Rayhan Asat
Introduction
On April 30th, 2012, the Justice
Minister of Turkey announced that a bill had been prepared for the development
of an arbitration center in Istanbul. The Bill prescribed the foundation of an
autonomous, independent arbitration center in Istanbul, with the capacity to
compete in the international arena. 1
Over the past few years, the
discussion regarding establishing an international arbitration center in Istanbul
has continually been raised. In the near future, a dramatic change can be
expected in the International Arbitration culture of Turkey. This raises the
important question of whether Turkey is ready to establish its own
institutional arbitration center that has equal standing with other
well-established, globally-recognized international arbitration centers.
In order to provide an analysis of
Istanbul's future prospects as a center for international commercial
arbitration, this Article, will first examine the
* I wish to express my sincere
gratitude to Assistant Professor. Dr. Mustafa Erkan for his special invitation
to Marmara Law School and in making me a part of the Private International Law
and Arbitration scholar's team. Because of his faith and confidence, I made my
way to Turkey and have been exposed to the Turkish Arbitration Culture. I also
extend my deepest gratitude to renowned arbitration specialist, mentor and
special friend, Mr. Noyan Göksu for his guidance and feedback regarding the
critical examination of the International Arbitration Act of Turkey. Without
the mentioned two mentor's feedback and guidance, this piece would not have
been possible.
She is a doctorate candidate at law
School of Zhongnan University of Economics and Law. Rayhan is also a visiting
Scholar of Law School of Marmara University. Her special focus is on
International Arbitration and Private International Law.
1 Albayrak, Aydin, Istanbul Arbitration
Center soon to be established, Today Zaman, Ankara, 30 April 2012., On line:
http://www.todayszaman.com/news-
279045-istanbul-arbitration-center-soon-to-be-established.html, (14 January
Turkish International Arbitration
Act Numbered 4686' ,
(Hereinafter TIAA) and the arbitration culture in Turkey. In doing so, it also
aims to illustrate the very important question of whether Istanbul is
positioned as a promising center for international arbitration.
I. SOURCES OF TURKİSH ARBITRATION
In 2001, the Turkish Parliament
enacted the TIAA in order to create a reliable arbitration environment in
Turkey, and to make the country a preferable arbitration venue. Toward this
same end, studies by the Istanbul Chamber of Commerce (ICOC) to establish an
arbitration center, and to draft rules for such arbitration center, have
continued. Both the TIAA and the draft set of Arbitration Rules from the ICOC
were mainly inspired by the UNCITRAL Model Law3, with a slight Swiss flavor and
a Turkish touch. The Turkish legislature has decided to follow the UNCITRAL
Model Law, not in its original form, but with some modifications. Those
divergences from the original Rules are partly adapted from the Swiss Private
International Law.4 Certainly, arbitration law is a welcome addition to the
commercial and legal landscape of Turkey which has resulted in the increase of
foreign investments. This outcome was precisely Parliament's aim by way of
introducing international arbitration in 2001.
Looking back at the historical
background of arbitration on an international level, one of the rationales for
developing the model law by the UNCITRAL was uncertainty concerning local law,
together with the inherent risk of frustrations that may adversely affect the functioning
of the arbitral process, and also impact the selection of the place of
arbitration.5
Accordingly, due to such uncertainty, a party may hesitate or
refuse to agree to a place, which for practical reasons would otherwise be
appropriate. It is fair to say that the same rationale applies to the place of
arbitration. For a new center that lacks international reputation, what the
UNICITRAL Model Law provides is a body of law that it is easily recognizable,
that
2 Published in the official Gazette dated 5 July 2001,
numbered 24453.
3 Adopted by the U.N. Commission
on International Trade Law on June 21, 1985 amended 2006 On line :
http://www.uncitral.org/uncitral/en/uncitral_texts/arbit-ration/1985Model_arbitration.html.
4 Ansay, Turgul, "Current
Development: International Arbitration in Turkey". 14 Am. Rev. Int'l Arb.,
333, 2003, p. 3.
