A Strong Alternative to Litigation : Settlement Through Attorneys (Attorneyship Act Art. 35/A) or Voluntary Mediation?

There are alternatives available for resolving disputes without turning them into lengthy and costly litigation processes. Except for cases where mandatory mediation applies, these alternatives are: (i) settlement through attorneys pursuant to Article 35/A of the Attorneyship Act, and (ii) voluntary mediation.

So, what are the differences between these two methods, and which is more advantageous in which circumstances?

What is the Settlement under Article 35/A of the Attorneyship Act and Why is it Preferred?

Article 35/A of the Attorneyship Act allows private law disputes between the parties to be resolved through settlement via their attorneys;

• before a lawsuit is filed, or
• even if a lawsuit has been filed, provided that the first hearing has not yet commenced.

Settlement under Article 35/A of the Attorneyship Act often constitutes a strong alternative to voluntary mediation in practice. Settlement under Article 35/A offers significant advantages to clients in terms of cost, speed, confidentiality, and enforceability.

Under this procedure, an attorney invites the opposing party to settle in writing. If the invitation is not accepted within two weeks, it is deemed rejected.

The possibility of settlement ceases once the first hearing has commenced. Any agreement reached thereafter will no longer qualify as a settlement under Article 35/A, but will instead constitute a settlement in the classical sense.

One of the most important characteristics of settlement under Article 35/A is that the process must be conducted exclusively through attorneys. The participation of the parties’ attorneys is mandatory, and settlement negotiations are carried out based on the mutual will of the attorneys. If one of the attorneys does not wish to continue the process, the settlement attempt is terminated.

If a settlement is reached between the parties, the settlement record drawn up and signed by the parties and their attorneys:

• is deemed a document having the force of a court judgment pursuant to Article 38 of the Enforcement and Bankruptcy Code;
• may be directly enforced without the need for any court decision or an enforceability annotation.

For the settlement record to be considered as having the force of a judgment, the subject matter of the settlement must be clear and unambiguous, and the reciprocal obligations undertaken by the parties must be definite and unconditional. The Court of Appeal has ruled that records containing conditional obligations do not have the force of a judgment, as determining whether the condition has been fulfilled would require judicial examination (8th Civil Chamber, F. 2013/13676, D. 2014/3383, dated 25.2.2014).

Similarities to Voluntary Mediation

Both voluntary mediation and settlement under Article 35/A are only possible for disputes over which the parties may freely dispose; matters concerning public order are excluded. 

Statements and admissions made by the parties or their attorneys during both methods, as well as any minutes drawn up during such negotiations:

• are invalid if settlement is not achieved;
• cannot be used as evidence against the parties in any lawsuit that has been filed and/or may be filed in the future in relation to the subject matter of the settlement;
• may not be disclosed in any manner by the parties or their attorneys.

By virtue of this safeguard, the parties may pursue settlement efforts without concern that matters raised during negotiations will later be used against them.

Differences Between Voluntary Mediation and Settlement Under Article 35/A of the Attorneyship Act

Voluntary mediation is an alternative dispute resolution method initiated by the parties of their own free will and conducted with the assistance of an independent mediator. Representation by an attorney is not mandatory. The process may be initiated before a lawsuit is filed or at any stage during the proceedings. The mediator does not render a decision but assists the parties in reaching an agreement.

In voluntary mediation, the parties are required to bear the mediator’s fee even if no lawsuit has been filed. In settlement under Article 35/A, however, the process is conducted entirely between the parties’ attorneys, and no additional third-party cost arises. This constitutes a financial advantage for clients.

Moreover, a settlement record under Article 35/A may be subject to enforcement with judgment effect directly, without the need for an additional court decision or enforceability annotation. In this respect, it provides the client with strong collection and enforcement power.

Without the need for mediator schedules, meeting organization, or mediator-driven direction, the settlement process under 35/A may be advanced swiftly based solely on the will of the parties’ attorneys.

The principal differences between settlement under Article 35/A and voluntary mediation may be summarized comparatively as follows: