Mandatory Mediation Between Traders in case of Negative Declaratory Actions Arising From a Lease Contract of Commercial Nature
The legal disputes heard in Türkiye have been exponentially growing in number and diversity. At this point, parties are driven to seek other options for the settlement of disputes because of the growing number of actions filed in courts and the workload that comes with it. The concept of mediation has been implemented since 2013 as another solution to settle disputes.
Art. 30 of the Code of Civil Procedure (CCP) titled “Principle of Procedural Economy”:
The judge is obliged to ensure that the trial is carried out within a reasonable time and on a regular basis and that no unnecessary expenses are made.
“ Mediation not only shortens the trial process as per the principle of procedural economy governed by the aforementioned article of the law, but also provides benefits for parties to be involved in the settlement in a more objective way, and it is divided into two categories: “Mandatory mediation/mediation as a condition of legal action” and “provisional mediation”.
Published by the Turkish Ministry of Justice, the Statistics on Voluntary Mediation for Disputes Under the Private Law indicate that 99% of nearly 963,990 mediation cases resulted in a settlement between 2013 and 2022. As the aforementioned rate is indisputable, the introduction of the mandatory mediation in 2018 for certain types of cases has made it unnecessary to file a lawsuit in many cases of dispute.
Mediation as a Condition of Legal Action in Disputes
The introduction of the mandatory mediation as a condition of legal action to settle disputes has mitigated the workload of the courts by half and designated mediation as a condition to file a legal action for disputes of consumers and disputes of commercial nature.
Article 18/A of the Law No. 6325 on Mediation in Civil Disputes (''HUAK'') No. 6325 and Article 22 of the Regulation on Mediation in Civil Disputes boast provisions on mediation as a condition to file a legal action. However, one can infer from the applicable legislation and legal grounds that mandatory mediation is set out in both general and specific articles of the law.
Mandatory mediation for disputes arising between employers and employees as per the labour law in particular is safeguarded by the Law No. 7036 on Labour Courts. The article 3 of the Law on Labour Courts stipulates that mandatory mediation shall provide parties with an alternative solution to settle disputes arising the Labour Law, the code of obligations, the law on trade unions, and the press law in addition to practices regarding employees under the Labour Law, and from ship crews subject to the Maritime Labour Law. It is also noted that mandatory mediation is sought as a condition of action for lawsuits filed by employees or employers on the grounds of their receivables and compensation and re-employment.
As for another legal aspect, the Law No. 6502 on the Protection of Consumers (''TKHK'') sets out the provisions on mediation as a condition of action in consumer disputes under the article 73/A. However, one should remember that mandatory mediation shall not be imposed for disputes that fall within the remit of the Consumer Arbitration Committee, that is, disputes the sum of which is below the monetary limit of TRY 66,000 for appeals to be made in 2023.
The article 5/A of the Turkish Code of Commerce (‘‘TCC’’) No. 6012 reads:
“It is a condition of action to seek mediation before filing a lawsuit about claims for receivables and compensation from lawsuits of commercial nature set out under the Article 4 of this Law and other laws.”
This sets the scope of mediation as a condition to file a legal action to settle commercial disputes.
If the parties to the lease contract are traders, what courts are mandated to hear their case to settle their dispute?
The Civil Courts of Peace are authorised to settle all disputes arising from a lease contract that is not covered by the provisions of eviction through enforcement without judgement set out under the Law No. 2004 on Enforcement and Bankruptcy for leased immovables as per the article 4/1-a of the CCP regardless of the value or sum of the action in question.
Under Article 4 of the TCC, one shall take into account that the subject of the dispute must arise from issues concerning the commercial enterprises of both parties in order for a lawsuit to qualify as a commercial lawsuit. Under the Article 12/1 of the TCC, one can argue that the Commercial Courts of First Instance are mandated to settle disputes arising from lease contracts whose parties are traders. However, the established case law of the Court of Appeals suggests that that the civil courts of peace are mandated to do so:
In fact, the Ruling No. 2014/2992 E. 2014/13963 K. of 15/12/2014 by the 6th Chamber of the Court of Appeals reads:
“The case concerns a request to reverse the appeal against the enforcement proceedings initiated to collect the receivable arising from the lease contract. The court ruled to dismiss the case on the grounds of the mandate, and the ruling was appealed by the plaintiff's attorney.
Except for the provisions regarding the eviction of immovables leased as per the sub-paragraph 1/a of the article 4 of the CCP No. 6610 that entered into force on 1/10/2011 on the roles of Civil Courts of Peace, it is the mandate of the Civil Courts of Peace to settle disputes arising from all cases regarding disputes and counter actions filed against them including those regarding receivables of rent contracts. Unlike the abrogated Law No. 1086 on Legal Proceedings, this legislation stipulates that the civil courts of peace shall settle disputes arising from any rent relationship such as eviction, receivables, compensation, determination of the title of tenancy regardless of the sum.
