Litigation and enforcement in Turkey: overview

A Q&A guide to dispute resolution law in Turkey.

The country-specific Q&A gives a structured overview of the key practical issues concerning dispute resolution in this jurisdiction, including court procedures; fees and funding; interim remedies (including attachment orders); disclosure; expert evidence; appeals; class actions; enforcement; cross-border issues; the use of ADR; and any reform proposals.

To compare answers across multiple jurisdictions visit the Litigation and enforcement Country Q&A tool.

This Q&A is part of the global guide to dispute resolution. For a full list of jurisdictional Q&As visit www.practicallaw.com/dispute-guide.

Serdar Bezen, Ümit Buzkan and Vakkas Nohut, Bezen & Partners
Contents

Main dispute resolution methods

1. What are the main dispute resolution methods used in your jurisdiction to settle large commercial disputes?

In Turkey the main dispute resolution method is litigation. However, arbitration is gradually developing in Turkey and arbitration practice is increasing year on year. It is used most often in the construction, finance, energy and infrastructure industries. Mediation is also used in Turkey, although it is a fairly newly established system and is used to a lesser extent.

Turkey has a civil law system and its civil procedure is governed by the Code of Civil Procedure (No 6100) (CPC) that entered into force on 1 October 2011.

Other relevant procedural rules are regulated by the:

  • Turkish Commercial Code (No 6102) (TCC) that entered into force on 1 July 2012.

  • Turkish Code of Obligations (No 6098) (TCO) that entered into force on 1 July 2012.

  • Enforcement and Bankruptcy Code (No 2004) (EBC) that entered into force on 9 July 1932.

 

Court litigation

Limitation periods

2. What limitation periods apply to bringing a claim and what triggers a limitation period?

The general provisions of the Turkish Code of Obligations (TCO) provide the following limitation periods:

  • A general statutory limitation period of ten years (unless otherwise regulated by law). This period is calculated from the due date of the obligation.

  • A specific statutory limitation period of five years for the following claims:

    • rent, interest and other periodic payments;

    • accommodation costs in premises such as hotels, and motels, and catering costs in restaurants and similar businesses;

    • claims arising from small art works and small scale retail sales;

    • claims arising from a partnership agreement that is based on the relationship between the partners, or between the partners or the company and its managers, directors, representatives and auditors;

    • claims arising from the work of legal counsel, commission, agency and brokerage agreements;

    • claims arising from a construction contract (except for circumstances where a developer does not perform his obligations, or performs his duties with gross misconduct).

The above time limits cannot be altered by agreement.

For claims under tort law or unjust enrichment, the statute of limitation is two years from the date the injured party becomes aware of both the injury and the identity of the person who is liable. Claims based on unjust enrichment are also time barred after two years. In any event tort actions are time barred for ten years from the date the tort was committed.

Court structure

3. What is the structure of the court where large commercial disputes are usually brought? Are certain types of dispute allocated to particular divisions of this court?

In general, if the parties do not agree that disputes will be resolved through arbitration, proceedings relating to large commercial disputes will be commenced at the commercial courts of first instance (Asliye ticaret mahkemeleri). Civil courts deal with disputes in civil proceedings.

The Code of Civil Procedure (CCP) regulates all civil claims in the same way regardless of the amount in question. However, Article 2 and 4 of the CCP provides a distinction of specific matters that must be heard in:

  • Civil courts of first instance.

  • Specialist civil courts that are the first tier of general courts in civil disputes.

Under Article 4 of the CCP, the commercial disputes which the specialised civil courts have jurisdiction over are as follows:

  • All kinds of tenancy disputes, including rent receivables arising from the tenancy and any counter claims brought against such claims (except for the provisions of the Enforcement and Bankruptcy Law No. 2004, dated 9 June 1932 concerning the evacuation of the immovable property without a court decision).

  • Claims concerning the sharing of movable and immovable property or rights and the termination of partnerships.

  • Claims concerning only the protection of possession of movable and immovable property.

  • Any other specific claims provided by law.

There are also special courts established under civil courts of first instance for dealing with special matters. Some of the courts include:

  • Commercial courts.

  • Employment courts.

  • Intellectual and industrial property courts.

  • Consumer courts.

  • Cadastral courts.

  • Maritime courts.

  • Family courts.

There is currently a two tier court system in Turkey. The Court of Appeal acts as a final appeal court and provides the final decisions in civil disputes. The CCP has introduced a three tier court system, with named regional appellate courts that will hear appeals from the courts of first instance. However, pursuant to the Decree of the Ministry of Justice in relation to the date on which the Regional Courts of Justice and the Regional Administrative Courts will start to operate as published in the Official Gazette on 7 November 2015 (No. 29525), this will be put in practice from 20 July 2016.

Rights of audience

4. Which types of lawyers have rights of audience to conduct cases in courts where large commercial disputes are usually brought? What requirements must they meet? Can foreign lawyers conduct cases in these courts?

