 5 (decide on the jurisdiction of the arbitral tribunal if court proceedings commence) and 6(interim relief) shall remain applicable. The competent court will be in the respondent's domicile, habitual residence or places of business in Turkey or where none of these is in Turkey, the İstanbul Civil Court of Justice.

    9.2 Does the court in your jurisdiction have any powers in relation to an arbitration seated in your jurisdiction and/or seated outside your jurisdiction? What are these powers? Under what conditions are these powers exercised?

    The arbitrators may seek assistance from the local courts with regard to, for instance, provisional measures and the collection of evidence. The cases in which the local courts have powers in the arbitration proceedings are not expressly listed in Turkish arbitration law.

    Article 414 of the TCPC states:

    (3) In cases where the arbitrator or the arbitral tribunal or another person appointed by the parties will not be able to act on time or efficiently, one of the parties may apply to the court on provisional measures or determination of evidence. If these conditions are not present, application to courts may only be made upon the consent obtained from the arbitrator or the arbitral tribunal, or by the written agreement between the parties.

    (4) The decision of provisional measures given before or during the arbitration proceedings by the court upon the request of a party, unless otherwise decided, is lifted ipso facto, by the arbitrator's or arbitral tribunal's decision becoming performable, or the case being denied by the arbitrator or the arbitral tribunal.

    (5) The decision of provisional measures given by the court may be amended or lifted by the arbitrator or the arbitral tribunal.

    The courts may also provide assistance with regard to the appointment of the arbitrators. Article 416 of the TCPC stipulates that: "if a sole arbitrator shall be appointed and the parties cannot agree on choice of arbitrator, it is chosen by the court upon the request of one of the parties." The same applies where three arbitrators are to be appointed and the third is not appointed by the other two arbitrators, or where a party does not appoint its arbitrator within the specified timeframe (Article 416(1)(c)).

    9.3 Can the parties exclude the court's powers by agreement?

    Certain matters (eg, family law and criminal law matters) fall within the jurisdiction of the local courts because they are not arbitrable. The parties cannot exclude the powers of the local courts in this regard. However, if the local court decides on the validity of the arbitration agreement where a party objects during litigation (where the dispute is subject to arbitration), the court's power may be excluded. Other than that, the only restrictions concern the arbitrability of the dispute and public order, which would not allow the parties to exclude the court's powers by agreement.

    9.3 Can the parties exclude the court's powers by agreement?

    There is not an explicit regulation to exclude the courts powers by agreement. Therefore, it is arguable to exclude the court's powers by agreement. Since the courts have limited grounds to intervene or give assistance to the arbitral proceedings, it is possible to accept that these powers of the courts may not be excluded. The only exception to this if parties renounce their rights to set aside. (Please see answer 42)

    10 Costs

    10.1 How will the tribunal approach the issue of costs?

    Costs of arbitration regulated under art. 16 of TCIA. Pursuant to this provision, parties are free to the decide which costs shall be borne by the which party. Unless otherwise agreed by the parties, the costs of arbitration shall be borne by the losing party. In case parties' claims are partially accepted in the arbitral award, the costs will be calculated considering the degree of the rightfulness of their claim.

    The Arbitral tribunal shall indicate the costs of the arbitration in the arbitral award and as per art. 16/d of the TCIA and the costs includes the fees of the arbitrators, travel and other expenses of the arbitrators, fees of the experts or other parties whose assistance is sought and who are, collectively, appointed by arbitral tribunal, the costs for the site inspection, travel expense or other expenses of the witnesses on the condition that the tribunal approves, attorney fee of the prevailing party determined by the arbital tribunal and calculated conspiring the minimum fee schedule, fees required for the applications to the courts and the expenses of notifications concerning the arbitral proceeding.

    If the parties cannot reach an agreement about the fees of the arbitrators, the fees of the arbitrators will be determined between the arbitral tribunal and the parties considering the amount in dispute, the nature of the dispute and the term of arbitral proceedings. The parties also can make a reference to the international rules or institutional arbitration rules to determine the fees. If the condition that there is no solution for determining those fees methods which mentioned above, the schedule of fees determined annually by the Ministry of Justice can also be referable.

    10.1 How will the tribunal approach the issue of costs?

    The issue of costs is regulated under both the Turkish International Arbitration Code (TIAC) and the Turkish Civil Procedure Code (TCPC). A distinction is drawn between the costs of proceedings and fees of the arbitrators in the TCPC; by contrast, the TIAC combines the fees of arbitrators, the costs of proceedings, the advance deposit and the payment of costs in a single article. Both laws are in line with each other.

