Stj. Öğr. Oğuz TOMAK

Calculation of Attorney Fees and Objections to Attorney Fees within the Scope of Insurance Arbitration

CALCULATION OF ATTORNEY'S FEES IN INSURANCE ARBITRATION AND OBJECTION TO ATTORNEY'S FEES

Attorney's fees are considered among litigation expenses under the Code of Civil Procedure No. 6100 (CCP), and this situation is regulated in articles 323/1-g and 441/1-d of the same code. The CCP states that the attorney's fees to be determined shall be calculated based on the Minimum Attorney's Fee Tariff (MAFT) in accordance with the Bar Act No. 1136 (BA). Accordingly, article 17/2 of MAFT states: "Insurance Arbitration Commissions, when ruling on attorney's fees, shall rule on attorney's fees according to the third part of this Tariff, provided that they do not fall below the fee stipulated for courts of first instance in the second section of the second part of this Tariff. However, one-fifth of the fee calculated according to this Tariff shall be ruled against those whose claims are partially or completely rejected. In matters that cannot be measured by money, the lump sum fee stipulated for courts of first instance in the second section of the second part of this Tariff shall be ruled. However, one-fifth of the stipulated lump sum fee shall be ruled against those whose claims are partially or completely rejected. The attorney's fee ruled by Insurance Arbitration Commissions cannot exceed the amount accepted or rejected." Additionally, article 169 of the BA states: "The attorney's fee to be imposed on the opposing party by judicial authorities cannot be less than the amount written in the attorney's fee tariff and cannot exceed three times that amount."

In cases where insurance-related disputes are conducted through arbitration, there is a special provision regarding attorney's fees in the Insurance Law No. 5684 (IL). Article 30/17 of the IL states: "The attorney's fee to be ruled against those whose claims are partially or completely rejected is one-fifth of the attorney's fee determined in the Minimum Attorney's Fee Tariff." In addition, article 16/13 of the Regulation on Arbitration in Insurance (RAI), issued based on the same article provision, states: "In cases where parties are represented by attorneys, the attorney's fee to be ruled against the parties is one-fifth of the attorney's fee calculated for cases heard in courts of first instance included in the Minimum Attorney's Fee Tariff for both parties."

Particularly, the relevant provision of RAI causes many confusions in practice. In this context, criticisms are made that this regulation was issued by disregarding the distinction between applicant (plaintiff) and opposing party (defendant) in determining attorney's fees, and that the regulation contains provisions contrary to the IL. In decision No. K. 2019/102994 of the Insurance Arbitration Commission, this situation is explained as follows: "Indeed, although article 16/13 of the Regulation on Arbitration in Insurance states that the attorney's fee to be ruled against the parties will be one-fifth of the attorney's fee calculated for cases heard in courts of first instance included in the Minimum Attorney's Fee Tariff for both parties, the said provision of the regulation contains a clearly contrary arrangement by expanding the scope of article 30/17 of the Insurance Law against the applicant. The said law has not explicitly granted authority to the Undersecretariat of Treasury for regulating attorney's fees in Insurance Arbitration. Article 124 of the Constitution stipulates that 'The Prime Ministry, ministries and public legal entities may issue regulations to ensure the implementation of laws and decrees concerning their own fields of duty, provided that they are not contrary to them.' In this regard, in the face of the general legal rule that regulations, which are also in the nature of usurpation of function and are lower in the hierarchy of norms, cannot stipulate provisions contrary to law, it has been concluded that it is mandatory to disregard the regulation provision contrary to law and apply the law provision instead."

Similarly, in decision No. K. 2021/37026 of the Insurance Arbitration Commission: "Regarding the determination of the attorney's fee to be ruled, although the 6th article of the Regulation on Making Changes in the Regulation on Arbitration in Insurance published in the Official Gazette dated 19.01.2016 and numbered 29598 requested that the attorney's fees to be ruled in favor of applicants' attorneys should also be determined as 1/5, the provision in the last paragraph of article 58 of Law No. 6327, which amended article 30 of Law No. 5684, states 'The attorney's fee to be ruled against those whose claims are partially or completely rejected is one-fifth of the attorney's fee determined in the Minimum Attorney's Fee Tariff.' and its justification 'Applications to the Insurance Arbitration Commission are generally made for low amounts. In this case, considering that the attorney's fee, which is among litigation expenses, may be high compared to the amount of the dispute for the party whose claim is partially or completely rejected, the necessary arrangement has been made in the article.' Since the law article aims to prevent the applicant from being exposed to high attorney's fees, it has been decided to rule on full attorney's fees in favor of the plaintiff, subject to the provision of article 6 of MAFT."