Rights of audience/ requirements

There is a single type of lawyer (Avukat) in Turkey, unlike in certain other jurisdictions. Under the Turkish Lawyers' Code (No 1136) (TLC) dated 19 March 1969 and as amended in 1979, only Turkish lawyers can practice Turkish law and have rights of audience. Some of the TLC's requirements include:

  • Having Turkish citizenship.

  • Graduating from a Turkish or foreign law school and receiving an equivalent qualification (denklik).

  • Completing the requisite legal training.

  • Residing in the relevant Bar Association region.

  • There being no obstacle to prevent qualification as a lawyer in Turkey (Article 5, TLC).

Foreign lawyers

Foreign lawyers do not have rights of audience before the Turkish courts. Under the TLC only Turkish lawyers can appear before the Turkish courts.

 

Fees and funding

5. What legal fee structures can be used? Are fees fixed by law?

Legal fees can be freely arranged between lawyers and their clients. The most common type of fees are hourly rates and contingency rate fees. There is also a growing trend towards fixed/capped fee arrangements. Under the Turkish Lawyers' Code (No 1136) (TLC) the maximum limit for contingency fees is approximately 25% of the claim amount

In addition, lawyers cannot be paid less than the amounts determined by the Minimum Lawyers' Fee Tariff published annually by the Union of Turkish Bar Association.

 
6. How is litigation usually funded? Can third parties fund it? Is insurance available for litigation costs?

Funding

In general, the parties will finance litigation themselves, but third parties can also fund a claim. However, when a claim is commenced all fees and expenses are borne by the claimant. If successful, the claimant can recover costs from the defendant. Certain costs (including court fees and disbursements) can be fully recoverable but lawyer fees will only be recoverable at the rates determined by the Minimum Lawyers' Fee Tariff.

Insurance

Insurance for litigation costs is available for private individuals under the Legal Protection Insurance General Terms as published by the Undersecretariat of the Treasury. However, this is limited to non-commercial disputes.

 

Court proceedings

Confidentiality

7. Are court proceedings confidential or public? If public, are the proceedings or any information kept confidential in certain circumstances?

Under Turkish civil proceedings only the parties to a claim are allowed to access their court files. Lawyers who are registered with the relevant Bar Association can also have access to court decisions. However, only lawyers who hold a valid power of attorney can obtain an actual copy of a court decision, otherwise they can only review court decisions from the relevant files.

As a general rule, civil proceedings are open to the public except for cases where the court decides or a party requests that the case is conducted in private due to reasons of public morality or public security.

Pre-action conduct

8. Does the court impose any rules on the parties in relation to pre-action conduct? If yes, are there penalties for failing to comply?

There is no requirement under the Code of Civil Procedure (CCP) in relation to pre-action conduct (although a notice is usually served on the defendant to request the payment/action before proceedings). A party can commence proceedings by submitting a petition to the competent court. Following service of the petition the defendant must respond in two weeks (unless an extension of time is granted).

Main stages

9. What are the main stages of typical court proceedings?

Starting proceedings

The main stages of typical court proceedings are as follows:

  • Exchange of petitions.

  • Preliminary examination.

  • Investigation and hearings.

  • Appeal.

  • Judicial review of appeal (if applicable).

The Code of Civil Procedure (CCP) regulates court proceedings and a typical civil case is based on three stages:

  • Preliminary examination (Ön inceleme). This is where the court considers the causes of action and preliminary objections of the parties.

  • Investigation (Tahkikat). Oral hearings take place and the court evaluates the evidence submitted by the parties and considers the accuracy of the facts that are submitted to the court.

  • Decision (Karar). The judge renders a decision based on the proven facts of the case.

Civil proceedings are initiated by the claimant filing a claim petition to the court together with the court fees and claim expenses. As a result of filing the petition:

  • The time limitation period stops running.

  • Interest starts to accumulate (if there is no specific agreement regarding interest).

Under Article 119 of the CCP, the claim petition must include:

  • The name of the competent court.

  • Full names and addresses of the claimant (including the claimant's Turkish ID number) and defendant.

  • Names and addresses of the legal representatives.

  • Subject matter of the dispute.

  • Summary of the material facts.

  • Explanation of each allegation.

  • Legal basis of the claim.

  • Relief that is being sought.

  • Signature of the claimant or his legal representatives (if any).

Under Turkish civil law, there are two types of procedures:

  • Written procedure. The main one is the written procedure which is used in most typical cases and involves a claim petition, defence petition, response statement and reply to the response statement. In the claim petition, the claimant sets out its claims and makes its requests to the court.

  • Simple procedure. There is also a simple procedure regulated under Article 316 of the CCP. This applies to matters that are within the jurisdiction of the specialist civil court (for example, certain family matters, matters related to service agreements, certain commercial matters). The simple procedure does not allow parties to submit a second petition in the exchange of petition stage. Accordingly, the court proceeds immediately to a hearing.

Notice to the defendant and defence

Under the CCP, following the submission of the claim, the court serves a notice on the defendant to submit a statement of defence within two weeks. The statement of defence must include (Article 129, CCP):

  • Name of the competent court.