5 Note prepared by the secretariat of the United Nations
Commission on International Trade Law (UNCITRAL) for informational purposes
only; though, it is not an official commentary on the Model Law. A commentary
prepared by the Secretariat on an earlier draft of the Model Law appears in
document A/CN.9/264 (reproduced in UNCITRAL Yearbook, vol. XVI - 1985)
Available on line: http://faculty.smu.edu/pwinship/arb-24.html.
186
meets the specific needs of
international commercial arbitration, and that provides an international
standard based on solutions acceptable to parties from different legal systems.
Indeed, one should realize that choosing simultaneously a new country as a
place of arbitration, as well as an unfamiliar arbitration institution to
administer the process, may often appear as a risky adventure for foreign
parties, especially when they come from Western countries and when the place of
arbitration considered is located in a developing country 6. Istanbul, as a
possible venue for arbitration, could therefore be subjected to this type of
scrutiny despite its modern act primarily based on UNICITRAL Model Law.
While Turkish legislation and case
law generally support international arbitration, TIAA provides a clearer
cornerstone for the Turkish arbitration regime. A critical examination of the
TIAA will assist us in assessing the likely impact on the culture of
international arbitration in Turkey and, further, to discuss how it promotes
Istanbul as a choice of venue for international arbitrations.
Over the past 10 years, Turkey has
made various legal improvements to reach a modern arbitration system. The reforms
not only proceed at the international level, such as being a signatory to
multinational treaties (e.g. the New York Convention and the International
Center for Settlement of Investment Disputes, ICSID), but also at the domestic
level, including the adoption of the UNCITRAL Model Law, and amendments to the
Turkish Constitution of 1982.
In order to make Turkey more competitive for foreign
investment, on August 13, 1999, article 125 of Turkish Constitution was amended
to enable resort to arbitration in disputes arising out of public concession
contracts that involve a foreign element.7 In addition, very recently a
new Turkish Commercial Code (TCC)8 was adopted which comes with a
reforming agenda to extend the use of corporate governance and international
financial standards. The TCC introduces numerous innovations to the business
environment and fundamentally modernizes the corporate law in line with
international trends. As to the domestic arbitration, although is governed by a
code that differs from international arbitration, that is the Code of Turkish
Civil Procedure and was substantially amended in
6 Kassir, Walid John,
"Current Development: The Potential of Lebanon as a Neutral Place for
International Arbitration", The American Review of International
Arbitration, 14 Am. Rev. Int'l Arb. 545, 2003, p. 14.
7 See Schneider, Eric &
Guendelsberger, Nese , "Foreign Investment and Privatization", in
Ansay, Tuğrul &Scheneider, Eric eds, "Introduction to Turkish Business
Law ", Kluwer Law International, 2001, p. 192-202.
8 Published in Official Gazette, February 14th 2011,
numbered 27846.
2011,9 The new amendments,
howewer, took place in relation to domestic arbitration and are in line with
UNICITRAL model law. Therefore, the new code amendments with regard to
arbitration was appraised by the Turkish arbitration practitioners as it
brought the Turkish domestic arbitration procedure in Turkey closer to international
arbitration standards. Yet, slight differences remain in comparison to the
international arbitration act10.
II. NOTEWORTHY PROVISIONS OF TIAA
It is fair to say that arbitration
became better known and popular in the 1990s in Turkey. Accordingly, several
constitutional and legal reforms were put in place to encourage the development
and use of arbitration.11 It has been argued by many scholars that
the lack of modem international arbitration law, as well as court interference
have been a major hindrance to the development of international arbitration in
Turkey. Generally speaking, it is the legal environment that will crucially
affect the outcome of a dispute and, thus, in turn, will influence the choice
of venue. Establishing a supportive legal environment as the fundamental basis
for a favorable arbitration venue,12 this article will selectively
focus on certain provisions of a new TIAA and the legal environment.
A. Expansion of the "Foreign Element" Definition
Comparatively, the new TIAA intends
to provide general criteria for identifying disputes as "international or
foreign" by subjecting it to the International Arbitration Act, rather
than CCP.
