international arbitration - Av. Namık Çağrı Gündoğdu

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international arbitration - Av. Namık Çağrı Gündoğdu
INTERNATIONAL ARBITRATION
POWERS OF THE ARBITRATORS
12.01.2015
İstanbul Bar Association
Legal Intern - Namık Çağrı GÜNDOĞDU
Januray 2015 | Legal Intern - Namık Çağrı GÜNDOĞDU 1
INDEX
A-
THE CONCEPT OF ARBITRATION AND IT’S ELEMENTS
:3
B-
SOURCES OF INTERNATIONAL ARBITRATION
:4
1-
CONVENTIONS
:4
2-
THE EUROPEAN CONVENTION ON INTERNATIONAL COMMERCIAL ARBITRATION (GENEVA CONVENTION)
:4
C-
a- Scope of Application of the Convention
:4
b- Arbitration Agreement
:6
c-
:6
Ad Hoc Arbitration / Arbitral Institutions
d- Parties of the Arbitration Agreement
:6
e- Formation of the Arbitral Tribunal
:6
f-
:8
State Parties of Geneva Convention
AUTHORITIES OF ARBITRATORS IN ARBITRATION
:8
1-
:8
AUTHORITIES OF ARBITRATORS
a- Interim Measures of Protection and Interim Attachments
:8
b- Determination of Arbitrators
:9
c-
:9
Challenging an Arbitrator
d- Withdraw of Arbitrator
:9
e- Invalidity of Agreement
: 10
f-
: 10
Lack of Venue and Exceeding the Scope of Authority
g- Arbitration Place
: 10
h- Language of Arbitration
: 10
i-
Amendments and Supplements
: 11
j-
Hearing – Expert Appointment – Viewing
: 11
k-
Substansive Law
: 11
l-
Decision Making
: 11
m- Correction of Award
: 11
D-
CONCLUSION
: 12
E-
BIBLIOGRAPHY
: 13
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A.
THE CONCEPT OF ARBITRATION AND IT’S ELEMENTS
Subjects of the arbitration are usually civil and commercial disputes. With
arbitration, power of making decision is transferred to one or more unofficial arbitrator
instead of court with a special declaration of intent.1 Application of this system especially
seen in international area with foreign elements and international trade.2
Arbitration based on the free wills of the parties. The parties can freely decide the
arbitrators, numbers and qualifications of arbitrators, procedure of their election, place of
arbitration, the law will be applied on arbitration agreement, arbitration process and
substantive law used for dispute settlement, means of proof and the language while they
are accepting arbitral proceeding.3 There are very limited number of mandatory rules in
national laws and international contracts, interferes the wills of the parties for preventing
abuse of arbitration.4
Application of arbitration procedure bases on a special decleration of intention, as a
rule, an arbitration agreement or arbitration clause.5
“Arbitration agreement”, “main contract”, “arbitrator agreement” and “arbitral
proceedings” are separated from each other. Arbitral proceedings includes arbitral award.
Arbitration agreement is an agreement that it gives an authority to the people chosen by
parties for settlement of the legal disputes which are existing (compromis) or may arise in
the future (clause compromissiore). Validity of the arbitration agreement is based on that
the dispute which is exist or may arise in the future should be determinable while the
agreement is made. Whereas it is not necessary that the legal relationship which will cause
to come up the dispute, to be existing while the agreement is made.6
Arbitrator agreement, between arbitrators and the parties, is not different from
arbitration agreement for qualification, but it looks like in the character of Law of
Obligations more than arbitration agreement. In this regard, general rules of contracts are
applicable for arbitrator agreement.7
Arbitrator agreement can be defined as an agreement between the parties of
arbitration contract and arbitrators which is prepared in respect of private law and
procedural law terms about a legal relationship based on adjective and material law like
1
KURU Baki, Hukuk Muhakemeleri Usulü, C. VI, 6. Bası, İstanbul 2001, p. 5937;
NOMER Ergin, Devletler Hususi Hukuku, 20. Bası, İstanbul 2013, p. 528
2
NOMER Ergin, , p. 528
3
NOMER Ergin / EKŞİ Nuray / ÖZTEKİN GELGEL Günseli, Milletlerarası Tahkim Hukuku, C. I, 4. Bası, İstanbul
2013, p. 1
4
NOMER Ergin, p. 530
5
NOMER Ergin, p. 530
6
KURU Baki, 5940-5941;
NOMER Ergin, p. 531
7
NOMER Ergin / EKŞİ Nuray / ÖZTEKİN GELGEL Günseli, p. 2
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rights and liabilities of the parties.8 Procedures and merits of the arbitration is determined
in this agreement.9
B.
