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

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insurance arbitration turkish practice

INSURANCE ARBITRATION- Turkish Practice -

Hüseyin Arslan, LLM

Legal Counsel

ERGO Turkey

a need for arbitration
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]”

b legislation
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]”

c organization
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]”

c organization1
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]”

c organization2
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]”

c organization3
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]”

c organization4
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]”

c organization5
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]”

c organization6
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]”

d membership to commission
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]”

e application to arbitration
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]”

e application to arbitration1
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]”

e application to arbitration2
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]”

e application to arbitration3
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]”

e application to arbitration4
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]”

f application to arbitration
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]”

f application to arbitration1
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]”

f procedure
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]”

f procedure1
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]”

h appeal
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]”

h appeal1
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]”

thank you

Thank you...

Hüseyin Arslan, LLM