Arbitration can be defined as the parties’ agreement to resolve disputes that have arisen or may arise between them through arbitration, instead of resolving them in state jurisdiction, provided that the dispute is within the scope of matters permitted by the law to be resolved through arbitration. An arbitral tribunal is formed based on the will of the parties. If the tribunal deems itself authorized to solve the dispute, the dispute can be solved in arbitration. In other words, arbitration is a procedural process that includes the agreement of the parties to resolve the dispute in a binding manner by special arbitrators, called arbitral tribunals, instead of bringing the disputes between them to the state judiciary. This process starts with the will of the parties and continues when and if the arbitrators, based on the will of the parties, consider themselves authorized to resolve the dispute. For a mechanism that is an alternative to state jurisdiction to function correctly, the first requirement is for the arbitrators to deem themselves authorized to resolve the dispute based on a valid arbitration agreement. In that way, arbitrators will replace the existing judges in the state jurisdiction in arbitration and will act like a judge to solve the dispute. In other words, arbitration can be defined as the agreement of two parties with a dispute over a right agreeing to solve their dispute by a tribunal and by applying the law rules they choose rather than a state judge and rules.
The arbitration agreement not only provides the parties to the dispute with the opportunity to choose the arbitrator with mutual agreement by blocking to an extent the jurisdiction power of state courts but also provides the freedom to determine many issues, including the place where the arbitration proceedings will take place, all the procedural rules to be followed in the proceedings and whether the arbitrators can decide in an equitable manner. Arbitration is based on a contract. An arbitration agreement is the agreement of the parties to leave the resolution of all or part of the disputes that have arisen or may arise from a contractual or non-contractual legal relationship to the arbitrator or arbitral tribunal.
The arbitrator’s decisions can be classified as national and non-national arbitral awards. Non-national arbitral awards are arbitral awards that were not made in Turkey and were not made in accordance with the International Arbitration Act numbered 4686, even if they were given in Turkey. To be put in application in Turkey, non-national arbitral awards must be enforced by Turkish courts. The conditions of enforcement are enumerated in the Private International Code of Civil Procedure numbered 5718 and the New York Convention. Today, since many states are party to the New York Convention, the provisions of the New York Convention are commonly applied instead of the provisions of international private law in terms of enforcement. Since the New York Convention deals with the recognition and enforcement of arbitral awards, its provisions are not related to arbitration procedure in general.
Likewise, in many other international regulations, the competence-competence principle is accepted and regulated under article 442 of the Code of Civil Procedure numbered 6100, according to which arbitrators have the right to decide on their own authority in arbitration. Accordingly, the arbitrators can make a substantive decision in the arbitration on their authority after they decided on the validity of the arbitration agreement and respond to the parties’ objections. For this reason, the arbitrators should first examine whether there is a valid arbitration agreement in arbitration and then decide on the objections of authority before reviewing the merits of the dispute. 
If the arbitrator or arbitrators consider themselves authorized without the presence of a valid arbitration agreement, the arbitral award may not be enforced. The annulment of the decision may be requested by the court of the place of arbitration. Even if the award is wanted to be enforced, the enforcement of the decision may be prevented by raising objections regarding the invalidity of the arbitration agreement to the enforcement court. So, the initial and the most significant step for a valid arbitral proceeding and arbitral award is to have a valid arbitration agreement between parties.
Legal Characteristics of the Arbitration Agreement
There are four views explaining the legal nature of the arbitration agreement. These are: the opinion that it is a substantive law contract, the opinion that it is a procedural law contract, the opinion that it is a mixed contract, and the opinion that it is an independent contract.
A) Substantive Law Contract
According to those who argue that an arbitration agreement can be a substantive law agreement, the arbitration agreement is concluded as a substantive law agreement at the time of its establishment and is subject to the conditions sought for a substantive law agreement as the arbitration agreement, like private law agreements, is a law of obligations agreement established with mutually compatible declarations of will. The law of obligations applies to the provisions of the arbitration agreement or its cancellation. Therefore, the arbitration agreement has been considered as a substantive law agreement. Since the freedom of will that constitutes the essence of arbitration is a law of obligations, arbitration contracts are also substantive law contracts.
B) Procedural Law Agreement
The authors who support this view argue that the concept of freedom of will is not only a concept specific to private law, but also in all legal theory and states that it cannot be a substantive law contract.
