International Arbitration

Özcan Legal is a law firm based in İstanbul, providing services with particular respect to international and national arbitration, while also offering extensive experience in client representation across such sectors as energy, construction, media and tourism, finance and machine manufacturing. Meanwhile, the firm provides representation in proceedings regarding recognition and enforcement of foreign arbitral awards, as well as the annulment of said awards.

Turgut Aycan Özcan, Managing Partner, is recognised by Who’s Who Legal as one of the Arbitration Future Leaders for 2023 & 2024 in Türkiye, and was placed in the Legal 500’s Private Practice Power List of Dispute Resolution, Türkiye, for 2023. Özcan Legal is further recognised as a recommended firm for international arbitration by Global Law Experts.

Mr Aycan Özcan’s career experience thus far has been wide-ranging, as – before establishing Özcan Legal – he managed the legal team at his previous firm, which represented the Republic of Türkiye in two major investment arbitration (ICSID) cases that were concluded in favour of the Republic. He has dealt with investment arbitration for more than 10 years and, during this time, has represented both the investors and sovereign states, including the Republic of Türkiye.

It should be noted that Türkiye hosts several notable arbitration institutions providing dispute resolution services. These institutions are integral to the management of both domestic and international commercial disputes. The major arbitration institutions in Türkiye encompass:

Istanbul Arbitration Centre (ISTAC): ISTAC was established in 2015 to provide efficient dispute resolution services. Today, it handles a wide range of civil and commercial disputes, both international and domestic, and is one of the most prominent arbitration institutions in Türkiye – designed to offer an alternative to traditional court proceedings with quicker and more specialised resolutions.

Istanbul Chamber of Commerce Arbitration & Mediation Centre (ITOTAM): ITOTAM is another significant institution in Istanbul, offering both arbitration and mediation services. It is affiliated with the Istanbul Chamber of Commerce, providing services primarily to its members, but also to other national and international parties.

Union of Chambers & Commodity Exchanges of Türkiye (TOBB) Arbitration Centre: TOBB Arbitration Centre provides arbitration services primarily for disputes related to commerce and trade within Türkiye, involving members of various chambers and commodity exchanges across the country.

Energy Disputes Arbitration Center (EDAC): EDAC is a specialised arbitration institution in Türkiye focused on disputes related to the energy sector. This extends to issues arising from the oil & gas industry, renewable energy projects, as well as other types of energy production and distribution. The EDAC aims to provide an effective and efficient dispute resolution mechanism, reducing the time and costs associated with traditional litigation. This is particularly valuable in the energy sector, wherein disputes can be highly technical and require prompt resolutions to resume normal operations.

Mr Aycan Özcan commented: “These arbitration institutions have developed rules and procedures that align with international standards – aiming to offer credible, neutral and efficient dispute resolution services. They play a crucial role in Türkiye’s legal landscape, especially in the context of increasing international trade and foreign investment.”

He also underscored the opinion that arbitration, as a form of ADR, offers several advantages over other ADR methods, such as mediation, negotiation or judicial litigation. Some of the key benefits of choosing arbitration can be summarised as below:

Binding Decisions: Arbitration awards are generally binding and enforceable in courts, not only domestically, but also internationally. This is especially true in countries that are signatories to the New York Convention on the Recognition & Enforcement of Foreign Arbitral Awards. Meanwhile, Türkiye is also one of the signatories of the New York Convention.

Confidentiality: Arbitration proceedings are private, meaning that the details are generally not made public. This confidentiality is particularly beneficial in commercial disputes wherein preserving trade secrets or maintaining corporate reputations is important.

Flexibility: The parties in arbitration can often tailor the process to their needs, choosing everything from the rules of procedure to the location and language of the arbitration. Besides, the parties can also choose arbitrators with specific expertise relevant to their dispute, which is particularly advantageous in technical or specialised fields.

Speed & Efficiency: Arbitration can be quicker than court litigation, especially in jurisdictions wherein the judiciary is slow or overburdened. The streamlined procedures in arbitration can lead to faster dispute resolution.

Expertise: Arbitrators are usually experts in their field, or have significant experience in arbitration, which ensures that the individuals deciding the case understand the nuances of the subject matter involved.

Less Formality: The process is less formal than court litigation, which can make it less intimidating and more manageable for all parties involved.

International Acceptance: Arbitration is widely accepted as a fair and neutral means of resolving international disputes, with established rules and procedures that are recognised globally.

