This article is the fourth in a four-part CPR summer series that examines ADR in a number of rapidly changing locales around the world. If you missed it, you can find the first post, about Colombia, here, the second about Mexico here, and the third about Taiwan, here.
Turkey: Political Conflict Makes ADR an Essential Tool
By Boaz Cohon and Ngutjiua Hijarunguru, CPR Student Interns
On June 3rd, 2015 the World Justice Project released an updated version of their Rule of Law Index. In this iteration, the Rule of Law Index dropped Turkey from 59th to 80th out of the 102 countries surveyed. This fall no doubt was impacted by recent developments involving interference by Turkey’s executive branch in the judiciary.
The Turkish economy has, to a lesser extent, also struggled. Notwithstanding that Turkey attracted over $12.5 billion dollars of Foreign Direct investment (FDI) in 2014, its gross domestic product (GDP) growth rate was just 2.9% for that year, down from 9.2% in 2010.
Currently litigation that relies on Turkey’s judicial system is the primary mode of commercial dispute resolution in Turkey, but complex commercial litigation can take over six years to complete. The primacy of litigation is due in part to technological innovations such as electronic proceedings and increased courthouse construction that have enhanced the effectiveness of the Turkish court system, but is mostly due to the fact that Turkish businessmen are still quite reluctant to initiate arbitral proceedings at distant venues that utilize unfamiliar rules and procedures.
That being said, the legal framework exists in Turkey for both foreign and domestic companies looking to avoid a legal system mired in political conflict by using impartial, independent forms of ADR to resolve commercial disputes. The primary law governing international arbitral proceedings that could be used by multinational enterprises (MNEs) is the Turkish International Arbitration Law (IAL), which is based on the UNCITRAL Model Law and the Swiss Federal Statute on Private International Law Domestic disputes are regulated under the Turkish Civil Procedure Law, which also draws heavily from the UNCITRAL Model Law.
In 2012 Turkey added a modern mediation law—the Law on Mediation for Civil Disputes—to its legal code. This law, which was opposed by the Istanbul Bar Association, took to heart the most cherished principles of mediation, such as insuring equal treatment of both parties by the mediator, confidentiality, and a duty to inform parties about the process of mediation. Although most disputes resolved thus far have been employment related, commercial disputes can certainly use mediation as a dispute resolution strategy as well.
Organizations like the Istanbul Chamber of Commerce and the Turkish Union of Chambers and Commodity Exchanges (TOBB) generally administer arbitrations, and a newly established institution, the Istanbul Arbitration Centre, was founded by the government effective January 1, 2015, to facilitate the settlement of domestic and international disputes through arbitration.
In sum, ADR processes in Turkey are slowly advancing toward becoming common practice, making Turkey both a potentially promising ADR marketplace and an ADR destination to watch. It may well be that government interventions in the judicial system will push the business community in Turkey towards more thoroughly utilizing ADR options at their disposal.
The CPR Institute would like to thank Boaz Cohon and Ngutjiua Hijarunguru for this contribution. Boaz, a summer public policy/legal intern at CPR, is majoring in Political Science and History at Vanderbilt. Ngutjiua is a LLM graduate from the Center of the Study of Dispute Resolution at the University of Missouri-Columbia.