According to the general principles
of Private International Law rules, a foreign element simply means a connection
to a system of law other than that of the "forum," that is, the
country whose court has jurisdiction over the dispute. In a general term, a
foreign element plays a significant role in a jurisdiction where domestic and
international arbitration are subject to different laws. Turkey is such an
example. The definition of a "foreign
1 0 E.g. Domestic arbitration sets
out explicitly that where the arbitral tribunal consists of more than one
arbitrator, one of the arbitrators must have a minimum of five years'
experience in his or her legal expertise.
1 1 Siiral, Ceyda, "Nearly a
Decade on the Perception of International Arbitration Law by Turkish
Courts", Arbitration International, Volume 26, Number 3, 2010, p. 421. s
1 2 Pernyhough, QC Richard, " A World of Choice: The
Competition for International Arbitration Work Part 1", 44, 2008 Asian DR
188
element" takes on the deciding
role in the application of the TIAA and, as such, the definition is
multi-faceted. 13 If a dispute has a foreign element, it becomes
international by its very nature under the TIAA.14 The Article 2 of TIAA
states as "The presence of any one of the following circumstances
indicates that the dispute contains foreign element and in this case, the
arbitration acquires an international character", then it further lists
circumstances in which what constitutes foreign element, it will be discussed
below. The ultimate outcome of being defined as "international" is
that an international dispute is governed by the International Arbitration Act,
whilst domestic arbitration is governed by the Turkish Code of Civil Procedure.
According to Article II of the
TIAA, the following circumstances qualify as constituting a foreign element:
a. If the usual residence,
domicile or place of business of any party to the arbitration agreement is
located outside of Turkey;
b. If the usual residence,
domicile or place of business of any party to the arbitration agreement is
located in a country different from the place of arbitration designated in the
arbitration agreement or determined on the basis of this agreement;
c. If the usual residence,
domicile or place of business of any party to the arbitration agreement is
located in a country different from the place where the majority of the
obligations under the main agreement will be performed, or the place to which
the subject of the dispute is primarily related;
d. If at least one of the
shareholders of a company that is a party to the main agreement containing the
arbitration clause has put foreign capital into the company under the
applicable foreign investment legislation, or when a loan or a guarantee
agreement is executed in order to bring foreign investment to Turkey for the
performance of the relevant agreement; or
e. The main agreement or
legal relationship constituting the basis of the arbitration agreement permits
the flow of capital or goods from one country to another.
It is clear that the TIAA
encompasses wide criteria that enable international transactions that have a
foreign element to be governed by the TIAA, in that international transactions
will be subject to the modern and contemporary Arbitration Act that is
primarily based on Model Law.
Akıncı, Zıya
"Arbitration Law of Turkey, Practice and Procedure", 2011, Jurist
Net, LLC , p. 33.
Ibid.
Nevertheless, such broad category
may be tricky, whereas the parities could intentionally create a link to a
foreign definition by subjecting it to the TIAA. Foreign investors who are
unfamiliar with the local laws feel more confident to choose a law that is in
line with international standards. Turkish jurisprudence, nevertheless, favors
such an approach. I.e: It states in Article 2(e) that refers to the existence
of foreign capital, that an international loan or international security gives
the dispute a foreign element, and makes the arbitration international, which
is also supported in jurisprudence by the Turkish Supreme Court in its decision
in its 2006.13
B. Non-intervention by Courts
Courts may only intervene in
arbitral proceedings if they are entitled to do so in accordance with TIAA,
which limits the intervention of the courts in arbitral proceedings in specific
circumstances.
No one would be interested in
choosing a venue of a country where domestic law permits its courts to
interfere with the arbitration, or worse, with the arbitral award.16
It is undesirable for there to be
an excessive level of interference by court in an arbitral process. However,
court assistance that supports arbitration is, to the contrary, desirable.17 The
line between intervening and assisting seems blurred, and it should be noted
that there is a wavering line between helpful assistance and unhelpful
interference.18 Take the example of Belgium: in order to increase the
number of its arbitration cases, Belgium passed a law to exclude recourse to
the courts to set aside arbitral awards for non-Belgian citizens, and the
opposite result of the intended assumption occurred. Obviously, whilst the
parties choose the private justice of arbitration by avoiding a state's
coercive power of a judicial system, they nevertheless, in whole, intend to be
deprived of the right to seek recourse to the courts against the arbitral
award, and that this was for judicial assistance. That is to say that business
does take kindly to being denied the
1 5 Turkish Supreme Court 11th Civil
Chamber, 24/12/2006, Numbered 3935/1815 decision took the view that transfer of
foreign capital is sufficient grounds to establish a foreign element making;
the dispute is subject to the TIAA.
