I. INTRODUCTION
Arbitration is gaining significance each day as an alternative dispute resolution method. Disputing parties increasingly refer to alternative dispute resolution methods due to the heavy workload in the legal system as well as lengthy legal processes. Alternative dispute resolution methods are also popular since judiciary is sometimes lacking in areas requiring expertise, such as Insurance Law.
The demand for alternative dispute resolution methods in the process of establishing insurance regulations respecting the European Union norms has resulted in the enactment of regulations on voluntary arbitration in insurance.
II. ARBITRATION SYSTEM IN INSURANCE DISPUTES
The arbitration system was regulated for the first time under Insurance Law no. 5684 (“Law”) in 2007 to provide independent, fast, simple and cost-effective dispute resolution while preventing loss of rights of the insured. In insurance law, arbitration is regulated not only in the Law but also in secondary legislation, including the “Regulation on Arbitration in Insurance” (“Regulation”), which was passed and became effective in 2007.
When the Law is not applicable for arbitration in an insurance dispute, the parties can refer to the Code of Civil Procedure (“Code”). However, it is crucial to remember that the arbitration system laid out in the Law has a unique (sui generis) character that is applicable to corporate arbitration.
III. INSURANCE ARBITRATION COMMISSION
In accordance with article 30 in the Law, an “Insurance Arbitration Commission” (“Commission”) was established for dispute resolution under “the Association of Insurance, Reinsurance and Pension Companies of Türkiye” in 2008. In Turkish insurance law, arbitration procedures are governed by the Insurance Arbitration Commission in line with the “corporate arbitration” principle.
IV. MEMBERSHIP TO THE INSURANCE ARBITRATION SYSTEM
The insurance arbitration system requires membership that will recognize the judiciary power of the arbitration system governed by the Commission. Only the “businesses practicing insurance”, i.e. “insurers”, can become a member of the insurance arbitration system. Organizations such as Güvence Hesabı, and the Natural Disaster Insurance Institution along with pension companies, which sell life insurance, can become a member as well.
- As of 2023, the insurance arbitration system has 44 members engaged in insurance.
Insurers wishing to become a member of the insurance arbitration system must notify the Commission about their wish in writing (article 30/I in the Law).
- Insurance disputes can be resolved through arbitration in three ways.
1.Arbitration Procedure to Be Followed When the Insurer Is Not a Member of the System
A written agreement stating that the dispute will be resolved through arbitration can be executed between an insurer that is not a member of the insurance arbitration system and the insurant or the policyholder. The parties may (i) enter into an explicit and written arbitration agreement or (ii) add an explicit and written arbitration clause in their insurance policy. In this case, the parties may have recourse to arbitration in accordance with the Code. The relevant articles in the Code (articles 407- 444) will directly apply. When an insurer is not a member of the insurance arbitration system, the parties cannot refer to the system as per the Law, i.e. the insured cannot appeal to the Commission (article 15/I in the Regulation).
2.Arbitration Procedure to Be Followed When the Insurer Is a Member of the System, and It Has Executed an Arbitration Agreement with the Insured
An insurer that is a member of the insurance arbitration system can execute an arbitration agreement with the insured to resolve their dispute as per the Code. In this case, the parties may resort to arbitration in accordance with the Code as explained above, and the insured may appeal to the Insurance Arbitration Commission since the insurer is a member of the insurance arbitration system, as stipulated in article 30 in the Law.
3.Arbitration Procedure to Be Followed When the Insurer Is a Member of the System but It Has Not Executed an Arbitration Agreement with the Insured
In this case, the disputing insured may still resort to arbitration since the insurer is a member of the insurance arbitration system even if the parties have not executed an arbitration agreement. When the insurer is a member of the insurance arbitration system, the requirement for a written arbitration agreement as stipulated in paragraph III in article 412 of the Code is no longer applicable (as the Law is more specific than the Code). Therefore, referral to arbitration becomes easier when an insurer is a member of the insurance arbitration system.
As an exception, there is no obligation to be a member of compulsory insurance to have recourse to insurance arbitration. In disputes concerning compulsory insurance, the insured may appeal to the Commission even if the insurer is not a member of the arbitration system. In this case, the insurer cannot file a plea to the jurisdiction since it is not a member of the Commission (article 30/1 in the Law).
V. MONETARY LIMITS FOR RECOURSE TO INSURANCE ARBITRATION COMMISSION (2023)
Official Gazette no. 32118 of 28 February 2023 contained the Communiqué Amending the Communiqué on Increasing the Monetary Limits in the Twelfth and Fifteenth Paragraphs of Article 30 in Insurance Law no. 5684. The communiqué aimed to amend the monetary limits specified in the twelfth and fifteenth paragraphs of Article 30 in Insurance Law no. 5684 of 3/6/2007.
Accordingly, arbitrator decisions will be final in disputes worth less than ₺15,000 (Fifteen thousand Turkish Liras) for which plea has been made to the Insurance Arbitration Commission. Objection may be filed with the Insurance Arbitration Commission against arbitrator decisions in disputes worth ₺15,000 (Fifteen thousand Turkish Liras) or more.
Appeal is possible for arbitrator decisions in objections filed with the Insurance Arbitration Commission regarding disputes worth more than ₺238,730 (two hundred thirty-eight thousand seven hundred thirty Turkish Liras).
