INSIGHTS

The Concept Of Istac Emergency State Arbitrator In Arbitration

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I.General Features of Arbitration and ISTAC
 

As is well known arbitration is a trial procedure aimed at the settlement of the disputes between the parties through arbitration instead of state courts, wherein binding and enforceable decisions are taken based on the preferences of the parties. Just like the numerous institutional arbitration centers all over the world Istanbul Arbitration Center (ISTAC) plays a role for the settlement of the disputes occurring in Turkey between the commercial persons both in Turkey and abroad based on institutional arbitration. Under this scope and concerning the settlement of the disputes that have arisen or may arise among them, the parties must state that the dispute between them shall be settled in accordance with the arbitration rules of Istanbul Arbitration Court by adding an arbitration clause to their contract or must conclude a separate contract in this regard.

The reason why commercial arbitration has become such a popular and preferable trial procedure in our day is the fact that arbitration is a rapidly proceeding and flexible [1] procedure based on the principle of confidentiality compared to the trial procedures in the state courts. As is well known by everyone institutional arbitration processes ensure the settlement of disputes more rapidly compared to the state courts. In addition to this, arbitration awards taken at the end of the arbitration procedure are just as enforceable as court decisions [2] and consequently meets the needs of the developing world in a comprehensive manner[3].

Another reason accounting for the huge preferability of arbitration procedure in the commercial life is the fact that it leaves quite a large initiative regarding the issues that may be decided on by and between the parties. As is well known arbitration procedure may be shaped by the parties and arbitrators in any manner whatsoever depending on the nature of the dispute. Under this scope the dispute is addressed in more detail in a manner meeting the needs of the parties and settled in a more effective manner. Since arbitration process is carried out in total confidentiality compared to the state courts with respect to the commercial lives of the parties, commercial actors have a bigger trust for the arbitration procedure. Taking into consideration the International Arbitration Law numbered 4686 prepared pursuant to UNCITRAL Model Law and New York Treaty dated 1958 and Geneva-Europe Treaty dated 1961 to which Turkey is a party we may say that ISTAC carries out its activities having fulfilled all legal requirements required for carrying out international arbitration procedures.[4]

II.Arbitration Procedure

It is obvious and evident that ISTAC rules shall be applied in two cases. Firstly these rules shall find a field of application if the parties have decided to have the actual or potential disputes between them settled pursuant to ISTAC Arbitration Rules: The second possibility arises when the ad-hoc arbitration procedure is preferred and the parties have decided the arbitrators who, shall be in charge of the settlement of the dispute, to be appointed by the international Arbitration Council affiliated to ISTAC and consequently International Arbitration Council serves as the appointment body and Arbitration Rules of ISTAC shall find a field of application.

What is to be done for initiation of the arbitration trial has been explained by ISTAC Arbitration Rules in a way that leaves no doubt. Under this scope the claimant party must first of all submit the following documents and information to the secretariat and deposit the arbitration fee: arbitration agreement: request for arbitration also containing special explanations, the result of the request, preferences concerning the number of arbitrators, selection of arbitrators, arbitration venue and language of arbitration. The defendant must respond to the request for arbitration within 30 days as of the date on which the claimant submitted the above mentioned request. At this point it is possible to file a counter lawsuit just as in the state courts.

III. The Concept of Emergency State

Provisional Legal Protection Measures have been regulated by the article 31 of ISTAC Arbitration Rules. Accordingly, it is possible to say that the concept of emergency state arbitrator is an effective protection mechanism through which the provisional legal protection is provided for the parties in cases where there is a situation as emergent as it cannot be waited for the arbitrator or arbitrators to be put in charge of the ordinary arbitration procedure to take office.

IV. Trial Process Conducted by the Emergence State arbitrator

Under this scope, the applicant party is not required to submit its request for arbitration, lawsuit petition, reply to request for arbitration or reply petition in order to ensure the appointment of the emergency state arbitrator, unlike in the case of ordinary arbitration. Such a regulation aims at ensuring the arbitration process to be conducted more rapidly than normal arbitration process and further ensuring legal protection needed by the parties urgently. Although the parties are not required to submit a lawsuit petition or request for arbitration as in the case of ordinary arbitration it must be stated that there are of course rules to be followed and documents to be submitted when a request is made for the appointment of an emergency state arbitrator and provisional legal protection. This issue was also clarified by the article 2 of the Rules of Emergency State arbitrator of ISTAC Arbitration Center. As a result although it is not required to submit a “lawsuit petition” or “request for arbitration” the parties are required to carry out all their preparations scrupulously and forward their explanations to the Secretariat in a as concise a form as possible. [5]

Emergency State arbitrator shall be appointed by the Council Chairman within 2 working days after the above mentioned documents have been submitted to the Secretariat completely.

