Introduction
Both the long duration of the proceedings in state courts and the fact that one of the parties, especially in commercial relations with a foreign element, does not wish the dispute to be resolved in the courts of the state where the other party is a citizen, have made arbitration a frequently preferred dispute resolution method. Especially in recent years, arbitration has become the customary dispute resolution method in international commercial relations. In order for a dispute to be resolved in arbitration, there must be a valid arbitration agreement between the parties. In this article, the element of authorization in arbitration agreements will be analyzed.
I. Can Arbitration Agreements Be Concluded by Proxy?
As stated above, in order for a dispute to be resolved by arbitration, there must be a valid arbitration agreement between the parties. The arbitration agreement may be concluded as a separate agreement, or it may be concluded by including an arbitration clause in the main contract. It is accepted that the validity of the arbitration agreement should be evaluated independently from the validity of the main agreement.1 As a rule, an arbitration agreement, like other legal transactions, may be executed by proxy within the scope of Articles 502-514 of the Turkish Code of Obligations ("TCO").2
II. Is Special Authorization Required to Conclude an Arbitration Agreement?
Different legal systems have different regulations regarding whether the special is required in the power of attorney for an arbitration agreement to be concluded by proxy.3 For example, in the legal systems of countries such as Switzerland, the Netherlands, the United Kingdom and the United States, it is not necessary to have specific authorization in the power of attorney in order to conclude an arbitration agreement.4 However, in the legal systems of countries such as Italy, Spain, Belgium, Belgium, Austria, Sweden, Egypt, etc., special authorization is required in the power of attorney in order to conclude an arbitration agreement.5 In Turkish law, a power of attorney must contain special authorization to conclude an arbitration agreement.6
If we talk about the regulations stipulated in Turkish law on the subject, we should mention Article 504/3 of the TCO and Article 74 of the Code of Civil Procedure ("CCP"). Pursuant to Article 504/3 of the TCO, the attorney cannot apply to the arbitrator unless specifically authorized to do so. If the attorney in question is a lawyer, then Article 74 of the CCP will also be applicable. Pursuant to Article 74 of the CCP, it is not possible for the attorney to conclude arbitration and arbitrator agreements unless expressly authorized to do so.
As can be seen, under Turkish law, in order to conclude an arbitration agreement by proxy, the power of attorney must contain special authorization. This rule is clearly stipulated in both the TCO and the CCP.
III. Consequences of Lack of Jurisdiction
In the event that a person who is not duly authorized concludes an arbitration agreement, the legal transaction in question will be void for incompleteness pursuant to the TCO. Pursuant to Article 46 of the TCO, if a person enters into a legal transaction as a representative without authorization, such transaction shall bind the represented party only if it is ratified. Pursuant to the same article, the other party with whom the unauthorized representative has entered into a legal transaction may request the represented party to notify within an appropriate period of time whether or not he approves the legal transaction. If the transaction is not ratified within this period, the other party will not be bound by this transaction.
Conclusion
As explained above, arbitration agreements, like other legal transactions, may be executed by proxy. However, there may be some hesitation as to whether a special authorization is required in the power of attorney for this transaction. Although there are different regulations in the legal systems of different countries, the relevant provisions of the TCO and the CCP stipulate that the power of attorney must contain special authorization for this transaction. In the event that a person who has not been duly authorized concludes an arbitration agreement, the provisions of the TCO on unauthorized representation will be applicable.
Footnotes
1. See also Mustafa Erkan, "Tahkimin Ayrılabilirliği Prensibinin Asıl Sözleşmenin Yokluğu Durumunda Değerlendirilmesi", Gazi Üniversitesi Hukuk Fakültesi Dergisi, C. VII, No: 1-2, 2013.
2. Fikret Eren, Borçlar Hukuku Özel Hükümler, Ankara, Yetkin, 2022, s. 735.
3. Melis Sılacı Korkmaz, New York Konvansiyonu Uyarınca Hakem Kararlarının Tenfizinde Tahkim Anlaşmasının Geçersizliği ve Tarafların Yetkisizliği, Bilgi Üniversitesi, Yüksek Lisans Tezi, İstanbul, 2019.
4. Sibel Özel, Milletlerarası Ticari Tahkimde Kanunlar İhtilafı Meseleleri, İstanbul, Legal, 2008, s. 75-76.
5. İbid, s. 75-76.
6. Eren, ibid, s. 735.
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.
