Amendment to the Regulation on Arbitration in Insurance

Recent Amendment

Pursuant to Article 30 of the Law No. 5684 on Insurance which entered into force in 2007, arbitration has been foreseen as a dispute resolution method for insurance related disputes. Rules and procedures regarding arbitration in insurance are regulated under the Regulation on Arbitration in Insurance No. 11554 (“Regulation“) and there have been some changes to the Regulation in the Official Gazette No. 31564, dated 10 August 2021, which are summarized below.
There are amendments that may be important for practitioners regarding the time limits and authorized institution. The most remarkable amendments are as follows:

1. The duties and authorities of the Minister of Treasury and Finance (“Minister“) and the Ministry of Treasury and Finance (“Ministry“) ⁠have been transferred to Insurance and Private Pension Regulation and Supervision Agency (“Agency“) and Insurance and Private Pension Regulation and Supervision Board (“Board“).
2. According to the changes respectively made to Articles 7 and 16/B of the Regulation, arbitral awards will no longer be stored by the competent courts but will instead be stored by the Insurance Arbitration Commission (“Commission“).
3. Pursuant to the amendment to Article 14 of the Regulation, arbitrators, who are included in the list of the Agency, will no longer be able to act as party representative in the disputes before the Commission. Furthermore, provisions of the Code of Civil Procedure No. 6100 (“CCP“), regarding the disqualification and challenge of judges will equally be applied to arbitrators.
4. The time limit to challenge arbitrators in Article 17 of the Regulation has been reduced to 5 business days from 15 days.

What Does the Amendment Signify?

1. Transference of the Duties and Authorities

The duties and authorities of the Ministry and Minister will be used by the Agency and Board following the amendments. Briefly, the authorized institution has changed with the amendments.

1. Confidentiality and the Storage of Arbitral Awards

Another important amendment is in relation to the storage of the arbitral awards. The awards, which were stored by the competent court at the place of the Commission, will be stored by the Commission itself. Storage of the arbitral awards by the competent court causes some discussions regarding the confidentiality of the arbitration. In this respect, the amendment regarding the storage of the arbitral award in the Commission instead of the competent court may have a positive effect relating to the preservation of confidentiality.

1. New Rules Regarding the Disqualification and Challenge of Arbitrators

CCP’s relevant rules will also apply to insurance arbitration in regards to disqualification and challenge of arbitrators in accordance with the amendments to the Regulation. In addition, with the amendment to the Regulation in relation to the arbitrator list, arbitrators who are included in the list of the Agency will no longer be able to act as party representative in the disputes before the Commission. With this latest amendment, it is clear that the intention is to prevent the situations that are likely to cast doubt on independence and impartiality of an arbitrator who acts in an insurance arbitration. In addition, with this amendment, the reasons for the arbitrator’s disqualification and challenges have been aligned with the CCP.

1. Reduced Time Limit for the Challenge of the Arbitrator

The most significant amendment for the practice may be the reduction of the time limit allowed for the challenge of arbitrators to 5 business days from 15 days. It can be thought that this amendment aims to make the arbitration process quicker. However, in such a case, the parties to the arbitration must act swiftly to challenge the arbitrators within this time period.

Conclusion

In accordance with the amendments regarding insurance arbitration, the Minister and Ministry’s duties and authorities in this field have been terminated, and these duties and authorities have been transferred to the Agency and the Board. Furthermore, regulations were introduced to expand the scope of challenge and disqualification of arbitrators. Another change that is of special importance in practice is the significant reduction of the time limit for challenge of the arbitrator. Finally, the storage of arbitral awards by the Commission instead of the competent court is an amendment that is especially significant for the practice and may have a positive impact on confidentiality of awards.