  • Names and addresses of the parties.

  • Turkish ID number of the defendant (or passport number for foreign claimants).

  • Names and addresses of the legal representatives (if any).

  • Summary of the subject matter.

  • Responses of the defence for each allegation.

  • Legal basis of the claim.

  • Remedy being sought.

  • Signature of the claimant or his legal representatives (if any).

On receiving such notice the defendant can request an extension, usually for a period of two weeks. However, this can be extended up to a maximum period of one month. If the defendant fails to respond within the specified time, the defendant is assumed to have denied all the facts asserted by the claimant.

Subsequent stages

A claimant is entitled to reply to a statement of defence. The claimant submits the reply statement that aims to negate the responses made by the defendant in the statement of defence. Similarly, the defendant is entitled to submit a second petition in response to the claimant's reply statement. Once the exchange of petitions is completed the preliminary examination will start.

The first hearing involves a preliminary examination procedure. The court considers the case, evaluates the preliminary objections of the parties and invites parties to settle the claim. In addition, the parties are required to submit all evidence to the court. The general rule is that this is the final point for the submission of evidence. However, under limited circumstances the court can provide at its discretion a two week extension for submitting further evidence.

The parties can reach a settlement at any time during the proceedings. Where no settlement has been reached, the court will go on to the examination stage and will evaluate all the facts and evidence submitted by the parties and thereby render a decision.

 

Interim remedies

10. What actions can a party bring for a case to be dismissed before a full trial? On what grounds must such a claim be brought? What is the applicable procedure?

An action can be dismissed before a full trial in the following circumstances:

  • Where the court lacks jurisdiction (which is examined by its own motion and can also be raised by the parties throughout the proceedings).

  • Certain behaviour (for example, waiver, acknowledgment of the claim or settlement).

A court will only hear a claim if it is within its competence. The court will consider the claim ex officio and will not consider the issue of territorial jurisdiction unless the defendant raises the issue of the territorial jurisdiction of the court. Under the Code of Civil Procedure (CCP) if the court lacks territorial jurisdiction, the parties must resubmit their claim in the court that has territorial jurisdiction to hear the case. This is because the court will not submit the claim on behalf of the parties, and therefore if the claim is not resubmitted by the parties, it will be considered as if not filed at all.

Under the CCP certain actions will result in dismissing a case before it has been fully heard. This can occur in the following circumstances:

  • If a claimant can partially or wholly waive his claim under Article 307 of the CCP.

  • A defendant can end a claim by acknowledgment of the claimant's claim under Article 308 of the CCP.

  • The parties can partially or wholly agree on settlement (mutual agreement before the court) under Article 313 of the CCP.

Acknowledgement of a claim and settlement will be valid only for disputes that are at the parties' free disposal (serbestçe üzerinde tassaruf edilebilen davalar).

 
11. Can a defendant apply for an order for the claimant to provide security for its costs? If yes, on what grounds?

Under the Code of Civil Procedure (CCP), a claimant who is a Turkish citizen/entity will be required to provide security if:

  • Resident outside of Turkey.

  • It is documented that the claimant is in financial difficulty.

In addition, under the International Private and Procedural Law (No 5718) (PIPL), published in the Official Gazette on 12 December 2007, a foreign claimant must also provide security unless there is:

  • A de jure or de facto reciprocity between Turkey and the foreign claimant's state that no security is required.

  • An exemption from providing security under the laws of the foreign claimant's state.

 
12. What are the rules concerning interim injunctions granted before a full trial?

Availability and grounds

A claimant can request the implementation of interim injunctions before a full trial so long as he provides the legal grounds and can demonstrate that:

  • A possible change in the current status of his case will result in the obstruction of his rights.

  • Inconvenience or serious damage would occur by delaying the granting of an injunction.

It is essential to file a request to the relevant enforcement office to render an interim injunction decision within a week following the request from the court (as otherwise the decision on the interim injunction will be unenforceable). On completion of this stage, a claimant will have to file a main claim with the relevant civil court within two weeks from the date of the above request.

The party requesting an implementation of an interim injunction is required to pay a security deposit in order to compensate any possible loss suffered by the other party or third parties if the interim injunction has been granted on wrongful grounds.

Prior notice/same-day

The general rule is that the court will hear both parties in relation to the granting of an interim injunction. However, in urgent cases, the judge can decide without a hearing, on the same day and even without prior notice to the defendant.

Mandatory injunctions

Mandatory injunctions are available under Turkish law. They are mainly available in cases involving insolvency and competition related matters, and where a party requests an order to:

  • Stop the other party from doing a particular act.

  • Oblige the other party to perform a particular act.

Rights of appeal

Under the provisions of the Code of Civil Procedure (CCP) on interim injunctions, a party can object to an interim injunction within one week of its implementation if the injunction is decided on without a hearing. Under paragraph 2 of Article 394 of the CCP, a party can object on the following grounds:

  • The conditions of the interim injunction.

  • The court lacked competence.

  • A security deposit was not provided.