    The TCPC provides as follows:

    Article 441 – (1) Costs of proceedings consist of,

    a) the fees of arbitrators and the arbitrators' secretariat identified by the arbitrators,

    b) travel costs of the arbitrators and other expenses they make,

    c) the fees paid to experts appointed by arbitrators or arbitral tribunals and other persons whose help was obtained and the expenses of on-site discoveries,

    ç) travel expenses of witnesses to the extent that arbitrator or arbitral tribunal approves and other expenses they make,

    d) if any, counsel's fee that arbitrator or arbitral tribunal estimates as per the minimum attorneys' fee tariff for the counsel of the prevailing party,

    e) proceeding fees taken in the applications made pursuant to this Code,

    f) notification fees as per the arbitration proceedings.

    10.2 Are there any restrictions on what the parties can agree in terms of costs in an arbitration seated in your jurisdiction?

    Both the TCPC and the TIAC provide that the arbitrators' fees are decided with the parties, taking into consideration the value and characteristics of the dispute, and the duration of the arbitration proceedings. Additionally, both laws provide that the parties may agree otherwise.

    As it is not specifically prescribed that the parties may agree otherwise in relation to costs other than the arbitrators' fees, it may be concluded that these are mandatory provisions.

    10.2 Are there any restrictions on what the parties can agree in terms of costs in an arbitration seated in your jurisdiction?

    There are no restrictions on what the parties can agree in terms of costs in an arbitration.

    11 Funding

    11.1 Is third-party funding permitted for arbitrations seated in your jurisdiction?

    There is no article in TCIA regulating third party funding.

    11.1 Is third-party funding permitted for arbitrations seated in your jurisdiction?

    Third-party funding is not common in litigation or arbitration in Turkey. However, pursuant to Article 334 of the Turkish Civil Procedure Code, claims that do not lack merit may qualify for legal aid from the state Treasury. There are no specific regulations on third-party funding or third-party funders in the arbitration legislation. Therefore, there are no legal restrictions that apply to third-party funders. Nevertheless, Article 35 of the Turkish Attorneyship Law (7249) infers that such funders cannot provide legal services. In addition, Articles 11 and 12 of the Turkish Attorneyship Law, titled "Activities incompatible with attorneyship" and "Activities compatible with attorneyship" respectively, imply that attorneys and law firms cannot function as funders.

    12 Award

    12.1 What procedural and substantive requirements must be met by an award?

    The procedural requirements for awards rendered in proceedings conducted under the Turkish Civil Procedure Code (TCPC) are set out in Article 436(1). The arbitral award must include:

    • the name(s) and surname(s) of the arbitrator or members of the arbitral tribunal;
    • the names, surnames, titles and addresses of the parties, their representatives and counsel, if any;
    • the legal grounds on which the award is based and its reasoning;
    • the formulation of the legal costs and the rights and obligations imposed on the parties, in a clear and precise manner and in sequence;
    • the fact that the award is subject to annulment and the timeframe for filing the annulment claim;
    • the seat of the arbitration and the date of the award; and
    • the signature(s) of the arbitrator or all or a majority of the members of the arbitral tribunal, and the dissenting opinion, if included in the award.

    Article 14(A) of the Turkish International Arbitration Code (TIAC) provides that awards rendered in proceedings under the TIAC must include the following:

    • the names, surnames, titles, and addresses of the parties, their representatives and counsel, if any;
    • the legal grounds on which the award is based, the reasoning and the amount of compensation, where awarded;
    • the seat of the arbitration and the date of the award;
    • the name(s), surname(s) and signature(s) of the arbitrator or the members of the arbitral tribunal who rendered the award and their dissenting votes; and
    • the fact that the award is subject to annulment.

    12.1 What procedural and substantive requirements must be met by an award?

    As per art. 14 of the TCIA, the award shall contain:

    • Full names, titles and addresses of the parties and their representatives and lawyers if any;
    • Legal reasons the award is based; the amount of compensation if it is requested so
    • Place of arbitration and the date of the award
    • The name, signature and dissenting option of the arbitral if any
    • A statement that parties may set aside the award.

    In addition to these characteristics of the award; an award should;

    • Be rendered in accordance with the procedure agreed by the parties or stipulated by TCIA,
    • Be rendered in due time in accordance with the procedure agreed by the parties or stipulated by TCIA,
    • Be rendered as per the scope of arbitration agreement and be rendered regarding the whole request,
    • Be rendered considering equality of the parties,
    • Not be rendered in conflict with the public policy.

