Introduction
Arbitration has always been an alternative dispute resolution method to litigation. Today, the continuous development, expansion and globalization of business networks along with an increase in related disputes and legal issues are urging states to make some exceptions in their jurisdictions, turning arbitration into a significant and common solution. When a dispute arises, it is usually resolved in court. However, the parties may insert an arbitration clause in their agreement for dispute resolution. Likewise, they may turn to arbitration following a dispute by concluding an arbitration agreement. Since the outcome of arbitration is binding for the parties, it is equivalent to a court decision. However, due to arbitration’s independence from the state court system, an arbitration agreement must fulfill certain requirements. Accordingly, if the parties wish to refer their dispute to arbitration, they must make a written arbitration agreement, where they clearly and unequivocally state their will to opt for arbitration. Unclear and equivocal arbitration agreements or clauses are deemed invalid. Nevertheless, in practice, it may be difficult to decide whether an arbitration agreement is clear and unequivocal.
A. Asymmetric Arbitration Agreements
In general, an arbitration agreement is expected to create equal rights and obligations for the parties. However, the parties sometimes violate this equality in their arbitration agreement. Under Turkish law, an arbitration agreement usually becomes invalid in case of a breach of equality. In fact, the Court of Appeal underlines that the violation of the equality principle will invalidate an arbitration agreement in its following decision: “If an arbitration agreement or an arbitration clause in an agreement gives the right to select the arbitral tribunal to a single party, that party will have an advantage in proceedings. Therefore, such an arbitration agreement or clause becomes invalid.”
Arbitration is deemed asymmetric in the event of a breach of equality between the parties. Although an asymmetric arbitration agreement is a meta-concept for arbitration practices favoring one party over the other, agreements that unilaterally give the right to opt for arbitration are also referred to as asymmetric arbitration agreements. There are different types of clauses that violate the equality between the parties in an arbitration agreement.
Although asymmetric arbitration clauses are generally considered invalid, they may sometimes be recognized under Turkish law and in domestic and foreign court decisions and doctrine. There are instances where asymmetric arbitration is accepted under Turkish laws. For example, article 6 in the Standard Recovery and Assistance Agreement of the Directorate General of Coastal Safety, prior to 2015, stated, “If the parties fail to reach a settlement, their dispute regarding the determination of the recovery-assistance receivable arising from the recovery-assistance service provided in relation to the recovered assets shall be settled by arbitration in Istanbul upon the request of the recovering party within the relevant legal period.” Accordingly, only one of the parties could refer to arbitration. The clause was later revised as follows: “If the parties fail to reach a settlement, their dispute regarding the designation, determination and collection of the recovery receivable arising from the recovery service provided in relation to the recovered assets or of the special compensation amount specified in article 6 shall be settled by arbitration in Istanbul upon the request of one of the parties within the relevant legal period.” The previous clause created an asymmetry by giving the right to arbitration to only one of the parties, i.e. the redeemed party. This situation was later amended by giving both parties the right to arbitration.
B. Views on the Validity of Asymmetric Arbitration Agreements
In the Turkish legal doctrine, the validity of asymmetric arbitration agreements is controversial. The debate on this issue usually concerns the positions of the parties, balance of power, and the dominant party’s ability to impose clauses to the detriment of the weaker party. It is argued that an asymmetric arbitration agreement where one party is weaker than the other, such as a consumer or an employee, leads to the dominant party’s imposition on the weaker party and should therefore be deemed invalid. Under Turkish law, the will to refer to arbitration must be clear and unequivocal; otherwise, the agreement is considered invalid. Therefore, asymmetric arbitration clauses may also be deemed invalid in the absence of a clear intent. Those who advocate the invalidity of asymmetric arbitration clauses argue that they impede the right to a fair trial. Article 36 of the Constitution states, “Everyone has the right of litigation either as plaintiff or defendant and the right to a fair trial before the courts through legitimate means and procedures.” Thus, the right to a fair trial is listed among fundamental rights and freedoms under Turkish law.
An alternative view on the validity of asymmetric arbitration agreements is that they are valid in any case. In this view, asymmetric arbitration clauses are a consequence of freedom of contract. As such, the will of the parties must be respected. Freedom of contract is also a universal fundamental right and freedom. Indeed, article 48 of the 1982 Constitution states, “Everyone has the freedom to work and conclude contracts in the field of his/her choice. Establishment of private enterprises is free. The State shall take measures to ensure that private enterprises operate in accordance with national economic requirements and social objectives and in security and stability.” Moreover, article 26 in the Turkish Code of Obligations states, “Parties may freely determine the content of an agreement within the legal limits.”
Conclusion
An arbitration agreement concerns a judicial process and is expected to give equal rights and obligations to the parties. However, in practice, the parties may conclude agreements containing unilateral terms in line with their will, putting one party at an advantaged position. These asymmetric arbitration clauses are generally considered invalid as they contradict with the principles of the equality of the parties and the equality of arms. However, asymmetric arbitration clauses should not always be deemed invalid. Since arbitration agreements follow the principle of freedom of contract, the invalidation of asymmetric arbitration clauses is contrary to this principle.
Freedom of contract and the right to a fair trial are fundamental rights provided in the Turkish Constitution. Asymmetric arbitration agreements are made at the will of the parties and do not deprive them of their right to a trial. Therefore, one cannot say that they violate the right to a fair trial. The invalidation of asymmetric arbitration clauses would restrict freedom of contract without valid justification. Therefore, we believe that asymmetric arbitration clauses should be considered valid in conformity with the will of the parties and the principle of freedom of contract.