As per the definition set out under Article 269 of the TCO, a lease contract is a contract in which the lessor shall commit to leave the use of something or to benefit from it along with the use to the lessee, and the lessee shall commit to pay the rent agreed in return. Under the aforementioned law, one shall acknowledge that the operational leasing contract between the parties is actually a lease contract. As the dispute arises from a relationship based on the private law, the fact that the parties are traders does not affect the mandate of the court set out under Article 4/1-a of Law No. 6100. In consideration of the foregoing, it is undue and unlawful to dismiss the case on the grounds of the mandate upon a written justification while it is necessary to deliver a ruling on the merits.” (See Court of Appeals 3rd Chamber., E. 2018/3276 K. 2018/6854 T. 20.6.2018, Court of Appeals 3rd Chamber., E. 2017/8280 K. 2018/6898 T. 21.6.2018, Court of Appeals 3rd Chamber., E. 2017/8767 K. 2018/7086 T. 26.6.2018, Court of Appeals 17th Chamber., E. 2016/6854 K. 2019/9341 T. 14.10.2019, Court of Appeals 20th Chamber., E. 2018/6462 K. 2019/558 T. 4.2.2019, Court of Appeals 23rd Chamber., E. 2018/1293 K. 2019/5145 T. 05.12.2019)
It has been ruled that the Civil Courts of Peace are the courts authorised to settle disputes arising from the lease contract. In this respect, one can argue that there is a consensus of jurisprudence that the civil courts of peace are authorised for judicial rulings.
Is seeking mediation mandatory for all disputes arising from lease contracts whose parties are traders?
One cannot argue that mediation is a condition to file a legal action given the fact that the Civil Courts of Peace are mandated to settle disputes arising from rent contracts whereas seeking mediation, which is mandatory as a condition to file a legal action, is set out under the category of commercial disputes. However, the parties are always free to seek voluntary mediation in this case.
Is mediation a condition of action in negative declaratory actions of money receivable arising from a lease contract?
A legal action filed by a debtor against a non-performing creditor to establish if he/she is a debtor or not is called a negative declaratory action. What must be considered about the court to be mandated to hear negative declaratory cases is that it shall be named in accordance with the type of receivable.
The law stipulates that the Civil Courts of Peace are authorised to settle disputes arising from lease contracts. However, the Doctrine and the rulings of the Court of Appeals are controversial in terms of the fact that the Commercial Court of First Instance is mandated to hear negative declaratory cases of lease contract where parties are traders under the provisions of the TCC.
As mentioned above, mediation is a condition to file a legal action should the action arise from commercial disputes over a claim for compensation and monetary payment.
In fact, the ruling No. 2022/6323 E., 2022/8692 K of 10/11/2022 by the 3rd Civil Chamber of the Court of Appeals concerning the admissibility of mediation a condition to file an action in negative declaratory cases reads as follows
"The legal action regarding the claim for a negative declaratory case stems from the commercial lease contract between the traders, and the action concerns the receipt of some money while the action had been filed directly on 30/12/2020 under the paragraph 2 of Article 18/A of the HUAK No. 6325, without seeking mediation. Therefore, it is deemed fit to dismiss the case on the procedural grounds.”
It was ruled that the demand for a negative declaratory case concerning the money receivable arising from the lease contract requires (mandatory) mediation.
In disputes arising lease contracts, one should consider that the subject of the action must concern the payment of a certain amount of money receivable and the claim for compensation, as well as the fact that the negative declaratory actions are based on a debt-receivable relation. The fact that mandatory mediation is a condition to file a legal action in negative declaratory commercial actions of money receivables arising from a lease contract shall be settled by the accurate identification of the matter of dispute.
In order for a dispute to be subject to mediation under the legislation, it must be a commercial action and concern the collection of a certain sum of receivables. Negative declaratory cases are intended to establish if the debtor is indebted or not, and one can argue that mediation is not a condition to file a legal action since there is no demand for the collection of some sum of receivables. One can also argue from the perspective of the creditor that it is possible to collect some sum of receivables in negative declaratory cases.
Although there are various arguments on this subject in the doctrine, one can infer from the recent ruling of the Court of Appeals that mediation is a condition to file an action in negative declaratory cases concerning any commercial action arising from a rental contract.
-KIRIŞ Mahmut Ekrem, Mediation as a Condition to File an Action and Abuse of Mediation, Istanbul Aydın University/Graduate Institute of Education Institute, Law, March 2022
-TUĞ Mehmet Arif, “The Court Hearing Commercial Cases Arising from Rent Contracts”, Selçuk University’s Faculty of Law Journal, C. 29, S. 3, 2021, p. (1897-1921)