The Law on the Amendments on the Execution and Bankruptcy Law and Other Laws No. 7445, also known as the 7th Judicial Reform Package, which brings significant changes, was published in the Official Gazette on April 5, 2023. Mandatory use of mediation in commercial and employment disputes and important amendments made to the Mediation Law are examined in this article.
Expansion of Mediation Scope in Employment Disputes
The 7th Judicial Reform Package expands the scope of mediation in employment disputes covered by Article 3 of Labor Courts Law No. 7036. Previously, the mediation requirement applied only to cases involving employment claims, compensation, and reinstatement demands by employees or employers. However, with the recent changes, mediation has become mandatory for objections to employment claims, declaratory judgments, and restitution claims related to employment compensations.
Extension of Mediation Provisions in the Turkish Commercial Code
The 7th Judicial Reform Package introduces amendments to Article 5/A of the Turkish Commercial Code regarding the mandatory use of mediation. Prior to the changes, only claims related to the payment of a certain amount of money required mediation. However, with the new amendments, the scope of mandatory mediation now includes objections to claims, declaratory judgments, and restitution claims related to commercial receivables.
New Disputes Subject to Mandatory Mediation
In addition to the above changes, the reform also addresses mediation in other disputes. The amendments introduced in the Mediation Law expand the scope of mandatory mediation to include the following disputes:
a) Disputes arising from rental properties, disputes arising from tenancy relationships, excluding the procedures for eviction through proceeding without judgement under Law No. 2004.
b) Disputes related to the division and elimination of common property, both movable and immovable.
c) Disputes arising from the Law No. 634 on Condominium Ownership, dated June 23, 1965.
d) Disputes arising from neighbor law.
An annotation regarding the enforceability of the agreement document issued within the scope of this article has been made mandatory and it has been regulated that the annotation will be obtained from the civil court of peace where the real estate is located in terms of agreement documents related to the real estate, or from the place where the mediator works in terms of other agreement documents. The court will inspect the content of the agreement in terms of whether the agreement is suitable for mediation and enforcement, and whether the restrictions, procedures, and principles in the laws regarding real estate are complied with.
With the new article 17/B, it has been regulated that disputes regarding the transfer of the immovable or the establishment of limited real rights on the immovable are suitable for mediation. According to the regulation, it is obligatory to take an annotation regarding the enforceability of the agreement document, and this annotation will be obtained from the civil court of peace where the real estate is located. In its examination, the court will inspect the content of the agreement, whether the agreement is suitable for mediation and enforcement, and whether the limitations, procedures, and principles in the laws regarding the transfer of the real estate or the establishment of limited real rights on the real estate are complied with.
The above changes will enter into force on 01.09.2023.
Procedures for Execution of International Mediation Agreements
The reform also introduces regulations regarding the execution of international mediation agreements through the new Article 17/A of the Mediation Law. According to this provision, the enforcement endorsement of agreements resulting from international mediation is made mandatory. The performability annotation will be obtained from the Commercial Court of First Instance where the parties have agreed, or if there is no agreed location, from the Commercial Court of First Instance at the opposing party's residence, or if the opposing party has no residence in Turkey, from the courts in Ankara, Istanbul, or Izmir. The performability annotation will be received without trial.
Voluntary Agreement between Parties and Attorneys
Except in cases where obtaining performability annotation is mandatory, the agreement document signed jointly by the parties and their attorneys or in commercial disputes by the attorneys and the mediator will be deemed as a verdict document without the need for a performability annotation. This means that in commercial disputes, the signature of the attorney will be sufficient, and the agreement will be valid even without the parties' signatures.
It should be noted that these changes entered into force on April 5, 2023, and are not retroactive.