Hüseyin Arslan, LLM Legal Counsel ERGO Turkey

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”  Insurance litigation in Turkey has long duration  No specialist courts  High costs for “consumer”claimants  Insurers financially capable to have proceedings dragged on.

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”  Insurance Law No. 5684, Art. 30  Code of Civil Procedure, Art  Regulation on Insurance Arbitration  Communiqué on Insurance Arbitration Procedure and Insurance Arbitrators No. 2009/1

Insurance Arbitration Commission 1. Insurance Arbitration Commission, 2. Director and Deputy Directors 3. Reporters 4. Arbitrators Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]” Association of Insurance and Reinsurance Companies

1. Insurance Arbitration Commission a) Members are i. One representative from the Undersecretariat of Treasury, ii. Two representatives from the Association of Insurers, iii. One representative from a consumers’ association, iv. One academician in legal studies (appointed by UoT) Members are elected for 2 years Members are elected for 2 years Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]” Internal

1. Insurance Arbitration Commission b) Functions and authorities i. to appoint directors and deputy directors, ii. to prepare the budget of the Commission for the approval of the Association, iii. to take measures to ensure that the arbitration system operates in a fair, impartial and effective manner, iv. to prepare an annual report on the results of the activities of the Commission, v. to prepare the computer infrastructure and vi. to perform other duties assigned to it by the laws Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]” Internal

2. Commission Director and Deputy Director  shall be appointed by the Commission  shall meet the criteria sought in founders of insurance companies and reinsurance companies except the criteria of financial power;  shall hold at least an undergraduate degree;  have a minimum two years of experience in insurance law or a minimum five years of experience in insurance (not sought for deputy director). Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]” Internal

3. Reporters  work in only one of the life and non-life insurance groups,  pre-examine the dispute files,  controls if the commission is entitle to resolve the dispute  controls if the claimant had applied to insurer  controls if the required documents were submitted  act impartially,  work under the liability of confidentiality in the execution of their duties, Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]” Internal

4. Arbitrators a. requirements:  Higher education of at least 4 years  “Insurance law” experience of at least 5 years or “Insurance practice” experience of at least 10 years  Registration in the “List of Insurance Arbitrators” (life or non-life) = currently 148 arbitrators are registered Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]” External

4. Arbitrators b. restrictions: Arbitrators cannot  be in management or in audit of  have signatory power on behalf of  perform professional activities for ◦ Insurance Companies, ◦ Reinsurance Companies, ◦ Loss Adjusters, ◦ Insurance Agents ◦ Brokers Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]” External Restriction applies to spouses and children

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”  Arbitration can be started only against member insurance companies (not intermediaries).  Membership is not mandatory  For an insurance company to become a member: ◦ Membership Agreement with Commission ◦ Payment of subscription fee: TL (EUR 8.700) ◦ Annual payment includes first 30 applications  Currently: 51 members / 64 companies  (over 90% of total insurance premium)

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”  Claimant has free choice to apply whether arbitration or court  Membership is enough to invoke arbitration, ◦ Arbitration clause is not necessary on related policy, contract or information form.  Date of risk occured must be later than date of insurer’s membership date (declared on the website) Occurence Membership Term of Policy

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”  Admitted only in respect of “Claimant against Insurer”  Insurance Law determines that the arbitration will be invoked against the party “undertaking the risk”. ◦ Not insurance agent or broker  Claimant can be ◦ Policyholder, ◦ Insured, ◦ Beneficiary ◦ Victim against liability insurer ◦ Subrogated property insurer (e.g. fire, hull) of victim against liability insurer.

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”  Not admitted in respect of “Insurer as claimant” e.g. against ◦ Policyholder for premium, ◦ Insured for return of excessive payment, ◦ Third party, who is not an insurer of legal liability, in pursuit of subrogated claim.  Not limited to “consumer” ◦ Open to e.g. traders, banks, shipping companies, every other business venture.

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”  Claimant files an application form with Comission.  Before application to Commission, claimant must have applied insurer  If claimant’s application ◦ Rejected by the insurer, or ◦ Insurer remains silent for 15 working days:  No other legal procedure (court, regular arbitration) pending reporter will control these prerequisites

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]” Application Fee  Depends on the amount of claim ◦ 1 – TL ( EUR)35,-TL (15,- EUR) ◦ – TL ( EUR) 100,-TL (45,- EUR) ◦ TL + (6.600 EUR +) 250,-TL (112,50 EUR)  No other payment requested from claimant

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”  Single Arbitrator for claims under <15.000,-TL (app. EUR 6.500,-)  Three Arbitrators for claims exceeding (mandatory) >15.000,-TL (app. EUR 6.500,-  Appointment from the list in order ◦ if arbitrator in turn is not an “expert” on the dispute, then next “expert” will be appointed (e.g. marine insurance) ◦ geographical aspects, ◦ work load

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”  Arbitrators’ fee is paid by the Commission.  Claimant pays the 50% of the fee if the award is in favor of the insurer.  The fee is deterined according to the claim ◦ 3% of the claims under 1.500,-TL (EUR 650,-) ◦ 2% of the amount exceeding ◦ Not less than 250,-TL (EUR 110,-)

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]” Arbitrator(s)  consider the case on submitted documents.  may hold hearings.  cannot grant interim injunction (new Code of Civil Procedure foresees this authority but the communiqué 2009/1 doesnot allow)  can rule on determination of evidence (court’s intervention is necessary for its execution)

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”  Panel takes decisions with majority Time limit:  Arbitrator(s) must reach an award in 4 months  If not, the dispute will be submitted to the court ◦ Unless parties agree to extend

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”  The awards up to TL (EUR ) is final and binding  The awards exceeding TL (EUR ) can be appealed to Yargıtay (Supreme Court) Chamber 11 on Insurance law  Award enforceable despite appeal,  Insurer may put up security to delay enforcement.

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”  The reasons for appeal is limited to the following: ◦ If the award is rendered subsequent to the expiration of the arbitration time limit, ◦ If the award is rendered for something not demanded, ◦ If arbitrators render an award falling beyond their competency, ◦ If arbitrators fail in rendering an award for each one of the allegations set forth by both parties.

Hüseyin Arslan, LLM