Turkey: Confidentiality In Alternative Dispute Resolution Methods And Consequences Of Breach Of Confidence

INTRODUCTION

Alternative dispute resolution methods are essential for modern legal frameworks. Indeed, alternative dispute resolution methods lead to a lighter judicial burden and faster resolution for the parties. In this article, the evaluation of the principle of "confidentiality", which is one of the basic principles in the processes of Mediation, Conciliation, Conciliation within the scope of Article 35/A of the Attorneys' Act and Arbitration, will be conducted. Furthermore, potential challenges arising from breaches of confidentiality will be explored.

A. Confidentiality in Mediation

Mediation is the settlement of legal disputes not before the court but with the help of a neutral and expert third party, on condition that it is specific to the field in which the parties are able to freely dispose of their disputes.

When examining the provisions of Law No. 6325 on Mediation in Civil Disputes ("Law No. 6325"), it becomes evident that the principle of confidentiality is among the fundamental tenets governing mediation. This is because fostering trust in the mediation institution is essential for facilitating openness and communication between the parties involved in resolving disputes. Therefore, the legislator has ensured the confidentiality of the mediation process through legal regulations aimed at promoting this openness and trust. With this legal guarantee in place, parties can freely and honestly articulate their circumstances, interests, and desires, thereby ensuring a healthy and equitable process for all involved parties.

Article 4 of Law No.6325 entitled "Confidentiality"states that;

"Unless agreed otherwise by the parties, the mediator shall be liable to keep confidential the information and documents submitted to him/herself in the frame of the mediation activity or obtained otherwise, and the records kept by him/herself."

In addition to the aforementioned provision, Article 6 of the The Turkish Mediators' Code of Ethics stipulates that unless otherwise agreed by the parties, the mediator is obliged to keep confidential the information, documents and records submitted or obtained in any other way within the framework of the mediation process.

In order for the mediation process to proceed safely for the parties, both parties' interests should be met to the maximum extent. Whether the process concludes in agreement or disagreement, the parties' possibility of easy communication with each other or with the mediator throughout the process depends on the existence of an environment of mutual trust. First and foremost, mediators are, as a rule, obliged to keep confidential any documents or information submitted or obtained by them in any other way. In addition, unless otherwise agreed by the parties, the mediator shall not share with third parties the documents and information shared and claimed by the parties during the mediation process, and shall not cause third parties to acquire such information for any reason whatsoever.

In this respect, the mediator shall inform the parties in detail about confidentiality at the very beginning of the process. The success of a mediation process conducted with informed parties regarding confidentiality is higher because the parties agree in advance that their thoughts will not be used against them in any way and will remain confidential, allowing them to express their thoughts more comfortably. It should be noted that, in addition to the parties involved, as stipulated in Law No.6325, other individuals in a third-party position also have a duty of confidentiality.

Violation of the confidentiality obligation is subject to sanctions, as envisaged under Law No.6325, which is specified in Article 33. Individuals who cause harm to the legally protected interests of others by acting contrary to this obligation may be punished with imprisonment for up to six months. If parties suffer damage due to the breach of confidentiality, it is also possible to seek compensation under private law provisions.

B. Confidentiality in Conciliation

Pursuant to the Criminal Procedure Code No. 5271 ("CPC"), conciliation in criminal law, as delineated in Article 253/1 of the CPC, refers to the procedure wherein the victim and perpetrator of the crime engage in communication to resolve the dispute with the assistance of a neutral mediator during the criminal investigation and trial. Conciliation stands as one of the alternative dispute resolution methods intended to resolve disputes extrajudicially yet under the oversight of judicial authorities.

Pursuant to Article 32 of the Regulation on Conciliation in Criminal Procedure titled "Confidentiality of Conciliation Negotiations"; the negotiations on conciliation shall be conducted in confidence. The conciliator, the parties, attorneys are obliged to keep confidential the statements made during the conciliation process, all the facts conveyed to him/her or obtained by any other means.

