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The 3rd Civil Chamber of the Turkish Court of Cassation has revised its stance on tiered dispute resolution mechanisms, holding that the requirement to pursue mediation before arbitration does not compromise the parties' agreement to arbitrate.
In its 2025 decision, the Court of Cassation had deemed arbitration agreements requiring pre-arbitration mediation invalid, reasoning that the parties' intent to arbitrate was not expressed with sufficient clarity and finality. Yet, in a landmark 2026 ruling, the Court reversed this position, affirming that the inclusion of mediation as a preliminary step does not negate the parties' commitment to arbitration. Rather, it should be understood as a "Mediation-Arbitration" ("Med-Arb") framework, designed to resolve disputes sequentially – first through mediation, and, if necessary, through arbitration.
i. The Court of Cassation's 2025 Decision: The Mediation Requirement as an Obstacle to Arbitration
In its first ruling1 on the matter in 2025, the Court of Cassation addressed the validity of an arbitration clause contained in an attorney fee agreement. The clause stipulated that disputes between the parties would initially be resolved through mediation, and if mediation failed, the matter would be referred to the Bar Arbitration Committee.
In the case under review, the parties initially resorted to mediation in accordance with the contractual provision; however, when mediation failed to produce a settlement, the respondent applied to the Arbitration Center of the Union of Turkish Bar Associations. The arbitrator, upon examining the dispute, determined that the arbitration clause was valid under Article 412 of the Turkish Code of Civil Procedure (Law No. 6100), assumed jurisdiction, proceeded with the arbitration, and ultimately issued an award partially upholding the claimant's demands.
The claimant subsequently filed an action seeking annulment of the arbitral award. The Ankara Regional Court of Appeal, 4th Civil Chamber, acting in its capacity as a court of first instance, concluded that the arbitration clause contained in the agreement was valid and that no grounds existed to justify annulment of the award. Accordingly, the court dismissed the claimant's request, thereby affirming the sole arbitrator's decision.
The claimant then appealed this decision. In its review, the Court of Cassation emphasized that the parties' intention to arbitrate must be articulated in a manner that is "clear, definite, and free from any ambiguity". Against this backdrop, the Court undertook a close examination of the contractual provision at issue, ultimately concluding that the requirement to engage in mediation prior to arbitration diluted the clarity of the parties' arbitration intent.
According to the Court of Cassation, the wording of the clause did not unequivocally demonstrate the parties' intention to waive recourse to state courts and submit their disputes to arbitration. The Court emphasized that mediation is a dispute resolution mechanism that parties are often required to pursue before initiating litigation, and, in certain categories of disputes, it is expressly regulated as a mandatory pre-litigation condition under Turkish law.
In the present case, however, the requirement to first resort to mediation prior to arbitration rendered the arbitration clause unclear and inconsistent leaving uncertainty about which dispute resolution method would apply.
On these grounds, the Court of Cassation determined that no valid arbitration agreement existed and, consequently, that the arbitrator lacked jurisdiction. The Court therefore concluded that the arbitral award had to be annulled on this basis.
ii. The Court of Cassation's 2026 Decision: Mediation Requirement Does Not Invalidate Arbitration Agreements
Nine months after its earlier ruling, the same dispute once again came before the 3rd Civil Chamber of the Court of Cassation following the Regional Court of Appeal's decision to resist. In its second review, the Court of Cassation departed entirely from its previous approach and held that contractual provisions requiring mediation prior to arbitration do not negate the parties' intention to arbitrate.2>
The claimant, appealing the Regional Court of Appeal's resistance decision, argued that the respondent had not raised any objection to arbitration during the mediation proceedings; that if a valid arbitration agreement existed, mandatory pre-litigation mediation provisions would not apply; that the arbitration clause in question was not drafted in a clear, precise, and unequivocal manner; and that the parties' intention to arbitrate had not been expressed in a way that left no room for doubt. On these grounds, the claimant requested that the decision be overturned.
In this context, the Court of Cassation reassessed the mediation requirement in relation to the parties' intention to arbitrate. On this occasion, the Court held that the combined use of mediation and arbitration – both recognized as alternative dispute resolution mechanisms – is commonly referred to in practice and doctrine as the "Med-Arb" model. Under this framework, parties may agree to first attempt settlement through mediation and, if no resolution is achieved, proceed to arbitration. According to the Court, this model enables the flexibility inherent in mediation to coexist with the final and binding nature of arbitration, thereby ensuring both efficiency and enforceability in dispute resolution.
Indeed, Article 5(1) of the Mediation Law No. 6325 expressly acknowledges that mediation and arbitration mechanisms may be combined. It provides that "neither the parties, nor the mediator, nor any third persons participating in the mediation may rely on certain statements or documents as evidence, or testify about them, in the event that a civil action or arbitration proceedings are subsequently initiated concerning the dispute."
In the present case, the relevant provision of the attorney fee agreement clearly expressed the parties' intention – without leaving any room for doubt – that if the dispute could not be resolved through mediation, it would be resolved through arbitration.
For this reason, a contractual arrangement whereby the parties first resort to mediation and, only if no settlement is reached, proceed to arbitration is valid. As no other grounds for annulment were identified, the Regional Court of Appeal's resistance decision was upheld.
iii. Assessment
The Med-Arb model, long acknowledged in both legal doctrine and practice, has generally not been considered a controversial mechanism with respect to safeguarding the parties' intention to arbitrate. However, in its 2025 judgment, the Court of Cassation construed this model as signifying the absence of such intention. By contrast, in its 2026 ruling, the Court appropriately corrected course and upheld the validity of Med-Arb arrangements.
In our assessment, the 2025 decision was unpersuasive. The mere fact that the parties elected to pursue mediation as an initial step does not indicate that they relinquished their intention to secure a binding and final resolution through arbitration.
The adoption of a tiered dispute resolution mechanism does not render the intention to arbitrate uncertain; rather, it demonstrates a deliberate effort to promote amicable settlement while preserving the right to binding arbitration should mediation fail. Accordingly, the 2026 decision represents a more balanced and well-reasoned approach, both in terms of the design of dispute resolution frameworks and the interpretation of the parties' intention to arbitrate.
Footnotes
1. The Turkish Court of Cassation's decision numbered E.2025/225, K.2025/2164 and dated 15 April 2025.
2. The Turkish Court of Cassation's decision numbered E.2025/5452, K.2026/129 and dated 15 January 2026.
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