Jan-Feb 2019

Mandatory Mediation For Commercial Disputes

In accordance with the new provisions which are added to the Turkish Commercial Code (“TCC”) just a month ago; for the disputes arising out of commercial dealings that are related to payment of some amount of money, a mediation process should be initiated before the lawsuit is filed.This amendment aims to resolve disputes in a much shorter period of timewith less costs and in accordance with the wishes of the parties.

The requirement to apply to mediation before filing a lawsuit has been inured in Turkish law by Labour Courts Code numbered 7036. After the entry into force of Law No. 7036 considering the success of the solution of labour disputes, it can be easily predict that the mandatory mediation method may be useful in commercial disputes.

In this context, if mediation is accepted as a requirement of litigation in the other laws, the Law of Mediation (No. 6325) will be taken into consideration for the basic provisions to be applied to the mediation process. Including the "there is an obligation to apply to mediation before filing a lawsuit" article is adequate for other laws to apply the mediation. However, if the relevant law brings special arrangements relating to mediation process, these regulations shall apply.

Which disputes are included?

If the disputes arising out of commercial dealings which are mentioned in Article 4 of  the TCC are related to payment of some amount of money, there is an obligation to apply for mediation before the lawsuit is filed. These cases are; Civil cases arising from issues concerning commercial enterprise of either party and unless regarded whether the parties have been businessmen or not; civil cases and non-contentious proceeding matters arising from the issues that are specified;

  • In this Code,
  • In the Articles from 962 to 969 of the Turkish Civil Code regarding the persons performing a work of making loan in consideration of mortgage,
  • In the Articles from 202 to 203 related to taking over assets and enterprise and merger or transformation of enterprises, in the Articles from 444 to 447 related to prohibition of competition, in the Articles from 487 to 501 related to publishing contract, in the Articles from 515 to 519 regulating letter of credit and order of credit, in the Articles from 532 to 545 relating to brokerage contract, in the Articles from 547 to 554 relating to commercial agents, commercial representatives and other businessman assistants, in the Articles from 555 to 560 regarding remitment, in the Articles from 561 to 580 regulating safekeeping contracts of the Turkish Code of Obligations dated November 01, 2011 and numbered 6098,
  • In statute regarding intellectual property law,
  • In special provisions concerning share markets, exhibitions, street fairs, bazaars, warehouses or other commercial-specific places,
  • In regulations related to banks, credit institutions, financial institutions and works of making loan,

shall be deemed commercial case and non-contentious proceeding matters having commercial character. Cases arising from the rights concerning remitment, safe custody, literary and artistic works which they have no any relation with any commercial enterprise are exempt from this.

With a provisional article which was added to the TCC, mandatory mediation will not implemented to still-continuing cases as a condition of litigation. This obligation of mediation shall only apply to cases which will be filed after the date of entry into force.

How will the mediation process be completed?

If the minute that ‘’mediation process concluded negatively’’ has not submitted to the court, the courts sends a invitation on ‘’the minute must be submitted within a week otherwise the case will be formally rejected’’. The claimant must certify that the obligation has fulfilled by a record of mediation with the original document (or a certified true copy).

The application shall be made to the mediation office where the competent court is located. If the mediation office doesn't exist within the court, it shall be made to the registry of the court.

Statute of limitations and period of prescription stops from the application to the mediation office, until the last report of mediation is issued.

The commission appoints the mediator from the predetermined list of registered mediators. However if the parties agree on a name on the list of the registered mediators, that person(mediator) shall appointed.

The mediator must conclude the process within six weeks from the date of assignment. This period may be extended by the mediator for a maximum of two weeks only in cases of essential necessity.

If the parties are unable to communicate, negotiate or agree; the mediator must terminate the mediation process and issue the final minute to be sent to the Mediation Office.

Plea of the Jurisdiction

The mediator shall not take into consideration the authority of mediation office by itself. The adverse party may object to the authority of the mediation office at the first meeting at the latest by submitting the documents related to the authority of the office. If related party objects to the authority of the mediation office, the mediator must deliver the file to the mediation office to be sent to the relevant civil court of peace.

The court will make a final decision at the end of the examination and return the file to the mediation office within one week without any fee. In the case of rejection of the authority objection, the same mediator shall be re-appointed and the maximum period to conclude the mediation process shall start from the date of the new appointment. In the event that the objection is accepted, the parties may apply to the authorized office within one week from the date of notification of the decision. The date of application to the unauthorised office will be accepted as the date of application to the authorized office.

Resolving disputes in a much shorter period of time, from the basis, with less costs and in accordance with the wishes of the parties should be the most significant things in a judicial process and this amendment of law aims to increase these factors success ratio.

After the mandatory mediation on labour disputes was entered into force at the beginning of 2018, the number of lawsuits filed in the labour courts decreased by 67% compared to the previous year and the rate of agreement is reached to 70%. In light of these statistics, it can be estimated that the workload of the courts will be reduce and the effectiveness of alternative dispute solutions methods will be increase.

Legal Intern Berkan ŞEKER