International Judicial Monitor
Published by the International Judicial Academy, Washington, D.C., with assistance from the
American Society of International Law

Spring 2014 Issue



New Arbitration Center in Turkey

Acelya Sahin
By: Acelya Sahin, Legal Advisor/Planning Specialist, Turkish Ministry of Development

Turkey is growing in financial importance in the Middle East, taking into account her young and dynamic population, geopolitical advantages and rapidly growing and developing economy. Istanbul is the natural financial center of Turkey. It is a bridge between Middle East, Central Asia, North Africa and Eastern European markets. It has the potential to become a global financial center. According to recent statistics Turkey currently is the 17th largest economy in the world. Based on international research it is highly likely she will move closer to the top within the next 40 years.

Considering these developments, Turkey has already made a wide range of law reforms relating to its place in international commerce.  One of these is a modern arbitration system. This reform proceeds at an international level such as being a signatory to multinational treaties, and also at a domestic level by the adoption of the International Arbitration Law of June, 2001, using the UNCITRAL Model Law on International Arbitration.

Turkey plans to establish a new arbitration center that can compete in the international arena with other centers that focus on the resolution of disputes through arbitration. The idea to establish an arbitration center in Istanbul first appeared in the "Strategy and Action Plan for Istanbul International Financial Center", prepared by the Republic of Turkey Prime Ministry Undersecretariat of State Planning Organization, currently known as the Ministry of Development, and approved by the High Planning Council. It was published in the Official Gazette of October 2, 2009.

The Plan under the “Enhancing Legal Infrastructure” section states:

[T]o make Istanbul an international financial center, it is necessary to make improvements in the legal area which would bring expeditious and effective resolution of disputes in the area of finance, establish an institutional arbitration center, and accelerate legislation of draft laws that would contribute to the IFC-Istanbul Project.

Based on the Strategy and Action Plan providing for the establishment of an independent and autonomous arbitration center capable of competing internationally, a working group was formed to prepare a draft arbitration center law. The working group mainly consisted of scholars and judges. This group of professionals examined the structure of other arbitration centers from all over the world, including the German Institute of Arbitration, the Arbitration Institute of the Stockholm Chamber of Commerce, the London Court of International Arbitration, ICC International Court of Arbitration and the American Arbitration Association. Among these the working group selected the German Institute of Arbitration and the Czech Arbitration Court as potential models for the Istanbul Arbitration Center. The working group conducted close examination of their structures and functioning. While the German Institute of Arbitration is organized in the form of an association, the Czech Arbitration Court was established as a statutory body. Both of these institutions have been the driving force behind developing the culture of international arbitration in


their respective societies. The Istanbul Arbitration Center is designed to act as the same force by promoting the effective operation of arbitration and other dispute resolution mechanisms. Eventually the working group prepared the Draft Law of Istanbul Arbitration Center (The Draft Law). It was sent to the Turkish Grand National Assembly on March 25, 2013. It is still being reviewed by a commission in the Assembly.   

According to the Draft Law, the Center would consist of a General Assembly, a Board of Directors, Auditor, an Advisory Board, National and International Courts of Arbitration and Secretary General. To provide broad representation, in the Draft Law provides that the make up of General Assembly would include members from the Union of Chambers and Commodity Exchanges of Turkey (TOBB), the Banks Association of Turkey, Capital Markets Board of Turkey (SPK), Union of Turkish Bar Associations, and the Banking Regulation and Supervision Agency (BDDK).

The Draft Law regulates only the organization of the Istanbul Arbitration Center and does not include any substantive provisions on arbitration and other dispute resolutions methods. The Board of Directors of the Center would determine the rules on arbitration and other alternative dispute resolution methods. After review of the rules by the Advisory Board of the Center, the Board of Directors would submit the rules proposal for approval by the General Assembly of the Center.

The Center would be responsible for determining and announcing the rules regarding arbitration and alternative dispute resolution methods, and provide for the establishment of services about those and to promote alternative dispute resolution methods. The Center would have an independent legal personality subject to private laws. The Center would provide alternative dispute resolution services for disputing parties, including foreign parties. The Center would be competent by the consent of the parties whether or not the dispute is domestic or international.

There are some concerns about the Istanbul Arbitration Center with respect to its creation by statute instead of through private initiative. Critics argue that this situation may cause problems relating to the independence of the Center. But prominent Turkish scholars have noted that it is difficult to argue that the Center’s independence should be undermined because of its establishment based on a statute. The key issue relating to its independence and impartiality is how much the executive branch of the government would take part in its formation and functioning. Considering that the Ministry of Justice, SPK and BDDK are the part of the executive branch that would have members in the General Assembly, which is only three out of the total number of 23 members of the Assembly, such criticism is unfounded.

Thanks to the law reforms, the Turkish legal system is more arbitral friendly today. The Draft Law shows Turkey’s arbitral-friendly approach one more time. If we set aside the current and potential criticism about the Draft Law, founding an arbitration center in Istanbul is an important initiative not only in terms of the Turkish alternative dispute resolution culture but also reaching the goal of the IFC Project which aims to establish Istanbul as a global financial center. The Center will provide a definite opportunity to attract international trade, which will benefit not only Turkey but other countries around the world.

ASIl & International Judicial AcademyInternational Judicial Monitor
© 2014 – The International Judicial Academy
with assistance from the American Society of International Law.

Editor: James G. Apple.
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