In view of the foregoing, it would be appropriate to conclude that arbitration is more suitable for companies that are dealing with cross-border transactions, such as importing and exporting products – or with international construction and/or energy projects – due to the international nature of these projects.

However, every jurisdiction is subject to its own unique complexities in matters of arbitration and the related areas, and Türkiye is no exception. Mr Aycan Özcan explained that in order to decrease the courts’ workload, in 2012 the Turkish Parliament enacted Law No. 6325 on Mediation in Civil Disputes. Law No. 6325 stipulates that before the commencement of court proceedings, the parties to civil and commercial disputes should, in principle, initiate the mediation process. Only if the parties could not reach an agreement through this mediation process, they could apply to the court for resolution of their disputes. Although the purpose of this mandatory mediation process is to decrease the number of cases existing in the courts, he notes that it is fair to state that there is still high workload of the courts.

On the other hand, due to the legal nature of arbitration – which is purely based on the consent of the parties – unlike mediation, there is no mandatory arbitration procedure prescribed under Turkish law except the arbitration procedure prescribed under the Law on Protection of Consumers with respect to the disputes between service/product providers and the consumers that do not exceed 30,000 Turkish Lira (approximately 794 Euro). The disputes between service/production provides and the consumers that exceed the said amount are also subject to court proceedings.

Furthermore, in Türkiye, the arbitration rules and procedures are regulated under Turkish Code of Civil Procedure numbered 6100 (the “TCCP”), as well as the Turkish International Arbitration Law, numbered 4686 (the “TIAL”). The legislator prefers to make a distinction between domestic and international arbitration, and so regulates the domestic arbitration under the TCCP, whereas international arbitration is regulated under the TIAL. The TIAL is primarily based on UNCITRAL Model Law and, therefore, contains provisions prescribing the situations wherein the parties may request the state courts’ assistance.

The court’s assistance is mainly prescribed under the TIAL on several issues, such as obtaining interim measures from the courts before or during the arbitral proceedings and appointment of the sole arbitrator, the chair or the co-arbitrator in such cases wherein a party fails to appoint its arbitrator.

As per Article 6 of the TIAL, it is not incompatible with an arbitration agreement for a party to request from a court – before or during arbitral proceedings – an interim measure of protection or an interim attachment, and for a court to grant such a measure or attachment. Besides, in cases wherein an interim measure or attachment was granted by an arbitral tribunal – and if a party does not comply with this interim measure or attachment – the other party may request the assistance of the competent court for taking an interim measure of protection or an interim attachment.

Aside from the above, in order to ensure the constitution of the arbitral tribunal, Article 7 of the TIAL provides that the parties may apply to the authorized courts for appointment of the sole arbitrator, the chair of the arbitral tribunal or the co-arbitrator in cases wherein a party fails to appoint its arbitration within the period prescribed under the TIAL.

Similar provisions regarding courts’ assistance in arbitral proceedings also exist in the TCCP, which regulates the domestic arbitration in Türkiye.

Reflecting on how Türkiye’s arbitration landscape has evolved in recent decades, Mr Aycan Özcan stated: “I would say that the major changes in the arbitration market since I began practising is the establishment of new arbitration institutions, such as ISTAC and EDAC. Establishment of these arbitration institutions definitely helps make Türkiye one of the important arbitration hubs in the region.

“Furthermore, the number of Turkish laws providing arbitration services is substantially increasing, and this would of course have positive effects in understanding the advantages of arbitration as a dispute resolution method – as well as in ensuring a legal environment that is more appropriate for arbitral proceedings in general.”

Other developments reshaping the landscape in recent years include the COVID-19 pandemic, which Mr Aycan Özcan agrees impacted various sectors in Türkiye, including the legal field – particularly in how disputes were resolved. Arbitration, which has traditionally involved in-person hearings, was forced to adapt swiftly to restrictions on travel and gatherings. As a direct consequence, this adaptation created a need for more virtual forms of arbitration. To this end, arbitration institutions and parties quickly adopted virtual meeting technologies, such as Zoom, Microsoft Teams and Cisco Webex. These tools facilitate the conduct of hearings with participants in differing geographical locations, ensuring the continuation of arbitration proceedings, despite such complications as lockdowns and travel bans.