In addition, a third party can object to the interim order if his interest has been explicitly infringed within one week from the service of the order.

 
13. What are the rules relating to interim attachment orders to preserve assets pending judgment or a final order (or equivalent)?

Availability and grounds

An interim attachment can be granted where the claim requested to be secured is monetary. However, the claim for an interim attachment regarding overdue money can only be granted if the:

  • Debt owing to the person seeking the interim attachment is due.

  • Due debt is not secured by a pledge or similar security interest.

An interim attachment decision for undue debt can be requested if the:

  • Debtor has no permanent place of residence.

  • Debtor is preparing to abscond or hide/transfer his assets with a view to evade the fulfilment of his obligations, or acts in a fraudulent manner that violates the creditor's rights.

Once an interim attachment decision is obtained, the claimant must request its implementation from the relevant enforcement office within ten days of the date of the interim attachment decision. Otherwise the interim attachment decision will become invalid.

If a claimant applied to court to obtain an interim attachment decision before he filed a claim or initiated enforcement proceedings against a debtor, he will have to file a claim or initiate enforcement proceedings within seven days of the date of the implementation of the interim attachment decision or the service of such decision.

Prior notice/same-day

Interim attachment orders are granted by the competent courts. Therefore, a creditor must provide documentary evidence to convince the court of the urgency of the order. If the court is convinced that it is an urgent matter the court can decide on the same day and without notice to the debtor.

Preferential right or lien

Attachment orders do not create any preferential rights or liens in favour of the party seeking such.

Damages as a result

The claimant is liable for damages suffered by the defendant or third parties as a result of an unjust attachment order.

Security

Depending on the circumstances, the court can order the payment of a security deposit from the claimant to compensate possible damages inflicted on the defendant or any third parties in case the order has been granted on unjust grounds. However, security will not be demanded where the debt is based on a court decision.

 
14. Are any other interim remedies commonly available and obtained?

There are no other interim remedies.

 

Final remedies

15. What remedies are available at the full trial stage? Are damages just compensatory or can they also be punitive?

In general, remedies are governed by the provisions of the Turkish Code of Obligations (No 6098) (TCO). The following remedies are available:

  • Damages.

  • Announcement of court decisions in newspapers.

  • Specific performance.

  • Rescission.

  • Annulment of an action.

  • Rectification.

  • Injunctions.

If parties have agreed a penalty clause in their contract and one party breaches a clause, the other party can seek the enforcement of the penalty clause.

 

Evidence

Disclosure

16. What documents must the parties disclose to the other parties and/or the court? Are there any detailed rules governing this procedure?

The general rule is that the parties must disclose all evidence to the court.

Under Article 219 of the Code of Civil Procedure (CCP), the parties are required to submit all documents that they rely on in their evidence list. In addition, under the principle of honesty and good faith (dürüst davranma ve doğruyu söyleme yükümlülüğü) the parties must state the truth and disclose the documents that are in their possession. However, if a party decides not to rely on a document, he is under no obligation to disclose the document.

In addition, a claimant must submit evidence to prove his allegations and all evidence must be submitted at the investigation stage. Once the preliminary investigation has ended, evidence can only be submitted if it was not possible to obtain in time or there is a good reason why the party was unaware of the evidence beforehand.

Privileged documents

17. Are any documents privileged? If privilege is not recognised, are there any other rules allowing a party not to disclose a document?

Privileged documents

Any information obtained from the client by the lawyer in the course of his duties, is considered confidential and privileged, and must not be disclosed by the lawyer (Article 36, Turkish Lawyers' Code (No 1136) (TLC)). Confidential information within the scope of the client and lawyer relationship can be disclosed provided that the:

  • Lawyer obtains the express consent of the client.

  • Law requires such information to be disclosed to government authorities and public bodies.

Lawyers can refuse to testify in court proceedings, even if they obtain the consent of their client in relation to disclosing privileged information. The duty to keep clients' secrets covers both lawyers and in-house counsel. With regard to settlement matters (sulh anlaşmaları) the "without prejudice" privilege is applicable. Therefore, any statements or communications between the parties will not be used as evidence in the courts.

Other non-disclosure situations

The rules on privilege are also applicable to lawyers who are not qualified in Turkey but who carry out business in Turkey as permitted by law.

Examination of witnesses

18. Do witnesses of fact give oral evidence or do they just submit written evidence? Is there a right to cross-examine witnesses of fact?

Oral evidence

A party who wants to call a witness at the trial must inform the court by submitting a list of witnesses (including the names and addresses of any witnesses). The witnesses are then required to give oral evidence at the trial. A witness will be obliged to testify under oath and must not fall within certain exemptions (for example being a spouse of a relevant party, or being unable to testify due to a conflict of interest).

The general rule is that witnesses provide oral evidence and are not permitted to submit written statements.

Right to cross-examine

Under Turkish law there is no specific right to cross–examine. Witnesses are generally questioned by judges. However, the parties' lawyers can directly question the witnesses, expert witnesses and third parties at the hearing (Article 152, Code of Civil Procedure (CCP)). It is also possible that the parties can ask questions through the judge (in instances where the parties are not represented by a lawyer or where a party wishes to direct questions to the witnesses at his own request).

