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New Omnibus Law Expands the Mediation System in Türkiye: Era of Mandatory Mediation in Lease Disputes

New Omnibus Law Expands the Mediation System in Türkiye: Era of Mandatory Mediation in Lease Disputes

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Initially regulated as a voluntary mediation system, through its official introduction to our legal system with the adoption of Law No. 6325 on Mediation in Civil Disputes in 2012, such was later accepted as "mandatory" in labor disputes, then in commercial disputes, and finally in consumer disputes.

We see that the scope of mediation system is once again expanded with the Law No. 7445 on the Amendment of the Execution and Bankruptcy Law and Certain Laws, which was published in the Official Gazette on April 5, 2023. Accordingly, the mediation system is now also accepted in disputes arising from immovable properties and lease agreements.

Mediation Regarding the Immovable Properties and Annotation Authorization of the Mediator

The amendments, which will enter into force on September 1, 2023, regulate the mediation procedure in disputes regarding the transfer of immovable property and the establishment of rights in rem on immovable property. Accordingly, mediation will be an option for disputes arising from the transfer of immovable property or the establishment of rights in rem on immovable property.

Regarding disputes with such scope, it will be possible to annotate the title deed and limit transfers via a request from the mediator in case that the parties agree to annotate the title deed in writing and the mediator records such agreement in minutes provided that such annotation is limited to the time period of mediation and does not extend beyond three months as of the annotation date.

In the event that the parties reach an agreement at the end of the mediation process, such agreement will be executed while adhering to the restrictions, procedures, and principles set forth in the laws regarding the transfer of immovable property or the establishment of in rem rights on immovable property.

According to the new regulation, it will be mandatory to obtain an annotation regarding the enforceability of the agreement from the civil court of peace in the jurisdiction of the immovable property’s location. The court will review the agreement's content to determine whether it is suitable for mediation and enforcement as well as whether the restrictions, procedures, and principles set forth in the laws regarding the transfer of the immovable property or the establishment of rights in rem on the immovable property are followed and if necessary, the court may hold a hearing.

Without prejudice to cases where seeking an enforceability annotation is mandatory, agreements signed by both parties and their lawyers alongside the mediator, and in the case of commercial disputes, signed by the lawyers of the parties and the mediator will be deemed as a court ruling without the need of an enforceability annotation.

Mandatory Mediation in Lease Disputes and Elimination of Joint Ownership

As of September 1, 2023, applying to a mediator prior to filing a lawsuit will be mandatory for disputes relating to lease agreements, the division of movables and immovables and the elimination of joint ownership, as well as disputes arising from Condominium Law and neighbouring rights.

The Execution and Bankruptcy Law No. 2004 provides an exemption to this rule, allowing for the eviction of leased immovable properties through enforcement proceedings without court ruling. In this respect, it is acknowledged that the requests for evacuation and the removal of the objection to be submitted to the execution court are not subject to mediation. However, the provisions regarding mandatory mediation as a condition of litigation will be implemented if it is necessary to file a lawsuit in the civil court of peace over the proceedings without judgment.

Annotation regarding the enforceability of the agreement will be mandatory. Such annotation will be obtained from the civil court of peace where the immovable property is located in terms of the agreement related to an immovable property, and from the civil court of peace where the mediator works in terms of other agreements. The court will inspect the content of the agreement to determine whether it is suitable for mediation and enforcement as well as whether the limitations, procedures and principles set forth in the laws regarding immovable property are complied with. If necessary, the court may hold a hearing.

Mediators Will Inform the Parties about the Mediation Process

As of September 1, 2023, the mediator will be obliged to inform the parties about the mediation process. Thus, to ensure that the parties, including those represented by a lawyer, are engaged in the process, mediators will have an obligation to provide information without being subject to any limitations on communication method.

Regulation of Negative Declaratory Action for Those Who Have Been Subjected to Enforcement Proceedings after Applying to The Mediator

After the application to mediation services, if an enforcement proceeding is initiated against the applicant party regarding the subject of the dispute and the applicant party files and requests a negative declaratory action against this proceeding within two weeks from the date of the final report; the court hearing the negative declaratory action initiated before the enforcement proceedings may issue a preliminary injunction to stop the enforcement proceedings in return for a collateral not less than 15 percent of the receivable.

Mediation As a Condition of Litigation for Some Lawsuits Arising from Employment Contracts

With the amendment to the Labor Courts Law No. 6102 brought by the respective omnibus law, in addition to the lawsuits filed for employee or employer receivables and compensations based on the employment contract and the reinstatement claims, which are already subject to mandatory mediation, for actions regarding reclamation, annulment of objection and negative declaratory action related to employee or employer receivables and compensation based on the employment contract, mediation is made a prior condition of litigation.

Obligation of Annotation for the Execution of International Settlement Agreements

It is now mandatory to obtain an enforceability annotation from the commercial courts of first instance for execution of the international settlement agreements issued following a mediation procedure. Accordingly, the application for the enforceability annotation to be issued according to the examination made on the file - except in cases requiring a hearing- can be made to the court of the jurisdiction agreed upon by the parties. In the absence of an agreed jurisdiction, it is possible to apply to one of the commercial courts of first instance in the jurisdiction of residence of the parties, or if such is not present, in Ankara, Istanbul or Izmir.

By Nihat Ozbek, Partner, Guleryuz & Partners

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