SOURCES OF INTERNATIONAL ARBITRATION
1. CONVENTIONS
There are some conventions at the international level, and also there are plenty of
laws within the frameworks of these agreements at the national level made by countries
about arbitration. From the ways to appeal for arbitration to final decision is regulated in
the European Convention on International Commercial Arbitration (Geneva Convention).
Second step after the process regulated in Geneva Convention, is that the
recognition and approval of the arbitral awards by contracting parties within the
frameworks of the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards really fast and plain. (The New York Convention) (10th June 1958).10 It is considered
as coloumn because of that this conventions is widely accepted.11
There is an international center established with the Washington Convention 12
relates to settlement of investment disputes between states and citizens of other countries
for dispute settlement. Main purpose of this center is settling disputes between contract
states13 and citizens of other countries about disputes inflicted from investment with
arbitration.
There are some special and individual investment agreements between Turkey and
other countries, but these agreements will not be examined in this article.
2. THE EUROPEAN CONVENTION ON INTERNATIONAL COMMERCIAL ARBITRATION
(GENEVA CONVENTION)
a) Scope of application of the Convention
Geneva Convention is a result of United Nations European Economic Commission’s
works at 21th April 1961 for promoting of commerce between European countries and
8
Abbr., Balcı, p. 146
Yrd. Doç. Dr. TAŞKIN Alim, Hakem Sözleşmesi, Ankara 2000, p. 8
10
NOMER Ergin / EKŞİ Nuray / ÖZTEKİN GELGEL Günseli, p. 88
11
LEW Julian D.M./MISTELIS Laukas A./KRÖLL Stefan M., Comparative International Commercial Arbitration,
Kluwer Law International 2003, §26-21, p. 693-694
12
Called as Washington Convention for the place where it is signed.
13
Membership of ICSID is open for all countries. (Abbr. Eğilmez A. Mahfi, IMF Dünya Bankası ve Türkiye,
İstanbul 1997, p. 119)
9
Januray 2015 | Legal Intern - Namık Çağrı GÜNDOĞDU 4
ensuring dissemination of arbitration with organizational way. Convention came into
operation at 1964 and accepted by Turkey at 8th May 1991 with the law number 3730.14
Geneva Convention regulating the arbitral process from arbitrators interfere relying
on arbitration agreement or arbitration clause to arbitrators award.15
There are ten articles in Geneva Convention. First of these articles delimitates
arbitration with the subject of international commercial relationship. First article of the
Geneva Convention says:
This Convention shall apply
(1) to arbitration agreements concluded for the purpose of settling disputes arising
from international trade between physical or legal persons having, when
concluding the agreement, their habitual place of residence or their seat in
different Contracting States;
(2) to arbitral procedures and awards based on agreements referred to in paragraph
1(a) above.16
There are two conditions which are objective condition and subjective condition for
application of Geneva Convention. Subjective condition is that, habitual residence of the
parties must be in different state parties. As a result of this condition, if both of the parties’
habitual residence is in the same state, Geneva Convention cannot be applied. Objective
condition is that, the dispute must be arisen from international commercial relationship. In
different words, if there is no international commerce, Geneva Convention is not acceptable
for disputes.17 With this conditions, economic character of relationship between the parties
must be related with international commerce.18 The concept of international commercial
relationship must be interpreted broadly. “e.g, transporting of goods or services from a
state to another in exchange for a price; international sales; license agreements; common
agreements for scientific and technical researches; contracts about artistic activities
including international tours; radio and TV broadcasting are defined as commercial acivities
and Geneva Convention is applicable for these activities.”19
14
ÇELİK Cemil, Yargıtay Dergisi, Temmuz 2003, p. 359 (Abbr. RG 23.9.1991/21000)
SCHMITTHOFF M. Clive, Schmitthoff’s Export Trade – The Law & Practice of International Trade, 9th ed.,
London 1990, p. 683
15
KAPLAN Yavuz, Milletlerarası Tahkimde Usule Aykırılık, Ankara 2002, p. 71
16
NOMER Ergin / EKŞİ Nuray / ÖZTEKİN GELGEL Günseli, p. 52
17
YILMAZ Ejder, Milletlerarası Ticari Tahkime Dair Avrupa (Cenevre) Sözleşmesi ve Türk Tahkim Hukuku
Hakkında Bazı Düşünceler – Bir Yorum Avrupa-Cenevre/New York Sözleşmeleri ve Türk Tahkim Hukuku
Sempozyumu, Ankara 1991, p. 16-17
18
ŞANLI Cemal, Milletlerarası Ticari Tahkimde Esasa Uygulanacak Hukuk, Ankara 1986, p. 32.
