
In the business world, disputes are almost inevitable. Handling these disputes efficiently is crucial for maintaining smooth operations and preserving business relationships. In Turkiye, the dispute resolution landscape has evolved to incorporate mandatory mediation alongside traditional lawsuit processes. In many disputes, it is mandatory to apply for mediation before filing a lawsuit. If no agreement is reached during the mediation process, the parties enter the litigation process.
1. Last Exit Before The Highway: Mandatory Mediation in Turkiye
1.1. What is Mediation?
For sustainable success in business, legal risks shall be minimized with “preventive law” services. In the moments when problems are encountered inevitably, they should be concluded with the least damage, and even with mutual gains if possible.
Mediation is an “alternative dispute resolution” method. It is voluntary and confidential process where a neutral third-party mediator assists disputing parties in reaching a mutually acceptable agreement. It is an alternative to litigation, focusing on collaborative problem-solving and preserving relationships. In this article, we will focus only on the mandatory type of mediation.
1.2. Legal Framework for Mandatory Mediation
The Turkish Law on Mediation in Civil Disputes (Law No. 6325) established the legal framework for mediation. More recently, mandatory mediation has been introduced for certain types of disputes, particularly in labor and commercial cases. The objective is to reduce the burden on courts and encourage amicable settlements.
Mediation process is a must before filing a lawsuit in certain types of legal disputes. It includes, but not limited to, labor disputes, commercial disputes and rent disputes.
1.3. The Mandatory Mediation Process
To give some basic information about the mandatory mediation process:
Initiation: For disputes subject to mandatory mediation, parties must initiate the mediation process before filing a lawsuit. This is done by applying to a mediation center or directly to an accredited mediator.
Selection of Mediator: The parties select a mediator from the registry maintained by the Ministry of Justice. If they cannot agree on a mediator, one is appointed by the mediation center.
Mediation Sessions: The mediator facilitates discussions between the parties, helping them explore options and negotiate a settlement. The process is confidential, and the mediator does not impose a solution.
Agreement or Termination: If the parties reach an agreement, it is documented and signed by both parties and the mediator, having the same legal effect as a court judgment. If no agreement is reached, the mediation process is terminated, and the parties may proceed to litigation.
Certificate of Mediation: Upon completion, whether an agreement is reached or not, a certificate of mediation is issued, which is required to proceed with a lawsuit.
1.4. Advantages of Mediation
Cost-Effective: Mediation is generally less expensive than litigation, reducing legal fees and court costs.
Time-Saving: Mediation can resolve disputes more quickly than court proceedings, minimizing business disruptions.
Enforcement power: If an agreement is reached in mediation, the agreement document prepared by the mediator has the force of a court order. As a result, instead of losing years in litigation, the mediation outcome document can be directly enforced and receivables can be obtained.
Confidentiality: Mediation sessions are private, protecting the parties’ reputations and business secrets.
Preservation of Relationships: Mediation promotes cooperative solutions, helping preserve business relationships.
Control Over Outcome: Parties have more control over the resolution, as opposed to a court-imposed decision.
2. Lawsuit Processes in Turkiye
2.1. The Lawsuit Process
2.2. Challenges of Lawsuits
3. What is Arbitration?
Parties can agree to submit their dispute to an arbitrator for a binding decision. In Turkiye, arbitration is a widely used method for resolving commercial disputes outside of court. Governed by the Turkish International Arbitration Law (Law No. 4686) and the Civil Procedure Code, arbitration allows parties to select arbitrators who render binding decisions. It is known for being faster, confidential, and more flexible than traditional litigation. Arbitration awards can be enforced in over 150 countries under the New York Convention, making it an effective choice for international and domestic disputes.
4. Practical Tips for Effective Dispute Resolution
5. Conclusion
Understanding the dispute resolution mechanisms available in Turkiye is essential for businesses to navigate conflicts effectively. Mandatory mediation offers a cost-effective, confidential, and cooperative approach, while lawsuits provide a formal, enforceable, and precedent-setting resolution. By choosing the appropriate method and following best practices, businesses can resolve disputes efficiently, minimize disruptions, and maintain healthy business relationships. Engaging legal counsel, drafting clear contracts, and being prepared for either mediation or litigation are crucial steps in managing business disputes successfully.
A Reminder About Business Starters’ Legal Kit: This article is a part of “Business Starters’ Legal Kit” series. As we explained in our introductory article, the articles in this series contain essentials only. For detailed information, you can review the articles in special categories on our website or contact us.
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