Emergency State Arbitrator must take the opinion of the parties within latest 2 working days after being appointed by the council and prepare a timetable accordingly and thereafter submit it to the Secretariat. Emergency State Arbitrator is of course obliged to examine the acceptability of the application and competence (doctrine of kompetenz-kompetenz) just as in the case of ordinary trial. At this point the concept of competence also covers deciding whether the arbitrator is authorized to give a decision for provisional protection[6]. It must be stated that since the Emergency State Arbitrator is obliged to give a decision within 7 working days, it will be very difficult to hold a hearing in such a situation and such a hearing shall constitute a contrariety to what the concept of Emergency State Arbitrator implies. The decision on providing provisional legal protection may be deemed conditional on giving an appropriate guaranty and such a decision shall of course be given based on the decision of the Emergency State Arbitrator that he has competence in this regard based on the doctrine of competence. 

Arbitration concerning the trial on the request for provisional protection and that request and the decision of provisional protection to be given by the Emergency State Arbitrator shall be binding for the parties as is the entire arbitration process. It goes without saying that if any of the parties submits an application claiming that the conditions that have led to giving a decision of provisional legal protection have changed, arbitrator may rule for changing or totally cancelling that decision.

It must not be forgotten that the concept of Emergency State Arbitrator is related to a mechanism to have recourse to for the purpose of obtaining a decision for provisional legal protection before the referral of the file containing the dispute to the Single Arbitrator or Arbitrator Board pursuant to the article 42/2 of ISTAC Rules. Likewise, the parties may also request provisional legal protection from the local courts before the beginning of the ordinary arbitration process.

   V.Conclusion

As has been stated above the concept of Emergency State Arbitrator is in deed directed at obtaining a decision of provisional legal protection in favor of the parties. After obtaining the decision of provisional legal protection the file containing the dispute shall be sent to an arbitrator or arbitration board pursuant to the article 42/2 of ISTAC rules. Another point to which attention must be drawn at this point is the fact that the decision for the provisional legal protection previously given based on the file sent to the Single Arbitrator or Arbitration Board pursuant to the relevant article is not binding on the arbitrator/ arbitrators in ordinary arbitration.

Neither ISTAC Arbitration Rules, nor the rules of ISTAC Center Emergence State Arbitrator and Arbitration Rules of Istanbul Arbitration Center contains any provision about what the decisions of provisional legal protection to be given by the Emergence State Arbitrator are. Under this scope it is prescribed that the Emergence State Arbitrator may give a decision about any request not in conflict with the basis of the dispute and relevant general rules.

 

For further information and inquiries please contact:

Av. Z. Deniz SEZER     ([email protected])

 


[1] David D. Caron, Lee M. Caplan and Matti Pellonpää, The Uncitral Arbitration Rules: A Commentary. Oxford University Press, 2006 at 30

[2] Christopher R. Drahozal, “Why Arbitrate? Substantive versus Procedural Theories of Private Judging”, 22 American Review of International Arbitration (2011) at 163-186

[3] Henry P. deVries, “International Commercial Arbitration: A Contractual Substitute for National Courts”, 57 Tul. L. Rev., 1982 at 43; Gary B. Born, International Commercial Arbitration, 2nd edition, Kluwer Law International 2014 at 73

[5] ISTAC Merkezi Acil Durum Hakemi Kuralları (EK-1) m.2

[6] ISTAC Merkezi Acil Durum Hakemi Kuralları (EK-1) m.6/2

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 – ©Hansu Law Office

– Hansu Law Office is at your disposal to provide service to its local and foreign clients especially in the field of real estate, companies, tax and intellectual property rights. This bulletin aims at sharing the developments in the field of law. It should not be considered as a legal opinion or guidance. The opinion of the legal counselor should be taken regarding the private questions and problems.

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