Author: Duygu Oner
Introduction
It is well known that the existence of a valid arbitration agreement in dispute resolution eliminates the jurisdiction of the courts. If, despite the existence of a valid arbitration agreement, one of the parties takes the dispute to court and the opponent party raises objection to the jurisdiction, the court must decide that it lacks jurisdiction.
This issue, which is frequently discussed before the courts of law, is associated with the right to the property. Recently, this right became the subject of a Constitutional Court decision. The applicant filed an individual application with the Constitutional Court, claiming that his right to recovery was abolished as a result of the lengthy trial before Turkish court and the court’s lack of jurisdiction decision rendered due to the existence of a valid arbitration agreement. In its decision on application number 2018/5832 dated 08.08.2021 (“Decision”), the Constitutional Court unanimously decided that the right of property was not violated. The decision was published in the Official Gazette dated 07.09.2021 and numbered 31591.
The Dispute Subject to the Decision
The dispute arose from damage to the cargo carried in maritime transport. The seller had agreed with the carrier for the transport of exported goods to a foreign port. After arrival, it was observed that the goods had been damaged by sea water. The consignee notified the carrier of the damage on the same date. The cost of the damaged goods was paid to the shipper (seller) within the scope of the insurance policy.
As a successor to the rights of the shipper, the insurance company initiated enforcement proceedings against the carrier, and the proceedings were stopped upon the objection of the carrier. Thereupon, the insurance company filed a lawsuit for the annulment of the objection against the carrier before the Istanbul 17th Commercial Court of First Instance (“Court”) , which acts as a specialized maritime court. The defendant carrier claimed that the Turkish courts had no jurisdiction to resolve the dispute, as there was a reference to the arbitration clause in the charter party (contract of carriage) in the bill of lading, which is binding in terms of the legal relationship between the parties. The objection of the defendant was rejected by the Court at the first hearing dated 29.01.2013. While deciding to reject the arbitration objection, the Court emphasized that the reference to the contract of carriage in the bill of lading related only to the cost of carriage and did not cover the arbitration clause. As a result of the trial, the Court decided to accept the claim on 25.06.2015.
On appeal, the Court of Cassation concluded on 12.01.2017 that the Turkish courts has no jurisdiction to resolve the dispute and overturned the trial court's decision. The Court of Cassation stated that the arbitration clause in the contract of carriage was included in the bill of lading by reference and was valid, and concluded that the dispute should be resolved through arbitration. They based their decision on the wording on the front of the bill of lading stating that it was "to be used with the charter party," as well as wording on the reverse side stating that “all the terms and conditions, rights and exceptions of the charter party whose date is stated on the reverse of the bill of lading, including the applicable law and arbitration clause, are thus valid.” Complying with the Court of Cassation’s annulment decision, the Istanbul 17th Commercial Court of First Instance decided to dismiss the case on 25.05.2017 due to lack of jurisdiction. After examining the decision of the Court on lack of jurisdiction upon the appeal of the plaintiff, the Court of Cassation upheld the decision of lack of jurisdiction on 04.12.2017.
Allegations Regarding the Violation of Rights
In his application to the Constitutional Court, the plaintiff claimed that the decision on lack of jurisdiction contradicted the jurisprudence of the Court of Cassation. In addition, the applicant stated that at the hearing on 29.01.2013, the objection to arbitration was rejected. However, it was accepted and a decision on the lack of jurisdiction was entered approximately seven years after the damage occurred in 2010, which meant that his claim was time-barred according to English Law. The plaintiff claimed that the right to remedy the damage was taken away due to not resorting to arbitration in due time, and claimed that the right to seek justice, the right to a fair trial, and property rights were violated...
