Arbitration As An Alternative Dıspute Resolution

Arbitration is a method of resolving private law disputes by unbiased and objective arbiters or arbitral tribunals, rather than courts. The decisions made by arbiters or arbitral tribunals are binding like court rulings, and are enforced in the same manner.

Arbitration has a history in both our country and the world. Especially in the last years, due to the increase in the number of multi-national corporations, globalisation and large growth in international trade, arbitration became a prominent alternative dispute resolution method. In Turkey, a regulation regarding arbitration was made in 2001, with 4684 International Arbitration Law, based on UNCITRAL Model law. Also, Turkey is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and European Convention on International Commercial Arbitration since 1991. Turkey also agreed to the Washington Convention on the Settlement of Investment Disputes in 1988.

Arbitration can bring many important and positive results compared to court trials. Considering the workload of the courts recently, it’s obvious that arbitration provides a swift dispute resolution. Even though the methods of judicial proceedings are also used in arbitration;

• Arbiters or arbitral tribunals will be able to reach a decision in a quick fashion as they don’t have such a workload, and they are able to be more flexible in applying the rules. Arguments and defences will be heard faster and the arbitration process will be quickly completed,
• Tests and Optimization
• Decisions will be effective as the court rulings, nationally and internationally, and will be enforceable,
• In line with the confidentiality principle, which some companies rightly consider important, the content of the case will be non-public.

It is possible to appeal the arbitral decisions, however, many decisions can also be final.

Arbitral decisions are valid in 143 countries, including Turkey and all members of EU, that are parties to New York Convention. Article 3 of New York Convention states that arbitral decisions with a foreign element are binding as domestic court decisions. Article 5 of New York Convention also states that listed exceptions aside, parties must recognise and enforce the decisions as soon as possible

There are two types of arbitration; administered arbitration and ad hoc arbitration.

In administered arbitration, the dispute is resolved in accordance to the arbitration rules of the institution referred by the parties. Some of these institutions are;

• International Chamber of Commerce – ICC,
• London Court of International Arbitration – LCIA,,
• American Arbitration Association – AAA,
• Chartered Institute of Arbitrators

However, in ad hoc arbitration, rules of arbitration aren’t set by an institution, parties decide on the rules themselves, like UNCITRAL Model Law.

In order to resolve a conflict of private law by arbitration, there must be an arbitration contract between the parties, or an arbitration clause in the main contract. According to the New York Convention, the arbitration agreement shall be written. Article 4 of Turkish International Arbitration Lawdeems the agreements made by fax, telegraph and other telecommunication methods valid.

Arbitration is a dispute resolution method Turkish foreign trade companies, import-export firms and companies with foreign partners might come across. In international trade contracts, under the title “dispute resolution”, regulations about arbitration are made. Separate agreements or arbitration clauses included in the contract may be binding, and prevent the parties from applying to the courts before an arbitration process.

The developments in national and international commercial arbitration, the legislation regarding arbitration and the international conventions entered might help arbitration to get more integrated to commercial life. The quick results achieved by arbitration is especially advantageous for traders, considering the workload of courts. It’s not far-fetched for arbitration to become a common method of dispute resolution for our national trade, or for our country to become a centre of arbitration (like Switzerland) due to its location.

Att. Bülent KAPTAN
Patent & Marka Attorney
http://bkaptan.com/
kaptan@bkaptan.com