New Precedent Re Bankruptcy Claims

The Court of Appeal reverses – again – its precedent regarding the applicability of arbitration clauses in bankruptcy proceedings:

For the last few decades, the Court of Appeal's (“CoA”) approach to arbitration clauses vis-à-vis bankruptcy cases has been extremely rigid. The CoA used to hold that Turkish courts had exclusive jurisdiction in bankruptcy claims, and that accordingly, parties were precluded from invoking an arbitration clause to enjoin the commencement or the continuation of litigation in Turkey.

Beginning with 2013, the CoA changed its approach and ruled that if there is an arbitration clause agreed between the parties, Turkish courts would be barred from deciding on the merits of the dispute, but instead, would have to stay their proceedings in the bankruptcy claim pending the resolution of the merits of the dispute by the arbitral tribunal. The CoA's said approach meant acknowledging and giving legal effect to the contractual will of the parties