    12.2 Must the award be produced within a certain timeframe?

    As per art. 10/B of the TCIA, unless otherwise agreed, an award must be granted within one year. In the event of a sole arbitrator, this one-year period starts on the date of his appointment whereas in the event of an arbitral tribunal, this period starts on the date of the first tribunal's meeting.

    12.2 Must the award be produced within a certain timeframe?

    Both Article 427 of the TCPC and Article 10(B) of the TIAC provide that: "Unless decided otherwise by the parties, the decision on merits shall be rendered by the arbitrator or the arbitral tribunal within one year starting from the appointment of the arbitrator for the arbitrations to be conducted by sole arbitrator; and starting from the date that the arbitrators issued the minute of first meeting for the arbitrations to be conducted by multiple arbitrators."

    This timeframe may be extended by agreement of the parties. If the parties cannot reach agreement, the timeframe may be extended by decision of civil court of first instance at the request of a party. The court's decision is final; and if the court dismisses the request for an extension, the arbitration will terminate once the timeframe agreed by the parties or prescribed in law has elapsed.

    13 Enforcement of awards

    13.1 Are awards enforced in your jurisdiction? Under what procedure?

    The procedure for the enforcement of arbitral awards in Turkey may differ depending on the law applicable to the dispute that was subject to the arbitration. In this regard, the International Private and Civil Procedure Law (5718) dated 27 November 2007 and the Turkish International Arbitration Code (TIAC) apply to the enforcement of arbitral awards that contain a foreign element; while domestic arbitration awards are subject to the Turkish Civil Procedure Code (TCPC).

    Turkey is a signatory to the New York Convention 1958, which has been in force since 30 September 1992. The International Private and Civil Procedure Law applies to arbitral awards rendered in non-signatory countries, whereas the TIAC – which is influenced by the UNCITRAL Model Law – functions as a guide to the implementation of the New York Convention within the national law. Arbitral awards that fall within the scope of the New York Convention and the TIAC are thus enforceable upon obtaining an ‘enforceability document' from the domestic courts. Moreover, under Article 15 of the TIAC, "filing an annulment claim automatically stays the enforcement of the award".

    In the preamble to Article 493/4 of the TCPC, it is acknowledged that domestic arbitral awards "become enforceable from the moment that they are rendered". These awards can be enforced in the same manner as domestic court decisions. In addition, and unlike in international arbitration under the TIAC, Article 493/4 of the TCPC provides that "filing an annulment claim does not stay the enforcement" of domestic arbitration awards.

    13.1 Are awards enforced in your jurisdiction? Under what procedure?

    As per art. 15/B, on the condition that the arbitral award is finalized, the competent court shall give a document concerning the enforceability of the award upon request of a party

    Since the Turkey is a signatory to New York Convention, it is also possible that an foreign award may be recognized and enforced if it is in scope of the New York Convention. Otherwise, the provisions of Turkish Private International Private and Procedure law regarding the recognition and enforcement of a foreign award shall be applicable.

    14 Grounds for challenging an award

    14.1 What are the grounds on which an award can be challenged, appealed or otherwise set aside in your jurisdiction?

    As per art. 15, the only way against an arbitral award is the action to set aside.

    An award may be set aside if:

    • a party has lack of capacity or the arbitration agreement is invalid as per the law agreed by the parties or Turkish law in the absence of the agreement,
    • the procedure of appointment of arbitral tribunal agreed by the parties or stipulated by the TCIA does not followed,
    • the award is not rendered in due time,
    • the arbitrator or arbitral tribunal unlawfully rule its own jurisdiction or rule unlawfully regarding lack of jurisdiction,
    • The award rendered is out of the scope of the arbitration agreement or not covers the all issues or arbitral tribunal exceeds its authorization,
    • The award is not rendered in accordance with the procedure agreed by the parties or stipulated by TCIA and this situation affects the substance of the award,
    • The equal treatment principle is not considered by the arbitral tribunal,
    • the subject matter of the dispute is not arbitable as per Turkish law,
    • The award is against public policy.

