Turkey: Mandatory Mediation for Commercial Disputes

On 19 December 2018 Law no 7155 was published in the Official Gazette and it came into force on 1 January 2019.

The main purpose of Law no 7155 is actually the integration of enforcement proceedings into the National Judiciary Informatics System (UYAP). However, it has great importance beyond this aim because of the introduction of amendments to the Turkish Commercial Code no 6102 (“TCC”) concerning the implementation of mandatory mediation in certain commercial law disputes.

When and how to apply mandatory mediation?

According to the new amendments, parties have an obligation to apply for mediation before commencing litigation regarding the following commercial disputes:

According to the article 5/A of the TCC both of the above-mentioned circumstances have to exist in order to initiate the mediation process.

In order to commence the mediation process, one of the parties has to apply to the Mediation Office in the jurisdiction of the Court that will be seized of the civil court proceedings.

In principle, the mediator will be appointed by the Mediation Office from the list of the mediators registered in that jurisdiction. However, if the parties agree on a mediator in the list, the Mediation Office will assign the case to this mediator.

Duration of the mediation

According to the amendment, the mediator must finalize the mediation process within six (6) weeks after the application by the relevant party, which may be extended to eight (8) weeks under special circumstances. It is important for the parties to be present at the first meeting. If one of the parties does not participate in the first meeting without any excuse and, as a result, the mediation process ends, then that party must pay all legal costs at the end of the civil court proceedings regardless of whether or not the lawsuit has been won.

Who will pay the mediator's fee?

Depending on whether the parties settle the dispute or conduct litigation after unsuccessful mediation, two different payment methods are regulated.

If the parties reach an agreement before the mediator, they must pay equal shares of the mediation fees unless otherwise agreed.

If the parties are unable to settle the dispute through mediation, they will not be under any obligation to pay the mediator's fee provided that the mediation meetings are completed in less than two hours. If the meetings take more than two hours, fees for the first two hours of the meeting are covered by the public treasury. The parties pay the remaining fees equally, unless they agree otherwise.

In both scenarios, the fees are considered to be court expenses.

It is important to bear in mind that if the parties do not fulfil the requirements of this provision and the court proceedings are commenced without applying for the mandatory mediation, the courts will reject the lawsuit on procedural grounds at the preliminary stage.

Conclusion

As a result of the new mandatory requirement for mediation, it is expected that approximately 250,000 commercial disputes per year will go through mediation as a pre-condition to formal litigation in the courts.

It must also be noted that the Turkish Government seems to be making an enormous effort to integrate mediation into the Turkish legal system. The development of mediation in Turkey has been promoted by government initiatives including this new legislation and an earlier law dealing with employment law disputes. It remains to be seen whether mandatory mediation will be introduced in future years for other fields of law.

Dr Gökce Uzar Schüller, Attorney
Frankfurt and Istanbul

Çiğdem İleri, Trainee
Frankfurt


June 2019


JETZT ANMELDEN