1 6 Varela, Karine Cherro,
"New Chilean Arbitration Law, Will Chile Become an Arbitration
Venue?" Max Plank Year Book of United Nation Law, V10, 2006, p. 681-729.
1 7 Ibid.
1 8 Moses, Margeret L., "The
Principle and Practice of International Commercial Arbitration," Cambridge
University Press 2008, p. 85.
1 9 Ibid.
190
opportunity to thought to be in
some way to be improper. As a consequence, Belgian law was amended in 1998 to
permit parties to seek recourse to the courts, unless they specifically opted
out of such recourse.21 It could be seen that a model that strongly demonstrates
harmonized balance, in which helpful court assistance is appreciated by
business and positive control of courts aims to assist arbitration proceedings,
should be "the model" for Turkey follow. An arbitration-favorable
attitude of the courts is often considered as one of the fundamental aspects in
the choice of the place of arbitration.22 Therefore, the jurisprudence
should be keen to develop well-trained and arbitration-friendly justices that
reflect the core values of such a model. In Turkish court practice, the courts'
interference with the arbitral process is very limited. A court may only
intervene in a dispute referred to arbitration to the extent permitted by the
provisions of the International Arbitration Act (to the extent it is an
international arbitration that is subject to that Act).23
C. No Appeal Against the Arbitral Award
The Turkish arbitration legislation
(be it international arbitration as governed by the TIAA, or domestic
arbitration as governed by the Civil Procedural Code (hereinafter CPC))
excludes the possibility of any appeal on the merits of the dispute.24 The
only available mechanism against an award is setting aside the proceedings
entirely. The TIAA sets limited procedural grounds that consist of
arbitrability, public policy and due process, which are determined in an
exclusive manner. It is fair to say that the UNCITRAL model, which was derived
from Article 5 of the New York Convention, in that it contained an exclusive
list of grounds for the award to be set aside. That is to say that TIAA
enumerates a list of explicit violations of public policy that may justify refusal
of enforcement request, including the lack of due process, invalidity of the
arbitration agreement under the law of the country to which the parties have
subjected it, improper arbitral procedure or composition of the arbitral
tribunal, in arbitrability of the subject matter or nonbinding status of the
award.25According
to Article 15 of the TIAA, an action for setting aside the award is to be filed
within 30 days
2 1 Park, W. William,
"The specificity of International Arbitration: The case for FAA Reform",
36 Vand.J. Transnat'l. 1241, 1267(2003), p. 1258.
2 2 Kassir, p. 15.
2 3 Gkösu, Noyan
,"Turkey" Chapter, The Dispute Resolution Review, Fourth Edition.
2012, p. 804.
2 4 Ibid.
2 5 Bozkurt, Ipek, "The Investment
Hub that Links the West and the East", Asian Legal Business, Emerging
& Frontier Markets Investment & Compliance Guide, 2012, p. 9.
before the Court of First Instance
with competent jurisdiction as to venue, and will be discussed with priority
and through expedited proceedings.
Article 15 of TIAA sets forth that
arbitral awards may be set aside in the following situations:
a) A party to the
arbitration agreement is under incapacity, or the arbitration agreement is not
valid under the law to which the parties have subjected it to or, failing such
a choice of law, under Turkish Law;
b) The appointment of the
arbitrator or the arbitral tribunal has not been made in accordance with the
procedure provided in this Law, nor specified in the agreement of the parties;
c) The award has not been rendered
within the term of the arbitration proceedings;
d) The arbitrator or the
arbitral tribunal has decided on its competence or incompetence in
contradiction with the law;
e) The arbitrator or the
arbitral tribunal has decided on a matter beyond the scope of the arbitration
agreement, or has not decided on all of the issues claimed, or has exceeded its
competence;
f) The arbitral proceedings
have not been carried out in accordance with the agreement of the parties as to
procedure or, failing to reach an agreement in this respect, in accordance with
the provisions of this Law, and this situation has affected the substance of
award;
g) The principle of the equality of parties has not
been respected; or, If the court determines that:
a) The dispute that is the
subject of the award of the arbitrator or the arbitral tribunal is not
arbitrable in accordance with Turkish Law; and
b) The award is in contradiction of public policy.