Contrary to the views explained above, there are also views that are compatible with the mentioned regulation. Accordingly, in the decision of the 11th Civil Chamber of the Court of Cassation dated 15.02.2016, No. 2016/64 Es. 2016/1453 K.: "...considering that arbitration proceedings are adversarial proceedings, when the arbitrator accepts the claim of one of the dispute parties to a certain extent, it means that the claim of the other party has also been rejected. At this point, the concept of rejection mentioned in the article is not only directed towards those in the position of plaintiff who benefit from the insurance contract." This situation is confirmed. Indeed, considering that arbitration proceedings are adversarial proceedings, to the extent that one party's claim is accepted, the other party's claim is also rejected. At this point, the concept of rejection mentioned in the article cannot be directed only towards those in the applicant position who benefit from the insurance contract. In addition, the attorney's fee ruled cannot exceed the amount accepted or rejected.

Additionally, according to the decisions of the 17th Civil Chamber of the Court of Cassation No. 2016/9857 E. 2019/3532 K. and 2018/4168 E. 2018/12891 K.: "In the decision dated 25.03.2016 given by the objection arbitration panel, considering that article 16/13 of the Regulation on Arbitration in Insurance should be applied for the attorney's fee to be ruled in favor of the plaintiff, it was necessary to rule on attorney's fees at a rate of 1/5 of the attorney's fee calculated according to article 13 of MAFT, but ruling on full proportional attorney's fees was not deemed correct. However, since this error was not deemed to require repetition of the proceedings, it was decided to correct and affirm the judgment in accordance with article 438/7 of CPCP No. 1086 by reference to article 3/II of the transitional provisions of CCP No. 6100."

As can be seen, how attorney's fees will be calculated as a result of arbitration in insurance brings great confusion. At this point, in my personal opinion, I find the explanations made by the Insurance Arbitration Commission in decision No. K. 2019/102994 very appropriate and consistent. The provision of IL stating "The attorney's fee to be ruled against those whose claims are partially or completely rejected is one-fifth of the attorney's fee determined in the Minimum Attorney's Fee Tariff" clearly indicates that the attorney's fee to be ruled against the applicant (plaintiff) will be 1/5 of the attorney's fee determined in MAFT. However, the provision of RAI stating "In cases where parties are represented by attorneys, the attorney's fee to be ruled against the parties is one-fifth of the attorney's fee calculated for cases heard in courts of first instance included in the Minimum Attorney's Fee Tariff for both parties" expands the law provision by evaluating not only the applicant but also the opposing party (defendant) within this scope. Therefore, according to the provision in article 124/1 of the Constitution of the Republic of Turkey stating "The President, ministries and public legal entities may issue regulations to ensure the implementation of laws and Presidential decrees concerning their own fields of duty, provided that they are not contrary to them," it is not possible to apply this regulation that is contrary to the law concerning its own field of duty and therefore contrary to the Constitution. Additionally, since it is a general legal rule that regulations, which are lower in the hierarchy of norms, cannot contain provisions contrary to law, it is clear that this regulation, which is contrary to law and the Constitution, should be disregarded and IL provisions should be applied. Because the application of a provision regulated contrary to law through regulation would clearly violate the RULE OF LAW principle stated in article 2 of the Constitution of the Republic of Turkey: "The Republic of Turkey is a democratic, secular and social state governed by the rule of law, within the notions of public peace, national solidarity and justice, respecting human rights, loyal to Atatürk nationalism, and based on the fundamental tenets set forth in the preamble." Therefore, in attorney's fees to be calculated within the scope of arbitration in insurance, IL will be taken as basis and it will be necessary to decide on 1/5 of the attorney's fee calculated according to MAFT for the attorney's fee to be ruled against the applicant. For the attorney's fee to be ruled in favor of the applicant, it is necessary to decide on full attorney's fees.

SAMPLE CALCULATIONS:

Let our dispute amount be 3,000.00 TL and a decision in our favor has been made:

1. According to article 17/2 of the Minimum Attorney's Fee Tariff (MAFT): "Insurance Arbitration Commissions, when ruling on attorney's fees, shall rule on attorney's fees according to the third part of this Tariff, provided that they do not fall below the fee stipulated for courts of first instance in the second section of the second part of this Tariff." The lump sum fee for cases followed in Courts of First Instance in the second section of the second part of the tariff is 5,100.00 TL as of 2022.

2. In the third part of the tariff, it is stated that 15% of up to 40,000.00 TL constitutes the attorney's fee. Since 15% of 3,000.00 TL is below 5,100.00 TL, the attorney's fee should be determined as 5,100.00 TL.

