The concept of mandatory mediation under Turkish law is introduced initially for certain employment disputes and then for all commercial disputes. This article aims to give a general overview of the mediation process in employment and commercial disputes.
1. Mediation in Employment Disputes
Application to mediation before instigating a lawsuit before labour courts has become mandatory for the majority of the employment disputes as of 1 January 2018 pursuant to the Labour Courts Law published in Official Gazette number 30221 dated 25 October 2017.
Such mandatory mediation applies to employment claims related to compensation and receivables arising from employment relations and re-employment. Claims related to occupational accidents and diseases, however, will not be subject to mandatory mediation.
Mediators are appointed by the mediation bureaus established by the Ministry of Justice upon the application of the filing party.
Application to the mediation suspends any statute of limitations or lapse of time until the mediator’s final minutes are prepared. The mediator must complete the mediation proceedings within three weeks, with the possibility of a one-week extension. The mediator’s final minutes must be drafted within four weeks of the first application.
Mediators must immediately send their final minutes to the mediation bureau, stating the mediation’s outcome.
If any of the parties do not attend mediation process, the court will apply legal expenses to the party which failed to attend the initial mediation meeting, irrespective of whether that party justifies its claim in the court. The court also cannot rule the legal counsel’s fee in favour of this party. If the parties initiate an employment lawsuit without first applying to mediation, the claim petition will be automatically dismissed on procedural grounds. If both parties fail to attend the mediation meeting, legal expenses will be applied according to their own expenses.
2. Mediation in Commercial Disputes
As of 1 January 2019, mediation process has become mandatory for all commercial disputes in Turkey pursuant to the Law on Starting Legal Proceedings for Monetary Receivables Arising from Subscription Agreements No 7155 published in the Official Gazette No 30630, dated 19 December 2018, which introduced new provisions to the Turkish Commercial Code No 6102 (“TCC“) and the Law on Mediation in Civil Disputes No 6325 (the “Mediation Law”). Accordingly it is now mandatory to resort to mediation before instigating a lawsuit before Turkish courts.
Scope of mandatory mediation
The mandatory mediation requirement will apply for acts and operations deriving from private law. Matters that can be solely settled by a judge cannot be subjected to commercial mediation.
According to Article 5/A of the TCC, which has been enacted recently, it is mandatory to apply for mediation with regards to commercial lawsuits regulated under TCC and other legislation concerning monetary receivables and compensation claims.
In addition, mediation is mandatory for issues and lawsuits that are not expressly stated under Article 4 of the TCC that involve parties that are merchants on both sides of the dispute and disputes concerning the commercial enterprises of said parties.
For commercial disputes within the scope of mandatory mediation, a mediation process has to be completed prior to filing a lawsuit before the courts failing which the lawsuit will be dismissed on procedural grounds.
Mandatory mediation is not a prerequisite for provisional remedies such as interim injunction and interim attachment requests. Pursuant to Article 18/A-18 of the Mediation Law, if mandatory arbitration or alternative dispute resolution methods are prescribed for certain disputes under special laws or in the event of the existence of an arbitration agreement between the parties, these mandatory mediation provisions will not be applied. Finally, as per provisional Article 12 of the TCC, mandatory mediation will not be applied with regards to cases pending before courts of first instance, regional courts of justice and the Court of Appeal as of the date of these regulations entry into force.
According to Article 18/A of the Mediation Law, mediation applications will be made to the mediation bureau administered by the Ministry of Justice within the jurisdiction of the competent court with regards to the subject of the dispute at hand and a mediator will be appointed by the mediation bureau from their list of mediators unless the parties agree on a mediator within listed as a certified mediator.
As per article 5/A of the TCC, the mediation process will be completed within six weeks beginning from the appointment of the mediator, and this period can be extended for maximum of two weeks if deemed necessary by the mediator.
Application to the mediation suspends any statute of limitations or lapse of time until the mediator’s final minutes are prepared.
According to Article 18/A-11 of the Mediation Law, if mediation fails due to one party’s non-participation in the first mandatory session held by the mediator without a valid reason, this situation will be recorded in the final report by the mediator and such party will bear the total cost of the proceedings even if the court rules in its favor.
If the parties reach an agreement, the necessary expenses of the mediation will be paid by the parties equally, unless decided otherwise, and if the parties fail to settle these, expenses will be borne by the party against whom the court rules. However, in the event that the parties fail to reach an agreement, the mediator fees for the first two hours will be paid from the budget of the Ministry of Justice.
As per Article 18/A-2 of the Mediation Law, if the parties fail to reach a settlement, the plaintiff must include the final report prepared by the mediator displaying that the parties have duly carried out the mediation process but failed to reach an agreement and a lawsuit can be filed before the competent courts of first instance.
In the event the parties reach an agreement during the mediation process, such mediation agreement can be enforced like a court decision. Consequently, the parties will not be able to file a lawsuit on the same subject.
This Article aims to provide a brief and general overview of mediation in commercial disputes in Turkey, but does not intended to serve as a legal advice. Before taking any action or relying on the information given, addressees of this Article should seek specific advice on the matters which concern them.