C) A Mixed Contract
The opinion that the arbitration agreement is a mixed contract was formed on the grounds that the explanations that the nature of this contract is only a procedural contract, and a substantive law contract is insufficient to define the contract. According to this view, the arbitration agreement is a mixed contract with the characteristics of both substantive law and procedural law. The fact that the arbitration agreement is based on the will of the parties shows that it is a substantive law agreement. Likewise, arbitration is an institution that is very flexible and provides a wide range of freedom to the parties. However, since the decision of the arbitrators is given the meaning attributed to the court decision, the arbitration agreement also has the character of a procedural law agreement.
Opinion on the Arbitration Agreement as an Independent Agreement
There is a fourth view regarding the nature of the arbitration agreement in modern doctrine. This view looks at the purpose and purpose of arbitration. According to this view, the nature of arbitration is to meet the needs of the international community. For this reason, it should be evaluated within the framework of the economic purposes of the arbitration agreement.
D) Conditions of Validity of An Arbitration Agreement
As explained above, for an arbitral award to be enforceable, it is important for it to be based on a valid arbitration agreement. For an arbitration agreement to be valid, it must meet certain criteria. These criteria are clearly stated under the International Arbitration Act numbered 4686. First of all, the general conditions required for the validity of an ordinary contract are also necessary for the validity of the arbitration agreement. For example, the arbitration agreement must not be collusive or have any flaws in the will of the parties. In order for the arbitration agreement to be valid, some special conditions are also needed. The special conditions are necessary for the validity of the arbitration agreement can be listed as: will to arbitration, the agreement executed in writing, the existence of a specific or identifiable matter, and arbitrability.
The enforcement conditions, on the other hand, are regulated in Article 5 of the New York Convention which are; the existence of a valid arbitration agreement between the parties, the decision that is rendered in compliance with the defendant’s rights of defense, and within the jurisdiction of the arbitrators, the decision must be related to a dispute that can be resolved through arbitration in accordance with the law of the enforcement state and comply with public order, and lastly, the decision must be binding on the parties or not annulled or suspended in accordance with the law of the country in which it was issued or the law of the country to which the arbitration is subject.
The material validity of the arbitration agreement is determined by the law to which it is subject. Although the convention does not contain a direct regulation regarding the material validity of the arbitration agreement, sub-paragraphs 1 and 2 of article II, regulate the form of the arbitration agreement. In the first paragraph of the relevant regulation, the necessity of making the agreement in writing, and in the second paragraph, what should be understood from the written agreement is indicated with examples.
Article 4 of the International Arbitration Act reads as follows: “Arbitration agreement is the agreement of the parties to resolve all or some of the disputes that have arisen or may arise from an existing legal relationship between them, whether arising from the contract or not, by arbitration. The arbitration agreement can be concluded with an arbitration clause in the main contract or a separate contract.”
Arbitration means that the parties authorize specially authorized persons, called arbitrators, instead of state courts, in the resolution of disputes. For this reason, in order for arbitration to be in question, the parties must make an arbitration agreement. It is not possible to resort to arbitration unless there is a written agreement between parties stating that disputes will be resolved through arbitration. The most important and indispensable element of the arbitration agreement is that the parties have agreed that the dispute will be resolved through arbitration. An arbitration agreement seeks to resolve a dispute, in other words, the function of the arbitration agreement is to settle the dispute.
Pursuant to sub-paragraph 2 of Article 4 of the International Arbitration Act; the arbitration agreement must be in writing. In order to fulfill the written form requirement, the respondent shall not object to the claimant’s claim of the existence of the written arbitration agreement between the parties in the statement of claims. The main point to be noted here is the arbitration clause. The legislator also accepts a reference to a document containing an arbitration clause in order to become a part of the main contract as a valid arbitration agreement.
In Article II/2 of the New York Convention, which Turkey signed and included in its domestic legislation, it is stated that the arbitration agreement must be drawn up in written form, and the term written agreement means an arbitral clause or an arbitral agreement, which is included in mutually exchanged letters or telegrams or included in an agreement signed by the parties.
The Constituent Elements and Terms of Validity of the Arbitration Agreement
To be able to talk about a valid arbitration clause or agreement, there must be a valid arbitration clause or agreement in terms of capacity, form, and substance.