Conciliation in criminal disputes must be conducted confidentially to ensure the freedom of expression of the parties, thereby facilitating their ability to reach an agreement, and to safeguard the interests of the parties. The conciliation process commences with the assurance that all negotiations and evidence presented during conciliation will be kept confidential and preserved.

Due to the principle of confidentiality, statements made during conciliation negotiations cannot be disclosed later unless otherwise agreed upon by the parties. Such statements cannot be admitted as evidence in any investigation, prosecution, or lawsuit. Participants in the negotiations cannot be called upon as witnesses regarding this information. However, the assertion of a pre-existing document or fact during conciliation negotiations does not preclude their use as evidence in the investigation, prosecution process, or lawsuit.

Pursuant to Article 285 of the Turkish Criminal Code No. 5237, if confidentiality is breached during settlement negotiations in the investigation phase, the offender may face imprisonment and a judicial fine. If the breach of confidentiality is committed by the conciliator, the penalty is increased due to the conciliator's holding of a public office.

C. Confidentiality in Conciliation within the Scope of Article 35/A of the Attorneys' Act

Article 35/A of Attorneyship Act No. 1136 is as follows:

"In actions and cases that have been entrusted to them, attorneys, together with their clients, may invite the other party to conciliation before a suit has been filed or before hearings have commenced for an already filed suit, provided that such conciliation relates exclusively to matters in which the parties obtain resulting from their intentions in the claim. If the other party takes up the invitation and conciliation is reached, the subject of the conciliation, its place and date, and the actions that each party will carry out are laid out in a memorandum and signed jointly by the attorneys and the clients.''

This article stipulates that attorneys have the authority to initiate conciliation in cases referred to them prior to the filing of a lawsuit or before the commencement of a trial, subject to the parties' consent. Conciliation enables parties to reach a settlement before resorting to litigation or initiating a lawsuit, thereby expediting the resolution of disputes.

The aim of this article is to authorize attorneys to pursue settlement negotiations with their clients either prior to initiating legal proceedings or after initiating proceedings but before the commencement of the trial. Article 35/A of the Advocacy Law is established to delineate the procedures and principles governing conciliation, with the objective of swiftly resolving disputes between parties with minimal expense.

The parties involved in the conciliation process are obligated to maintain the confidentiality of all information, documents, verbal communications, and records prepared, submitted, or obtained in any manner during the process. Settlement agreements cannot be utilized as evidence against the parties in lawsuits already filed or to be filed concerning the settlement, and any information disclosed about the dispute cannot be divulged by the parties or their legal representatives. Lawyers who breach these regulations will face sanctions in accordance with the Attorneyship Act and professional codes of conduct.

Articles 5 and 6 of the Regulation on Reconciliation of the Union of Turkish Bar Associations emphasize the principle of confidentiality as one of the core principles of conciliation. It is stipulated that, unless otherwise agreed, the parties are required to maintain the confidentiality of all information, documents, and records submitted to them, conveyed verbally, or obtained in any manner within the scope of the conciliation process.

D. Confidentiality in Arbitration

Arbitration is the convergence of the mutual consent of the parties to have a dispute resolved by an arbitrator or arbitral tribunal on matters within their control. In line with this, the agreement prepared establishes that the dispute is now subject to arbitration jurisdiction.

Although arbitration is subject to certain principles, the principle of confidentiality, which is one of the fundamental principles of arbitration, means that the existence of the arbitration clause, the evidence, the information and documents submitted to the file, and the arbitral award should not be disclosed to third parties. This principle also includes the refusal to allow the participation of anyone other than the parties to the dispute, their legal representatives and persons designated by them in the proceedings. After the proceedings, the confidentiality continues between the parties, unless otherwise agreed.