Third party experts

19. What are the rules in relation to third party experts?

Appointment procedure

The court can appoint third party experts either directly or on the request of the relevant party. Experts are required to prepare a report of their findings and opinions and submit such report to the court. Experts owe their duty to the courts. Experts must be appointed for matters related to specific and technical issues. Experts are selected from the expert list prepared by each civil jurisdiction commission in the relevant judicial region. Third party experts can give their opinions on the facts and cannot form an opinion on legal matters.

Role of experts

Third party experts must be impartial. The expert report is non-binding evidence for the judge. The expert's duty is to:

  • Appear before the court on a date determined by the court.

  • Take the oath.

  • Provide the court with his professional opinion.

  • Submit his report within a timeframe determined by the court.

The expert report must be objective in nature.

Right of reply

Parties are entitled to object to an expert report within two weeks of being notified of the report. The court can direct new questions to the expert for the purpose of eliminating any deficiencies or unclear points in the report. In addition, the parties can also request additional points that are missing from the report and ask for clarification regarding any unclear points. Parties are also entitled to ask for the appointment of a second expert.

The court may:

  • Ask for an additional report.

  • Invite the expert to a hearing for an oral opinion.

  • Appoint a second expert for a second examination.

The third party expert is under a duty to assist the court with his report and opinion. Therefore, the lawyer of a party can directly ask questions to the expert by virtue of the Code of Civil Procedure.

Fees

The expert fees are determined by the court on its own motion as to which party must pay such fees. The fee is based on the annual tariff published by the Ministry of Justice and includes remuneration, examination, fares, accommodation and any other expenses.

 

Appeals

20. What are the rules concerning appeals of first instance judgments in large commercial disputes?

Which courts

A party who has a legal interest has the right to apply to the Court of Appeal for a review of a first instance court decision. However, only decisions regarding a moveable or debt that is not less than TRY2,080 can be appealable. The parties are also entitled to a hearing, but in order for a hearing request to be granted, the amount involved in the dispute must be not less than TRY21,220.

In the past, the civil procedure was based on a two tier system, that is, the court of first instance and the Court of Appeal. However, it is now evolving towards a third tier system. The Code of Civil Procedure (CCP) established the Regional Courts of Justice which are expected to serve as first tier courts to review any objections to decisions of the court of first instance. Once these are operational by 20 July 2016, the Court of Appeal will be the second tier appeal court. As a result, there will be significant changes. In particular, some of the main duties and powers of the Court of Appeal will pass to the Regional Courts of Justice. This will significantly reduce the workload of the Court of Appeal.

Grounds for appeal

Decisions that are sought to be appealed can be on the basis of procedural law as well as substantive law. Examples of procedural law include a lack of jurisdiction of the court of first instance, or the existence of a decision of a different court on the same matter. Examples of substantive law include incorrect application of the law and inaccurate evaluation of disputed facts. In addition, the Court of Appeal has the authority to evaluate the evidence and reverse the decision of the court of first instance if it finds that the facts are incorrectly evaluated in light of the evidence or the evidence is incorrectly evaluated or the law is incorrectly applied.

Time limit

The time limits to lodge an appeal are as follows:

  • 15 days from the date of service of the court of first instance decision.

  • Eight days from the date of service of a specialist civil court decision.

In case of an exceptional time limit set by law (for example, employment law related disputes) the time limit will take priority over the periods specified above.

The appeal procedure can be fairly long in Turkey. It can take one year or longer depending on the specifics of the matter.

 

Class actions

21. Are there any mechanisms available for collective redress or class actions?

There is no class action mechanism under Turkish law, but there are some mechanisms available for collective redress.

The Code of Civil Procedure introduced a new provision under which certain circumstances permit third party legal entities (such as associations) to file a claim on behalf of themselves but for the interests of their members or persons that they represent in order to:

  • Establish a right or legal status.

  • Prevent the imminent violation of rights.

  • Prevent unlawful acts.

Similarly, under the Law on Protection of Consumer Law (No 6502) dated 28 November 2013 that came into force on 28 May 2014, the consumers' associations can file an action for infringements in respect of the consumer protection.

 

Costs

22. Does the unsuccessful party have to pay the successful party's costs and how does the court usually calculate any costs award? What factors does the court consider when awarding costs?

The unsuccessful party will bear all costs arising from a legal action, including the court costs and lawyer fees. However, there is a cap on the lawyer fees which is annually published by the Union of Turkish Bar Associations. Therefore, the unsuccessful party is not responsible for any lawyer fees that are above the Minimum Lawyers' Fee Tariff. The judge will allocate the sums to be paid by each party in accordance with the requirements under the Code of Civil Procedure (CCP).