A few points worthy of elaboration
are as follows. Firstly, the arbitrability of the dispute is determined under
mandatory Turkish laws. Under Turkish law, Turkish courts enjoy exclusive
jurisdiction over immovable property; therefore, disputes concerning immovable
rights are not arbitrable if they have arisen from immovable properties located
in Turkey, and the dispute concerns rights in rem.26 Secondly, public law
disputes are also
A consistent approach taken by Supreme^Court jurisprudence,
and also Turkish Private and International Procedure Law published in Official
Gazette on November 27* 2007, numbered 26728
192
non arbitrable since they affect
Turkish public policy. Third, the Court of Appeals grants exclusive
jurisdiction to the tax authorities for tax collection27 and
Turkish courts reaffirmed the position in its decision of 1 May 2007.28 Again,
Turkish Law only allows disputes that are subject to parties' will to be
arbitrable. Thus, family disputes, administrative law disputes, or criminal
matters cannot be referred to arbitration. Showing particular concern to the weaker
party's rights, labor law disputes are not arbitrable. However though,
according to Article 20 of Labor code a dispute arising from the termination of
the employment contracts (Narrowly interpreting reemployment contract) is
arbitrable.29
At the same time, the labor code30 allows for the inclusion of an
arbitration clause in the employment contract.31
D. Time Limit
The TIAA provides a time period for
arbitration. Arbitrators, unless otherwise' agreed by the parties, are required
to render arbitral awards on the substance of the case in question within one
year from the date of their first hearing or meeting. This term may be extended
by the parties' agreement, or, failing this, by the court. If the court
dismisses the request to extend this term, the arbitration will be terminated.
Such provision offers certain advantages to the parties in disputes in avoiding
situations where the arbitrators prolong the process by not rendering an
arbitral award. One should note that the TIAA shows greater deference to a
party's autonomy with respect to the time element. The parties may set out a
timeframe for the arbitration proceedings during the course of the proceedings.
For this
Hergüner Bilgen, Ayşe,
"Recognition and Enforcement of Foreign Arbitral A¬ wards", Chapter 10 in "Turkish Law Today
An Overview", Hergüner Bilgen Özeke, P. 235.
2 8 Turkish Supreme Court, 11t h Civil
Chamber decision, Numbered 2006/7396, 2007/6672.
2 9 Turkish Supreme Court 9t h Civil
Chamber decision dated 22. 3. 2004 numbered 5864/5621
3 0 Labor Act of Turkey,
published in the Official Gazette On 10 June 2003 Law, numbered 4857.
3 1 Akıncı, page 154, Amendment article
20 of the Labor Code stipulates that: "The employee who alleges that no
reason was given for the termination of his employment contract or who
considers that the reasons shown were not valid to justify the termination
shall be entitled to lodge an appeal against that termination with the labour
court within one month of receiving the notice of termination. If there is an
arbitration clause . . . i f the parties so agree, the dispute may also be
referred to private arbitration within the same period of time". The
Turkish Constitutional Court in the decision Turkish Constitutional Court
decision, Numbered 2003/66, 2005/72 abrogated article 20 partially where
collective agreement is no longer subject to arbitration.
obvious reason, arbitration is far
more attractive to businesses in avoiding prolong court proceedings. More
interestingly, the judicial recess of Turkish courts02 does
not apply to applications for recognition and/or enforcement of an arbitral
award. On the other hand, an arbitral award not made within the arbitration
time is invalid.33 Moreover, the arbitral award will be set aside because
it was not made within the requisite time, and the arbitration agreement is
rendered null and void.
E. Application of the Principle of Good Faith of Turkish
Supreme Court Jurisprudence
Another significant feature of the
TIAA and the practice of the judicial system are defined in respect of the
assessment of the objection to the formal invalidity of an arbitration
agreement are both definded in accordance with the principle of good faith.
