Arbitration Advocacy and International Arbitration: Procedures and Decision-Making Processes

Arbitration is the resolution of a dispute between parties not by a judicial body, but by independent arbitrators chosen by the parties. It is considered an alternative dispute resolution method to the state's judicial activity. For arbitration to be possible, the subject matter of the dispute must fall within the scope of cases permitted by law. In addition, special laws specify cases where arbitration is mandatory.

A. Arbitration Agreement

An arbitration agreement is established when the parties agree to submit any disputes that may arise or already exist between them to an arbitrator or an arbitration panel. While the arbitration agreement can be made as a separate contract, it can also be a condition of an existing contract between the parties. For the agreement to be valid, it must be in writing and signed. In addition, there must be an arbitration agreement concerning a specific subject matter of the dispute, and that subject matter must constitute a matter suitable for arbitration. If the arbitration agreement is made as a separate contract, it acquires an independent legal status and is not dependent on the validity of the main contract. That is, even if the main contract is invalid, the arbitration agreement retains its validity and enforceability.

In disputes that do not involve a foreign element and where the place of arbitration is determined to be Turkey, the Code of Civil Procedure ("CCP") applies. This is based on Article 407 of the CCP. In this respect, a distinction is made between national and international arbitration.

of the Code of Private International Procedure ("PIP"), for international arbitration awards to be enforceable in Turkey, they must be enforced by a Turkish court. The conditions for enforcement are specified in the New York Convention and the PIP. If the relevant arbitration award was rendered in a country that is not a party to the New York Convention on the recognition and enforcement of foreign arbitration awards, the PIP applies.

B. International Arbitration

International arbitration procedures can be conducted in two different ways: ad hoc arbitration and institutional calendar arbitration.

 a) Ad Hoc Arbitration

In ad hoc arbitration, the parties choose their own arbitrator or arbitration panel. They can also choose the arbitration procedure themselves, and are not bound by any pre-determined arbitration panel. The chosen arbitrator or arbitration panel only resolves the dispute between the parties. The fact that institutional arbitration involves more general rules is one of the reasons for choosing ad hoc arbitration. This is because it is easier to conduct the process in ad hoc arbitration in a way that best suits the resolution of the dispute. If the parties cannot agree on the rules of arbitration, the arbitrator or arbitration panel will decide which rule will apply. Although the parties have this freedom, in practice we often see that the United Nations Commission on International Trade Law (“UNCITRAL”) arbitration rules are chosen.

b) Institutional Arbitration

In institutional arbitration, unlike ad hoc arbitration, the parties do not determine the procedures and rules. Instead of establishing rules for a future dispute when forming a legal relationship, the parties agree to resort to institutional arbitration, thus ensuring the implementation of this procedure. Therefore, it is a type of arbitration where the arbitration process is conducted according to the rules of an arbitration institution. The transparent framework offered by arbitration institutions with their predetermined procedures and rules makes the arbitration process more predictable. In addition, the detailed regulations governing arbitration proceedings and the efficient conduct of the process through an administrative structure are among the reasons for choosing institutional arbitration. Some examples of institutional arbitration centers include the International Chamber of Commerce (“ICC”) Arbitration Tribunal, the London International Arbitration Court (“LCIA”) , and the Istanbul Arbitration Centre (“ISTAC”) in Turkey .

      aa) International Chamber of Commerce Arbitration Court (ICC)

The International Chamber of Commerce Arbitration Tribunal (“ICC”) plays a critical role in ensuring the sustainability and reliability of international trade by resolving disputes between parties in an independent environment in a fair, effective, and impartial manner. Therefore, it is a highly important institution.

C. ICC Arbitration Process

  a) Application Stage

The ICC arbitration process begins when a party wishing to initiate arbitration submits their request to the Secretariat. The requirements for this request are set forth in Article 4 of the ICC Arbitration Rules. Accordingly, the request submitted to the Secretariat must include the following information and documents:

• The full names, titles, addresses, and contact information of the parties,
• The full name, address, and contact information of the person or persons representing the plaintiff,
• The definition of the claims describing the nature and characteristics of the dispute, and the issues on which these claims are based,
• The amounts of claims containing a specific sum and the approximate monetary value of other claims,
• All relevant agreements, in particular the arbitration agreement or agreements,
• If claims are based on multiple arbitration agreements, it must be specified under which arbitration agreement the claim is made
• Information, opinions, or proposals regarding the number, selection, and appointment of referees,
• Determining the venue of arbitration, the applicable law, and the language of arbitration, as well as opinions or proposals on these matters.

