Recent Development
Arbitration Rules (“Rules“)[1] and Tariff of Costs and Fees (“Scale“)[2] of the Union of Turkish Bar Associations (“UTBA“) Arbitration Center (“Center“), which was founded in 2015, entered into force pursuant to the decision taken during the board meeting on 19 February 2022. Arbitration rules and tariff of costs and fees, both of which were previously part of the UTBA Directive dated 2020 (“Directive“), are made into separate documents and many new provisions are regulated under the Rules. As such, the UTBA established the Rules, which are in compliance with the standards of other most preferred arbitration centers in Turkey and the arbitration practice around the world.
Amendments to the Rules and Significant Provisions
The most significant amendment to the Rules, which is regulated under article 2, is that the Center is no longer restricted to resolving disputes arising out of the attorney-client relationships. Accordingly, the scope of the Center’s services will now cover all types of national and international disputes. This change is a great step forward in the Center’s efforts to earn a place among the other arbitration centers in Turkey by moving away from a restricted service scope, namely, resolving disputes arising out of attorneyship agreements and attorney-client relationships. Further to this significant amendment on the scope, the Rules have been amended and modernized to ensure the Center serves to resolve all kinds of commercial disputes.
The Rules have been brought up to the standard of rules of leading arbitration centers by amending the provisions of the Directive and adding new ones to provide fast, efficient and flexible proceedings as evident from the significant provisions listed below:
- Pursuant to article 2 of the Rules, the parties may apply to the Center to record the executed settlement documents, conciliation minutes and mediation conciliation documents prepared according to article 35/A of Attorneyship Law No. 1136, as an arbitral award. This is an innovative provision that facilitates the execution capability of these documents.
- Pursuant to article 6 of the Rules, as opposed to the Directive, arbitral proceedings will be initiated with a statement of claim rather than a request for arbitration. Pursuant to article 7 of the Rules, the defendant will submit a statement of defense within two weeks of notification of the statement of claim. A remarkable amendment concerning the contents of the statement of claim and statement of defense is that they must include the personal data approval form published by the Center.
- Pursuant to article 11 of the Rules, arbitrators must be impartial and independent when they accept their duty and remain impartial and independent until the arbitral proceedings are concluded. This provision is parallel with the Directive; however, the new regulation under the Rules is that each arbitrator must sign a statement of impartiality and independence within three days of accepting their duty.
- Pursuant to article 12 of the Rules, disputes will be resolved by a sole arbitrator unless the parties have agreed otherwise. On the other hand, the parties are permitted to choose multiple arbitrators provided that the number of arbitrators must be an odd number.
- The parties had to select the arbitrators from the Center’s list pursuant to the Directive, whereas, the Rules have removed this restriction as well as the criteria for the arbitrators. In line with this, the rules on the challenge and replacement of arbitrators have been implemented in accordance with the rules of modern arbitration centers.
- The Rules do not explicitly regulate reply and rejoinder, unlike the Directive. However, pursuant to article 22, the sole arbitrator or the arbitral tribunal will set the dates for procedural matters as they deem fit with a procedural timetable. In this regard, the sole arbitrator or the arbitral tribunal may decide whether the specifics of the dispute necessitate the submission of these petitions.
- Pursuant to article 16 of the Rules, the sole arbitrator or the arbitral tribunal may take the necessary decisions to ensure the conduct of the arbitral proceedings is cost and time-effective, by taking into account the specifics of the dispute and the amount in dispute.
- The Rules include provisions on specific concepts such as claims arising out of multiple contracts and consolidation of arbitrations, which are in parallel with the arbitration rules of the International Chamber of Commerce and the London Court of International Arbitration.
- Pursuant to article 17 of the Rules, the arbitral proceedings should, in principle, be conducted in a confidential manner. The arbitral proceedings were also confidential under the Directive; however, it was provided that the Center could publish the arbitral awards. The provision regarding the publication of the arbitral awards has been removed by the Rules.
- Pursuant to article 18 of the Rules, the seat of arbitration will be Ankara unless the parties have agreed otherwise. The Directive had not regulated this matter, thus, this is a new provision that provides ease and practicality.
- Another new provision in the Rules that is in parallel with the rules of the most preferred arbitration centers, is regarding terms of reference. Pursuant to article 21, the sole arbitrator or the arbitral tribunal will prepare terms of reference within a week after the statement of claim and statement of defense are submitted and the statement of impartiality and independence of arbitrators is submitted to the Secretariat of the Center.
- One of the most remarkable aspects of the Rules is article 25 permitting virtual hearings, which shows adaptation to recent developments in arbitration practice especially after the COVID-19 pandemic. In fact, under the Directive, the general rule was rendering the decision based solely on documents, without holding a hearing, whereas pursuant to the Rules, it is mandatory to hold a hearing in the disputes where the amount in dispute exceeds TRY 100,000. In this regard, the option to hold virtual hearings will provide speed and flexibility to the proceedings.
- Pursuant to article 28 of the Rules, the limit for the arbitral award is three months, the same as it was under the Directive. As such, the sole arbitrator or the arbitral tribunal will render the final arbitral award within three months of notification of approval of the terms of reference by the Secretariat of the Center. This time limit can be extended if requested by the parties or, in the absence of an agreement, upon the request of the sole arbitrator or the arbitral tribunal, or ex officio by Court of the Center if such is deemed necessary.
- Finally, it is necessary to emphasize that especially the provisions under the Rules regarding the procedural timetable, terms of reference and mandatory hearings, all of which are very different from the provisions of the Directive, will not apply to arbitration proceedings already transmitted to the sole arbitrator or the arbitral tribunal unless the Court of the Center deems it necessary.
Conclusion
Another domestic arbitration institution has adopted a set of rules which are in compliance with the standards of international arbitration practice with the Rules published by the UTBA. As such, the Center has risen as a new alternative arbitration institution to resolve disputes and pledged to enable resolution of disputes in a short time frame, with a three-month duration of arbitration. The future will show the place that the Rules will take in Turkish arbitration practice.