19
YILMAZ, 17
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b) Arbitration Agreement
There are two possible ways for accepting arbitration in Article I/2-a of Geneva
Convention. Parties can sign an individual contract different from main contract and accept
arbitration. In this situation, subject of the contract is exclusively arbitration. Parties can
add an arbitration clause in main contract.20
There is really flexible regulation about form of the arbitration clause or arbitration
agreement. In the same article it is explained that the arbitration agreement or arbitration
clause must signed by the parties, or contained in an exchange of letters, telegrams, or in a
communication by teleprinter and, in relations between States whose laws do not require
that an arbitration agreement be made in writing, any arbitration agreement concluded in
the form authorized by these laws.
c) Ad Hoc Arbitration / Arbitral Institutions
The term “arbitration” shall mean not only settlement by arbitrators appointed for
each case ( ad hoc arbitration) but also by permanent arbitral institutions.
d) Parties of the Arbitration Agreement
There are no limitation about the parties of the arbitration agreement or arbitration
clause in Geneva Convention. Both real person and legal person can apply arbitration for
commercial dispute resolution. legal persons considered by the law which is applicable to
them as “legal persons of public law” have the right to conclude valid arbitration agreement.
On signing, ratifying or acceding to this Convention any State shall be entitled to declare
that it limits the above faculty to such conditions as may be stated in its declaration.
e) Formation of the Arbitral Tribunal
Article IV/1-a of the Geneva Convention is regulating the formation of the arbitral
tribunal. The parties to an arbitration agreement shall be free to submit their disputes to a
permanent arbitral institution; in this case, the arbitration proceedings shall be held in
conformity with the rules of the said institution.21
If the parties submit their disputes to an ad hoc arbitral procedure; in this case, they
shall be free inter alia;
(1) to appoint arbitrators or to establish means for their appointment in the event of
an actual dispute;
(2) to determine the place of arbitration; and
(3) to lay down the procedure to be followed by the arbitrators.
20
21
NOMER Ergin / EKŞİ Nuray / ÖZTEKİN GELGEL Günseli, p. 53
NOMER Ergin / EKŞİ Nuray / ÖZTEKİN GELGEL Günseli, p. 54
Januray 2015 | Legal Intern - Namık Çağrı GÜNDOĞDU 6
Article IV/2 of the convention regulates that where the parties have agreed to
submit any disputes to an ad hoc arbitration, and where within thirty days of the
notification of the request for arbitration to the respondent one of the parties fails to
appoint his arbitrator, the latter shall, unless otherwise provided, be appointed at the
request of the other party by the President of the competent Chamber of Commerce of the
country of the defaulting party's habitual place of residence or seat at the time of the
introduction of the request for arbitration.
Arbitrators are different from judges in the light of the given information above, such
as they are assigned by the parties’ will and they have no official capacity. Judges cannot be
an arbitrator; they can only do their duty.22
Real person and legal person can be an arbitrator23 if they have legal capacity to use
their civil rights.24 In Turkish law system, legal person is not in the same standing with real
person about legal capacity for using civil rights, and they have limited capacity for having
rights. That’s why legal person cannot be a chosen arbitrator, only real person can be an
arbitrator in the light of Article VII/A-1 of International Arbitration Law25 ,
Arbitrator can be identified with their name by the parties. In this case, if one of the
arbitrators, identified with his name in the contract, does not accept to be an arbitrator,
arbitration agreement will be invalid.26
It is possible to authorize a 3rd person for selecting arbitrators in the arbitration
agreement by parties of the agreement. If this person dies or he does not accept to select
arbitrators, then arbitration agreement will be invalid.27
22
Abbr.