The law under which the validity of the arbitration agreement will be determined is stated in the New York Convention. Accordingly, in the validity of the arbitration agreement, the court will first consider the law that the parties have agreed to apply to the validity of the arbitration agreement. If the parties fail to determine the law applicable to the arbitration agreement, it will be determined whether the arbitration agreement is valid in accordance with the law of the place where the arbitral award was made. According to Turkish law, in order for the arbitration agreement to be valid, the will to arbitrate must be clearly stated, it must be made in writing and on a subject that is suitable for arbitration, and the subject of the dispute must be clearly stated in the agreement.
If there is no valid arbitration agreement, the dispute must be heard in state courts. This is a constitutional requirement under Turkish legislation. The conditions of validity of an arbitration agreement are examined one by one below:
A) Will of Arbitration
The declaration of intent regarding the resolution of disputes through arbitration is the basic constituent element of the arbitration agreement, beyond the validity condition. In order for a valid arbitration agreement to be established, the parties’ will to arbitrate must be clearly stated in the written agreement, without causing any confusion.
If the parties did not explicitly include an arbitration clause in the contract, they signed between them and did not make an arbitration agreement, then the existence of an arbitration agreement is also accepted if they refer to a contract that includes an arbitration clause in accordance with Article 2 of the International Arbitration Act. If the arbitration agreement is claimed to be invalid based on reasons such as error, fraud, or threat, the validity of the arbitration agreement will be governed by the law chosen by the parties, and in the absence of a choice of law, the law of the place of arbitration applied.
B) Requirement of the Agreement to be Executed in Writing
The form to which the arbitration agreement is governed is directly regulated under Article II of the New York Convention, to which Turkey is also a party. Accordingly, a written agreement signed by the parties, an exchange of letters, or a telegram is required to be able to talk about an arbitration clause. The national legislation regarding this situation is regulated under the International Arbitration Act and the Code of Civil Procedure. The form required here is the form that should be implemented for validity.
While arbitrability is a matter related to the validity of the arbitration agreement, the New York Convention regulates the issue of arbitrability separately and distinctly from the validity of the arbitration agreement. Accordingly, the arbitrability of the dispute is a different matter from the validity of the arbitration agreement. For this reason, if the dispute is claimed to be non-arbitrable, the arbitrability will be discussed rather than the validity of the arbitration agreement. There is a difference between these two concepts in terms of content as well as results. While arbitrability is a reason for annulment to be taken into account by the court itself, the objection that the arbitration agreement is not valid is a ground for annulment, which can only be considered if the parties put forward during proceedings, pursuant to the International Arbitration Act.
Arbitrability is a legal limitation. The concept of arbitrability can be expressed as matters that the law allows to be resolved through arbitration. Arbitrability is one of the most important aspects of the validity of the arbitration agreement. Arbitrability is divided into objective and subjective arbitrability. While objective arbitrability refers to the fact that a dispute is arbitrable in terms of subject matter, subjective arbitrability is related to the issue of whether a natural or legal person will be a party to an arbitration agreement or proceeding.
D) Existence of a Specific or Identifiable Matter
In the definition of an arbitration agreement, the phrase “disputes that have arisen or may arise from an existing legal relationship” is used. The dispute that constitutes the subject of arbitration must be clear. There is a complete consensus in the doctrine that this type of arbitration agreement will not be valid if the subject of the dispute is unclear. When making an arbitration agreement, the parties should know about which dispute (or possible dispute) they are making this agreement. In other words, the will of the parties regarding which dispute will be resolved through arbitration should also be understandable. If it has been decided that the disputes arising from a certain legal relationship will be resolved through arbitration, the dispute is again deemed to be determined.
E) Legal Capacity of Parties
Lastly, the parties signing the arbitration agreement must be competent. In other words, if one of the parties to the arbitration agreement is incapacitated, enforcement of foreign arbitral awards may be refused. There is no provision in the International Arbitration Act regarding which law will be applied to the capacity of the parties. Two views emerge here. According to one view, the conflict of laws rules of the place of arbitration should be taken as a basis for determining the law to be applied to the capacity of the parties. According to another view, the capacity of the parties should be determined according to the conflict of laws of the state law in which the enforcement is demanded. The scope and limits of the capacity to enter into an arbitration agreement and the reasons for its termination are also governed by the law governing the capacity. This is particularly important in terms of the ability of the state or state institutions or companies to enter into arbitration agreements. The powers of state institutions or companies that are party to the New York Convention to conclude arbitration agreements may be unrecognized, restricted, or may be dependent on the completion of some bureaucratic procedures such as approval. In such cases, the incapacity objection of the party who lost the case during the enforcement phase is often encountered. Such objections will be decided based on the status of the state or state institutions, unless, in principle, they do not contradict the rules of goodwill.
