Ulgener

- Tuba Duygu Yazıcı, LL.M.

As maritime trade disputes are often international in nature, it is common practice to refer disputes to arbitration for dispute resolution. Disputes arising from cargo and passenger transportation, cargo damage and loss, carrier’s liability and charter parties are often referred to arbitration because the arbitrators who are experts in their field are trusted and the disputes are often resolved more quickly than in court.

For this reason, the parties to the charter party prefer to specify arbitration in their contracts for dispute resolution. However, there are of course certain conditions for this preference to be legally valid.

According to Turkish Law, the arbitration clauses in the charter party must have the following characteristics:

(1) The arbitration concent shall be clear and the agreement shall be in writing. (2) The parties to the arbitration agreement shall be authorized to make this choice. (3) The arbitration agreement shall be valid according to the law chosen by the parties.

Arbitration clauses that meet the above conditions will be valid and binding for the charter party parties. Accordingly, if the bill of lading holder is one of the parties to the charterparty (charterer), it is clear that the arbitration clause will bind him. However, the dispute generally arises in cases where the bill of lading holder is a third party, and in this case, it is discussed whether the bill of lading holder, who is not a party to the charter party, is bound by the arbitration clause inserted in the charter party.

The requirement that the arbitration agreement to be in writing can be met in two ways in maritime trade;

An arbitration clause can be added to the bill of lading together with the other existing terms and conditions.

The charter party containing the arbitration clause can be incorporated into the bill of lading by refence and a copy of the charterparty can be delivered to the holder of the bill of lading together with the bill of lading.

According to the relevant article of the Turkish Commercial Code, if there is a reference to the charter party in the bill of lading, a copy of the charter party must be presented to the bill of lading holder when the bill of lading is transferred. In this case, the provisions of the charter party can also be enforced against the holder of the bill of lading to the extent possible.

Therefore, in order for the provisions of the charter party incorporated into the bill of lading to bind the bill of lading holder, both the charter party must be referred to in the bill of lading and a copy of the charter party must be delivered to the bill of lading holder.

If all these conditions are met, the arbitration clause in the charter party should be considered binding for the bill of lading holder too. Despite this, we have previously encountered cases where the court ruled that that the arbitration clause in the charter party/ bill of lading shall be considered void because it was contrary to the ‘general terms and conditions’ of the Turkish Code of Obligations. The provisions of the Code of Obligations on general terms and conditions principally aim to regulate terms and conditions included in commercial agreements. In the article 25 of Turkish Code of Obligation it is regulated that “Provisions that are contrary to the rules of honesty (good faith) and against to the other party or that aggravate the situation of the other party can not be included in general terms and conditions”.

Based on this, in some of the cases we were involved in, the courts were of the opinion that in the event of damage to low-cost goods, the bill of lading holder's freedom to seek justice was hindered since he would not be expected to apply for arbitration in foreign countries, and for this reason, they considered the aforementioned arbitration clauses invalid since it violates the ‘general terms and conditions’.

However, in its recent decision dated June 2024, the Istanbul Maritime Court accepted the arbitration clause written in the charter party as valid and binding for the bill of lading holder and ruled that the Turkish courts did not have the jurisdiction to hear the dispute. In the case in question, the remark "to be used with the charter party" was written on the front of the bill of lading and there was also the remark "see back page for carriage conditions". Due to these remarks, it was accepted by the court that the charter party referred to was an annex to the bill of lading. Since it was clear that the bill of lading holder has received the goods by presenting the said bill of lading, the court decided that the arbitration clause in the charter party referred to in the bill of lading is valid and binding for the bill of lading holder and the dispute should be resolved through arbitration. (Istanbul Maritime (17th) Court, Case No 2023/460, Decision No, 2024/282, Decision Date 26 June 2024).