The recent jurisprudence34 of
the Turkish Supreme Court demonstrates the importance of the principle of good
faith. There is no express provision in the arbitration legislation to indicate
the applicability of the principle of good faith in disputes that are subject
to arbitration. One would ask that whether this principle can be taken into
consideration in the enforcement stage with respect to objections as to the
formal invalidity of an arbitration agreement. Particularly, objections to the
formal invalidity of an arbitration agreement that are made at the enforcement
stage, despite the objecting party having forgone all opportunities to raise
such objections during the arbitration itself, may be considered as a violation
of the principle of good faith.
Having gone through few selective
provisions of the TIAA under the legal framework, culture and practice of
international arbitration in Tur-
Judicial recess in Turkish Courts is defined as being the
dates between the 1st of August and the fifth day of September. Akıncı, p.
97.
Turkish Supreme Court 11th Civil Chamber decision,
numbered 2004/3751. This is a dispute arising out of a ship management contract
that was settled by the Arbitration Institute of the Stockholm Chamber of
Commerce (the "SCC"). In the enforcement proceedings, the defendant
argued that the legal representative of the plaintiffs company did not have
specific powers to conclude an arbitration agreement. This argument was not
raised before the arbitral tribunal. The Turkish Court of Appeal found this
argument contrary to the principle of good faith, which is the fundamental
concept under Turkish law that is stipulated in Article 2 of the Turkish Civil
Code. Article 2 of the Turkish Civil Code provides that "every person is
bound to exercise his rights and fulfill his obligations according to the
principle of goocf faith. The law does not sanction the evident abuse of a
man's rights.
194
key, we now turn to a critical
question: How are we confident to assert that Istanbul can join the ranks of
popular venues for arbitration in the world?
It appears that an
arbitration-friendly, and, more correctly speaking, a supportive legal system
towards the recognition of arbitral awards is a huge advantage for a country to
promote itself as an arbitration venue.
For countries trying to establish
themselves as an arbitration venue, we believe they need to find a good model
in tailoring their approach to designing an attractive arbitration venue. There
is no uniform example; the most important task is to create a unique venue that
could best attract busi-nesspeople as a preferable choice. Reference to the
China International Economic and Trade Arbitration Commission (Hereinafter
CIETAC), some have been critical of CIETAC s past practice of regularly
appointing Chinese arbitrators, as opposed to foreign arbitrators, as
chairpersons in cases.
A recent report from Beijing's
Arbitration center by Moser and Long35 highlight that some aspects of
international arbitration in China are still troubling for many foreigners, in
particular because there are few appointments of foreign nationals. This often
leads to a Chinese majority on panels, excessive administrative and other fees
charged by the Chinese arbitration commissions in larger cases, the potential
for abuse of mediation-arbitration matters in the Chinese tradition, uncertain
compliance with the criteria of the New York Convention at the time of
enforcing a foreign award in China, etc.
Learning from valuable lessons of
leading arbitration centers to closely model best practices and, at the same
time, define a unique approach that could be applicable to Turkey, is a
critical matter.
The real success of a center or a
country in the field of international arbitration, however, should be measured
by its capacity to attract "neutral" cases36, in
which none of the parties is a national of that country, the seat having been
chosen exclusively because it is objectively convenient for the parties (e.g.,
strategic location, legal background, suitable infrastructure, neutrality,
availability of professional skills, language and other socio-cultural
aspects). "Although the fact cannot be denied that many leading
arbitration centers, at the early stage, their primary case sources are where
Moser J, Michael & Long, Yujian, "CIETAC and
its Work: An Interview with Vice Chairman Yu Jianlong, Journal of International
Arbitration, 24(6), 2007, Kluwer Law International. Kassir, p. 34.
J, Michael & Long, Yujian, "CIETAC and its Work: An
Interview with Vice Chairman Yu Jianlong, Journal of International Arbitration,
24(6), 2007, Kluwer Law International. Kassir, p. 34.
