The validity of the arbitration agreement refers to both formal validity and substantive validity. Since the parties should have a free and sincere intention to enter into an arbitration agreement, it must be determined whether the parties have actually consented to the arbitration before concluding that an arbitration clause incorporated by reference is valid.  Therefore, for an arbitration clause to be validly incorporated by reference, the intention of the parties must go so far as to make the arbitration clause an integral part of the main contract.  Although Article 4(2) of the IAA and Article 412(3) of the CCP provide that the written form requirement is met and that the arbitration agreement is deemed valid for the purposes of arbitration agreements incorporated by reference, the question arises whether this inclusion includes the will and consent to arbitration. The effects of these provisions are clearly evident in the jurisprudence of the Turkish courts.  In fact, there are precedents in this regard by the Court of Appeal that broadly interpret the written form requirement under Article II of the 1997 New York Convention, even before the entry into force of the LIA.  Article II of the New York Convention states that “written agreements shall include an arbitration clause in a contract or arbitration agreement signed by the parties or contained in an exchange of letters or telegrams.” In the present case, the tribunal held that the parties may appeal to an arbitral tribunal if the correspondence between the parties indicates that there is a contract subject to the FOSFA rules. This raises certain problems, not least because the reasoning is based mainly on the technical aspect of an arbitration clause according to which, although it may be part of a contractual document, it is a contract in itself. This misnomer about an “arbitration clause” may be familiar to corporate lawyers, but it is not rational to assume that this is also the case for a business owner. “All terms and conditions are hereby incorporated” does not generally mean “all provisions except the arbitration clause” for the parties. (a) the contract in question should be in writing; “Each State Party shall recognize a written agreement by which the parties undertake to submit to arbitration all or part of any disagreements which have arisen or may arise between them concerning a particular contractual or extra-contractual legal relationship concerning any matter which may be settled by arbitration. The term `written agreement` includes an arbitration clause contained in a contract or arbitration agreement signed by the parties or contained in an exchange of letters or telegram. So far, there has not been a uniform way in which European courts have dealt with the issue of arbitration agreements incorporated by reference; An overview of case law in different countries shows that, in most cases, these arbitration agreements are analysed according to the existence and scope of the parties` agreement to submit their disputes to arbitration. However, in the absence of a clear position of jurisprudence or international or national rules clarifying the conditions for proper incorporation, any party that has to deal with standard forms or general commercial terms in the course of its commercial activities is strongly advised to include in the main agreement an explicit reference to the arbitration clause contained in the annexed document.
The above statement was found to be similar to what the Supreme Court held in M.R. Engineers. However, the Court chose not to rely entirely on these judgments. The Supreme Court relied on Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v. Sometal S.A.L. (hereinafter “Habas Sinai”), which extended the scope of “individual contractual cases” to include even the standard contracts of one of the parties. This essentially meant that “individual contract cases” were no longer limited to model contracts of professional associations or regulatory authorities, but also included the standard forms of one of the contracting parties. The Oberster Gerichtshof therefore extended the exception to the general reference as defined by it in M.R. Engineers. These views appear to have been phased out following the enactment of the Arbitration Act 1996, section 6 of which contains a specific provision dealing with arbitration agreements by reference and providing that “a reference in an agreement to a written form of arbitration clause or to a document containing an arbitration clause constitutes an arbitration agreement where that reference makes that clause an integral part of the agreement”. In addition, article 5, paragraph 3, of the Act stipulates that “parties who agree otherwise than in writing by reference to written terms shall enter into a written agreement”; Thus, an oral agreement containing by reference the provisions of a written form containing an arbitration clause would now constitute a valid arbitration agreement.
To put this in perspective, suppose there is a contract in which the parties have referred to another document containing an arbitration clause. In addition, the document in question is not a “model contractual contract” issued by a recognized professional or regulatory body. In such a scenario, two possibilities could arise, first, the parties refer to certain parts of this document; Second, the reference is so important that it has the obvious effect of including the whole of that document in the contract, that is to say, any person referring to such a contract would consider that the parties intend to include each of the clauses of that document in their contract. We believe that this issue should be considered on a case-by-case basis, taking into account various factors, such as the experience of the parties and whether these included conditions were actually discussed between the parties prior to the performance of the contract. A party who is not a professional may well be bound by a general reference to a separate document if it is proved that he was aware of the contents of the documents mentioned. Conversely, an entrepreneur may not be bound by a general reference if he is an inexperienced player in an unknown market. Similarly, decisions of French courts generally show that enforcement is not precluded by a general reference to standard clauses containing an arbitration clause. In such cases, it would have to be determined whether both parties were actually aware of the relevant arbitration clause and intended to be bound by it.  In Aughton Limited v. MF Kent Services Limited (1991), the Court of Appeal, holding that arbitration agreements should be treated differently from other terms of a standard contract, concluded that an arbitration clause “must be expressly mentioned in the document relied on as a letter of receipt.
It cannot be occupied by a mere reference to the clauses of the contract to which the arbitration clause is ancillary. The same reasoning has been supported by subsequent cases such as Alfred McAlpine Construction Ltd v. RMG Electrical (1994) and Ben Barrett and Sons (Brickwork) Ltd v. Henry Boot Management Ltd (1995). The validity of an arbitration agreement between the assignee and the debtor after an assignment of receivables is also contested. In this case, the generally accepted view is that the assignee automatically becomes a party to the arbitration agreement.  Under Turkish law, unless the contract provides otherwise, all pre-emptive rights, with the exception of assignor-specific rights, are transferred to the assignee with ancillary rights.  Since the arbitration agreement consists of ancillary rights, they are transferred to the assignee, unless the contract provides otherwise and the main contract has not already been terminated or declared null and void. Here, the principle of the saving clause of an arbitration clause does not justify a possible claim that the parties are not bound by the arbitration agreement because the arbitration clause depends on the main contract and follows the fate of the claim.  In the latter cases, the majority of authorities in Europe consider that the judgment of the General Court should focus not so much on the form of the agreement as on the content of the parties` will, specifying whether the party objecting to the arbitration agreement was actually aware of its existence and wished to express its consent. If, instead of an express reference to the arbitration clause contained in the separate contractual document, the main contract generally refers to a separate document as a whole, it is traditionally questionable whether the parties` intention to arbitrate is clear and intelligible.
It has been established in the doctrine that a contractor is obliged to examine all documents that can be added to the main contract by inclusion, based on the principle of acting as a prudent trader.  If the main contract contains a number of standard clauses, the trader concerned only needs to accept the main contract if he also accepts the supporting documents.