Dispute Bulletin – Pekin Bayar Mizrahi

Structuring or restructuring companies to benefit from investment treaties

With recent political shifts in the US and around the world, companies engaged in cross-border business should structure or restructure their businesses to take advantage of the protections of investment treaties against unexpected and unfair government acts.

Under bilateral and multilateral investment treaties, countries make certain promises to the companies and individuals of the other treaty signatory countries. When political winds shift, governments can end up breaching those treaty obligations. In such cases, companies domiciled in a state that is signatory to an investment treaty with the host state may resort to investor-state arbitration to recoup monetary losses resulting from the government’s acts. To best protect foreign investments, companies should spot problematic trends early, and evaluate whether they have treaty protection in place. If not, companies should consider restructuring in a jurisdiction with favorable investment treaties. Governments may heed their treaty obligations or foreign investors may appeal to those obligations as leverage in negotiations with the host government. If all else fails, companies can resort to investment treaty arbitration to recover monetary damages.

You can access the full article authored by Kevin O’Gorman (Global Co-Head of International Arbitration, Norton Rose Fulbright US LLP), Courtney Hikawa (Senior Counsel, Norton Rose Fulbright US LLP) and Maral Celepyan Avşar (Partner, Pekin Bayar Mizrahi) from here .

Why parties should specify the governing law of their arbitration agreement

The arbitration agreement within a contract is a contract in its own right,collateral to the main contract. The law governing the arbitration agreement covers substantive matters relating to the agreement to arbitrate, for example, the interpretation, scope and validity of the agreement to arbitrate.

When drafting an arbitration agreement, parties should specify the governing law of the arbitration agreement, and not just the governing law of the main contract. A failure to do so creates risk for the parties.

This issue continues to generate caselaw, illustrating that if parties wish to avoid uncertain and potentially unwelcome outcomes in relation to a future arbitration and the enforcement of any award, they should specify the governing law of the arbitration agreement, in addition to the governing law of the main contract.

You can access the full article authored by Ergin Mizrahi (Senior Partner, Pekin Bayar Mizrahi) and Mustafa Mert Dicle (Senior Associate, Pekin Bayar Mizrahi) from here .

Is there a valid arbitration agreement when parties make reference to their standard terms and conditions ?

This was a question answered by the 11th Civil Chamber of the Court of Appeal in its judgment dated 28 May 2024 (Docket No. 2024/1265 E., Decision No. 2024/4403 K.), where the Court upheld the decision of the Regional Court of Appeals, which had found that there was no valid arbitration agreement, in a case where:

There was no arbitration agreement that was mutually signed by the parties.
The invoices issued by the claimant, and accepted by the respondent, included a reference to the General Terms and Conditions of Sale, which were reportedly published on the claimant’s website;
Article 13 of the aforementioned General Terms and Conditions of Sale stipulated that disputes should be resolved by arbitration under the auspices of the Arbitration Institute of the Finland Chamber of Commerce;
These General Terms and Conditions were unilaterally posted online by the claimant; and
The invoices did not expressly contain an arbitration clause, but merely made reference to the claimant’s website where such terms were available.

As per the Court’s decision, it is advisable that parties exercise caution and due diligence in incorporating clear arbitration agreements into their contractual arrangements, rather than making a reference to either side’s general terms and conditions.

You can access the full article authored by Ergin Mizrahi (Senior Partner, Pekin Bayar Mizrahi) and Mustafa Mert Dicle (Senior Associate, Pekin Bayar Mizrahi) from here.

Swiss Federal Supreme Court reaffirms that a criminal judgment does not have a direct impact on the setting aside of an arbitral award as a result of its review

The Swiss Federal Supreme Court has held that a criminal conviction arising from the same factual circumstances as those underlying an arbitral proceeding does not, in and of itself, justify the setting aside of an arbitral award as a result of its review.

You can access the full article authored by Ergin Mizrahi (Senior Partner, Pekin Bayar Mizrahi) and Melis Beler (Senior Associate, Pekin Bayar Mizrahi) from here .

