Updated: Aug 6
Pursuant to Art.10/E of the International Arbitration Law No. 4686, “Unless otherwise agreed by the parties, the arbitrator or the arbitral tribunal prepares a terms of reference after the action and response petition are submitted. In the terms of reference, the names, titles and titles of the parties, valid addresses for notification during arbitration, summary of their claims and defenses, explanation of the dispute, names and surnames of the arbitrators, titles and addresses, the place of arbitration, the duration of the arbitration, the beginning of the period, the procedural provisions applicable to the dispute, and whether the arbitrators are authorized to mediate amicably. The terms of reference is signed by the arbitrators and the parties”.
The terms of reference resemble the certificate of consent prepared by the state courts in Turkey. After successfully finding a field of application in ICC Arbitration, it has also inspired other institutional arbitration centers. It has been observed that the terms of reference can also be found in the ad hoc arbitration practice.
As can be understood from the relevant regulation, the terms of reference is prepared by the arbitrator or arbitral tribunal after the case and response petitions are submitted. In other words, the time when the certificate of duty will be issued has been determined by the legislator. After the terms of reference is prepared, the referees and the parties sign it.
Preparation of a terms of reference has many advantages for the parties. The first of these is that it is a road map for the parties before starting the trial due to the fact that there are many issues such as the language of the judgement, the place of arbitration, the law to be applied to the dispute, the parties to the case. Thus, the parties will see the dispute clearly.
Another advantage of preparing a terms of reference is to clarify the determination of the jurisdiction of the arbitrator or arbitral tribunal. Accordingly, the arbitrator or arbitral tribunal will easily see the claims and defenses of the parties, and matters other than this claim and defense will not be addressed while making a decision. The fact that the arbitrator or the arbitral tribunal does not make a decision on an issue that is not requested from him is also of great importance in terms of not canceling the relevant arbitration decision.
Preparation of the terms of reference has some legal consequences. The first is that when the terms of reference are prepared and signed by the parties, the parties accept the existence and validity of the arbitration clause. Accordingly, the party who signed the terms of reference would not later object to the absence of arbitration clause. In case the parties prepare a terms of reference with a different content than the arbitration agreement, it is also important whether the arbitration agreement or the terms of reference will be taken as basis.
Another consequence of the preparation of a terms of reference is the reduced likelihood of annulment of the arbitral award and refusal of its enforcement. Such that, if the terms of reference are duly prepared, the chances of validity of the arbitrator's decision will increase. Issues such as the claims and defenses of the parties in the terms of reference, writing the claims of the parties, disclosure of the dispute, notification of the place of arbitration, its duration, the beginning of the period, and the selection of the law to be applied to the dispute will prevent the arbitral award from being annulled for these reasons because the parties will have declared their agreement on these matters during the trial.
Mehmet Tuğberk DEKAK