Remedy For The Financial Sector : Voluntary Mediation Practices

Working as a member of the Mediation Board at the Ministry of Justice since 2013, focusing on the mediation method, which has found application in participation banking, we talked to Arbitration Lawyer Nihat Şimşek.

WHO IS NIHAT ŞIMŞEK? CAN YOU PROVIDE US WITH A BIT OF INFORMATION ABOUT YOURSELF?

I was born in 1971 in Kayseri. I completed my primary, secondary and high school education in Kayseri. After studying at the Middle East Technical University Public Administration for 2 years, I transferred to Ankara University Faculty of Law. After entering the legal profession in 1997, I became a trademark-patent attorney at the Turkish Patent Institute in 1999. I am still a member of MUSIAD. In 2007, I took part in establishing the Kayseri Science Dissemination Society as the Founding President. In 2013, I became one of Turkey's first mediators. Again in 2013, I was appointed as a Member of the Mediation Board of the Ministry of Justice by the then Minister of Justice Bekir Bozdağ. Subsequently, after he renewed this duty  in 2015, I was re-appointed as a Member of the Mediation Board for 3 years by our Minister of Justice Abdulhamit Gül in 2018. Apart from all these, I also participated as the founder of Kalem Mediation, Arbitration, Training and Dispute Resolution Center Inc., operating in Kayseri. Under the roof of this centre, I worked as a mediator to realise problematic bank receivables and restructuring agreements.

WHAT ARE THE APPLICATION AREAS OF MEDIATION PRACTICES FOR PARTICIPATION BANKS?

Financial mediation has a wide range of applications in disputes in participation banking. In this context, preferring the mediation method as an alternative solution for all problematic receivables, whether in legal proceedings or not, brings many advantages for participation banks.

Our legislator stipulated that the dispute should be handled primarily by mediation before filing commercial lawsuits in courts to ensure that mediation becomes widespread in commercial affairs. In this context, within the scope of the provision of Article 4/1-f of the TCC, "Civil lawsuits arising from the issues stipulated in the regulations regarding banks, other credit institutions, financial institutions and lending businesses are considered commercial lawsuits" against banks, other credit institutions, financial institutions, Commercial Lawsuits Related to Institutions and Money Lending are included in the scope of Litigation Mediation.

In disputes regarding the fields of activity of participation banks, it does not matter whether the parties are merchants and/or whether the dispute is related to the commercial enterprise of the other party. After all, in disputes related to commercial loans the parties usually deal with trade in the ordinary course of life. Therefore, lawsuits related to such loans are also considered within the scope of commercial cases, and disputes regarding these loans are also included in the range of mediation lawsuits.

Thanks to the qualified mediationservice provided by specialised mediators, the agreement rates are extremely high.

In disputes regarding consumer loans extended by participation banks, although one of the parties is a consumer since the subject of the transaction is banking, these are also considered commercial lawsuits. Moreover, with the amendment made in the Law on the Protection of the Consumer dated 22.07.2020, it is necessary to go to mediation first for the cases to be heard in consumer courts, which are in the nature of a consumer transaction and which are not within the scope of the duty of consumer arbitration committees, since it is necessary to go to mediation (to stay within the above-mentioned scope). The first mediation meeting was made mandatory for the parties before going to court. Considering our explanations above, most of the businesses and operationswithin the scope of activity of Participation Banks are the subject of mediation.

WHAT ARE THE ADVANTAGES OF MEDIATION IN DISPUTES INVOLVING PARTICIPATION BANKS?

Due to their nature, disputes in financial markets are primarily technical information-based disputes that can be resolved by evaluating many legislations together. While the judgment rendered at the end of the lawsuits regarding the said disputes may not be of the desired quality, this may extend the duration of the proceedings. In mediation practice, the parties settle the dispute between them by agreeing within the framework they accept. If a person with solid expertise and experience in dispute mediation is in question, the decision process regarding the dispute emerges as a concise and definitive solution. For this reason, our legislator has stipulated primarily to resort to mediation, one of the alternative dispute resolution methods, before filing not only commercial lawsuits but also financial institutions' consumer transactions and lawsuits that are beyond the scope of the arbitral tribunal.

Concerning problematic receivables, agreement rates are extremely high thanks to the qualified mediation service provided by mediators specialising in Banking  and Finance Law. As a result of the signing of the same agreement with the acceptance of the other party of the bank's customer, the relationship of the customer with the bank continues in a very positive way. The bank avoids the risk of encountering an unforeseen outcome, as the disputes are concluded under the supervision of an expert legal mediator trained in Banking and Finance Law and with a result accepted by the bank. After the Mediation Agreement Minutes, which the parties have agreed upon, is processed as a court order, the parties do not have to litigate with each other again regarding the dispute. As a result, participation banks go a long way, especially in the collection of problematic receivables, whether they have entered into legal proceedings or not.

WHAT ARE THE ADVANTAGES OF THE PARTICIPATION BANKS CHOOSING VOLUNTARY MEDIATION TO RESOLVE THEIR PROBLEMATIC RECEIVABLES?

In the case of mediation as a cause of action, the participation bank cannot decide who will be the mediator. The mediator here is selected from the list of expert mediators with a program. However, in the voluntary mediation method, the participation bank has the opportunity to decide in advance who the mediator will be and what standards mediation services will be provided. As a result, it will be possible to resolve the dispute more quickly and in the interests of the parties,when a mediator approached is a mediator who is expert in Banking and Finance Law, has knowledge and experience in the field of disputes, has previous references in resolving disputes, and can produce alternatives for the resolution of the dispute. The presence of mediators with the above qualifications is essential, especially for complex and high-numbered critical debts. In voluntary mediation, this opportunity is provided to participation banks.

Arbitration Lawyer Nihat Şimsek Nihat Şimşek