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Mandatory Mediation In Commercial Disputes

Mandatory Mediation In Commercial Disputes

Mediation as a Prerequisite for Lawsuit

The regulation published in the Official Gazette on 19 December 2018, inserted a provision to the 5th Article of the Turkish Commercial Code. According to this rule, as of 1 January 2019, mediation has been introduced as a legal requirement for all commercial disputes concerning claims for monetary receivables or compensation.

ARTICLE 5/A: It is a prerequisite for lawsuit to apply to the mediator before the lawsuit is filed regarding receivables and compensation claims that are subject to a certain amount of money among commercial lawsuits specified in Article 4 of this Law and other laws.

** However, as of the date this regulation comes into force, it will not be applied for the litigations in the courts of first instance, District Courts and the Court of Cassation.

Because the regulation stipulates only claims with regard to “payment of some money”, cases that do not include this element such as annulment of the decisions of the general assembly of shareholders, decision of bankruptcy, decision of concordat or dismissal from partnership, and applications, known as temporary legal protection measures, such as provisional attachment, provisional injunction are not included in the scope of this regulation.

It is necessary to emphasize negative declaratory action and restitution claim. In fact, in principle, there is a request for determination in the negative declaratory cases, not receivables or compensation. Therefore, we think that it is not subject to mediation. If the lawsuit is filed directly in the form of restitution, it is clear that it is subject to mediation because it has an evident claim for receivables. The problem may arise in cases where the lawsuit began as a negative declaration and turns into a restitution due to payment during the case. In this case, we think that the judge should lead the parties to mediation and continue the case if an agreement cannot be reached.

Besides, because the above mentioned provision concerns “cases”, it s not necessary to apply for mediation for debt enforcement proceedings. If a proceeding is, however, contested, then the mediation will be required for cases to continue proceeding.

According to the Turkish Commercial Code (TCC) “the mediator concludes the application within six weeks from the date of his assignment. This period may be extended by the mediator for a maximum of two weeks, if necessary. ” While this duration is set to 4 weeks maximum (3+1) in the Law on Mediation, under the special provision of TCC this time period can be 8 weeks (6+2) at most in commercial disputes.

In case the parties do not reach an agreement at the end of mediation process, the plaintiff is required to provide either the original or a copy approved by the mediator of the record concerning the disagreement of parties in his petition. If this requirement is not fulfilled, the court would rule a conclusive period of one week. The case will be dismissed unless the requirement is fulfilled in this duration.

Moreover, if the mediation process ceases because one of the parties did not attend the first meeting without a valid excuse, this party will be mentioned in the record and he/she will be responsible for the entire cost of the trial, even if he is partially or fully won in the case.

The periods concerning statute of limitation and foreclosure shall not apply during the mediation process, from the date of application to the date of the last record.

The Law regulates that cases where the prerequisite for the lawsuit will not be applied exceptionally in commercial disputes and labor claims where arbitration or any other alternative dispute resolution is required or an arbitration agreement is provided in special laws.

This study is prepared by Kula Law Office. Please contact by e-mail (kula@kulahukuk.com) or call at +902324350604 for publication of the article in other channels, detailed information and questions about the subject.

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