POSTACIOĞLU İlhan, Medeni Usul Hukuku Dersleri, Ankara 1975, p. 65;
ÇENBERCİ Mustafa, Hakemlerin Tayini Usulü ve Ücreti, (Tahkim IV. Ticaret ve Banka Hukuk Haftası), Ankara
1965, p. 124.
23
TAŞKIN Alim, Hakem Sözleşmesi, Ankara 2000, p. 55
24
Abbr.
ÖZSUNAY Ergun, Medeni Hukukumuzda Tüzel Kişiler, Tüzel Kişilerin Genel Teorisi Dernekler, Vakıflar, 5. Bası,
İstanbul 1982, p. 61;
ZEVKLİLER Aydın, Medeni Hukuka Giriş ve Başlangıç Hükümleri Kişiler Hukuku, Aile Hukuku, 3. Bası, Ankara
1992, p. 190
25
RG 5.7.2001/24453
26
KURU Baki/ARSLAN Ramazan/YILMAZ Ejder, Medeni Usul Hukuku Ders Kitabı, Ankara 2000, p. 925
27
KURU Baki, Hukuk Muhakemeleri Usulü, İstanbul 1991, p. 4038
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f) State Parties of Geneva Convention28
Germany
Czech republic
Kazakhstan
Romania
Austria
Denmark
Cuba
Russian Federation
Belarus
Finland
Luxembourg
Slovenia
Belgium
France
Hungary
Slovakia
Bosnia and
Herzegovina
Croatia
Macedonia
Turkey
Bulgaria
Spain
Moldova
Ukraine
Burkina Faso
Italy
Polan
Yugoslavia
C.
AUTHORITIES OF ARBITRATORS IN ARBITRATION
It is mentioned that Geneva Convention is an convention regulating general
framework of arbitration process, and the procedures and merits of the arbitration process
is determined by parties.29 Based on this rule, we will examine the authorities of the
arbitrators in International Arbitration.30 It is necessary to state that, subjects and rules of
arbitration process are determined by parties and because of that arbitrators have authority
within the limits of arbitration agreement.
International Arbitration Law has nineteen articles and a provisional clause, but none
of them listing the authorities of arbitrator. It must be examined article by article and topic
by topic for making a list for authorities of arbitrators.
1. AUTHORITIES OF ARBITRATORS
a) Interim Measures of Protection and Interim Attachments
If a dispute, which is the subject of an arbitration agreement, occurs, before the
arbitration process, one of the parties cannot request from arbitral tribunal an interim
measure of protection or an interim attachment.
28
http://untreaty.un.org (31.8.2012)
Abbr. Geneva Convention Art. IV/1-a-iii
30
RG 5.7.2001/24453
29
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Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a
party, order an interim measure of protection or an interim attachment during arbitral
proceedings. The arbitral tribunal may require any party to provide appropriate security in
connection with such measure or attachment. The arbitral tribunal shall not grant interim
measures or interim attachments [a] that are required to be enforced through execution
offices or to be executed through other official authorities or [b] that bind third parties.31
If a party does not comply with the interim measure or attachment, the other party
may request the assistance of the competent court for taking an interim measure of
protection or an interim attachment. The competent court, if necessary, may hear [the case
in question] through a substitute court. 32
b) Determination of Arbitrators
Unless otherwise agreed by the parties33 or in arbitration with three arbitrators, each
party shall appoint one arbitrator and the two arbitrators thus appointed have authority
appoint the third arbitrator.34
In an arbitration with more than three arbitrators, however, the number shall be
odd , the arbitrators who will appoint the last arbitrator shall be appointed by the parties
in equal numbers in accordance with the procedure set forth in the above paragraph.36
35
c) Challenging an Arbitrator
A party who challenged one or more arbitrators before the arbitral tribunal shall
provide its request and reasoning [for that purpose]. Arbitral tribune has authority to accept
or reject of this request. A party who becomes aware that the challenge is not successful
may, within thirty days after having received notice of the decision rejecting the challenge,
apply to the civil court of first instance for lifting such decision and removal of the arbitrator
or the arbitrators.37
d) Withdraw of Arbitrator
If an arbitrator becomes de jure or de facto unable to perform his functions or for
other reasons fails to act without undue delay, and if the parties not agree on the
termination, arbitrator has authority to withdraw from his office.38 When an arbitrator
withdraws, his duty finishes for the arbitration agreement.
