VALIDITY CONDITIONS OF THE ARBITRATION AGREEMENT IN TURKISH LAW 14 September 2021
VALIDITY CONDITIONS OF THE ARBITRATION AGREEMENT IN TURKISH LAW
1. INTRODUCTION
Arbitration is an alternative way to the public courts. The parties may decide arbitration proceedings with their mutual assent on existing disputes or disputes that may arise between themselves. This mutual assent might be for different purposes such as saving money and time. In order to achieve these purposes, a valid arbitration agreement is needed. In this article, we will examine the validity conditions of arbitration agreement in Turkish law.
2. LEGAL CHARACTERISTIC OF ARBITRATION AGREEMENT
The supreme view in the doctrine is that the arbitration agreements are procedural agreements. However, there are different opinions such as the arbitration agreement is substantive law agreement and the idea that the arbitration agreement is a mixed agreement due to the fact that it has consequences in terms of both procedural and substantive law.
Although the arbitration agreement is a procedural law agreement, it should contain the necessary conditions of an ordinary agreement to be valid.
In this respect, the validity conditions of the arbitration agreement can be divided into two as the validity conditions of the ordinary contract and exclusive conditions.
3. VALIDITY CONDITIONS OF THE ORDINARY CONTRACT
The validity conditions of the ordinary contract apply to the arbitration agreement too. In this respect; the capacity of the parties to conclude a contract, absence of collusion and absence of defect in consent is also needed in arbitration agreement as the ordinary contracts.
4. EXCLUSIVE CONDITIONS
a. Intent to arbitration
Mutual intent of the parties is required for the valid arbitration agreement. However, the mere arbitration intent is not enough to meet relevant validity condition. This intention must be understood clearly and precisely. Arbitration agreements that contain ambiguous expressions and the intention which cannot be understood clearly and precisely will not be valid.
Although the doctrine holds the view that the arbitration agreement should be regarded valid when the mutual consent to make arbitration agreement is understood in some point; the Supreme Court (Yargitay) opposes this view. According to Supreme Court’s decisions the arbitration agreements that contains ambiguous expressions such as “arbitration may be applied” are not valid due to the fact that these expressions are not clearly and precisely indicates the mutual consent of the parties to make arbitration agreement.
b. Requirement of written form
According to the second paragraph of Article 4 of the International Arbitration Law (“IAL”) and third paragraph of Article 412 of the Code of Civil Procedure (“CPC”); arbitration agreement must concluded as written form. This requirement is a validity conditions.
c. Specific or identifiable dispute
In the definitions of the arbitration agreement both in the CPC and the IAL, the expression "disputes that have arisen or may arise from a contractual or non-contractual legal relationship" is mentioned. Therefore, the dispute that will be the subject of the arbitration agreement must be specific, even if it is not yet determined, and identifiable. If it has been decided that the disputes arising from a certain legal relationship will be resolved through arbitration, the dispute is again deemed to be determined.
d. The Arbitrability
Arbitrability refers to the areas that can be subjected to arbitration by the parties. The parties cannot subject all disputes between them to the arbitration based on their common will. At this point, arbitrability can be seen as a limitation imposed by the law. Arbitrability is also a necessary element for the recognition and enforcement of arbitral awards.
Article 408 of the CPC, which regulates the domestic arbitration, states: ‘’Disputes arising from real rights on real properties or the disputes that are not subjected to the will of the parites; are not suitable for arbitration’’. At the same time, according to the similar regulation on IAL states that IAL does not apply to disputes arising from immovables in Turkey and real rights related to these immovables and disputes that are not subjected to the will of both parties.
The disputes that are not subjected to the will of the parties means that the parties do not have the freedom of the conclude a contract on relevant dispute. It is regulated by the mandatory rules of the law. In addition to that, there are certain situations which are not subjected to the arbitration due to its nature. In this respect, criminal and enforcement law related matters are not arbitrable.
Moreover, the Supreme Court (Yargitay) states that it is not possible for the parties to cover issues which related to public policy on the arbitration since the parties are not entitled to dispose on the issues related to public policy.
5. THE LAW APPLICABLE TO THE VALIDITY OF THE ARBITRATION AGREEMENT
In domestic arbitration, the law which applied to the validity of the arbitration agreement will be the Turkish Code of Obligations, considering the substantive law character of the relevant agreement. However in the foreign arbitration, the law which applied to the arbitration agreement is the law chosen by the parties to be applied to the arbitration agreement, as stated by the IAL, or Turkish law in case that there is no such choice of law.
6. CONCLUSION
The validity conditions of the arbitration agreement are divided into two as validity conditions of ordinary agreement and exclusive conditions. The validity conditions of the contract are as following: the parties should have capacity in terms of making a contract; there must be no collusion and defect in consent. The exclusive conditions of the arbitration agreement are; the existence of the mutual intend of the parties to arbitrate in a clear and definite manner, written form, the Specific or identifiable dispute, and arbitrability as being suitable for arbitration.
