Judgment of the Court Once More Verifies Turkish Practice of Interpretation of Arbitration Agreements: A Clear and Unhindered Will for Arbitration Must be Present
By Abdülkadir Güzeloğlu &
Fatma Esra Güzeloğlu
March 13, 2017
In a recent decision of Turkish Court of
Cassation[1]
(“Court) dated 23 January 2017; the Court held that an arbitration clause
should clearly express the absolute intention to arbitrate.
The case was regarding a construction
agreement between a contractor and a sub-contractor; whereby the contractor, Defendant,
requested the dismissal of the case by raising a preliminary objection as to
the arbitration. The local court accepted Defendant’s claim and dismissed the
case.
Upon Plaintiff’s appeal of the decision,
the Court reversed the decision of the local court by declaring that the arbitration
clause in question failed to reflect parties’ clear and absolute intention to
arbitrate. The clause in question states that:
“Any
dispute between the company and the contractor that may arise from the execution
of this contract shall be settled by arbitration. The arbitrators selected by
the parties shall appoint the 3rd arbitrator and the decision
rendered by this tribunal shall be valid. The arbitrators shall be a member of …
and the arbitration costs shall be borne by the contractor. Parties shall resort
to Istanbul Courts and Execution Offices for the matters that are not
arbitrable and in cases stipulated under the contract and its appendices.”
The Court stated that although the parties
may choose to submit all or certain disputes to arbitration in respect of a
defined legal relationship, the arbitration clause in question conferred
jurisdiction to national courts regarding the matters relating to the contract
and its appendices, after expressing parties’ intention to submit to
arbitration all disputes in relation to the contract. Hence the statement in
relation to the national courts called parties’ absolute and unconditional intention
to arbitration in question; therefore rendered the arbitration agreement invalid.
The dissenting opinion stated that the
arbitration clause in question expressed parties’ intention to submit all their
disputes in relation to the contract to arbitration, provided that the dispute
in question is arbitrable. As per disputes that are non-arbitrable, parties agreed
to bring their dispute before Istanbul courts; stressing that such statement
does not affect parties’ absolute intention to arbitrate.
The decision reveals yet again the
significance in drafting an arbitration agreement with clear wording, leaving
no point for interpretation that may possibly call parties’ intention to
arbitrate in question.
For more information on arbitration law and practice in Turkey, you may reach us at info@guzeloglu.legal
[1] 15th Civil Chamber,
2016/4735 E., 2017/259 K.