Swiss Supreme Court redefines parties’ duty to investigate arbitrators’ impartiality and independence

The Swiss Federal Supreme Court’s recent decision underscores a pivotal issue in international arbitration: the parties’ duty to investigate the impartiality and independence of arbitrators. The case centered on a challenge to an arbitral award on the grounds that one arbitrator had previously represented the opposing party in unrelated proceedings in England. The Federal Supreme Court rejected the challenge, delivering key clarifications on the extent of a party’s duty to investigate an arbitrator’s impartiality and independence.

The Swiss Federal Supreme Court’s decision serves as a stark reminder of the parties’ duty to investigate arbitrators’ impartiality/independence and to act without delay when concerns arise. This ruling not only reinforces the importance of due diligence in international arbitration but also solidifies the principle that procedural fairness cannot be compromised for tactical advantage.

You can access the full article authored by Ergin Mizrahi (Senior Partner, Pekin Bayar Mizrahi) and Alara Ünal Orak (Senior Associate, Pekin Bayar Mizrahi) from here .

The new Arbitration Act 2025: Necessary modernization or missed opportunity ?

The UK’s Arbitration Act 2025 modernises the highly successful Arbitration Act 1996, reinforcing London’s position as the world’s leading arbitration seat. The key reforms include: (1) a new default rule providing that arbitration agreements are governed by the law of the seat (rather than the main contract) unless expressly stated otherwise, aligning England with France and Sweden; (2) express powers for tribunals to summarily dismiss claims with no real prospect of success, addressing concerns about meritless claims; (3) a revised framework for jurisdiction challenges under Section 67 that prevents parties from introducing new evidence or arguments at the court stage, promoting finality and efficiency; (4) statutory recognition of emergency arbitrators with enforceable peremptory orders; (5) codification of arbitrators’ duty to disclose circumstances that could raise doubts about their impartiality; and (6) enhanced immunity protections for arbitrators, limiting liability for removal to cases of bad faith and for resignation to unreasonable conduct.

You can access the full article authored by Holly Stebbing (Partner, Norton Rose Fulbright LLP), Joseph Bentley (Counsel, Norton Rose Fulbright LLP), Majdie Hajjar (Associate, Norton Rose Fulbright LLP), Courtney Rodda (Associate, Norton Rose Fulbright LLP) and June Ong (Associate, Norton Rose Fulbright LLP) from here.

The Chartered Institute of Arbitrators’ new guideline on the use of AI in arbitration

Global regulators are developing frameworks to govern AI use in legal proceedings. The EU’s Artificial Intelligence Act (Regulation (EU) 2024/1689), enacted in 2024, classifies AI systems used by judicial authorities as high-risk, imposing strict obligations on providers and users. Various judiciaries including the UK Courts and Tribunals Judiciary, Colombia, and California have issued guidance, whilst professional organisations have published responsible use guidelines.

The Chartered Institute of Arbitrators (CIArb) has released practical guidelines for AI use in arbitral proceedings, providing a non-binding resource that parties may incorporate by agreement.

You can access the full article authored by Amy Joan Armitage (Partner, Norton Rose Fulbright LLP), Sam Bamford (Senior Associate, Norton Rose Fulbright LLP), Courtney Rodda (Associate, Norton Rose Fulbright LLP) and June Ong (Associate, Norton Rose Fulbright LLP) from here.

The Chartered Institute of Arbitrators’ new guideline on the use of AI in arbitration

The Chartered Institute of Arbitrators (CIArb) has released practical guidelines for AI use in arbitral proceedings, providing a non-binding resource that parties may incorporate by agreement.

Pilot decision from the Constitutional Court: Violation of the right to property in claims for inflation loss

In its decision dated 8 July 2025 and numbered 2024/41763, the Constitutional Court of Turkey ruled that a violation of the right to property occurs when receivables between private legal persons lose their real value due to inflation. As a pilot decision, this ruling has the potential to bring about significant changes in claims concerning inflation-related losses arising from the late payment of receivables.

This pilot decision marks a significant turning point in addressing inflation-induced loss of value for receivables collected late in private legal relations. Given its pilot nature, it is expected that lower courts and the Court of Appeal will develop new assessment criteria for inflation compensation claims, accelerating the evolution of judicial precedent. Moreover, the decision highlights the need to revisit evidentiary standards in consequential damage lawsuits.

You can access the full article authored by Maral Celepyan Avşar (Partner, Pekin Bayar Mizrahi) and Aslı Metin Yağcı (Senior Associate, Pekin Bayar Mizrahi) from here .