International agreements related to arbitration do not directly address the principle of confidentiality in international commercial arbitration. However, it is worth mentioning that while some states do not enact direct legal regulations on this matter, others incorporate the principle of confidentiality through either legislative means or implicit acceptance.

For instance, the International Arbitration Code No. 4686 ("IAA") also does not regulate the principle of confidentiality. There is also no restrictive provision in the IAA that allows the arbitral tribunal to decide that the parties are under a confidentiality obligation and that they shall not disclose the information obtained during the proceedings to third parties who are not parties to the arbitration. On the other hand, the IAA expressly regulates that the arbitral tribunal may issue preliminary injunction and preliminary attachment. According to this provision, the arbitral tribunal may grant all kinds of preliminary injunctions that are enforceable, may order a party to do or not to do something, and may award compensation for damages and losses arising from the failure of the parties to comply with such orders. Accordingly, in arbitrations governed by the IAA, the arbitrators may grant an preliminary injunction on the confidentiality obligation if a party requests such an injunction, and in such an injunction, the arbitrators may order the parties not to disclose information obtained during the arbitration proceedings to third parties.

To summarize, under Turkish law, the initiation of arbitration proceedings does not inherently impose a confidentiality obligation on the parties. However, it is worth noting that, through interpretation, arbitrators may establish confidentiality measures as a precautionary step in accordance with the provisions of the IAA.

Moreover, it is observed that arbitration institutions incorporate confidentiality provisions into their regulations. For instance, the rules of the London Court of International Arbitration (LCIA), the World Intellectual Property Organization (WIPO) arbitration rules, and the UNCITRAL arbitration rules revised in 2013 explicitly address the principle of confidentiality. Similarly, according to the Istanbul Arbitration Center (ISTAC) arbitration rules, "Unless otherwise agreed by the parties, the arbitration proceedings are confidential."

In International Centre for Settlement of Investment Disputes ("ICSID") arbitration, which differs significantly from commercial arbitration, interpretations regarding the confidentiality obligation yield varying conclusions. To summarize succinctly, some tribunals have asserted that confidentiality matters in investment arbitration differ from those in international commercial arbitration, emphasizing the need for transparency in arbitrations arising from international treaties. Conversely, in other instances, tribunals have expressed that the arbitration process would benefit from limiting public disclosure of proceedings in a non-controversial manner.

It is crucial to underline that in arbitration, the parties may agree on the confidentiality obligation. In such a case, it is easier to determine the information not to be disclosed to third parties who are not parties to the proceedings than in the absence of an agreement. Within the scope of such an agreement, issues such as which information will be considered confidential by the parties, how such information will be kept, and the obligations of the parties in case of disclosure of confidential information to third parties may be regulated.

On the other hand, in the absence of a confidentiality agreement, determining the boundaries of confidentiality becomes more challenging. If parties do not prearrange a confidentiality obligation in arbitration proceedings, the extent of the confidentiality obligation must be ascertained in accordance with the law governing the arbitration and its accompanying regulations.

E. CONCLUSION

As explained above, confidentiality is one of the fundamental principles in alternative dispute resolution methods. The principle of confidentiality is crucial as it allows parties to communicate openly with each other, facilitating the healthy and successful completion of the process in all alternative dispute resolution methods where parties aim to resolve the dispute

The presence of confidentiality in alternative dispute resolution methods fosters trust in these institutions and encourages parties to prefer these methods, which ultimately helps reduce the burden on the judiciary.

It is also significant to note that behaviors contrary to the principle of confidentiality and the disclosure of documents without confidentiality protection within the scope of alternative dispute resolution methods can result in violations of personal rights. In the event of a breach of confidentiality, various criminal sanctions may be imposed depending on the extent of damage to the honor, dignity, material, and moral personality of the other party.

In summary, alternative dispute resolution methods aim to resolve parties' issues with an equal approach without resorting to litigation, and it is crucial to fully implement the principle of confidentiality from the beginning of the process until the resolution of the issue.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.