The long-awaited Law on Istanbul Arbitration Center (“the Law”) has been passed on November 20, 2014 and entered into force on January 1, 2015.
The enactment of the Law is part of the Turkish government’s comprehensive plan to support the Turkish economy through new financial reforms in order to establish Turkey as the new international financial center.
In Turkey, arbitration is not widely used for domestic disputes. The aim of the Law is to set up the Istanbul Arbitration Center (the “IAC”) and regulate the procedures and principles of the center’s operations, which intends to encourage the use of arbitration for both domestic and international disputes.
In order to become a member of the IAC’s General Assembly, candidates must have at least 10 years experience in their respective professions. The General Assembly will consist of 25 members chosen by different unions and associations for a period of 4 years.
The Board of Directors of the IAC will consist of 5 permanent members and 4 substitute members chosen among the members of the General Assembly. Among these, at least 3 permanent and 2 substitute members must have a law degree. The Board of Directors is the designated body to draft the rules for arbitration and the procedures and principles of the center’s operation.
Another important body of the IAC is the Advisory Board. The Advisory Board will consist of 15 members with at least 5 years of experience in the field of alternative dispute resolution. The members of the Advisory Board will be required to provide information and advice on arbitration.
The IAC will consist of two separate courts; a court of arbitration for domestic disputes, and a court of arbitration for international disputes. Each court of arbitration will have 3 legal experts with at least 10 years of experience in their professions.
It is worth noting that although the Law only provides information on the duties, structure and the establishment of the IAC, regulations relating to the aforementioned procedures and principles and the rules of arbitration will be prepared and enter into force within 6 months of the selection of the Board of Directors.