Disputes Subject to ICC Arbitration and Party Standing

ICC Arbitration and the Concept of Arbitration

While the method of resolving disputes through the courts is a classic approach, it is often criticized for being ineffective, both in terms of the outcome and the process by which it is achieved.

Furthermore, in international trade, the concern among the parties about what law will apply to them, coupled with the inevitable diversity of parties, has led to criticism of the classic method of dispute resolution, namely resolving disputes through the courts, and this criticism has in turn given rise to alternative dispute resolution methods.

The result is that, in the event of a dispute between the parties, the desire to resolve the dispute through an independent judicial body arises. This is what gives rise to arbitration.

For example, Istanbul Chamber of Commerce arbitration or ICC (International Court of Arbitration) arbitration can be given as examples.

However, the ICC arbitration tribunal is said to be the leader in this matter.

When referring to the ICC arbitration tribunal, one is actually referring to the independent arbitration body of the International Chamber of Commerce. Contrary to popular belief, the tribunal does not resolve disputes.

This is done by the appointed referee or referees through the arbitration panel.

The Tribunal is competent to manage the resolution of disputes in accordance with the rules of arbitration of international chambers of commerce.

The council consists of the president, vice-president, and members.

There is also the council's secretariat, the importance of which will be explained later, but for now, saying that it assists the council in its work would be an incomplete but not entirely wrong description.

 

So, is arbitration a suitable method for resolving all existing disputes?

Regardless of whether an arbitration agreement arises from a contract or not, it is sufficient that it has arisen from, or even may arise from, a legal relationship; it can be accepted as an alternative dispute resolution method that can be used to resolve all or part of the matter in dispute.

If arbitration is sought before a dispute arises, the dispute is expected to be arbitrable.

Agreements containing phrases like "From now on, any disputes arising from contracts signed between us will be resolved through arbitration" are argued to be invalid because they do not yet indicate an existing legal relationship.

The conclusion is that the existence of a specific and existing legal relationship is important. This means that disputes arising from, or potentially arising from, a legal relationship can be resolved through an arbitration agreement.

It should also be noted that arbitration can be exhausted if a legal relationship involves a dispute 

But above all, the validity of the arbitration agreement is crucial. Arguments claiming the arbitration agreement is invalid can prevent the arbitration from continuing, and even hinder the issuance of an enforcement decision.

It is also important to know before which authority the validity of the agreement is challenged.

If a lawsuit is to be filed to overturn an arbitration award, the case will be heard in the court where the arbitration award was rendered. The court will resolve the dispute through domestic legal remedies.

This leads us to determine the validity of the arbitration agreement according to the legal rules of that place. For now, explanations will only be given for Turkish law.

If an enforcement action is involved, meaning a decision is needed to execute the arbitration panel's ruling—which is called an enforcement decision—then the enforcement action is heard in the court of the country where the execution will take place.

As mentioned above, only explanations necessary for Turkish law will be provided.

It should be noted that in an annulment action, the legal rules of the place where the arbitration is conducted will be taken into consideration. Similarly, in making an enforcement decision, the court will decide according to the legal rules of the place where the execution of the decision is requested.

If we were to revisit the validity of a contract under Turkish law..

When the subject is a contract, it is said that mutually agreeable declarations of intent between the parties are a prerequisite.

The protection of declarations of intent by the legal system necessitates that the parties possess legal capacity and capacity to act. This is because the validity of a contract requires that the parties have legal capacity and capacity to act.

Legal capacity is the ability to possess rights and obligations, beginning with birth from the womb, provided the individual is born healthy and fully formed.

Legal capacity relates to not being under guardianship, being of legal age, and having the capacity to discern.

Discernment is the ability to foresee the consequences of one's actions and act accordingly.

To avoid giving the impression that the statements made so far are about real people, it should be noted that:

Both natural and legal entities can be parties to an arbitration agreement.

The law under which a legal entity was established shall apply. According to Turkish law, it is presumed that they acquire legal capacity upon possessing the necessary organs. Of course, for a legal entity to enter into an arbitration agreement, it is expected to perform the legal transaction through its organs. The organ's authorization is not a requirement for this.

 

In terms of legal entities

If we consider an association or a foundation, then its governing body would be..

If we consider a joint-stock company, then the board of directors would..

In the case of a limited liability company, it is stated that the partner or partners acting as directors, or an authorized third party, can enter into an arbitration agreement.

If the focus were on a collective company, then the company directors would only be able to enter into arbitration agreements relating to ordinary business matters

If we were talking about limited partnerships with capital divided into shares, we could say that their managers could enter into arbitration agreements limited to the ordinary operations of the company.

In the case of an agency, it is not possible to enter into an arbitration agreement on behalf of a client merchant without obtaining written authorization, and even without this authorization being publicly announced.

Brokers can only enter into arbitration agreements in their own name but on behalf of others if they are specifically authorized to do so.

Even if it were a representative, we would say that unless specifically authorized, it is inconceivable for them to enter into such an arbitration agreement, at least under Turkish law. The arbitration agreement they have made would be invalid.

 

Both arbitration and the designation of specific courts as competent authorities

The existence of independently drawn up arbitration agreements is possible only through the definitive and mutually agreeable declarations of intent of the parties.

The Court of Cassation's view, in such a situation where both arbitration and judicial review provisions exist, has been that the parties' definitive intentions regarding the arbitration agreement do not exist, thus declaring the arbitration agreements invalid. However, the legal doctrine is debatable. It appears that some argue that the parties had a right of choice.

Intern Student

Bedirhan TAŞÇI