195
one of the parties is the local
party. It is argued by scholars that in the new centers, such as Hong Kong,
Singapore, and India, that bargaining power most likely allows one party to
convince the other to locate the place of arbitration in its country, sometimes
at the price of important concessions by that party in the main contract.38
III. ISTANBUL AS A FINANCIAL HUB
A. Geography
Turkey, being a civil law jurisdiction
with its location equally convenient to Eastern Europe, the Turkic states of
Central Asia and the Middle East, is already ideally positioned to be a center
for international arbitration. Both European countries and Asian countries are
nearby, within just a few hours of air travel.
However, one should take careful
note that Dubai's unique international arbitration center with its common law
feature has targeted the Middle East, and has been quietly successful. What is
left for Turkey then in the Middle East? Would Turkey find itself aiming to
attract Middle Eastern countries, whilst Dubai dominates the jurisdiction with
its pre-established and recognized center?
Take the example of Asia. Although
Hong Kong has a well-established arbitration system with plenty of lawyers and
arbitrators available, more and more Asian firms are now turning to Singapore.
Lower costs and closer ties with India give Singapore advantages for South
Asian dispute resolution. What will it take for Turkey to find its own features
that single it out as the preferable venue? Turkey is often seen as a country
that can bridge the gap between the West and the Middle East, and it is not too
much of a cliche to say that Turkey, as the most eastern country in the west,
and the most western country in the east, makes it a perfect chance to host
geographically neutral international arbitration in cross-border dispu-tes.39
B. Major Contribution of International Financial Center
Strategy
To add a new concept to the meaning
of what Istanbul represents, is that it is an unparalleled center of the arts,
science, culture and history. The government is taking initiatives to assume a
new title for Istanbul as a center of finance and commerce. The strategic plan
to make Istanbul a finan-
196
cial center has been proposed and
is in action. The plan is Turkish government's economic reform agenda, namely,
the International Financial Center-Istanbul (IFC-Istanbul) project. In October
2009, the finalized Strategy and Action Plan for IFC-Istanbul included 23
priorities and 71 actions for the project to become fully functional and
compete with other similar cities such as London, Singapore, Dubai, Doha,
Bahrain and other global and regional financial centers.40
In this strategy and action plan,
in order to establish Istanbul as an international financial center, priorities
and measures have been determined to build a legal infrastructure that operates
at international standards, increasing the diversity of financial products and
services, developing a simple and effective tax system, improving regulatory
and supervisory framework, strengthening the physical and technological
infrastructure, ensuring an educational system that provides qualified human
resources in required fields, and establishing an organizational structure that
will promote and monitor at a global scale.41
These strategy plans provide that
in the bid to make Istanbul an international financial center, improvements
will be made in the judicial system to ensure expeditious and effective
resolution of disputes in the area of finance, to establish an institutional
arbitration center, and to accelerate legislation of draft laws that will
contribute to the Project.
These plans set a strong tone in
that in Istanbul, an independent and autonomous institutional arbitration
center capable of international competition is to be established, and effective
operation of a mediation system shall be ensured. The legal structure of Turkey
becomes a priority in the plan to establish Istanbul as an international
financial center. This would be one of the significant contributing factors for
the future of an Istanbul arbitration center. It is fair to conclude that the
bulk of a comprehensive and modern international arbitration system is
established in Turkey with the modern arbitration act, and the necessary steps
are, in large part, in place through strong government support.
Bayhan, Arthur, "Istanbul as an Financial
Center", Today's Zaman, 27 June, 2012. Online
http://www.todayszaman.com/newsDetail_getNewsById.action? newsld=284831,
(January 14 2012). 4 1 Strategy And Action Plan for Istanbuj International
Financial Center (IFC Istanbul), on line:
http://www.ifm.gov.tr/Shared%20Documents/Strategy%20and%20Action%20P
lan%20for%20IFC%20Istanbul.pdf. (January 14 2012).
Ibid. N Akıncı, p. 33.
www.ifm.gov.tr/Shared%20Documents/Strategy%20and%20Action%20P
lan%20for%20IFC%20Istanbul.pdf. (January 14 2012).
