Türkiye & England | Legal Update

Arbitration has become a preferred method of dispute resolution in international commerce due to its flexibility, confidentiality and the enforceability of arbitral awards. English law and Turkish law provide robust frameworks for arbitration, yet they reflect different legal traditions and practices. In this article, we delve into the key differences between the two jurisdictions, providing insights for practitioners navigating arbitration in either country.

Conclusion

Both English and Turkish arbitration laws are designed to facilitate effective dispute resolution with emphasis on party autonomy and the enforceability of arbitral awards. English law offers greater flexibility and less court intervention, particularly in international arbitration. While modern and harmonised with international standards, Turkish law retains elements of its civil law heritage, particularly in domestic arbitration, where court oversight is more pronounced.

Belgravia Law, with our team of highly qualified, multilingual lawyers, specialises in English law with a strong focus on arbitration. We are eager to collaborate with esteemed Turkish law firms, offering our expertise in both English and Turkish legal frameworks and exchanging valuable legal insights on arbitral matters.

On 18 July 2024, the Arbitration Bill (the “Bill”), designed to modernise the Arbitration Act 1996, was reintroduced to Parliament following its announcement in the King's Speech the day before. The Bill, presented by Justice Minister Lord Ponsonby, incorporates measures from previous legislation lost during the pre-election period in May 2024 and builds upon last year’s Law Commission recommendations.

The updated Bill aims to enhance the UK’s arbitration laws, ensuring London remains a leading global hub for arbitration. It seeks to make arbitration quicker, more cost-effective and more efficient. A provision expected to reduce nuisance claims and improve overall arbitration efficiency is Section 39A, granting tribunals the power to issue summary awards where a party has no realistic prospects of success.

Additionally, the Bill introduces the arbitrator’s duty to disclose relevant circumstances which could raise doubts as to their impartiality, further ensuring the integrity of the arbitration process. According to the UK government, these changes will bolster the UK’s position in the global dispute resolution market, contributing at least £2.5 billion annually to the British economy.

Lord Ponsonby emphasised the government’s commitment to maintaining the UK’s leadership in dispute resolution and enhancing the efficiency of legal processes for businesses and individuals alike.

Bar Chair Sam Townend KC welcomed the bill, noting it supports London’s reputation as a premier centre for international arbitration and contributes positively to the country's export income. The Bill reached its second reading in the House of Lords on 31 July 2024.

The revised Bill, introduced to Parliament on 18 July 2024, can be found here.

The EU Artificial Intelligence (AI) Act, a landmark regulation on AI technologies, was formally signed on 13 June 2024 and successfully entered into force on 1 August 2024.

This Act is set to transform how AI systems are developed, deployed and managed across the European Union. Organisations must therefore understand their obligations under the new legislation.

The EU AI Act applies to all providers, deployers, importers and distributors of AI systems impacting EU users. Initially proposed in 2021, the Act has undergone significant changes following negotiations. The AI Act adopts a risk-based approach, assigning AI applications to four risk categories based on the potential threat they pose: unacceptable risk, high-risk, limited risk and minimal risk applications.

The EU AI Act is expected to become a global standard for AI regulation. It aims to establish a unified framework that incorporates the concepts of risk acceptability and trustworthiness of AI systems as perceived by their users. By addressing these aspects within a single framework, the Act aims to provide a comprehensive approach to AI regulation that can be adopted and implemented internationally.

The EU AI Act will have extraterritorial reach across all sectors. Other jurisdictions should be aware that they may still be subject to the Act if:

• their system is placed on the market in the EU;

• their providers or users are physically present in the EU; or

• the output of the system is used in the EU.

The EU AI Act's implementation will be phased:

• 6 months after entry into force: Prohibitions on specific AI systems begin.

• 12 months: Obligations for GP-AI providers and penalty provisions apply.

• 18 months: Guidelines on high-risk use cases released.

• 24 months: Regulation applies to high-risk AI systems.

• 36 months: Obligations for high-risk AI systems under Article 6(1) commence.

Next Steps for Law Firms

Law firms should take several key steps to ensure compliance with the EU Artificial Intelligence Act. They should catalog all AI systems used within the firm, including those from third parties, and classify each system according to the Act’s risk categories: unacceptable, high, limited, or minimal risk. This classification will guide the level of regulatory oversight required.

Establishing effective governance structures is crucial. Consider setting up an AI compliance team or appointing a Chief AI Officer to oversee compliance. Develop and document comprehensive strategies for monitoring and managing compliance and ensure all required documentation is prepared and maintained.

Training staff on the new regulations is essential. They should understand the risk categorisation, compliance measures and procedures for reporting non-compliance. Review and update internal policies and procedures to align with the Act’s requirements and establish a process for ongoing review and adaptation.

Engage with legal and AI experts to gain insights and stay informed about any updates to the Act. Communicate with clients about how the new regulations might impact them and their AI-related projects to maintain trust and ensure mutual compliance.

By taking these steps, law firms can navigate the transition to compliance with the EU AI Act effectively.

At Belgravia Law, we will continue to closely monitor how these regulations will impact the operation of law firms and will provide updates as the landscape evolves.

We are thrilled to announce the Eurasian Legal Professionals’ Forum, chaired by Benjamin Wells, is a supporting organisation for the prestigious Istanbul Arbitration Week. The event will take place from 30 September to 4 October at the Mandarin Oriental Bosphorus Hotel in Istanbul.

Istanbul Arbitration Week is a key gathering for legal professionals and arbitrators from around the globe, offering a platform for in-depth discussions on arbitration trends, best practices and the future of dispute resolution. The week-long event promises to be an enriching experience with a series of insightful panels, workshops and networking opportunities.

Our, Ceyda Ilgen, will be attending the event on behalf of Belgravia Law.

We look forward to the valuable insights and connections that will emerge from this event. If you are due to attend we would be delighted if you could meet with Ceyda to discuss latest developments and welcome your indication of when might be convenient for you.