3. However, according to article 17/2 of MAFT: "The attorney's fee ruled by Insurance Arbitration Commissions cannot exceed the amount accepted or rejected." Therefore, the accepted amount of 3,000.00 TL will be our attorney's fee.

Let our dispute amount be 50,000.00 TL and a decision in our favor has been made:

1. According to MAFT, 15% for up to 40,000.00 TL, then 13% for the subsequent 50,000.00 TL constitutes the attorney's fee. 15% of 40,000.00 TL is 6,000.00 TL. 13% of the remaining 10,000.00 TL is 1,300.00 TL. The total is 7,300.00 TL.

2. Since 7,300.00 TL is not less than the lump sum fee in MAFT, our attorney's fee will be 7,300.00 TL.

3. Finally, we check whether 7,300.00 TL exceeds the accepted amount. 7,300.00 TL is less than the accepted amount. Therefore, 7,300.00 TL is our attorney's fee.

Let our dispute amount be 10,000.00 TL and a decision of 8,500.00 TL partial acceptance in our favor and 1,500.00 TL partial rejection against us has been made:

Rejection Decision:

1. According to the calculation in the first example, the attorney's fee will be 1,500.00 TL.
2. According to IL, 1/5 of 1,500.00 TL will be calculated. That is 300.00 TL. The attorney's fee we will pay to the insurance company will be 300.00 TL.

Acceptance Decision:

1. According to article 17/2 of the Minimum Attorney's Fee Tariff (MAFT): "Insurance Arbitration Commissions, when ruling on attorney's fees, shall rule on attorney's fees according to the third part of this Tariff, provided that they do not fall below the fee stipulated for courts of first instance in the second section of the second part of this Tariff." The lump sum fee for cases followed in Courts of First Instance in the second section of the second part of the tariff is 5,100.00 TL as of 2022.

2. In the third part of the tariff, it is stated that 15% of up to 40,000.00 TL constitutes the attorney's fee. Since 15% of 8,500.00 TL is below 5,100.00 TL, the attorney's fee should be determined as 5,100.00 TL.

3. According to article 17/2 of MAFT: "The attorney's fee ruled by Insurance Arbitration Commissions cannot exceed the amount accepted or rejected." 5,100.00 TL does not exceed the accepted amount. Therefore, 5,100.00 TL will be our attorney's fee.

As a result, it is obvious that adverse consequences will occur against us when attorney's fees are not calculated in this manner. Therefore, the commission's attorney's fee decision should be carefully checked and it should be meticulously examined whether a calculation as I explained above has been made. Objection applications should be made as urgently as possible against attorney's fee decisions that do not comply with the calculation. (However, the provision in article 30/12 of the Insurance Law stating "Arbitration decisions regarding disputes below five thousand Turkish liras are final. Arbitration decisions regarding disputes of five thousand Turkish liras and above can be objected to the Commission once within ten days from the notification of the decision to the interested party by the Commission. It is mandatory to deposit the application fee determined according to this article to the Commission in order to make an objection request. Upon objection, the execution of the arbitration decision is suspended. The objection request is examined by arbitration panels established by the Commission exclusively to examine these requests. A decision is made within two months from the transfer of the case to the panel regarding the objection request. Arbitration decisions regarding disputes of five thousand Turkish liras and above become final if no objection application is made within the time limit according to this article. The decision given upon objection made according to this article regarding these disputes is final." should be taken into consideration.) For objection, it is necessary to fill out the objection application form that can be obtained from the Commission's website, deposit the required objection application fee to the Commission's bank account, and deliver the original objection application form with wet signature and a copy of the receipt showing that the objection application fee has been paid to the Commission within the 10-day objection period.

An objection made within the time limit and in accordance with the procedure prevents the finalization of the arbitration decision and suspends the execution of the decision in accordance with article 30/12 of IL. Objections made to the Commission against arbitration decisions will first be examined procedurally at the Commission, and objections not made within the time limit or not made in accordance with the procedure will be rejected by the Commission objection authority and ninety percent of the deposited objection fee will be refunded to the interested party. If it is concluded that the objection has been made in accordance with the procedure, the file subject to objection will be submitted to a 3-person Objection Arbitration Panel selected from the Objection Arbitration Panel list and will be decided within the two-month legal period. The decision given by the Objection Arbitration Panel will be notified to the parties by the Commission. For disputes over 40,000.00 TL, parties have the right to appeal the decisions given upon objection. For other disputes, the decision given upon objection is final.

BIBLIOGRAPHY

Arbitration Decision Journal. (2021), 46. http://www.sigortatahkim.org/files/karardrgs46.pdf Access Date: 26.03.2022.

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https://www.mevzuat.gov.tr/mevzuatmetin/1.5.5684.pdf Access Date: 26.03.2022.

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