Contact: Att. Leyla Orak; Erdem & Erdem (Turkey)
Arbitration Centers
Globalization, cross-border transactions and transnational disputes increase the need for a reliable dispute resolution mechanism, which inevitably results in emphasis on international arbitration. Despite the costs, corporations are inclined to prefer arbitration over litigation before courts, recognizing it as better suited to meet their needs[1].
Although ad hoc arbitration remains a valid and effective choice, agreements usually include dispute resolution clauses that refer disputes to arbitration under well known arbitration institutions. While the International Chamber of Commerce ("ICC") remains the most preferred institution, followed by the World Intellectual Property Organization ("WIPO") and the American Arbitration Association ("AAA"), other arbitration institutions, such as the London Court of International Arbitration ("LCIA") and Singapore International Arbitration Center give rise to new arbitration centers[2].
Factors such as costs, distance and logistics, expertise in a field or competence in national laws favor choosing various arbitration institutions. For instance, the similarity of Turkish Law with Swiss Law is one of the reasons why Switzerland is chosen as the place of arbitration by Turkish parties, and the "Swiss Rules" are chosen as applicable rules of arbitration[3]. The diversification of choices result in an increase of arbitration centers, not just in Europe and America but also in Asia, such as Singapore and Hong Kong. States increasingly promote their institutions for international arbitration, stressing their geopolitical advantages and arbitration friendly legal infrastructure.
Istanbul as International Center of Finance and Arbitration
Istanbul is not only the financial center of Turkey, but also, due to its geopolitical advantages and developing economy, a prominent and increasingly dominant headquarters in the region for cross-border financial transactions. Unsurprisingly, the Turkish Higher Planning Council adopted a resolution, dated September 29, 2009, and numbered 2009/31[4], designating Istanbul as the center of international finance, and foreseeing the establishment of the Istanbul International Finance Center (“IFC”)[5]. One of the pillars of the IFC and the second priority specified in its Strategy and Action Plan, dated October 2009, is the establishment of an independent and autonomous institutional arbitration center that is capable of competing internationally with respect to cost, speed and effectiveness[6].