31
International Arbitration Law, Article. 6
Art. 6/3
33
Art. 7/A
34
Art. 7/B-3
35
Art. 7/A
36
Art. 7/B-4
37
Art. 7/D
38
Art. 7/F
32
Januray 2015 | Legal Intern - Namık Çağrı GÜNDOĞDU 9
e) Invalidity of Agreement
The arbitral tribunal has authority to rule on any objections with respect to the
existence or validity of the arbitration agreement and contract. For that purpose, an
arbitration agreement, which forms part of a contract, shall be treated as an agreement
independent of the other terms of the contract. A decision by the arbitral tribunal that the
contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.39
f) Lack of Venue and Exceeding the Scope of Authority
A plea that the arbitral tribunal does not have jurisdiction shall be raised not later
than the submission of the statement of defense. The arbitral tribunal may, in either case,
admit a later plea if it considers the delay justified and has the authority to accept delayed
plea.
The arbitral tribunal shall rule on an objection as to its jurisdiction as a preliminary
question and has the authority to acceptance or rejection of the objection. If the arbitral
tribunal considers itself competent then it shall proceed with arbitration and shall render its
decision.
A plea that the arbitral tribunal is exceeding the scope of its authority shall not be
valid if it is not raised without undue delay. The arbitral tribunal may, in either case, admit a
later plea if it considers the delay justified and has the authority to accept delayed plea.40 41
g) Arbitration Place
The parties or an arbitration institution chosen by the parties are free to determine
the place of arbitration. Failing such agreement or determination, arbitral tribunal has the
authority to determine the place of arbitration having regard to the circumstances of the
case.
The arbitral tribunal may meet upon notification in advance to the parties at any
place where the circumstances of the arbitration so require.42
h) Language of Arbitration
The parties are free to agree on the language or languages to be used in the arbitral
proceedings. Failing such agreement, arbitral tribunal has the authority to determine the
language or languages. The agreement or determination, unless otherwise specified
39
Art. 7/H
Art. 7/H
41
Geneva Convention Art. V/1
42
Art. 9
40
Januray 2015 | Legal Intern - Namık Çağrı GÜNDOĞDU 10
therein, shall apply to any written statement by a party, any hearing and any award,
decision or other communication by the arbitral tribunal.43
i) Amendments and Supplements
Unless otherwise agreed by the parties, either party may amend or supplement his
claim or defense during the course of the arbitral proceedings. But arbitral tribune has
authority to determine that it inappropriate to allow such amendment having regard to the
delay in making it or to whether or not it creates an unjust difficulty for the other party or to
other circumstances and reject it.44
j) Hearing- Expert Appointment - Viewing
The arbitral tribunal has authority to decide whether to hold oral hearings for
presentation of evidence or for oral argument, or whether the proceedings shall be
conducted on the basis of the case file.45
The arbitral tribunal also has authority to appoint one or more experts to report to it
on specific issues to be determined by the arbitral tribunal, require a party to give the
expert any relevant information or to produce or to provide access to, any relevant
information or documents, rule on inspection of goods or other property. if the arbitral
tribunal considers it necessary, the expert shall, after delivery of his written or oral report,
participate in a hearing.46
k) Substantive Law
If the parties do not decide the applicable substantive law, the arbitral tribunal has
authority to decide the substantive law of a State, which has the closest connection with the
dispute.47
l) Decision Making
Certain issues concerning procedure may be decided by a presiding arbitrator, if so
authorized by the parties or the members of the arbitral tribunal. For having this authority,
it is necessary to acceptance of the members of the arbitral tribunal.48
m) Correction of Award
If a party may request the arbitral tribunal to correct in the award any material
errors in computation, any clerical or typographical errors or any errors of similar nature,
the arbitral tribunal considers that, following the receipt of the other party's opinion, the
43
Art. 10/C
Art. 10/D
45
Art. 11/A
46
Art. 12/A
47
Art. 12/C
48
Art. 13/A
44
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request is justified, it shall make the correction of the material error or give the
interpretation within thirty days of receipt of the request. The arbitral tribunal has authority
to correct any material error on its own initiative within thirty days from the date of the
award.49
D.