As a result, many arbitration institutions have amended their rules or issued guidelines to accommodate the need for virtual arbitration. For instance, the ISTAC has implemented provisions that explicitly allow for virtual hearings, as well as the electronic submission of documents.

“On the other hand,” said Mr Aycan Özcan, “while initially adopted out of necessity during the pandemic, the benefits of virtual arbitration may lead to its continued use post-pandemic. Hybrid models – wherein some participants are present in-person, while others join virtually – are likely to become more commonplace. It should be considered that these models offer a balance between the benefits of virtual proceedings and the advantages of face-to-face interactions, particularly for complex cases, or when detailed witness examinations are necessary.”

Another timely consideration on a global scale is the ongoing shift towards greener arbitration practices, which has gained momentum as part of a broad trend towards sustainability across numerous industries, affecting the majority of legal professional practising today. The arbitration community has, accordingly, recognised its role in reducing environmental impacts, and has begun implementing measures to ensure the arbitration process becomes more environmentally friendly.

Mr Aycan Özcan noted: “The adoption of virtual hearings, significantly accelerated by the COVID-19 pandemic, has had a substantial impact on the environmental footprint of arbitration. Virtual hearings reduce the need for travel, thereby cutting down on carbon emissions related to flights, ground transportation and hotel stays. This transition to digital platforms not only aligns with sustainability goals, but also offers economic benefits by reducing costs.

“Arbitration traditionally involves extensive use of paper for filings, exhibits and other documentation. Today, however, there is a growing shift towards electronic submissions and the use of electronic case management tools. This move not only streamlines the process and improves accessibility, but also significantly reduces paper waste.

“Various arbitration institutions and bodies have developed green protocols and guidelines to encourage environmentally responsible practices. These guidelines cover such aspects as reducing material waste, opting for electronic communication and documentation, as well as choosing sustainable venues and suppliers for in-person hearings.

“At the same time, some arbitration institutions and law firms are exploring carbon offsetting programmes to mitigate the environmental impact of necessary travel and other activities that produce carbon emissions. These programmes typically involve investing in environmental projects that reduce greenhouse gases, such as reforestation or renewable energy projects.”

According to Mr Aycan Özcan, the move towards greener arbitration reflects a broader recognition within the legal community of the need to adopt sustainable practices. By integrating technology, revising procedural norms and adopting environmentally conscious behaviours, arbitration can reduce its environmental impact while still effectively resolving disputes. This transition not only benefits the planet, but also enhances the efficiency and accessibility of arbitration as a dispute resolution mechanism.

Innovations in virtual interfacing are also highly beneficially for when law firms wish to consult with one another, as it is insufficient for them to operate in isolation, specialising only in the nuances of their own jurisdiction. Mr Aycan Özcan stresses the importance of networking with like-minded professionals in other regions, who may be able to impart the wisdom of doing things differently. He commented: “Ensuring a well-informed global advisory varies based on each particular case, and heavily depends on several factors, such as the substantive law applicable to the merits of dispute, the procedural rules that shall be applied in the arbitral proceedings in question and the seat of arbitration. All these factors should be carefully considered by us to determine the appropriate strategy before rendering a professional and global advisory to the foreign clients. We are of the opinion that best advertisement of a lawyer is the satisfaction of his/her existing clients in consideration of rendered legal services; on the other hand, of course, networking plays a crucial role for us to meet with potential clients and to be able to explain our experiences in arbitration. Therefore, in addition to daily works, it is necessary to allocate sufficient time to attend networking events to the fullest extent possible.”

Another topic presented to Mr Aycan Özcan was that of arbitration “databases”, wherein information – such as feedback from clients – may be accessed. He offered his opinion: “Appointment of an impartial and independent arbitrator, who has sufficient experience in the sectors wherein the dispute is related, is crucial to have fair and effective arbitral proceedings for both parties. Therefore, databases existing in such web platforms such as Jus Mundi and Kluwer Arbitration, indicating the experiences of the arbitrators, are very helpful for the counsels to locate the right arbitrator for their arbitration cases. Moreover, although the arbitrators are under the obligation to disclose all relevant issues that may affect their impartiality or independency pursuant to provisions of the arbitration rules of the relevant arbitration institutions during their appointment, the conflict check tools in these web platforms are also frequently used by arbitration practitioners to check whether there is any conflict for any arbitrator that prevents him/her from acting as an arbitrator in each specific case. We are of the opinion that these databases play an important role during the constitution of the arbitral tribunals.

