News & Insights

Mandatory Mediation In Commercial Lawsuits.

As per Law on Labor Courts[1], filing lawsuits for certain labor law disputes[2]  is subject to making a submission to a licensed mediator and not having to settle. This is a cause of action under Turkish law and any lawsuits filed without complying with this legal requirement shall be dismissed.

Nearly one year have passed since the initiation of mandatory mediation procedure in labor law and according to the official statistical records[3], there have been 127,845 applications to the mediators and %65 of these disputes have been resolved by mediation.

According to the bill related on law changes on various legal matters[4] on November 13 2018, which was addressed to the Grand National Assembly of Turkey on November 13, 2018, exact same mandatory mediation process is being discussed for “commercial lawsuits”.

Under Turkish law, a commercial lawsuit is defined under two major segregations as (a) by its subject and (b) by its parties.

As for subject, any disputes arising from matters stated under the Turkish Commercial Code are deemed as commercial lawsuit. On the other hand, a lawsuit shall be deemed as commercial lawsuit, if both of the parties are be merchants and the conflict is related with both parties’ commercial enterprises.

 The reasoning[5] behind the currently discussed bill is the same with the mandatory mediation under labor law disputes: Fast and cost-efficient dispute resolution, which will result in the parties’ will the most.

Being party to a commercial lawsuit in Turkey is a lengthy process and the length of the disputes is continuously increasing due to unfortunately insufficient court house personnel and amount of courts. In addition to that, there is at least 2 years of waiting’s in appeal courts due to file stock. Most natural outcome of this is the disputes are not resolved in due time. As the Turkish economy has been facing major inflation throughout history, most of the time no one comes out as beneficiaries from a commercial lawsuit as much as they expect to.

According to official numbers published by the Ministry of Justice, there are more than 75.000 commercial lawsuits filed only in Istanbul, the nation’s finance and trade capital in 2017 only. Please note that any lawsuits that have not been ruled in the appeals courts are not included in the above stated numbers.

As the numbers don’t lie, it is obvious that an alternative dispute resolution mechanism is a need in Turkish legal system and as mandatory mediation for commercial disputes is currently being discussed, we believe that there will be major changes in the legal market in the upcoming years.

We will keep you updated about the process with the Bill on Mandatory Mediation on Commercial lawsuits as to when and how it will be a law.

Yours faithfully,

Av. Mahmut Barlas
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