What is Mediation?
Mediation as a way of formal dispute resolution methods has been introduced in Turkey by the Code on Mediation in Civil Disputes numbered 6325 (Mediation Code) entered into force on 22 June 2013. Since then mediation practice is becoming more common, in particular in relation to commercial, employment and consumer disputes.
Mediation is a process where an impartial person (the mediator) helps two or more people, or groups of people, to discuss and resolve disputes. Within mediation, offers can be made without influencing what happens if the dispute is eventually resolved in court (known as offers made ‘without prejudice’) which can enable participants to try to reach a settlement without compromising their position.
Mediation is a process which:
- is confidential
- is voluntary & mandatory
- Requires those who have authority to make decisions to be involved
- Enables participants to determine the outcome
- Lead to a binding settlement if the agreement is written down and signed
- Offers access to justice
The fundamental principle of mediation, and also its primary advantage, is that it is a confidential process. Confidential that it is taking place, confidential in what is said and done in the mediation and confidential in its outcome. Unless the parties (and the mediator) agree otherwise.
This should give the parties the confidence that whatever is said and done, whatever unsuccessful offers are made to settle, none of it can be shared outside the mediation group unless agreed. Of course, when a deal is done, others may need to be informed so that the necessary payments and/or actions can be taken, but the overriding principle is that it is a confidential process; and without prejudice, so if the mediation does not settle, whatever is said and done in the mediation cannot be repeated in court.
Voluntary & Mandatory
In General, mediation is said to be a voluntary process and there is no doubt that if a party does not want to come, the mediation cannot take place. All parties need to be present.
In recent years, legislation has been introduced to extend the application of mediation as a dispute resolution mechanism by making it mandatory and a pre-condition to filing a lawsuit before the courts in certain cases. As of the October 2020, mediation is mandatory before filing a lawsuit in commercial, labour and consumer disputes. Since the introduction of mandatory mediation for certain types of commercial disputes, mediation has become a widespread practice for dispute settlement in Turkey.
Many contracts now have a mediation clause, so, unless all parties agree to waive it, mediation must be tried. But most parties choose to mediate in the knowledge that it must be tried at some stage, so the real decision is not if but when, where and with whom?
Many parties, when asked what they really need to be able to settle at the mediation, will say that they want to end the misery of the dispute, not least the misery of it dominating their business and home lives as well as ‘wasting’ precious management time that could be better used in wealth-generation.
Mediation provides an opportunity to put the litigation to one side and, for a day, allow commercial considerations rather than legal arguments and rights, to prevail. There is little to lose and much to gain in taking a case to mediation.
Requires those who have authority to make decisions to be involved
Each party needs to attend with a decision-maker who has authority to settle in the mediation. Ideally, this will be full authority. It can be difficult, and sometimes embarrassing, if the agreed limit of authority needs to be exceeded resulting in several phone calls having to be made to a person who has not experienced first hand what has been said and done in the mediation, and not seen the body language and heard the expressions of the other party.
Putting the team together for a mediation can be challenging. After the decision-maker there needs to be careful consideration of who else attends. Is the support of a lawyer preferred? Experts have usually done their reports, and met to agree common ground, so their presence is rarely justified. Often others are included in the team for comfort, but the bigger the team the more people who need to be kept engaged and committed, otherwise they may become a blockage to settlement.
Enables participants to determine the outcome
Mediation gives the parties the freedom to put litigation aside and to enter into a commercial negotiation in an effort to find a settlement. Anything can be tried in an effort to structure a deal, and can be abandoned if it is not acceptable without it endangering a party’s position. Parties are not committed until the deal is put into writing and signed. Then it becomes a court judgement. Up to that moment anything goes. A deal in the mediation is whatever the parties say ‘Yes’ to. Often it is a deal that could not be made in court – eg stage or deferred payments, future business, payment in kind such as services, even take-overs and joint ventures have been known.
Lead to a binding settlement if the agreement is written down and signed
Under Turkish law, the enforceability of the settlement agreement is similar to a judgement given by a court. However, to enforce a settlement agreement, the parties should obtain an annotation on the enforceability of the agreement from the competent court.
Offers access to justice
The benefits of mediation over the court system are tried and tested.
- Mediation can be quicker, less stressful and cheaper than going to court
- Once a settlement has been reached a mediation agreement can be drawn up. Parties tend to keep to the mediation agreement because they have prepared the terms themselves.
- Mediations are completely confidential and the information discussed within them cannot be used in court or any other legal action issued at a later date.
On those occasions where mediation doesn’t resolve the dispute, court proceedings can follow. Mediation therefore offers participants better access to justice than a court process alone: it provides a chance to settle the dispute without recourse to the court, bringing all the advantages listed above, and yet until a final settlement is reached, the back-stop of the court process is preserved.