This Legal Alert aims at providing you with an overview on the new procedural rules for commercial disputes as introduced by the Law No. 7155 on Procedures of Initiation of Execution Proceedings Concerning Monetary Receivables Originating from Subscription Agreements published in the Official Gazette numbered 30630 and dated December 19, 2018 (“New Law”). In addition to new procedural rules introduced for proceedings to be initiated for the monetary receivables under subscription agreements, the New Law made amendments to the Turkish Commercial Code numbered 6102 (“TCC”) and Law No. 6325 on the Mediation re. Civil Law Disputes.
The main objective of the mandatory mediation requirement in commercial disputes is to speed up the resolution of such disputes and by this means to lessen the workload of the commercial courts.
The provisions of the New Law pertaining to mandatory mediation for commercial disputes shall enter into force on January 1, 2019. Such provisions of the New Law concerning the mandatory mediation process will not apply to pending lawsuits.
Please note that this Legal Alert does not cover the entire provisions of the New Law but intended to be general information purposes only. No statement herein contains any opinion or professional legal advice.
MANDATORY MEDIATION IN COMMERCIAL DISPUTES AS A DISPUTE RESOLUTION METHOD
One of the important changes introduced by the New Law that profoundly effects the judiciary structure of the commercial disputes is changing the voluntarily nature of the mediation process into an obligatory system for the parties. However, such obligation does not apply to all commercial disputes but those with claims of compensation and receivables re. payment of a certain amount of money.
Application to the mediation procedures is set out to be a ‘prerequisite of lawsuits’. This means, if a party wishes to initiate a lawsuit with the claims of receivables re. payment of a certain amount of money and compensation in commercial disputes, the relevant party must initiate mediation proceedings prior to filing of a lawsuit. Differently put, the court shall reject the lawsuit on procedural grounds without any additional proceedings, if it is clear that the lawsuit was initiated without applying to mediation first.
Application for the mandatory mediation should be made to the mediation office where the competent court is located, which is to be determined based on subject-matter of the dispute. After receiving an application from the parties, the mediation office shall appoint a mediator from the list of mediators, who will run the mediation procedures. Of course, the parties may also mutually choose a mediator from the same list of mediators.
As a general rule in mandatory mediation proceedings, the mediator is required to finalize proceedings within 3 (three) weeks starting from his/her appointment date. However, the mediator can extend this period for 1 (one) more week, where necessary. As for the mandatory mediation for commercial disputes, the mediator is required to finalize the mediation proceedings within 6 (six) weeks starting from his/her appointment date and the time limit can be extended for 2 (two) more weeks by the mediator, where necessary. In general, the mediator will end the mediation process in cases where the parties:
- reach an agreement to resolve their disputes; or
- cannot come to an agreement.
Moreover, the mediator may also end the process for various other reasons, such as not being able to contact the parties or not being able to hold a meeting as a result of parties’ non-attendance.
At the end of the mediation process, the mediator writes down the details of the agreement or disagreement to the final mediation minutes and informs the mediation office immediately. Where the final mediation agreement is issued and signed by the mediator and parties (or their representatives), such final agreement is deemed to have the force of a court verdict. If the mediation process is concluded due to non-attendance of one of the parties to the first meeting without a valid excuse, non-attending party shall be stated in the final mediation minutes and shall be held responsible for the entire litigation costs, even if it turns out partially or fully right in the lawsuit.
In case of failing to reach an agreement through the mediation process, the party that intends to file a lawsuit is required to attach the original final mediation minutes or its certified copy (certification is made by the mediator) to the lawsuit petition.
Statute of limitations and lapse of time stop running during the period from the date of application to mediation office until the date on which the final mediation minutes is issued. Further, in the event that an interim injunction or provisional attachment is imposed before the lawsuit, time limits to file a lawsuit according to the relevant pieces of legislation do not run during the period from the date of application to mediation office until the date on which the final mediation minutes is issued.
Finally, in the event that arbitration or other alternative dispute settlement requirement is set out in special laws or where an arbitration agreement is in place, the provisions on mandatory mediation shall not be applicable.