Date : 30/04/2018

Alternative Dispute Resolution Method for Insurance Disputes: Semi-Obligatory Arbitration System in Turkish Insurance Law

Because it is faster, more flexible and less expensive people are increasingly choosing alternative dispute resolution methods over classic court litigation procedures. The Legislator also promotes alternative dispute resolution methods to ease the workload of the courts.
Over the last 20-years the Turkish legislator expanded the scope of the arbitrable disputes to attract and encourage the international investors.

In this respect, the Legislator regulates a special arbitration procedure for the insurance related disputes.

Arbitration procedure for  insurance disputes was regulated for the first time with Insurance Law No. 5684 dated 03.06.2007 ("IL"). Approximately 2 months later, the Regulation on Insurance Arbitration was published in order to clarify application of the IL.

As it is called “semi-obligatory arbitration method” by the doctrine; since the applicant has the option whether to recourse the arbitration institution or to apply directly to the court without resorting to arbitration, the insurance company have to adhere to the chosen method.

Arbitration Procedure for Insurance Related Disputes

The insurance arbitration system, established in the IL, is based on the principle of voluntary participation of insurance companies.

According to this voluntarily participation principle, the Insurance Arbitration Commission was established with the aim of resolving the disputes arising from the insurance contracts through an arbitration procedure.

As per to the Article 30 of the IL, any dispute arising from an insurance contract with an insurance company that is member of the Insurance Arbitration System can be resolved thorough insurance arbitration even though the insurance contract does not contain any arbitration clause.  

Besides that, disputes arising from insurance policies concerning compulsory insurances can be also solved through arbitration, irrespective of whether the insurance company is a member of the Insurance Arbitration System or not.

It should be noted that disputes related to the insurance law can also be resolved directly by the courts. The insurance arbitration system is an opportunity for the consumer or applicable, not an obligation.

Who Can Apply to The Insurance Arbitration

The Insurance Law states that the policy holder or the people who benefit from the insurance contract have right to apply to the Insurance Arbitration Commission. Thus, similar to standard procedure of insurance disputes which enables aforesaid to apply to the Insurance Arbitration Commission is not only recognized for the policy holder but also for the beneficiaries of the insurance contract.

The Condition of Application to the Insurance Company

The Insurance Law stipulates that the party who have a dispute with an insurance company, at the time of request for arbitration, must have made the necessary dispute-related applications to the insurance company and must have documented that the claim is partially or entirely denied.

Advantages of the Insurance Arbitration System

According to the Code of Civil Procedure No. 6100, unless the parties agrees otherwise, the arbitration court must decide on the merits of the disputes within one year; if the case will be solved by one arbitrator from the date of the arbitrator is appointed, or; from the date of first meeting of the arbitral tribunal if the case will be handled by more than one arbitrators.

However, in the insurance arbitration system, this period is set to 4 months. If the arbitral tribunal is unable resolve the dispute within this given period according to the system prescribed by the IL, the dispute will be settled by the competent courts. It must be noted that the 4-months period can be extended by written consent of the parties.

To encourage the parties to resolve the disputes through the such arbitration method, the attorney fees, application fees and other expanses has been determined to be fairly lower than the standard litigation procedure.

Should you have any question or inquiries about Turkish and international arbitration practice, please do not hesitate to contact us at

Author: Abdülkadir Güzeloğlu & Tarık Kurban
Relevant Fields: Litigation and Dispute Resolution