As cross-border trade and global investments continue to grow, more foreign individuals and companies are entering into contracts with Turkish citizens or businesses. While international agreements offer great potential, they also bring legal complexities—especially when a dispute arises. This article provides foreign parties with a clear roadmap on jurisdiction, applicable law, and legal remedies in contract-related disputes involving Turkish counterparts.
When Is Turkish Law Applicable?
If a contract involves a Turkish party but no specific legal system is chosen by the parties, Turkish conflict of law rules apply, particularly the Turkish Private International Law and Procedural Law Act (PIL).
According to Article 24 of PIL:
The applicable law is the one explicitly chosen by the parties.
If no choice of law is made, the law most closely connected to the contract applies—typically the law of the country where the party providing the characteristic obligation resides.
If the contract is strongly tied to Turkey (e.g., performance in Turkey), Turkish law may apply automatically.
Thus, foreign parties may be subject to Turkish law even if they are not based in Turkey, depending on the nature of the agreement.
Are Turkish Courts Competent to Hear the Case?
If a dispute arises, determining whether Turkish courts have jurisdiction is essential. The rules are outlined in Articles 40 and onwards of PIL.
🔹 If a Jurisdiction Clause Exists:
When the contract includes a valid jurisdiction clause (e.g., “The courts of London shall have exclusive jurisdiction”), Turkish courts will typically decline jurisdiction, provided that:
The clause is clear and written, and
It does not contradict Turkish public order or mandatory laws.
⚠ Note: Jurisdiction clauses are often not enforceable against weaker parties, such as consumers or employees.
If No Jurisdiction Clause Exists:
In the absence of a jurisdiction clause, Turkish courts may have jurisdiction if:
The defendant resides or operates in Turkey,
The contract is to be performed in Turkey,
The subject matter (goods/services) is located in Turkey,
The damage occurred—or its effects are felt—in Turkey.
Alternative Dispute Resolution (ADR): Arbitration & Mediation
Many international contracts include an arbitration clause to avoid lengthy and costly court proceedings.
The Istanbul Arbitration Centre (ISTAC) offers fast and reliable dispute resolution for both domestic and foreign parties.
You can also use well-established platforms like ICC Arbitration or the UNCITRAL Model Rules.
In Turkey, commercial mediation is also widely used, and in some cases, mandatory before litigation.
What Should Foreign Parties Pay Attention To?
Always include a choice of law and jurisdiction clause in your contract.
Understand that Turkish courts may still have jurisdiction under certain legal criteria.
Consult a Turkish attorney to avoid procedural pitfalls and maximize your legal protection.
Be prepared for ADR processes such as arbitration or mediation if the contract includes them.
Conclusion
Entering into a contract with a Turkish citizen or company can be highly beneficial—but it also requires legal caution. Even if you are a foreign party, Turkish law and courts may become relevant depending on the circumstances of the dispute. To avoid legal uncertainty, foreign investors and businesses should carefully draft their contracts and seek legal support when needed. A clear contract is not just good business—it’s smart risk management.
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