 
23. Is interest awarded on costs? If yes, how is it calculated?

Under the Turkish legal system, interest is governed by the Law Regarding Legal Interests and Default Interests No 3095 (Interests Law) dated 4 December 1984 in addition to the relevant provisions of the Turkish Commercial Code (No 6102) (TCC) and the Turkish Code of Obligations (No 6098) (TCO). The types of interest listed under the Interests Law are:

  • Legal interest. This will accrue from the day of delay of the debt payment and the amount will be determined by the Central Bank of the Republic of Turkey unless the parties have agreed otherwise.

  • Default interest. This will be payable once a party misses the determined payment date.

  • Compounded interest. This is applied to limited cases, for example, banks may charge compounded interest to merchants in commercial deals.

  • Interest on debts of foreign exchange. This can be agreed contractually as per interest for foreign currency debts.

Interest payments cannot be determined by the courts ex officio. The relevant party must request and specify the interest payment in their claim petition.

 

Enforcement of a local judgment

24. What are the procedures to enforce a local judgment in the local courts?

The successful party can apply to the enforcement office for the enforcement of the court decision. Essentially, the enforcement of a decision is governed by the Code of Civil Procedure (CCP) and the Enforcement and Bankruptcy Code (No 2004) (EBC). In cases of debt claims, the claimant applies to the execution office for an order of receivables. In other cases, for example, tenancy related disputes; an order for evacuation of the property will be served for the purpose of enforcement.

 

Cross-border litigation

25. Do local courts respect the choice of governing law in a contract? If yes, are there any areas of law in your jurisdiction that apply to the contract despite the choice of law?

In general, parties are free to choose the applicable law for their contractual relations. In cases where the parties did not include the choice of law in their contract, the court will apply the law that is most closely connected to the contract.

Under Article 25of the International Private and Procedural Law (No 5718) (PIPL) contracts relating to immoveable property are governed by the laws of the state where the immovable property is located.

In addition, Turkish law can prevail for matters relating to consumers, employees and insurance related matters even when the contract contains a choice of law.

 
26. Do local courts respect the choice of jurisdiction in a contract? Do local courts claim jurisdiction over a dispute in some circumstances, despite the choice of jurisdiction?

Under Article 47 of the International Private and Procedural Law (No 5718) (PIPL) parties can agree on the jurisdiction of a court of a foreign state in a commercial dispute that contains a foreign element. This is except for cases where the domestic courts have exclusive jurisdiction. A case can also be heard by the Turkish courts if the:

  • Foreign court rules itself incompetent.

  • Defendant raises no plea of jurisdiction to the Turkish courts.

There are areas where Turkish courts have exclusive jurisdiction. Such areas include consumer, employment and insurance related matters where only Turkish law will be applied and Turkish courts will have jurisdiction.

 
27. If a foreign party obtains permission from its local courts to serve proceedings on a party in your jurisdiction, what is the procedure to effect service in your jurisdiction? Is your jurisdiction party to any international agreements affecting this process?

Service of notices in Turkey is regulated by the Notification Law, No 7201, dated 11 February 1959. Turkey is also a party to the HCCH Convention on Civil Procedure 1954 and the HCCH Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters 1965 (Hague Service Convention).

Service of notices must be performed in accordance with the relevant provisions of the above laws and agreements and through the authorised bodies determined by them. Under the Hague Service Convention, the Directorate General for International Law and Foreign Relations of the Ministry of Justice of Turkey is designated as its central authority. Accordingly, this central authority serves the document to the local judicial authorities.

 
28. What is the procedure to take evidence from a witness in your jurisdiction for use in proceedings in another jurisdiction? Is your jurisdiction party to an international convention on this issue?

Taking evidence from a witness in Turkey and using that evidence in another jurisdiction is possible through the civil legal assistance (istinabe) procedures, based on the bilateral or multilateral agreements to which Turkey is a party. Turkey is a party to many bilateral agreements on legal assistance regulating civil legal assistance procedures and is also a party to multilateral agreements such as the HCCH Convention on Civil Procedure 1954 and the HCCH Convention on the Taking of Evidence Abroad in Civil and Commercial Matters 1970 (Hague Evidence Convention). If there is no agreement between Turkey and the relevant country in which the claimant or the defendant wishes to benefit from the reciprocity principle, then international legal assistance rules must be applied. In this respect, it is possible to request legal assistance from a Turkish local court through the Directorate General for International Law and Foreign Relations of the Ministry of Justice of Turkey and collect all required evidence from a witness in Turkey.

Enforcement of a foreign judgment

29. What are the procedures to enforce a foreign judgment in the local courts?

Foreign court decisions are enforceable in Turkey by virtue of the provisions of the International Private and Procedural Law (No 5718) (PIPL). However, the Turkish courts can refuse the recognition and enforcement of foreign court decisions if:

  • There is no de jure or de facto reciprocity between Turkey and the jurisdiction where the decision has been rendered.

  • The decision relates to a matter that falls within the exclusive jurisdiction of the courts of Turkey.

  • The party against whom enforcement is sought has not been properly summoned or served in connection with the proceedings.

  • The decision is against the public policy of Turkey.

