Hüseyin Arslan, LLM Legal Counsel ERGO Turkey. Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]” Insurance litigation in Turkey has long

INSURANCE ARBITRATION- Turkish Practice -

Hüseyin Arslan, LLMLegal CounselERGO Turkey

Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]”

A. Need for Arbitration

Insurance litigation in Turkey has long duration

No specialist courts

High costs for “consumer”claimants

Insurers financially capable to have proceedings dragged on.


B. Legislation

Insurance Law No. 5684, Art. 30

Code of Civil Procedure, Art. 407-444

Regulation on Insurance Arbitration

Communiqué on Insurance Arbitration Procedure and Insurance Arbitrators No. 2009/1

Insurance Arbitration Commission

1. Insurance Arbitration Commission,

2. Director and Deputy Directors

3. Reporters

4. Arbitrators


C. Organization

Association of Insurance andReinsurance Companies

1. Insurance Arbitration Commission

a) Members are

i. One representative from the Undersecretariat of Treasury,

ii. Two representatives from the Association of Insurers,

iii. One representative from a consumers’ association,

iv. One academician in legal studies (appointed by UoT)

C. Organization

Members are elected for 2 years


Internal

1. Insurance Arbitration Commission

b) Functions and authorities

i. to appoint directors and deputy directors,

ii. to prepare the budget of the Commission for the approval of the Association,

iii. to take measures to ensure that the arbitration system operates in a fair, impartial and effective manner,

iv. to prepare an annual report on the results of the activities of the Commission,

v. to prepare the computer infrastructure and

vi. to perform other duties assigned to it by the laws

C. Organization


Internal

2. Commission Director and Deputy Director

shall be appointed by the Commission

shall meet the criteria sought in founders of insurance companies and reinsurance companies except the criteria of financial power;

shall hold at least an undergraduate degree;

have a minimum two years of experience in insurance law or a minimum five years of experience in insurance (not sought for deputy director).

C. Organization


Internal

3. Reporters

work in only one of the life and non-life insurance groups,

pre-examine the dispute files, controls if the commission is entitle to resolve the dispute controls if the claimant had applied to insurer controls if the required documents were submitted

act impartially,

work under the liability of confidentiality in the execution of their duties,

C. Organization


Internal

4. Arbitrators

a. requirements:

Higher education of at least 4 years

“Insurance law” experience of at least 5 years or “Insurance practice” experience of at least 10 years

Registration in the “List of Insurance Arbitrators” (life or non-life) = currently 148 arbitrators are registered

C. Organization


External

4. Arbitratorsb. restrictions:Arbitrators cannot be in management or in audit of have signatory power on behalf of perform professional activities for

◦ Insurance Companies,◦ Reinsurance Companies,◦ Loss Adjusters,◦ Insurance Agents◦ Brokers

C. Organization


External

Restriction applies to spouses and children


D. Membership to Commission

Arbitration can be started only against member insurance companies (not intermediaries).

Membership is not mandatory

For an insurance company to become a member:◦ Membership Agreement with Commission◦ Payment of subscription fee: 20.000TL (EUR 8.700)◦ Annual payment includes first 30 applications

Currently: 51 members / 64 companies (over 90% of total insurance premium)


E. Application to Arbitration

Claimant has free choice to apply whether arbitration or court

Membership is enough to invoke arbitration,◦ Arbitration clause is not necessary on related policy,

contract or information form. Date of risk occured must be later than date of

insurer’s membership date (declared on the website)

OccurenceMembership

Term of Policy



Admitted only in respect of “Claimant against Insurer”

Insurance Law determines that the arbitration will be invoked against the party “undertaking the risk”.◦ Not insurance agent or broker

Claimant can be ◦ Policyholder, ◦ Insured, ◦ Beneficiary◦ Victim against liability insurer◦ Subrogated property insurer (e.g. fire, hull) of victim

against liability insurer.



Not admitted in respect of “Insurer as claimant” e.g. against◦ Policyholder for premium,◦ Insured for return of excessive payment,◦ Third party, who is not an insurer of legal liability, in

pursuit of subrogated claim.

Not limited to “consumer”◦ Open to e.g. traders, banks, shipping companies, every

other business venture.



Claimant files an application form with Comission.

Before application to Commission, claimant must have applied insurer

If claimant’s application ◦ Rejected by the insurer, or◦ Insurer remains silent for 15 working days:

No other legal procedure (court, regular arbitration) pending

reporter will control these prerequisites



Application Fee

Depends on the amount of claim

◦ 1 – 5.000 TL (1-2.200 EUR) 35,-TL (15,- EUR)

◦ 5.001 – 15.000 TL (2.200-6.600 EUR) 100,-TL (45,- EUR)

◦ 15.001 TL + (6.600 EUR +) 250,-TL (112,50 EUR)

No other payment requested from claimant


F. Application to Arbitration

Single Arbitrator for claims under <15.000,-TL (app. EUR 6.500,-)

Three Arbitrators for claims exceeding (mandatory) >15.000,-TL (app. EUR 6.500,-

Appointment from the list in order

◦ if arbitrator in turn is not an “expert” on the dispute, then next “expert” will be appointed (e.g. marine insurance)

◦ geographical aspects,

◦ work load


F. Application to Arbitration

Arbitrators’ fee is paid by the Commission.

Claimant pays the 50% of the fee if the award is in favor of the insurer.

The fee is deterined according to the claim

◦ 3% of the claims under 1.500,-TL (EUR 650,-)◦ 2% of the amount exceeding ◦ Not less than 250,-TL (EUR 110,-)


F. Procedure

Arbitrator(s)

consider the case on submitted documents.

may hold hearings.

cannot grant interim injunction (new Code of Civil Procedure foresees this authority but the communiqué 2009/1 doesnot allow)

can rule on determination of evidence (court’s intervention is necessary for its execution)


F. Procedure

Panel takes decisions with majority

Time limit:

Arbitrator(s) must reach an award in 4 months

If not, the dispute will be submitted to the court◦ Unless parties agree to extend


H. Appeal

The awards up to 40.000TL (EUR 17.400) is final and binding

The awards exceeding 40.000TL (EUR 17.400) can be appealed to Yargıtay (Supreme Court) Chamber 11 on Insurance law

Award enforceable despite appeal,

Insurer may put up security to delay enforcement.


H. Appeal

The reasons for appeal is limited to the following:

◦ If the award is rendered subsequent to the expiration of the arbitration time limit,

◦ If the award is rendered for something not demanded,

◦ If arbitrators render an award falling beyond their competency,

◦ If arbitrators fail in rendering an award for each one of the allegations set forth by both parties.

Thank you...Hüseyin Arslan, LLM

Documents

Hüseyin Arslan, LLM Legal Counsel ERGO Turkey. Hüseyin Arslan, LLM. “Insurance Arbitration [Turkish Practice]” Insurance litigation in Turkey has long