INSURANCE ARBITRATION - Turkish Practice -

1. INSURANCE ARBITRATION- Turkish Practice - Hüseyin Arslan, LLM Legal Counsel ERGO Turkey

2. A. Need for Arbitration • 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]”

3. B. Legislation • Insurance Law No. 5684, Art. 30 • Code of Civil Procedure, Art. 407-444 • Regulation on Insurance Arbitration • Communiqué on Insurance Arbitration Procedure and Insurance Arbitrators No. 2009/1 Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”

4. C. Organization Insurance Arbitration Commission • Insurance Arbitration Commission, • Director and DeputyDirectors • Reporters • Arbitrators Association of Insurance and Reinsurance Companies Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”

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

6. C. Organization • Insurance Arbitration Commission • Functions and authorities • to appoint directors anddeputy directors, • to prepare the budget of the Commission for the approvalof the Association, • to takemeasures to ensure that the arbitration system operates in a fair, impartial and effectivemanner, • to prepare an annual report on the results of the activities of the Commission, • to prepare the computerinfrastructure and • to perform other duties assigned to it by the laws Internal Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”

7. C. Organization • Commission Director and Deputy Director • shall be appointed by the Commission • shall meet the criteria sought in founders of insurance companiesand 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 ora minimum five years of experience in insurance (not sought for deputy director). Internal Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”

8. C. Organization Internal • Reporters • work in only one of the lifeand 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]”

9. C. Organization • 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 External Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”

10. C. Organization • 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 Restriction applies to spouses and children External Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”

11. D. Membership to Commission • 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: 20.000TL (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]”

12. E. Application to Arbitration • 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) Membership Occurence Term of Policy Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”

13. E. Application to Arbitration • 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]”

14. E. Application to Arbitration • 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]”

15. E. Application to Arbitration • 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]”

16. E. Application to Arbitration Application Fee • Depends on the amount of claim • 1 – 5.000 TL (1-2.200 EUR) 35,-TL (15,- EUR) • 5.001 – 15.000 TL (2.200-6.600 EUR) 100,-TL (45,- EUR) • 15.001 TL + (6.600 EUR +) 250,-TL (112,50 EUR) • No other payment requested from claimant Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”

17. F. Application to Arbitration • 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]”

18. F. Application to Arbitration • 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]”

19. F. Procedure 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]”

20. F. Procedure • 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]”

21. H. Appeal • The awards up to 40.000TL (EUR 17.400) is final and binding • The awards exceeding 40.000TL (EUR 17.400) 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]”

22. H. Appeal • 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. “Insurance Arbitration [Turkish Practice]”

23. Thank you... Hüseyin Arslan, LLM