    14.1 What are the grounds on which an award can be challenged, appealed or otherwise set aside in your jurisdiction?

    Under Turkish law, the sole legal remedy that may be sought against an arbitral award is an application to set aside the award under the Turkish Civil Procedure Code (TCPC). Before the enactment of the TCPC, the repealed TCPC 1086 provided for appeal proceedings in relation to an arbitral award. To harmonise the set-aside procedures for domestic and international arbitral awards, the legislature introduced – in compliance with the New York Convention – nine grounds on which an award can be set aside by the Regional Court of Justice, as per Article 15 of the TIAC and Article 439 of the TCPC:

    • The set-aside grounds that will be considered by the court ex officio are as follows:
      • The award violates public order; or
      • The subject matter of the dispute was not arbitrable under Turkish law.
    • The set-aside grounds that the parties may invoke are as follows:
      • One of the parties did not have legal capacity to enter into the arbitration agreement or the arbitration agreement was invalid in terms of the applicable law;
      • The appointment of the arbitrator(s) was in breach of the procedure specified by the parties or prescribed in law;
      • The award was rendered after the specified timeframe had elapsed;
      • The arbitral tribunal made an unlawful determination on its competence or incompetence;
      • The arbitral tribunal ruled on matters falling outside the scope of the arbitration agreement, or ruled infra petita or beyond the scope of its powers;
      • The arbitral proceedings were conducted in a manner that was contrary to the applicable procedural rules determined by the parties or, in absence of such, to the rules contained in law, to the extent that the substance of the award was thereby affected; or
      • The principle of equal treatment was violated.

    The decision on the set-aside of the award is subject to appeal before the Court of Cassation, as per the TCPC.

    14.2 Are there are any time limits and/or other requirements to bring a challenge?

    With respect to awards under the TIAC, a set-aside claim must be filed within 30 days of the date on which the parties are notified of the award or a decision relating to its correction, interpretation or completion. For awards under the TCPC, this timeframe is one month from the date of such notification.

    14.2 Are there are any time limits and/or other requirements to bring a challenge?

    As per art. 15 of TCIA, the request for annulment of an award shall be made within thirty days. The period of thirty days for bringing a challenge begins to run from the date of notification of a decision on correction or an award or interpretation or an additional award. This request suspends the fulfilment of the arbitral award per se.

    14.3 Are parties permitted to exclude any rights of challenge or appeal?

    As per art. 15 of TCIA, the parties may renounce partially or wholly their right to set aside the award. However, only the parties whose domicile or habitual residence is located outside the Turkey may renounce their rights to set aside in writing in the arbitration agreement with an express clause or after the arbitration agreement has been signed.

    14.3 Are parties permitted to exclude any rights of challenge or appeal?

    Pursuant to Article 15/A-5 of the TIAC, the parties may fully or partially waive their right to file a set-aside claim, except on the grounds that the court will consider ex officio – that is, public policy and arbitrability. According to this article, parties that have their place of domicile or habitual residence outside Turkey may fully or partially waive this right through an explicit provision in the arbitration agreement or a subsequent written agreement. The TCPC does not provide for such waiver with regard to domestic awards.

    15 Confidentiality

    15.1 Is arbitration seated in your jurisdiction confidential? Is a duty of confidentiality found in the arbitration legislation?

    Turkish arbitration law contains no explicit or implicit provisions on the confidentiality of arbitrations seated in Turkey. Given that Turkish law acknowledges the principle of publicity of adjudications concerning civil law disputes, as per Article 28 of the of the Turkish Civil Procedure Code (TCPC), the parties may ensure the confidentiality of the arbitration through other means, such as:

    • entering into a confidentiality agreement;
    • referring to arbitration centre rules on confidentiality; or
    • requesting a provisional measure in this regard from the tribunal as per Article 6 of the Turkish International Arbitration Code (TIAC) or Article 414 of the TCPC.

    However, pursuant to Article 6 of the TIAC and Article 414 of the TCPC, a provisional measure ordered by the tribunal concerning the confidentiality of an arbitration will be abolished on its own motion once the award becomes enforceable or as a result of the dismissal of the case by the tribunal. In addition, even a confidentiality agreement between the parties may be insufficient to preserve the confidentiality of the information therein, as set-aside proceedings and enforcement proceedings before the national courts are subject to the provisions of the TCPC, which embraces the principle of publicity of adjudications.

    15.1 Is arbitration seated in your jurisdiction confidential? Is a duty of confidentiality found in the arbitration legislation?

    TCIA is silent regarding the confidentially of the arbitration. However, in Turkey it is recognized that the arbitration shall carry out confidential. All Parties involved in arbitration no matter in which kind (witnesses, experts, counsels etc.), are under the duty of confidentiality. Since there is a gap in law, It is advisable to add confidentiality clause in the agreement between the parties.

    15.2 Are there any exceptions to confidentiality?

    If parties may agree on not to comply with the confidentiality obligation. In addition, it is also noted that in the cases where courts intervene the arbitration procedure or give assistance, the hearings will be held publicly available due to publicity of trial.

    15.2 Are there any exceptions to confidentiality?

    Given that there are no direct legal provisions on the confidentiality of arbitration proceedings, there are also no exceptions in this regard.

    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.