Mandatory mediation in commercial disputes in Turkey
Alper Arslan
Arslan Law, Istanbul
alper.arslan@arslanlaw.com.tr
Commercial disputes are an inevitable part of business life, but the length and cost of court processes can have negative impacts on a company’s business. Mandatory mediation in Turkey represents an effective approach for resolving commercial disputes. This article discusses the function and practical stages of mandatory mediation in commercial disputes in Turkey.
Turkey is one of many jurisdictions with a heavily burdened court system, leading to commercial cases of prolonged duration with relatively high legal costs.
In Turkey, mandatory mediation for commercial disputes came into effect in 2019. This practice requires that parties attempt to resolve their dispute through mediation before they can commence a legal action in court. Mediation involves a neutral third party, namely the mediator, who assists the parties in reaching a consensual solution. It offers flexible, cost-effective and swift solutions.
The mandatory mediation process in Turkey
The mediation process is governed by the Law on Mediation in Civil Disputes, No 6325, and related regulations, ensuring a standardised approach across commercial disputes.
Under Turkish law, it is mandatory to apply to a mediator before filing a lawsuit for commercial cases involving claims for a specific amount of money, such as:
- debt;
- compensation;
- annulment of objection to execution proceedings;
- negative declaratory actions; and
- restitution claims.
When a commercial dispute arises, parties must apply to mediation offices before initiating a lawsuit. An application can be made at mediation offices located in the place of residence of the respondent, or at the place where the agreement was to be performed. A mediator is either chosen by mutual agreement of the parties or appointed by the mediation office. The mediator operates under the principle of impartiality, striving for a fair resolution between parties. The mediator organises the meeting to bring the parties together in a neutral and professional environment, where biases or emotional reactions can be managed productively.
The mediation process is typically concluded swiftly. In commercial disputes, the time allocated for mediation is limited by law. Mediation can only occur within the time frames prescribed – the commercial mediation period. The mediator is expected to finalise the mediation within six weeks; if necessary, this period may be extended by the mediator for a maximum of two additional weeks (Turkish Commercial Code, Article 5/A-2).
Should the parties reach an agreement, the resulting document has the force of a court judgment. If no agreement is reached, parties are free to pursue litigation.
If a settlement is reached at the end of the mediation process, a settlement agreement is prepared and signed by the parties and the mediator (Law on Mediation, Article 18/1). The parties cannot file a lawsuit regarding the agreed-upon matters (Law on Mediation, Article 18/5).
Each of the parties may request an enforcement decree from the court regarding the enforceability of this settlement agreement. An agreement containing this enforcement decree is considered a document equivalent to a court decision (Law on Mediation, Article 18/2). Except in cases where obtaining an enforcement decree is mandatory by law, a settlement agreement signed jointly by the parties and their attorneys, or by the attorneys and the mediator in commercial disputes, is considered a document equivalent to a court decree without needing an enforcement decree (Law on Mediation, Article 18/4). Settlement agreements can be executed according to the provisions of the Enforcement and Bankruptcy Law regarding the execution of judgments.
Mandatory mediation in Turkey offers numerous advantages for both the private and public sectors:
- While court proceedings can take years, mediation processes usually conclude in weeks, significantly reducing time loss and associated costs.
- Mediation is less expensive than a court case.
- Unlike court cases, mediation processes keep negotiations and all related documents confidential.
- Parties have the opportunity to shape the process and outcome more directly.
- Mediation helps maintain and even strengthen business relationships during and after the dispute resolution period.
The implementation of mandatory mediation in Turkey has several practical impacts on the business sector:
- Mediation allows parties to evaluate their real demands and encourages settlement before costly court proceedings are necessary.
- While mediation agreements do not directly contribute to legal precedents, the process fosters new, creative solutions that enhance legal stability.
- Predictable and reliable legal processes foster greater security for foreign investors.
- Mediation practices enhance the credibility of Turkey’s judicial system.
Conclusion
Mandatory mediation in commercial disputes is an effective means of maintaining peace in the business landscape in Turkey. As a method known for its speed, cost effectiveness, and constructive nature, mediation offers an effective means of resolving commercial disputes in Turkey. It is also an effective means of avoiding lengthy and costly court cases before national courts.