If the plaintiff fails to meet any of these conditions, the Secretariat may grant the plaintiff a specific period of time to complete the missing documents. If the plaintiff fails to complete the missing documents within this period, the case will be closed. If there are no deficiencies, the Secretariat will receive a sufficient copy of the request and the litigation costs. Subsequently, it will forward a copy of the request and its accompanying documents to the defendant for a response. The defendant must submit a response within 30 days of receiving the request. The content of the response should be as follows:

• Defendant's full name, title, residential address and other contact information,
• The name(s), address and contact details of the person(s) appointed to represent the defendant in arbitration,
• Explanations regarding the source, nature, and underlying grounds of the dispute
• Responses to the demands and their outcomes,
• As requested, opinions or suggestions regarding the number of arbitrators and the selection process should be submitted. Thoughts on the arbitrator appointment process should also be expressed.
• Opinions and recommendations regarding the determination of the place of arbitration, the applicable law, and the language of arbitration

The Secretariat may grant the respondent additional time to submit their response if there are any deficiencies regarding the number of arbitrators, the selection process, or the arbitrator appointment process. The plaintiff must submit their response within 30 days of receiving the counterclaim from the Secretariat. The Secretariat may grant the plaintiff additional time to submit their response to the counterclaim. Finally, after the response to the counterclaim has been submitted, the case file is sent to the arbitration board.

 c) Selection of the Referee

For an arbitrator to be appointed, the parties must agree on this matter, and the arbitrator must submit a document acknowledging their acceptance of the role. The arbitrator is not obligated to give a positive response to the parties. If the parties cannot agree on the number of arbitrators, there are different solutions depending on the number of arbitrators to be selected. If a single arbitrator is to be selected, the court appoints one arbitrator at the request of one of the parties. If three arbitrators are to be selected, the parties each choose one arbitrator, and the court appoints the third arbitrator. If more arbitrators are to be selected, this logic continues, and the final arbitrator is always chosen by the court. The selection of arbitrators is a very important matter. For a dispute to be resolved fairly, the arbitrators must be impartial and able to maintain their impartiality throughout the arbitration proceedings. The Arbitration Tribunal also considers these matters when approving the arbitrators.

 b) Commencement of Arbitration

The Arbitration Tribunal decides whether the arbitration proceedings should continue, primarily by considering certain conditions. If the decision is to continue, the arbitration proceedings proceed. The failure or refusal of one of the parties to participate in the arbitration process or any stage of it does not prevent the continuation of the arbitration proceedings.

 d) Making the Decision

After this stage, if the requested advance payment of expenses has also been made, the Secretariat will forward the file to the arbitration board as soon as it is established. If the parties have not agreed on a place of arbitration, the Tribunal will undertake this task. The arbitration board will determine the language of arbitration, taking into account the circumstances and conditions.

The arbitration panel has a time limit for making its final decision. This period is six months from the date the assignment document is approved by the Board and notified to the arbitration panel. The Board may extend this period upon request or on its own initiative.

The arbitration panel submits a draft of its decision to the Court of Justice before finalizing it. The Court of Justice may make structural changes to the decision, but cannot make substantive changes other than drawing attention to fundamental issues. The arbitration panel cannot issue a decision that has not been formally approved by the Court of Justice.

Şeydanur TOSUN

SOURCE

1. Eyuboğlu, Ceren. “Validity of Arbitration Agreements in Turkish Law”, Istanbul Bar Association, June 2017.
2. ICC Arbitration Rules, (2012), https://icc.tobb.org.tr/docs/ICC_Tahkim_Kurallari_Kitapcik.pdf.
3. Basic Concepts, Regulations and Current Developments Regarding Arbitration, Publications of the General Directorate of Law and Legislation, Ankara, 2021.
4. Yüksel, S. Reyhan. “Evaluation of the Arbitration Agreement Between the Arbitration Parties and the Arbitrator from the Perspective of Substantive Law”, Marmara University Faculty of Law Law Research Journal, November 2012.