Mandatory mediation for commercial disputes was recently introduced by the Law on Legal Procedures to Initiate Proceedings for Monetary Receivables arising out of Subscription Agreements. As a result, an application for mediation is a condition for bringing a legal action before the courts, and a case will be dismissed on procedural grounds if the claimant in a commercial action fails to fulfil this obligation.
The United Nations Commission on International Trade Law Model Law adopts the principles of competence-competence and the separability of arbitration agreements. Under these principles, an arbitral tribunal may rule on its own jurisdiction, including any objection with respect to the existence and validity of an arbitration agreement. In 2001 the International Arbitration Law introduced these principles to Turkish legislation.
Under the International Arbitration Law, if a party initiates court proceedings to resolve a dispute which falls within the scope of an arbitration agreement, the counterparty can object to the court's jurisdiction based on said agreement. The submission of objections and the resolution of disputes concerning the validity of an arbitration agreement are subject to the Civil Procedure Law. If a court accepts such an objection, it will dismiss the lawsuit on procedural grounds.
The Istanbul Arbitration Centre (ISTAC) has provided dispute resolution services to Turkish and foreign entities through arbitration and other alternative dispute resolution processes since the introduction of the ISTAC Arbitration and Mediation Rules in 2015. The Global Arbitration Review has listed ISTAC among the institutions worth a closer look, and this recognition has strengthened its aspiration to become a regional hub for dispute resolution for companies and individuals from Europe, Asia and the Middle East.
In 2015 the 15th Chamber of the Court of Appeals held that courts cannot grant a preliminary attachment on the ground of a foreign court judgment, unless this judgment had been enforced in Turkey. The court's reasoning was that foreign court judgments and foreign arbitral awards can be executed in Turkey only if and when they are enforced in Turkey. However, a dissenting opinion in this decision stated that courts can grant a preliminary injunction before an enforcement decision has been finalised.
The Communique on Compliance with Principles and Standards of Interest-Free Banking entered into force in September 2019. The communique aims to regulate the procedures and principles regarding the structures and processes to be established by participation banks and development and investment banks which finance their clients in accordance with the Regulation on Financing Transactions of Banks.
Suretyships are a kind of security commonly used in loan transactions which provide personal security to lenders if a borrower fails to fulfil its payment obligation. The Code of Obligations sets out certain requirements regarding the validity of suretyship agreements and enacting a suretyship agreement by proxy. This article examines these requirements in detail.
The Council of Ministers recently amended Decree 32 on the Protection of the Value of Turkish Currency. The amending decree introduced strict restrictions on foreign currency loans obtained from overseas or in Turkey. The provision of foreign currency indexed loans to legal entities or real persons is now forbidden. However, legal entities which generate no foreign currency income but have credit exposure equal to or above $15 million may obtain foreign currency loans without limitation.
Boards of directors are the administrative and representative bodies of joint stock companies. This article examines the general duties of directors in Turkey under the Commercial Code and the liability regime for directors, including social security-related liability, tax liabilities and potential exemptions to liability.
The enforceability of share options is one of the most controversial issues in the context of shareholders' agreements. There are a number of widely used solutions to improve the enforceability of share options in this regard, including inserting share options provisions into articles of association, establishing a holding company outside Turkey and inserting a statement on registered share certificates that shares are subject to transfer restrictions.
Each January, the Central Bank determines and announces the default interest to be applied where parties fail to agree on such interest or when their agreement is or becomes invalid. According to the Central Bank's recent announcement in the Official Gazette, default interest has been set at 21.25% as of 1 January 2019, compared with 10.75% in 2018.
The Law regarding Procedures for Initiating Legal Proceedings for Monetary Claims deriving from Subscription Agreements, which introduces a mandatory mediation process for commercial disputes to the Commercial Code, was recently published in the Official Gazette. Mandatory mediation will apply to all lawsuits that fall within the scope of the new law; however, it will not apply to lawsuits pending before first-instance courts, regional courts of justice or supreme courts.
The Law amending Certain Laws to Improve the Investment Environment was recently published in the Official Gazette. In order to boost Turkey's investment environment, the law has introduced notable changes to a number of different laws, including the Law on Movable Pledges in Commercial Transactions.
Two of the three vacant positions on the Competition Board (the competent decision-making organ of the Competition Authority) have now been filled. Despite the Competition Board's existing backlog, the inauguration of the newly appointed members means that it can now proceed with and resolve contentious matters that were pending on its agenda. The lack of quorum will no longer be a limiting factor for the functioning of the board.
The Competition Board recently published the results of its preliminary investigation into a gym franchise business following a complaint that its franchising agreements violated Law 4054 and the Block Exemption Communique on Vertical Agreements. The board ordered the franchiser to revise its non-compete and non-poaching clauses to comply with competition law in terms of duration, geographical area and written consent.
The Competition Board recently fined a fertiliser company for hindering an on-site inspection. The matter concerned whether company officials had been correct in preventing the case handlers from accessing personal email correspondence found in a corporate email account during the on-site inspection which implied that another company had been willing to revise its prices.
The Competition Board recently published its reasoned decision following a preliminary investigation into allegations that çiğ köfte producers in Gaziantep province had restricted competition through anti-competitive behaviour and agreements. The complainant claimed that at a meeting at the Gaziantep Chamber of Commerce, the çiğ köfte producers had determined market prices, and that undertakings which chose not to comply with the determined prices would be penalised.
The Competition Board recently announced its decision following an investigation of five undertakings and one association of undertakings active in cabotage roll-on/roll-off (Ro-Ro) transportation lines in Turkey. The reasoned decision, especially the evaluation on the Ambarli-Topcular Ro-Ro line, is expected to provide enlightening information on the board's reasoning, its views on the definition of a cartel and its approach regarding information exchange.
A leveraged buyout (LBO) is a term used for a variety of transactions in which buyers (usually private equity firms) use leverage to acquire a company's shares. However, it is impossible to fully mitigate the risk that a target is deemed to provide financial assistance for the purchase of its own shares if the acquirer uses an LBO and the target provides guarantees or securities over its own assets due to a lack of established precedents. This uncertainty means that a diligent analysis is required for each transaction.
Squeeze-outs in Turkey are regulated under the Commercial Code where they concern private companies and the Capital Markets Law where they concern publicly held companies. This article examines the different processes for carrying out squeeze-outs at private and publicly held companies, as well as the squeeze-out rights available to controlling shareholders and the squeeze-out merger process.