Turkey updates

Arbitration & ADR

One last step before litigating your commercial receivables: mandatory mediation
Gün + Partners
  • Turkey
  • 07 February 2019

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.

Application of competence-competence principle
  • Turkey
  • 13 September 2018

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.

Jurisdictional objections based on arbitration agreements – an overview
  • Turkey
  • 19 July 2018

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.

Istanbul Arbitration Centre goes from strength to strength
  • Turkey
  • 19 April 2018

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.

Possibility of obtaining preliminary attachment before filing or during enforcement lawsuit
  • Turkey
  • 15 February 2018

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.


Banking

Contributed by Selvi & Ertekin
Representation by proxy in suretyship agreements
  • Turkey
  • 07 June 2019

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.

Amendments to decree protecting value of Turkish currency in relation to foreign currency loans
  • Turkey
  • 16 November 2018

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.


Company & Commercial

Shareholders' agreements – enforceability issues
Kayum & Demir
  • Turkey
  • 12 August 2019

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.

Central Bank announces 2019 default interest rate for commercial agreements
  • Turkey
  • 21 January 2019

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.

Mandatory mediation process for commercial disputes introduced
  • Turkey
  • 14 January 2019

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.

Recent amendments to Law on Movable Pledges in Commercial Transactions
  • Turkey
  • 02 July 2018

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.

New electronic notification requirements introduced
  • Turkey
  • 18 June 2018

The recent amendments introduced to the Notification Law have significantly broadened the scope of parties for which electronic notification is compulsory. Prior to the amendments, electronic notification was compulsory only for joint stock companies, limited liability companies and limited partnerships with capital divided into shares. In contrast, following the amendments, electronic notification is now compulsory for a wide range of real persons and legal entities.


Competition & Antitrust

Contributed by ELIG Gurkaynak Attorneys-at-Law
Competition Board orders gym franchiser to revise non-compete and non-poaching clauses
  • Turkey
  • 19 September 2019

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.

Competition Board fines fertiliser company for hindering on-site inspection
  • Turkey
  • 18 July 2019

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.

Competition Board concludes preliminary investigation into food chains
  • Turkey
  • 16 May 2019

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.

Competition Board fines Ro-Ro line operators
  • Turkey
  • 02 May 2019

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.

Competition aspects of merger control: 2018 M&A status report
  • Turkey
  • 07 March 2019

The Competition Board recently published its annual M&A status report, which outlines statistics concerning merger control decisions with regard to the number of transactions, the parties' country of origin, economic activities and transaction values. The Competition Board reviewed a total of 223 mergers and acquisitions in 2018, which is higher than average and constitutes a 21% increase compared with 2017.


Corporate Finance/M&A

Contributed by Kayum & Demir
Leverage buyouts – an overview
  • Turkey
  • 29 May 2019

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-out mergers in Turkey – an overview
  • Turkey
  • 20 March 2019

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.