Foreign arbitral awards can be recognised and enforced by virtue of the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) which was ratified by Turkey on 2 July 1992 and came into effect on 30 September 1992. The provisions of the New York Convention (most notably Article V which provides the conditions for recognition and enforcement of foreign arbitral awards) will be applicable in cases where a decision is rendered in a state which is also a signatory to the New York Convention. If a state is not a signatory, the provisions of the PIPL will be applied.

Turkey is also a party to the HCCH Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters 1971 (Hague Foreign Judgments Convention). Turkish courts will not need to seek reciprocity in order to recognise and enforce awards issued in countries which are parties to the Hague Foreign Judgments Convention.

 

Alternative dispute resolution

30. What are the main alternative dispute resolution (ADR) methods used in your jurisdiction to settle large commercial disputes? Is ADR used more in certain industries? What proportion of large commercial disputes is settled through ADR?

In Turkey, ADR is understood to refer to only arbitration and mediation.

Arbitration

The subject of the arbitration is mainly regulated under two laws:

  • Code of Civil Procedure (CCP). Under the CCP the arbitration:

    • must have no foreign element;

    • the determined seat of arbitration must be in Turkey.

  • International Arbitration Law No 4686 (IAL) which came into force on 5 July 2001. Under the IAL the arbitration must:

    • involve a contract that contains a foreign element; and

    • have the determined seat of arbitration in Turkey; or

    • be in a place outside of Turkey that the parties or their arbitrator or the arbitral tribunal have chosen been designated.

There are some matters that cannot be subject to commercial arbitration, such as disputes arising from rights in rem and matters which are not in the competence of the parties (such as family matters).

Mediation

In Turkey the applicable law relating to mediation is the Law on Mediation in Civil Disputes No 6325 (Mediation Law) which came into force on 22 June 2013. Under Article 1 of the Mediation Law, mediation will apply to disputes related to private law matters (including those with a foreign element) arising from the parties' actions and transactions which they have capacity to resolve.

ADR methods are used far more frequently in areas such as construction, finance, energy and infrastructure.

In addition, under clause 35/A of the Turkish Lawyers' Code (No 1136) (TLC) lawyers can invite the parties to settle if the matter can be resolved through the relevant parties' will and mutual consents.

 
31. Does ADR form part of court procedures or does it only apply if the parties agree? Can courts compel the use of ADR?

The use of ADR is completely down to the parties' own free will. It is not part of the court proceedings, but the court will encourage the parties to settle at the preliminary examination stage in accordance with the provisions of the Code of Civil Procedure. However, the court cannot force the parties to use ADR.

 
32. How is evidence given in ADR? Can documents produced or admissions made during (or for the purposes of) the ADR later be protected from disclosure by privilege? Is ADR confidential?

The procedure for submission of evidence for arbitration within the territory of Turkey is depending on the procedural rules adopted by the parties in the arbitration agreement. However, for domestic arbitration, the procedural rules cannot be contrary to the provisions of the Code of Civil Procedure (CCP). In cases of international arbitration, the determination of the submission of the evidence is the same as for domestic rules. However, the procedural rules cannot be contrary to the provisions of the International Arbitration Law No 4686 (IAL). If necessary the parties can collect evidence through the assistance of the local courts.

Both the Union of Chambers and Commodity Exchanges of Turkey (Türkiye Odalar ve Borsalar Birliği (TOBB) and the International Chamber of Commerce provides guidelines containing provisions on confidentiality in arbitration proceedings. Confidentiality is the reason most parties opt for arbitration.

 
33. How are costs dealt with in ADR?

The parties can freely decide by agreement how the costs will be shared. If the agreement stipulates that the costs will be shared equally then both parties will be responsible for the costs.

For arbitration, the amount of costs will depend on which procedural rules are followed in the arbitration proceedings. However, if the parties have not agreed otherwise, the costs will be calculated by the arbitrators or the arbitral tribunal by taking into account the (Article 440, Code of Civil Procedure (CCP)):

  • Claimed amount.

  • Nature of the dispute.

  • Duration of the arbitration proceedings.

 
34. What are the main bodies that offer ADR services in your jurisdiction?

In Turkey the organisations that offer ADR services (that is, arbitration and mediation) are as follows:

  • Union of Chambers and Commodity Exchanges of Turkey (Türkiye Odalar ve Borsalar Birliği) (TOBB) (www.tobb.org.tr).

  • Istanbul Chamber of Commerce (Istanbul Ticaret Odası) (ITO) (www.ito.org.tr).

  • Istanbul Arbitration Centre which has recently been established with Law No 6570 and dated 1 January 2015 and will operate in the near future. It aims to provide ADR services for all private disputes of both domestic and international applicants.

  • Mediation Centre which is established under the Department of Directorate of Mediation of the Ministry of Justice of the Republic of Turkey (T.C. Adalet Bakanlığı, Arabulucuk Daire Başkanlığı)(www.adb.adalet.gov.tr).

