Mediation in Commercial Disputes: What You Need to Know Before Filing a Lawsuit

In commercial life, disputes may arise between parties stemming from contracts, debt relationships, company transactions, or commercial activities. However, taking all these disputes directly to court is not always the first and only legal avenue.

In some commercial disputes, mediation is mandatory before filing a lawsuit . In this system, known as pre-litigation mediation, filing a lawsuit before the mediation process is completed can lead to procedural consequences.

Therefore, parties facing a commercial dispute need to answer not only the question of "Which lawsuit should I file?" but also "Do I need to seek mediation before filing a lawsuit?"

What is mediation?

Mediation is an alternative dispute resolution method in which parties attempt to resolve their dispute with the help of a neutral third party.

The mediator does not make decisions on behalf of the parties.

The mediator's primary role is to help the parties to a dispute to negotiate and develop their own solutions.

In this respect, mediation differs from court proceedings.

While the outcome of a dispute in court is determined by the judge, in mediation, the parties themselves decide whether or not to reach an agreement.

When is mediation mandatory in commercial disputes?

The situations in which mediation is a prerequisite for litigation in commercial disputes are regulated by law.

Specifically Article 5/A of the Turkish Commercial Code , mediation is a prerequisite for filing a commercial lawsuit concerning claims for payment of a sum of money or compensation.

It should not be assumed that every commercial dispute is automatically subject to mandatory mediation.

The dispute;

• Whether it is a commercial lawsuit,
• What is the subject of the request?
• Whether there is a claim for monetary compensation or damages,
• Is there a specific provision in the law?

This should also be considered.

Therefore, it is important to correctly determine the legal nature of the dispute before filing a lawsuit.

What is a commercial lawsuit?

In determining whether mediation is mandatory, the first step is to ascertain whether the dispute is of a commercial nature

The Turkish Commercial Code contains various regulations regarding commercial lawsuits.

For a dispute to be considered a commercial case, it may not always be sufficient for the parties to be merchants. The connection of the dispute to a commercial enterprise and other criteria stipulated in the law may also be taken into consideration.

For example, an invoice receivable arising from a sale conducted as part of a commercial activity between two companies is not evaluated in the same way as a purely private debt relationship between two individuals.

Therefore, when evaluating the necessity of mediation, one should consider not only who the parties are, but also the source and legal nature of the dispute .

What is mandatory mediation as a prerequisite for litigation?

Mandatory mediation is a system that requires the completion of a mediation process before resorting to court proceedings in certain disputes.

There is an important distinction here:

Seeking mediation is mandatory; however, reaching an agreement is not.

If the parties fail to reach an agreement during mediation, a lawsuit can be filed by fulfilling the conditions stipulated by law.

Therefore, mandatory mediation as a prerequisite for litigation is not a system that necessarily requires the parties to reach an agreement.

The aim is to give the parties the opportunity to resolve the dispute voluntarily before resorting to litigation.

What happens if a lawsuit is filed without first resorting to mediation?

In a dispute where mediation is a prerequisite for filing a lawsuit, initiating a lawsuit directly without first resorting to mediation creates a significant procedural problem.

The court may examine whether the procedural requirements have been met.

If the mediation process must be completed before a lawsuit is filed, and this condition is not met, the case may be dismissed on procedural grounds.

Therefore, before filing a lawsuit in a commercial dispute, it is necessary to check whether mediation is a prerequisite.

How to Apply for Mediation?

Applications for mediation may be submitted to the mediation office within the competent judicial district, depending on the nature of the dispute.

The application primarily provides information about the parties to the dispute and the subject matter of the dispute.

Following the application, a mediator is appointed and contact is made with the parties to initiate the negotiation process.

The participation of the parties in mediation talks and the conduct of the process can be carried out in different ways depending on the nature of the dispute.

Can a lawyer be present during mediation talks?

The parties may participate in mediation talks with their lawyers.

Seeking legal assistance can be particularly important in high-value commercial disputes or complex cases requiring the interpretation of contract terms.

The lawyer stated that his client;

• The legal basis of his claim,
• The risks in a potential legal process,
• The state of the evidence,
• Agreement options

It can help with the evaluation.

However, in the mediation process, the decision-maker is neither a lawyer nor a mediator. The parties decide for themselves whether or not to reach an agreement.

What topics can be discussed in mediation?

Depending on the nature of the commercial dispute, different demands may be subject to negotiation.

For example;

• Payment for commercial goods or services,
• Invoice receivables,
• Receivables arising from the contract,
• Claims for compensation arising from commercial relationships,
• Current account disputes,
• Some inter-company commercial disputes

This could be the subject of mediation talks.

However, it should not be assumed that every legal dispute can be resolved through mediation.

Whether the dispute is suitable for mediation and whether it falls within the scope of mandatory mediation as a prerequisite for litigation should also be evaluated.

How long does the mediation process take?

The duration of the mediation process depends on the nature of the dispute and the progress of the parties' negotiations.

One of the key features of mediation is its ability to reach a conclusion in a shorter time compared to litigation.

