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The Law on the Execution Proceedings for the Collection of Monetary Receivables Arising out of Subscription Agreements No. 7155 (”Law”) was published in the National Gazette on December 19, 2018. The Law regulates the mediation process as a threshold requirement for commercial cases to be heard as of January 1, 2019.

What’s New?

Article 20 of the Law stipulates that the parties must have triggered the mediation process before applying to commercial courts to bring a monetary claim.

The article further stipulated that the mediator must conclude the mediation process within six weeks as of their appointment. The mediation process can be extended by two weeks.

As of January 1, 2019, the document showing that the parties could not settle the dispute through mediation must be included in the statement of claims. Otherwise, the relevant court grants the plaintiff a peremptory term of one week for the submission of this document. If the plaintiff does not submit the document within the peremptory term, the case is dismissed based on procedural grounds.

The Law’s provisions on the mediation process being a threshold requirement for commercial cases to be heard are not applicable to cases pending before first instance or appeal courts as of the Law’s effective date.

Moreover,  Law No. 7155 added a provision to the Law on Mediation in Civil Disputes No. 6325 (the “Mediation Law”). According to Article 18/A of the Mediation Law, parties who choose to settle their disputes through arbitration do not have to undergo mandatory mediation.

Conclusion

As of January 1, 2019, parties are obligated to apply to a mediator  before applying to commercial courts for monetary claims. If a party files a case before fulfilling this obligation, the court will dismiss the case on procedural grounds.

If the parties in a dispute have already concluded an arbitration agreement, they may resolve their dispute through arbitration without undergoing mandatory mediation. If the parties have not chosen arbitration but are willing to avoid mandatory mediation, they can bypass mandatory mediation by agreeing to arbitration.

In brief, when the parties in a dispute believe that mediation will be ineffective and wish to bypass the mandatory mediation, they can agree to arbitration and initiate arbitration directly.

 

 

Author

Ismail G. Esin is a partner in Baker McKenzie's Istanbul office. He is a member of the Istanbul Bar Association, the International Chamber of Commerce (ICC) Turkish National Committee, the German Arbitration Institute (DIS), the London Court of International Arbitration (LCIA) and the Istanbul Arbitration Centre (ISTAC) Advisory Committee.

Author

Koray Söğüt is a member of the Dispute Resolution team at Esin Attorney Partnership, a member firm of Baker McKenzie. He has extensive experience representing clients in complex corporate and commercial litigation, administrative litigation as well as in criminal proceedings. He focuses on all kinds of shareholder and M&A disputes, disputes arising from distribution contracts and unfair competition, real estate disputes, bankruptcy and white collar crimes. He represents governments, international corporations, private equity firms, banks, and construction and manufacturing conglomerates before all levels of the courts in Turkey. Koray Söğüt can be reached at [email protected] and +90 2123766400.

Author

Ali Selim Demirel is a senior associate at Esin Attorney Partnership, a member firm of Baker McKenzie, where he leads the arbitration practice group. He focuses his practice on arbitration, domestic and international mergers and acquisitions and energy and concessions. He is a member of the Istanbul Bar Association.

Author

Ceylin Üsküp is a member of the Dispute Resolution team at Esin Attorney Partnership, a member firm of Baker McKenzie. She focuses her practice on dispute resolution, particularly through litigation. She assists clients before all levels of national courts and guides them through all aspects of the litigation process, including strategy development, conduct of hearings and settlement negotiations. She also assists clients on various aspects of employment law. Ceylin Üsküp can be reached at [email protected] and +90 2123766400.