 

Proposals for reform

35. Are there any proposals for dispute resolution reform? If yes, when are they likely to come into force?

The Istanbul Arbitration Centre has been introduced very recently. As a result, Turkey has been making progress in becoming more arbitration-friendly and making arbitration more accessible.

 

Online resources

General Directorate of Legislation Development and Publication

W www.mevzuat.gov.tr

Description. The official website of the state for providing up- to -date legislation.

Istanbul Bar Association

W www.istanbulbarosu.org.tr

Description. The official website of the Istanbul Bar Association.

Kazancı Elektronic Database

W www.kazanci.com.tr/

Description. The official database publishing up- to- date legislation and decisions of Court of Appeal.



Contributor profiles

Serdar Bezen, Founding Partner

Bezen & Partners

T. +90 212 366 6868
F. +90 212 345 1026
E. serdar.bezen@bezenpartners.com
W. www.bezenpartners.com

Professional qualifications. Lawyer, Turkey

Areas of practice. Corporate and commercial law; dispute resolution.

Non-professional qualifications. LLB Law, Ankara University, Turkey; LLM, University of London, Queen Mary and Westfield College

Recent transactions

  • Representing an international bank regarding the misappropriation of gold bullions and on the consignment and the cancellation of an insurance policy in this regard.

  • Representing an international bank in relation to a dispute arising out of a restraining order issued by an English court regarding the liquidation of a bank guarantee and a performance bond.

  • Representing an international organisation regarding fraudulent actions committed by a third party and the representation of such international organisation before the Turkish courts and the Public Prosecutor's Office.

  • Representing a corporation located in the United Arab Emirates on real estate matters on the transfer of certain properties held by an appointed individual to a designated Turkish entity and the obtaining of an injunction to prevent such appointed individual from disposing of such properties unauthorised.

  • Representing an international insurance company in arbitration proceedings regarding the enforcement of an insurance policy.

Professional associations/memberships. Member of the Turkish Bar Associations since 1991

Languages. Turkish, English

Publications

  • Arbitration in Turkey, Getting the Deal Through – Arbitration, 2009 (Co-author).

  • "The Stance of the Turkish Courts in the Adoption of the New York Convention – The Road From Opposition To Acceptance" , Mealey’s Executive Summary, the New York Convention: 50 Years of Experience, October 2008, pp. 114-119

  • "Turkey Adopts the UNCITRAL Model Law”, Mealey’s International Arbitration Report, Vol.16, Issue 8 [2001], pp. 42-43

  • Recent Developments in International Commercial Arbitration in Turkey", Arbitration, Vol. 67, Issue 2 [2001], pp. 155-175

  • "Recent Developments in International Arbitration in Turkey", Mealey’s International Arbitration Report, Vol.16, Issue 2 [2001], pp. 32-64

  • "Sovereign Immunity", "Appointment and Challenge of Arbitrators", "Drafting Arbitration Agreements", "Arbitral Institutions ICOC", "Privacy and Confidentiality in Arbitration" and "Arbitral Institutions UCCET", Kluwer Arbitration Smart Chart – Turkey – Kluwer Law International [2015] (co-author).

Ümit Buzkan, Senior Litigator

Bezen & Partners

T +90 212 363 6868
F +90 212 345 1026
E umit.buzkan@bezenpartners.com
W www.bezenpartners.com

Professional qualifications. Lawyer, Turkey

Areas of Practice. Litigation and arbitration.

Non-professional qualifications. Marmara University, Istanbul (LLB Law).

Recent Transactions

  • Advising a Swedish controlled Turkish industrial group in relation to the fraudulent actions against the company of employees.

  • Advising a Czech group controlling a Turkish drilling machinery producer in relation to its claims against its manager for embezzlement of company funds.

  • Advising a French company regarding the collection of its receivables through execution proceedings.

  • Advising an international company regarding a rental agreement of its receivables through recognition and enforcement of foreign judgment.

  • Advising an international company for a debt claim in the enforcement offices.

  • Advising an international company regarding the re-employment claims brought by its employees.

Professional associations/memberships. Member of the Turkish Bar Associations since 2008

Languages. Turkish

Vakkas Nohut, Associate

Bezen & Partners

T +90 212 363 6868
F +90 212 345 1026
E vakkas.nohut@bezenpartners.com
W www.bezenpartners.com

Professional qualifications. Lawyer, Turkey

Areas of Practice. Dispute resolution; real estate law and employment law.

Non-professional qualifications. University of Westminster, London (LLB Law); Dokuz Eylül University, Faculty of Law (Equivalence qualification)

Recent Transactions:

  • Providing legal assistance for a wide range of domestic and international clients in dispute resolution matters as well as representing them before the local courts.

  • Preparing various types of employment agreements, advising on termination procedures, employee health and safety issues and advising on other employment law matters.

  • Involved in matters related to recognition and enforcement of foreign court decisions.

  • Providing legal assistance in interim injunctions.

  • Advising on real estate disputes as well as issues relating to leasing and mortgages.

Professional associations/memberships. Member of the Turkish Bar Associations since 2014

Languages. Turkish and English


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