Compulsory Mediation In Commercial Disputes

1. Introduction

Law No. 7155 on the Procedure of Starting the Foreclosure of Money Debts Arising from Subscription Agreement (Law No. 7155) was published in the Official Gazette dated 19 December 2018 and numbered 30360. The provisions of Law No. 7155, which regulate mediation in commercial debts and indemnity cases as a pre-condition of a lawsuit, entered into force on 1 January 2019.

Pursuant to this Law, Article 5 / A has been added to the Turkish Commercial Code No. 6102 (“Turkish Commercial Code”) and the provision stating that(1); From commercial lawsuits specified in Article 4 of this Law and other laws It is a condition of a lawsuit to be applied to the mediator before the lawsuit is filed for the financial claims and compensation subject of which is the payment of certain amount of money

(2) The mediator shall finalize the application within six weeks from the date of appointment. This period may be extended by the mediator for a maximum of two weeks if necessary, was brought.

Accordingly, the subject matter of the dispute should relate to financial claims and compensations, which involves payment of certain amount of money.

In addition, if the disputes that are necessarily required to be mediated are examined under two main headings;

- Claims for Money or Compensation of the commercial lawsuits referred to in Article 4 of the Turkish Commercial Code, subject matter of which is the payment of certain amount of money,

- Claims for Money or Compensation of the commercial lawsuits referred to in the other Laws, subject matter of which is the payment of certain amount of money,

(i) Commercial Litigations Subject to Mandatory Mediation set out in Article 4 of the Turkish Commercial Code

According to the aforementioned provision of the Turkish Commercial Code; civil and non-contentious jurisdictions disputes arising from the matters related to the commercial transactions of both parties and the disputes which are obligatory to apply to the mediator before the lawsuit is opened regardless of whether the parties are merchants or not are as follows:

· Disputes arising from the provisions of Articles 962 to 969 of the Turkish Civil Code concerning those engaged in lending in exchange for pledge,

· Articles 202 and 203 of the Turkish Code of Obligations no. 6098 on the merger and transformation of enterprises by taking over of its assets or facilities.

Article 444 and 447 on non-competition rule,

Articles 487 to 501 on publication contract,

Articles 515 to 519 stipulating credit letters and credit orders,

532 to 545 on commission agreements,

547 to 554 provided for trade representatives, commercial agents and other merchant assistants,

555 to 560 on remittance,

The disputes arising from the issues stipulated in Articles 561 to 580 regulating custody contracts,

· Disputes arising from the issues envisaged in the legislation on intellectual property law,

· Disputes arising from the matters stipulated in the special provisions relating to the stock exchange, exhibition, fair and markets and other warehouse and trade-specific places,

· Disputes arising from the issues stipulated in the regulations concerning banks, other credit institutions, financial institutions and lending.

Exceptions are cases that arise from the rights of remittance, safe custody, and intellectual and artistic works that do not concern any commercial enterprise. But; If these lawsuits are of any business interest, it will be deemed as commercial litigation and the mediation condition will become mandatory.

(ii) Commercial Litigations within the Scope of Mandatory Mediation in Some Other Laws

In addition to the Turkish Commercial Code, mediation is mandatory as a condition of litigation for commercial lawsuits in some other laws. Hereby some examples of commercial lawsuits specified in other laws covered in this framework;

· Civil lawsuits arising from the issues regulated in the Cooperatives Law No. 1163 published in the Official Gazette No. 13195 dated May 10, 1969,

· Cases arising from the relevant provisions of the Law no. 5362 on Tradesmen and Craftsmen Professional Organizations published in the Official Gazette No. 25852 dated 21 June 2005,

· Lawsuits related to bankruptcy in the relevant provisions of the Execution and Bankruptcy Law No. 2004 published in the Official Gazette No. 2128 dated 19 June 1932 may be filed.

2. Important Issues within the Scope of Compulsory Mediation

(i) Application Process

The mediation process starts when two parties between whom there is a dispute concerning a financial claim and compensation including payment of certain amount of money, with the application to the mediation bureaus in Court Palaces, appointment of a mediator chosen from the list already submitted to justice commission, agreement of the parties on a name on that list and the admission of that choice by the mediator.

In addition, the parties themselves can directly initiate the mediation process by contacting a mediator or by applying to a mediation center.

It is possible for the parties to make these applications by agreeing on and selecting the mediator between them, or by accepting a mediator to be chosen by one of the parties and / or their representative, by the other party.

In the process of following the selection the mediator by of one of the parties and the acceptance of the other or in process of the agreement of the parties on a mediator; the parties are free to choose the mediator to take part in the dispute.

But; if an application will be made to the mediation offices in the courthouses; application should be made to the mediation office where the competent court in the settlement of the dispute, is located, and where the mediation office is not established, it should be applied to the Registrar's Office assigned for this matter at the courthouses.

(ii) Mediation Process

The mediator is obliged to settle the dispute within 6 weeks from the date of appointment and this period shall be extended by the mediator for a maximum of 2 weeks in case of necessity.

In case that it was found out that a case has been filed without applying to the mediator, it will be decided to reject the case without taking any further action due to the absence of case pre-condition.

Mandatory mediation clause, in accordance with the Provisional Article 12 of the Turkish Commercial Code; as of the date of entry into force of the regulation, will not be applied to the cases before the first instance courts regional courts of Appeal and the Court of Cassation. As it is understood from this provision, in the case of commercial lawsuits filed before 01.01.2019, compulsory mediation which is the pre-condition of litigation will not be applied.

(iii) Termination of Mediation Process

Termination of Mediation Process realizes in cases of;

• Failure to reach the parties,

• Failure to hold a meeting due to non-attendance of the parties,

• Failure to reach an agreement,

• Success of the parties in reaching an agreement and the bureau of mediation shall be immediately notified that the mediation activity was terminated.

In case that the plaintiff fails to comply with this obligation, the court will be sent an invitation to the plaintiff, stating that the final report must be submitted to the court within a definite period of one week, otherwise the case will be rejected. If the warning given by the court is not properly fulfilled by the plaintiff, the court may decide to dismiss the case from the proceedings without notifying the other party.

In the event that mediation is terminated due to the failure of one of the parties to attend the first meeting without a valid excuse, the party not participating in the meeting shall be held responsible for the full costs of the proceedings, even if it is partly or completely justified at the end of the case.

In the cases that will be filed for mediation activities ended due to the absence of both parties to the first meeting, the costs of the parties' proceedings shall be left on their own.

In case that an agreement cannot be reached at the end of compulsory mediation, a lawsuit should be filed. In this case, the original copy of the final minutes of mediation or a copy approved by the mediator must be submitted to the court.

If it is not submitted, the court will give the plaintiff a definite one-week deadline to repair the deficiency, and if the deficiency is not repaired within this definite period, the case will be rejected without the other party has been notified.

3. Conclusion

The main purpose of Law No. 7155, which entered into force as of 01.01.2019, in introducing the provisions regulating mediation as a pre-condition of litigation in commercial debts and compensation cases; is to settle the dispute between the parties by means of mediation before proceeding to the trial phase. Thus, it is aimed that the parties will resolve the dispute both more economically and more quickly in the mediation process. In addition, in accordance with the principle of confidentiality the mediation process; Since the parties are obliged to comply with the confidentiality principle during the mediation activity, it is considered that compulsory mediation activity will be beneficial in terms of the commercial reputation of the parties.

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