Rules of reinstatement mediation reshaped following Constitutional Court decision

The Constitutional Court of Turkey delivered its decision dated 3 June 2025, numbered 2024/157 E., 2025/121 K., striking down Article 3, paragraph 15 of the Labour Courts Law No. 7036 and introducing a critical change in reinstatement mediation.

The court removed the obligation for both the principal employer and the subcontractor to participate together in reinstatement mediation. As a result:

An employee can initiate the mediation process even by applying to just one employer. There is no longer a requirement to determine the principal- subcontractor relationship in advance or to summon all parties to the mediator.
Joint participation of the principal and subcontractor in the mediation session is no longer mandatory.
This change makes the mediation process more flexible and accessible.

You can access the full article authored by Alara Ünal Orak (Senior Associate, Pekin Bayar Mizrahi) from here .

Commercial courts have jurisdiction over disputes arising from a breach of non-compete obligation

Pursuant to Articles 444 to 447 of the Turkish Code of Obligations, the competent court for actions arising from a breach of a non-compete obligation shall be the commercial court of first instance.

There had long been a divergence of opinion between the chambers of the Court of Appeal and the General Assembly of Civil Chambers as to whether actions arising from a breach of non-compete obligations occurring after the termination of an employment contract should be heard before the labour court or the commercial court of first instance. For these reasons, the General Assembly, by a qualified majority of more than two-thirds, has ruled that the competent court for disputes arising from a breach of a non-compete obligation is the commercial court of first instance. A dissenting opinion was submitted, arguing that such disputes are rooted in the employment relationship and therefore should fall within the jurisdiction of the labour courts.

You can access the full decision from here .

The Personal Data Protection Authority conducted a YouTube broadcast titled “Personal Data Processing Activities Conducted by Lawyers.”

Lawyers’ personal data processing activities are not generally exempt under the Law on the Protection of Personal Data No. 6698 (“Law”). For the full exemption set out in Article 28 of the Law to apply, the data processing activity must be carried out by judicial or enforcement authorities, and lawyers do not fall within this definition.

Therefore, when lawyers obtain data from their clients, publicly available sources, or official institutions under the authority granted by the Attorneyship Law, they must comply with the general principles and obligations of the Law. During the data collection process, it is critical that the processing is based on a lawful reason (e.g. a contract, the establishment of a right), that the notification obligations toward the data subjects are fully fulfilled, and that data is not obtained through unlawful software. The right of lawyers to request information from official institutions is limited by the principles of necessity and proportionality and is not discretionary.

This is an important detail that requires lawyers to comply with the special conditions for international data transfers under Article 9 of the Law. Similarly, disclosure of personal data to third parties also constitutes a data processing activity and is lawful only if there is a legitimate processing condition specified in the Law, such as the protection of a right; otherwise, sharing a debtor’s information with unrelated parties would constitute a violation of the Law.

You can access the full broadcast from here .

Assessment of heirs’ claim regarding insufficient compensation for unreasonable length of criminal proceedings

The case concerns heirs who applied to the Human Rights Compensation Commission (“Commission”), arguing that the compensation of TL 2,000 determined by the Commission was insufficient due to the unreasonable length of a criminal trial. The applicants claimed that the low amount of compensation violated their right to an effective remedy in connection with the right to a trial within a reasonable time, and that their right to a fair trial was breached because attorney’s fees were not awarded. The criminal proceedings concerning the applicants’ deceased relative lasted 9 years, 8 months, and 6 days, and concluded upon the relative’s death.

The Constitutional Court ruled that the Commission’s refusal to award attorney’s fees did not violate the right to a fair trial, as the relevant legislation did not allow for such an award. However, the Constitutional Court found that the compensation of TL 2,000 for a trial lasting over nine years was insufficient and did not provide adequate redress. Consequently, the Constitutional Court concluded that the applicants’ right to an effective remedy related to the right to a trial within a reasonable time had been violated. To remedy the violation, the decision was remitted to the relevant court for re-evaluation and a retrial.

You can access the full decision from here.

Constitutional Court ruling on access to court in “annulment of renunciation of inheritance” cases

The applicant filed a lawsuit for the annulment of the renunciation of inheritance, alleging that a debtor’s heir’s renunciation of the inheritance was made with the intent to harm creditors. The first-instance court, Ankara 18th Civil Court of First Instance, accepted the case and annulled the renunciation.