However, it is not possible to say that every case will be completed in the same amount of time.

The number of parties involved, the scope of the dispute, the amount claimed, the evidence, and the parties' willingness to reach an agreement can all affect the length of the process.

Is reaching an agreement mandatory in mediation?

No.

In mandatory mediation, a prerequisite for filing a lawsuit is applying to and participating in the mediation process with a mediator.

Agreement between the parties is not mandatory.

If the parties cannot reach an agreement, the mediation process is concluded as a failure to reach an agreement, and if other necessary conditions are met, a lawsuit can be filed.

Therefore, mediation is not a process where one party is forced to accept an agreement they do not want.

What happens if an agreement is reached through mediation?

If the parties agree, the scope and terms of the agreement may be documented in writing.

The provisions of Law No. 6325 on Mediation in Legal Disputes are important in terms of the legal consequences of the agreement document.

In some cases, a separate assessment may be required regarding the enforceability of the agreement document.

Therefore, especially in high-value commercial agreements, it is important to carefully examine the legal aspects of the agreement before signing it.

Can a lawsuit be filed after a mediation agreement is signed?

If the parties reach a valid agreement regarding all or part of the dispute, it may not be possible to file a new lawsuit concerning the matters covered by the agreement.

Therefore, it is important to clearly define the scope of the agreement document.

For example, the legal consequences of an agreement that resolves only a dispute regarding a specific invoice may not be the same as those of a comprehensive agreement that terminates the entire business relationship between the parties.

Therefore, it is important that the agreement clearly states which demands and which periods are covered.

Are mediation meetings confidential?

One of the key features of mediation is the principle of confidentiality.

Discussions held during the mediation process and some proposals put forward by the parties may be considered confidential under the conditions stipulated by law.

This allows the parties to negotiate some solutions they might not want to use in the litigation process.

However, the scope of the confidentiality principle is not unlimited. The law contains specific regulations regarding which information and documents cannot be used and under what conditions.

Therefore, it should not be assumed that everything said in mediation talks can never be taken into account in another process under any circumstances.

Can an offer made during mediation be used later in court?

In the mediation process, a significant portion of the offers and statements made by the parties in an effort to reach an agreement are protected under the confidentiality provisions stipulated by law.

The main goal is to allow the parties to negotiate without worrying that "everything I say will later be used against me.".

However, the situation may be different with regard to documents that are already available in the mediation process and those that can be independently obtained from another source.

Therefore, proposals made during the mediation process should be distinguished from independent evidence relating to the dispute.

The Importance of Mediation in Commercial Disputes

In commercial disputes, lengthy resolution processes can cause harm to the parties involved, not only legally but also economically.

For example, a company having to pursue a lengthy legal process due to uncollectible receivables;

• Cash flow,
• Commercial relations,
• The financing need,
• Business plans

It can have an effect.

Mediation, on the other hand, can provide parties with the opportunity to resolve their dispute more quickly and continue their business relationship.

However, it is not possible to say that mediation will necessarily result in an agreement in every dispute.

What should be considered in mediation?

Before initiating mediation in a commercial dispute, it is crucial to accurately assess the legal and financial aspects of the dispute.

Especially;

• Contracts,
• Invoices,
• Current account records,
• Payment documents,
• Delivery notes,
• Email and correspondence,
• Warnings,
• Commercial books and records

Documents such as these may need to be reviewed.

In addition, it is important to clearly define how the requested amount was calculated.

For example, instead of simply saying "we are owed money," clearly outlining the actual amount owed, interest, any compensation claims, and other demands can help facilitate a more productive negotiation.

What happens if an agreement cannot be reached in mediation?

If the parties fail to reach an agreement during mediation talks, the process may end in disagreement.

In a dispute subject to mandatory mediation, the parties may resort to litigation after the necessary conditions have been met.

Therefore, the failure of the mediation process does not prevent a party from pursuing their rights in court.

However, when filing a lawsuit, it is also important to determine the competent and authorized court, to check the statutes of limitations and forfeiture periods, and to formulate the claim correctly.

Conclusion

In commercial disputes, mediation is an important dispute resolution method that should be considered before resorting to litigation.

In commercial disputes, particularly those falling under Article 5/A of the Turkish Commercial Code, resorting to mediation before filing a lawsuit may become a prerequisite for litigation

The key point here is that there is a difference between the requirement to resort to mediation and the requirement to reach an agreement.

The parties are not obligated to reach an agreement during mediation talks. If an agreement cannot be reached, legal action can be taken provided the necessary legal requirements are met.

However, before initiating mediation in a commercial dispute, it is important to evaluate the legal basis of the claim, the amount owed, the contracts, and the available evidence.

In particular, the scope of the document to be signed if an agreement is reached should be carefully examined. Clearly defining which claims have been terminated, payment terms, interest, installments, collateral, and other obligations is crucial to prevent future disputes.

In conclusion, mediation in commercial disputes should be considered not merely a procedure to be completed before filing a lawsuit, but a legal process that allows parties to resolve their disputes voluntarily.

 

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