CONCLUSION
Arbitration is different from courts, because it base on the intentions of the parties.
Therefore, it can be defined as special adjudication which is totally decided by parties, and
they create their own adjudication procedures.
Whole process from the number of arbitrators, to deciding how awards will be
written, is decided by parties. As a result of that, arbitrator’s authority is in the field of
undecided areas by the parties. In other words, arbitrators have authority to fill the gaps of
arbitration process, for which elements are not decided by the parties.
Most important reason of preferring arbitration in international commercial
relationships is that, Geneva Convention and other domestic laws about International
Commercial Arbitration are just a framework rules, which are identifying the largest limits of
arbitration, and parties have almost limitless authority to decide how to settle the disputes,
including delimiting authorities of arbitrators, between them and other merchant.
*
49
*
*
Art. 14/B
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BIBLIOGRAPHY
 KURU Baki, Hukuk Muhakemeleri Usulü, C. VI, 6th Edition, İstanbul 2001
 NOMER Ergin, Devletler Hususi Hukuku, 20th Edition, İstanbul 2013
 NOMER Ergin / EKŞİ Nuray / ÖZTEKİN GELGEL Günseli, Milletlerarası Tahkim Hukuku,
C. I, 4th Edition, İstanbul 2013
 Yrd. Doç. Dr. TAŞKIN Alim, Hakem Sözleşmesi, Ankara 2000
 LEW Julian D.M./MISTELIS Laukas A./KRÖLL Stefan M., Comparative International
Commercial Arbitration, Kluwer Law International 2003, §26-21
 Eğilmez A. Mahfi, IMF Dünya Bankası ve Türkiye, İstanbul 1997
 ÇELİK Cemil, Yargıtay Dergisi, Temmuz 2003
 SCHMITTHOFF M. Clive, Schmitthoff’s Export Trade – The Law & Practice of
International Trade, 9th Edition., London 1990
 KAPLAN Yavuz, Milletlerarası Tahkimde Usule Aykırılık, Ankara 2002
 YILMAZ Ejder, Milletlerarası Ticari Tahkime Dair Avrupa (Cenevre) Sözleşmesi ve Türk
Tahkim Hukuku Hakkında Bazı Düşünceler – Bir Yorum Avrupa-Cenevre/New York
Sözleşmeleri ve Türk Tahkim Hukuku Sempozyumu, Ankara 1991
 POSTACIOĞLU İlhan, Medeni Usul Hukuku Dersleri, Ankara 1975
 ÇENBERCİ Mustafa, Hakemlerin Tayini Usulü ve Ücreti, (Tahkim IV. Ticaret ve Banka
Hukuk Haftası), Ankara 1965
 ÖZSUNAY Ergun, Medeni Hukukumuzda Tüzel Kişiler, Tüzel Kişilerin Genel Teorisi
Dernekler, Vakıflar, 5th Edition, İstanbul 1982
 ZEVKLİLER Aydın, Medeni Hukuka Giriş ve Başlangıç Hükümleri Kişiler Hukuku, Aile
Hukuku, 3rd Edition, Ankara 1992
 TAŞKIN Alim, Hakem Sözleşmesi, Ankara 2000
 KURU Baki/ARSLAN Ramazan/YILMAZ Ejder, Medeni Usul Hukuku Ders Kitabı, Ankara
2000
 KURU Baki, Hukuk Muhakemeleri Usulü, İstanbul 1991
 http://untreaty.un.org
 Geneva Convention
 T.C. BAŞBAKANLIK – RESMİ GAZETE
 International Arbitration Law - Turkey
Januray 2015 | Legal Intern - Namık Çağrı GÜNDOĞDU 13

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