“Similarly, on a global scale, arbitration often involves parties, lawyers and arbitrators from diverse cultural backgrounds – a factor that can introduce complexity into the arbitration process. Understanding cultural differences is vital for arbitrators to ensure a fair, respectful and efficient resolution of disputes.”

Mr Aycan Özcan presented the following strategies that arbitrators can use to minimise cultural clashes, while at the same time enhancing their understanding of differing cultures:

Engagement with Local Practices: Before arbitrating in a specific region, arbitrators should familiarise themselves with the local legal culture and practices. This may include studying local laws relevant to arbitration, understanding the role of legal institutions, as well as recognising customary business practices and norms.

Diverse Arbitral Tribunals: Forming arbitral tribunals with members from diverse cultural backgrounds can enhance the tribunals’ collective understanding and sensitivity to cultural issues. A diverse tribunal is more likely to approach arbitration in a balanced manner that respects the cultural expectations of all parties involved.

Clear Communication: Clear and precise communication is essential in minimising misunderstandings that could arise from cultural differences. Arbitrators should ensure that all legal documents and proceedings are accessible and comprehensible to all parties, possibly offering translation services when necessary.

Building Trust: Arbitrators can build trust by showing respect for each culture’s unique attributes, as well as by being impartial and transparent in their decision-making. Trust is crucial in settings wherein cultural differences may otherwise lead to suspicion or misunderstanding.

Continuous Learning & Reflection: The field of international arbitration is dynamic, and cultural norms and practices can evolve. Arbitrators should commit to ongoing learning about cultures and reflect on their own cultural biases (and how these may affect their arbitration practice).

By employing these strategies, international arbitrators can better manage cultural differences – leading to more effective and fair arbitration outcomes. Moreover, such sensitivity promotes a more inclusive approach to international dispute resolution, reflecting the global nature of modern business and legal practices.

Lastly, for young practitioners eager to build a successful career in arbitration, the field offers a dynamic and intellectually challenging environment. Mr Aycan Özcan offered several pieces of advice that may assist those individuals starting out in arbitration:

Gaining a Strong Foundation in Law: Understanding the legal principles, procedures and the framework of arbitration is crucial. Therefore, it is important for young practitioners to possess a solid grounding in relevant areas of law, such as contract law, international law and specific arbitration laws – not only in their countries, but also in other arbitration friendly and well-developed countries.

Developing Specialised Knowledge: Consider developing expertise in a specific area of arbitration, such as commercial, investment or construction arbitration. Specialisation can help make new practitioners more attractive to firms and clients looking for experts in a particular field.

Participating in Continuing Education: Arbitration is an ever-evolving discipline. Therefore, we suggest that young practitioners regularly attend seminars, workshops and conferences to stay updated on the latest developments and trends in arbitration practice and law.

Gaining Practical Experience: We recommend gaining as much hands-on experience as possible. This can include internships at arbitration institutions, law firms or with independent arbitrators. Participating in moot court competitions – especially those focused on arbitration – can also be particularly beneficial.

Understanding Different Legal & Cultural Contexts: As arbitration can involve parties from various cultural and legal backgrounds, understanding these differences enhances the new practitioners’ ability to handle cases sensitively and efficiently.

Networking Actively: Building a professional network is also crucial. Hence, attending industry events and joining the relevant associations (such as the Young ICCA, LCIA Young International Arbitration Group, etc.) and engaging in online forums dedicated to arbitration play an important role for up-and-coming practitioners who wish to develop their affiliations within the arbitration sphere.

Publishing Articles & Papers: Writing about arbitration in legal journals or blogs can help establish the young individual’s reputation as a knowledgeable practitioner. It also keeps them engaged with current issues affecting the field.

Being Patient & Persistent: Building a career in arbitration can take time. Patience and perseverance are important, as it may take some time before young practitioners begin leading cases, or make significant contributions to the field.

Embracing Technology: Adapting to the use of legal tech tools can aid in research, case management and virtual arbitration proceedings. It should be reiterated that the COVID-19 pandemic accelerated the move towards digital platforms in arbitration – and, as a consequence, being tech-savvy is of increasing importance.

Mr Aycan Özcan concluded by noting: “Following these steps can help young practitioners not only enter the field of arbitration, but also excel and make meaningful contributions to this ever-evolving discipline.”