The Ministry of Justice Publishes the Annual Communique on Arbitrators’ Fees

The Turkish International Arbitration Act (“TIAA”) vests the authority to determine arbitrators’ fees in the Ministry of Justice (“The Ministry”). Since the enactment of the TIAA, the Ministry has published a communique annually, regulating arbitrators' fees in the absence of any explicit or implicit agreement by the parties.

On 6 March 2021, The Ministry published the Communique on the Tariff Applicable to Arbitrators’ Fees (the "Communique”), replacing the previous tariff announced on 1 March 2020, which will remain in effect until 15 March 2021.

The Communique will be applicable to arbitration proceedings subject to the TIAA, only in circumstances where:

• Parties and the arbitrator(s) have failed to reach an agreement on the fees,
• An arbitration agreement does not provide a rule on the determination of arbitrators’ fees,
• There is no reference made by parties to established international rules or institutional rules of arbitration.

The fees provided under the tariff will cover arbitrators’ activities starting from the initiation of proceedings until the issuance of the final arbitral award. Correction, interpretation, or completion of an award does not require the payment of an additional fee.

The scope of the Communique is extensive. Here are some highlights:

If the Arbitrator(s) dismiss a case on jurisdiction, they will be compensated with 25% of the fee provided under the tariff (7/H of TIAA).

An Arbitrator will not be compensated in cases where:

• An arbitrator is removed upon his/her own failure to perform their disclosure obligation,
• An arbitrator’s mandate is terminated because of his/her failure to perform the functions of an arbitrator without sufficient cause,
• An arbitrator’s mandate is terminated by his/her own withdrawal, by parties’ agreement or court decision, or upon the occurrence of a de facto or de jure impediment for the arbitrator to perform their function on time or at all.

An arbitrator will be entitled to 25% of the fees provided under the tariff in circumstances where the proceedings are terminated upon:

• A claimant’s failure to communicate a statement of claim in a timely manner without sufficient cause,
• A claimant’s failure to rectify a statement of claim that does not fulfill the criteria prescribed under Article 10 (D) of TIAA.

Article 5 of the Communique regulates further scenarios in which proceedings are terminated without a final award in detail. These include withdrawal, settlement, or an incident that eliminates the subject matter of a dispute. The Communique also touches upon partial awards and annulments.

Rates provided under the Communique are as follows:

Value of the dispute

Fee for sole arbitrator

Fee for three or more arbitrators

For the first TRY 500,000

5%

8%

For an additional TRY 500,000

4%

7%

For an additional TRY 1,000,000

3%

6%

For an additional TRY 3,000,000

2%

4%

For an additional TRY 5,000,000

1%

2%

For over TRY 10,000,000

0.1%

0.2%

Once again, the new tariff will be in force as of 15 March 2021 and will be applicable to awards rendered after this date.