Types of Execution of Arbitration Agreements
- Deciding on Arbitration as a Standalone Contract (Separate Arbitration Contract)
The subject of the independent arbitration agreement is only arbitration. the parties of the contract, within the framework of the freedom of contract, “we agreed on the settlement of the dispute between us … through arbitration, we agreed.” By preparing a short and separate text from the main contract and signing it, they will have concluded an independent arbitration agreement.
However, the parties to the main contract may not prefer such a short contract but may also draw up a more detailed arbitration agreement in order to reveal the issues they deem important for themselves, to facilitate the arbitration proceedings, and to reduce the possible disputes that may arise in the future. For example; how the parties will apply to the arbitrator, how the arbitrators will be identified or selected, or who they have chosen or will choose as the arbitrator, how the arbitrator’s fee will be shared, where and how the arbitrators will make the proceedings, which law will be applied in the field of both substantive and procedural law, what the evidence will be, how the arbitrator’s decision will be made can also be determined by the parties at the beginning while executing the arbitration agreement. Parties can also conclude an independent arbitration agreement arranged in much more detail, such as how the content of the decisions will be.
Institutional arbitration centers provide examples of arbitration clauses in a way to ensure that arbitration proceedings are carried out within their own institutions and in the meantime, to facilitate the parties. For example, examples of arbitration clauses that can be used in the Arbitration Rules of the International Chamber of Commerce are recommended for those who want to apply to ICC arbitration in disputes arising from international contracts. The arbitration clause proposed for the parties wishing to prefer these rules is as follows: “All disputes arising from this agreement will be decided definitively by one or more arbitrators to be appointed in accordance with the provisions of the Conciliation and Arbitration Regulation of the International Chamber of Commerce.”
In an arbitration agreement established with an arbitration clause, the subject of the main contract is not only arbitration, but arbitration (the provision regulating the condition) is only one of the articles in this contract. However, this provision in the contract (arbitration clause) is an arbitration agreement in itself and is subject to the provisions governing the (separate) arbitration agreement.
In addition, in the arbitration clause in international arbitration; the place of arbitration, the language to be used in the arbitration proceedings, the arbitration procedure and the law to be applied, the substantive law to be applied to the merits of the dispute, institutions rules if institutional arbitration is desired, the jurisdiction of the country to submit the arbitration, the filing of an appeal or annulment action against the decision to be rendered as a result of the arbitration proceedings also takes place. It would be beneficial and appropriate for the practice of international arbitration to include the necessary provisions on ensuring the easy execution of the decision. In contrast, the parties that demand to resort to arbitration for all possible disputes between them will be null and void since it is not related to a specific dispute.
Independence of the Arbitration Clause from the Main Contract: Separability Principle
In accordance with the general principles of law, if a contract is absolutely null and void, it requires that a condition in that contract is also void. In this case, it should be clarified whether the objections regarding the existence and validity of the original contract will affect the arbitration clause or not and whether the arbitration clause (agreement) is also invalid.
This principle, which is that the arbitration clause can continue to exist separately from the main contract, is expressed in our law with the concepts of “independence” and “separability” of the arbitration clause. This principle is expressed with the concepts of “autonomy” in the Continental European legal system and “severability/separability” in the Anglo-Saxon legal system. The principle of severability is that the validity of the arbitration clause is not dependent on or separate from the main contract and is resolved within its own contractual statutes. As a corollary of this principle, even if the arbitration clause is invalid, the original contract may still be valid, or vice versa, if the original contract is invalid, the arbitration clause may remain valid. The arbitration agreement is independent from the original agreement in both cases, whether it is made separately or included in the main agreement as an arbitration clause. The purpose of this principle is to prevent the invalidity of the main contract from rendering the arbitration clause invalid or to prevent the invalidity of the arbitration clause from affecting the main contract, thereby maintaining the consent required for arbitration proceedings. This principle not only helps to protect the common will of the parties to resort to arbitration but also guarantees the jurisdiction of the arbitrators.
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