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The Istanbul Regional Court has answered whether a general (accountable) manager of an airline needs specific authority to enter into arbitration contracts under Turkish law.

Istanbul Regional Court of Appeals decided that the general manager of an air carrier, who is an accountable manager with significant powers, is classified as a registered attorney rather than an agent. Therefore, according to the Turkish commercial code (“TCC”), he does not need specific authorization to enter into an arbitration agreement on behalf of the company.

 

In a recent ISTAC ("Istanbul Arbitration Centre") domestic arbitration award, it was concluded by the sole arbitrator that the general manager of an airline functions as an agent. Consequently, the arbitration clause of an aircraft lease and operation agreement signed by a Turkish air carrier and another Turkish aviation service company is deemed null and void due to the absence of the managing director's specific authority to execute arbitration agreements, as they were the only one signing on behalf of the air carrier.

 

After considering the filed set aside action, the 17th Chamber of Istanbul Regional Court concluded that the general manager, designated as the accountable manager under Article 17 of the Turkish Civil Aviation Authority ("CAA") regulation governing commercial airline operators, holds complete authority to carry out operational and maintenance activities as stated by the CAA and having been granted extended powers, such as the ability to sign letter of intent agreements to purchase aircraft and execute contracts for operational and financial leases of aircraft or aircraft parts should be considered a "registered attorney" (Article 547, TCC) and not an "agent" (Article 551, TCC). Consequently, they do not require specific authorization to execute arbitration agreements.

 

(*This judgement is open to appeal and is not final)

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