197
IV. LEGAL EDUCATİON
Turkey is filled with incredibly
cultured and educated persons who undoubtedly form the basis of the country's
prospects as a modern nation state. Following the foundation of the Turkish
Republic, reforms were undertaken in education. Under the law for the
unification of education, which was ratified in 1924, all schools were annexed
to the Ministry of Education. The Ministry of Education was charged with the
task of implementing a contemporary mode of education.42
In the legal education of Turkey,
the country has more than 60 law schools, with more waiting to be approved by
the Council of Higher Education (YÖK)43. Many private law schools or
including various state-run law schools teach certain law school courses in
English or French. In addition, law schools invite visiting professors from
other jurisdiction to teach at Turkish law schools. International languages are
becoming essential component of the law school education.
Law school curricula include
arbitration courses in private international law courses with little exception.
No debating dubs exist that are similar to those existing in Anglo-American or
British system, although there exist some but not many moot courts. Practical
skills are deemed to be acquired by young lawyers only later, during an
articling period preparing for a career as a judge, prosecutor or advocate.44 Moot
court competitions among Turkish law schools should be strongly encouraged.
Moreover, active participation on the international stage, exposure to students
from leading jurisdictions, and engaging in dialogue and sharing experiences
with peers should compose a vital element of law school education. Only then
would legal education produce lawyers and arbitrators who specialize in
arbitration and further contribute to collecting the vital elements of an
attractive arbitration venue.
V. RESPECTED AND WELL-PREPARED LEGAL PROFESSIONALS AND LAW
FİRMS
It is important to have internationally renowned arbitrators
who are
4 2 Istanbul Lawyers, A Brief of
Turkish Law by Topics, online: http://www.yar-gan.com/turkishlaw.html (January
14 2012).
4 3 YÖK is an autonomous
organization having a public juristic personality within the framework of the
duties and authorities given by the Higher Education Law, which regulates
higher education and directs the activities of the higher education
institutions.
4 4 Lonbay, Julian "Experts' Report on the Legal Education
and Training System in Turkey". 14 August 2009 Experts Repcxt , On line :
Social Science Research Network :
http://papers.ssrn.com/sol3/papers.cfm?abstract_id= 1677818 ( January 14 2012).
198
experienced
in commercial arbitration and have proven international experience.
A
country that wishes to become a good arbitration venue should have a certain
number of arbitration practitioners. Well-prepared legal professionals,
by
definition, must follow a strong code of ethics. In this respect,
it is
essential for a country trying to become a center of arbitration to maintain a
strongly ethical reputation for its arbitrators,45 since arbitration is in
essence a type of justice, and requires the full trust of all the parties
concerned.46 As to the quantity and quality of arbitration practitioners, we
are confident to say that Turkey does satisfy that vital element. Many Turkish
lawyers
in coming from various law firms have appeared before the permanent court of
arbitration or the ICC. Investment disputes arising from the notorious Uzan
family itself challenged lawyers to be ready for investment
disputes
against the Turkish state or large-scale commercial arbitration
litigation.
Conclusion
Since
the passing of International Arbitration Act in 2001, there has been increasing
flow of international arbitrations to Turkey. With its modern
international
arbitration act and large scale of reforms in the legal landscape, Turkey has
inherently transformed into a modern and investor friendly legal environment.
Without a doubt, such investor friendly environment
naturally
leads to increase volume of international arbitration of Turkey. Taking into
consideration the launch of the Istanbul Finance Center
project,
the establishment of the Istanbul Arbitration Center has inherently
increasingly
received more attention and huge support.47
Turkey
has, as outlined above, many key advantages as an arbitration venue. Within the
legal community, there is a strong belief that Turkey will increasingly become
a popular venue for international arbitration once the arbitration center is
established. Indeed, Istanbul as the commercial and cultural heart of Turkey,
has demonstrated significant potential to become a distinguished center for
international arbitration along with reputable and emerging centers. The author
wishes to witness the Istanbul Arbitration Center's rise to a position of
prominence.
Kassir,
p. 18. Kassir, p. 18.
Recent
International Arbitration Conference strongly supported by the international
community
proves beyond. The conference successfully held at Union Chambers and Commodity
Exchanges of Turkey on November 30th of 2012, the conference attracted
international voices coming from different jurisdiction as presenters.
Rayhan Asat
Av. Hikmet DÜNDAR
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