However, the Ankara Regional Court of Appeal overturned this decision, dismissing the case on the grounds that the statutory limitation period had expired. The Regional Court counted the six-month filing period from the date the heir first applied to the Gölbaşı Civil Court of Peace, an incompetent court. Following the Court of Appeal’s affirmation of this decision, the applicant submitted an individual application to the Constitutional Court, claiming that the miscalculation of the time limit violated their right of access to court.

The Constitutional Court found the Regional Court’s interpretation “excessively formalistic” and ruled that the applicant’s right of access to court had been violated. The Constitutional Court emphasized that, for a lawsuit seeking annulment of the renunciation of inheritance, the six-month period should begin when the renunciation declaration reaches the competent Civil Court of Peace at the decedent’s last place of residence and is recorded in the special registry. The Constitutional Court noted that considering the application to an incompetent court imposed an undue and disproportionate burden on the applicant. To remedy the violation, the Constitutional Court ordered a retrial. The applicant’s claim regarding the violation of the right to a trial within a reasonable time was rejected as inadmissible, due to the failure to exhaust domestic remedies.

You can access the full decision from here .

Ministry of Justice publishes draft “Compulsory Enforcement Law” for public consultation

The Ministry of Justice (“Ministry”) has released the Draft Compulsory Enforcement Law (“Draft Law”) for public consultation, proposing a comprehensive restructuring of the existing Execution and Bankruptcy Law.

The Draft Law provides that, as a general rule, decisions of first-instance courts in cases involving judicial enforcement cannot be executed before the appellate review is completed, while explicitly listing certain exceptions such as alimony, bodily injury / loss of support, employee claims, and ship evacuation/delivery. In parallel with this change, the provisions on “stay of execution” are also being updated. In execution proceedings without judgment, the Draft Law introduces a requirement that proceedings be based on a written document (contract, invoice, etc.); the procedure of “lifting of objection” through application to the enforcement court is abolished, and it is adopted that proceedings stayed due to objection will continue through an “annulment of objection” lawsuit in the general courts.

There are also significant proposals regarding the systemic architecture, which are being debated: the merger of the rarely used institutions of “Restructuring of Corporations and Cooperatives through Reconciliation” and “Extension/Suspension in Extraordinary Circumstances” under the concordat framework is positively viewed for simplification and uniformity, though legal doctrine reminds that these institutions are fundamentally separate from concordat and full merger may cause a loss of functionality.

You can access the full draft from here .

Constitutional Court annuls binding effect clause in case consolidation procedure

The Constitutional Court in its decision dated 17 June 2025 and numbered 2025/137, annulled a phrase contained in Article 166(1) of the Law of Civil Procedure No. 6100 (“the Law”). The annulment decision concerns the procedure for the consolidation of cases.

The phrase “…and this decision shall be binding on the other court” in Article 166(1) of the Law provided that, in related cases filed within the same judicial district, the decision of the court hearing the second case to consolidate the proceedings would be final and binding on the court before which the first case had been filed. The Nevşehir 4th Civil Court of First Instance and the Istanbul Anatolian 15th Civil Court of Peace applied to the Court, arguing that this provision was unconstitutional.

In its decision, the Court held that the provision in question was contrary to the principle of the “guarantee of the lawful judge” laid out in Article 37 of the Constitution. In its reasoning, the Court emphasized that a binding consolidation decision rendered by the second court irreversibly changed the judge competent to hear the case after the dispute had arisen. The Court further noted that there was no effective review mechanism to ensure that a file could be returned to the original court in the event of a faulty or arbitrary consolidation decision. The dissenting opinion argued that the consolidation decision was subject to review together with the final judgment and could be quashed if necessary, and that the rule served the purpose of procedural economy under Article 141 of the Constitution by expediting proceedings and reducing costs.

Contacts

Pekin Bayar Mizrahi
Ergin Mizrahi, LL.M.
Senior Partner
Tel +90 (212) 359 5700
e.mizrahi@pekin.com.tr

Pekin Bayar Mizrahi
Maral Celepyan Avşar
Partner
Tel +90 (212) 359 5700
m.avsar@pekin.com.tr