Client Alert:

MANDATORY MEDIATION NOW EXTENDED TO COMMERCIAL DISPUTES!

MANDATORY MEDIATION NOW EXTENDED TO COMMERCIAL DISPUTES!

As of 1 January 2018, it had been made mandatory to apply for mediation for a number of labour law related disputes, before commencing litigation.

Now, the Law on Initiating Proceedings Against Monetary Receivables Arising Out of Subscription Agreements (“Law no 7155”), published in the Official Gazette on 19 December 2018, bears a significance beyond its purpose of setting out the procedures and principles regarding the said proceedings, as it introduces amendments to the Turkish Commercial Code. The said amendments provide that certain commercial disputes are subject to mandatory mediation.

UNDER WHICH CIRCUMSTANCES SHALL MANDATORY MEDIATION APPLY?

  • If the lawsuit is one of those categorized as “commercial” under article 4 of the TCC or under other laws
  • If the subject matter of the dispute is a monetary payment or a claim for compensation

HOW TO APPLY TO MANDATORY MEDIATION?

The party who wants to initiate the mediation process shall have to apply to the Mediation Office in the jurisdiction of the Court that will be seized of the merits of the dispute. If a mediation office is not established there, the clerk of the peace court will act as the mediation office.

In principle, the Mediator will be appointed by the Mediation Office from the list of the mediators registered in that jurisdiction. However, if the parties agree on a mediator in the list, the Mediator Office will assign the case to this mediator.

The Mediator will invite the parties to the first meeting – the parties are allowed to attend the meetings with their attorneys at law.

DURATION OF THE MEDIATION

The Mediator shall finalize the procedure within six (6) weeks and this duration can only be extended by two (2) weeks under special circumstances.

It is important for the parties to be present at the first meeting. If one of the parties fail to attend the first meeting without any excuse and consequently the meditation process is abandoned, that party shall have to bear all legal costs at the end of the adjudication process regardless of whether they win or lose the lawsuit.

THE MEDIATOR’S FEE AND WHO WILL BEAR THEM?

The fees of the mediator varies depending on whether the parties settle the dispute or not at the end of the mediation process.

If the parties cannot settle the dispute, they will not be under any obligation to pay the mediator’s fee provided that the meetings are completed in less than two hours. If the meetings take more than two hours, the mediator’s fee will be assessed as per the First Part of the Minimum Tariff for Mediator Fees. The parties will share this fee equally unless otherwise agreed.

If the parties reach a settlement at the end of the mediation process, the mediator fee will be assessed as per the Second Part of the Minimum Tariff for Mediator Fees and again the parties shall share this fee equally unless otherwise agreed.

WHEN DOES THE REQUIREMENT START?

As from 1 January 2019, parties shall have to apply for mediation before filing a lawsuit regarding the above mentioned commercial disputes. If the parties fail to comply with this provision and initiate the litigation procedure without mediation, the Courts shall dismiss the lawsuits on procedural grounds at the preliminary stage.

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