1) Why energy contracts break under “extraordinary events” faster than other sectors

Energy projects and energy trading arrangements are unusually sensitive to disruptions. A single event can simultaneously affect permitting, construction, grid connection, fuel supply, dispatch, cash flow, and financing covenants. Unlike many industries where deliveries can be postponed with limited consequence, energy projects often operate under:

• strict milestone schedules (COD, acceptance tests, commissioning windows),
• regulated market obligations (grid codes, balancing rules, settlement and collateral),
• complex multi-contract chains (EPC, O&M, PPA/offtake, financing, insurance),
• public-law dependencies (licensing, environmental permits, expropriation or easements).

When something “extraordinary” happens—currency shocks, sanctions, war-related supply constraints, earthquake damage, pandemic restrictions, export bans, grid curtailment—the immediate question is not only operational. It is legal:

Is this force majeure (impossibility) or hardship (excessive onerousness)?
Do we suspend performance, renegotiate, terminate, or sue for adaptation?
What evidence do we need to survive an expert review and court/arbitration scrutiny?

This guide explains how Turkish law approaches force majeure and adaptation (hardship) lawsuits in energy contracts, with practical drafting and dispute tactics aimed at preserving project value.

---

2) The legal framework in Turkish law: three pillars you must distinguish

Turkish contract law does not treat every “big problem” the same way. In practice, energy disputes fall into one of three pillars:

Pillar A — Objective impossibility (performance becomes impossible)

This is the territory of TBK Article 136: if performance becomes impossible due to reasons not attributable to the debtor, the obligation ends; in reciprocal contracts, the party released due to impossibility must return what it received under unjust enrichment principles. (Türkiye Sigorta Birliği)

Energy examples

• A generation unit is destroyed and cannot be replaced within any reasonable timeframe.
• A legal prohibition makes delivery permanently unlawful (e.g., a definitive export ban on a critical fuel or technology component).
• A project site becomes permanently inaccessible due to irreversible legal constraints.

Pillar B — Partial impossibility (only part can be performed)

This is covered by TBK Article 137: if performance is partially impossible for reasons not attributable to the debtor, the debtor is released only to that extent; the counterparty may have termination rights depending on whether it would have entered the contract had it known the partial impossibility. (Türkiye Sigorta Birliği)

Energy examples

• Only part of contracted capacity can be delivered because a transformer or substation component cannot be sourced for an extended period.
• A plant can run, but at reduced output due to a permanent grid constraint that was unforeseeable and not caused by the operator.

Pillar C — Hardship / excessive onerousness (performance is still possible but becomes unbearable)

This is the heart of TBK Article 138 (often called the “adaptation” rule): if an extraordinary event that was unforeseeable and not attributable to the debtor occurs after contract formation, and it changes the equilibrium so severely that demanding performance would contradict good faith, the debtor may request adaptation; if adaptation is not possible, the debtor may terminate (and in continuous performance contracts, rescind prospectively). A key condition is that the debtor must not have performed (or must have performed with reservation of rights). (Türkiye Sigorta Birliği)

Energy examples

• Dramatic FX depreciation makes imported EPC components or debt service costs explode beyond the assumed risk allocation.
• A sudden regulatory shift forces costly technical upgrades not reflected in the agreed price (and not contractually allocated).
• Financing costs spike due to extraordinary macro events, rendering the original tariff/price model commercially non-viable.

Takeaway:
Force majeure (impossibility) tends to release or suspend obligations; hardship tends to rebalance obligations through adaptation or termination.

---

3) “Force majeure” is not a magic word: what decision-makers look for

Turkish law does not provide a single statutory definition of force majeure applicable to all contracts. Courts and arbitral tribunals typically examine whether the event is:

• external to the debtor’s control,
• unforeseeable (or not reasonably foreseeable),
• unavoidable despite due diligence,
• causally linked to the inability to perform.

In regulated energy contexts, authorities sometimes adopt their own force majeure logic. For example, EMRA’s electricity market framework recognizes “force majeure” in pre-license timing and project milestone contexts, allowing certain periods not to be counted and enabling extensions in defined settings. (epias.com.tr)
Separately, the electricity quality regulation provides a detailed force majeure classification approach for interruptions, listing categories (natural disasters, epidemics, war, sabotage, large-scale events) and emphasizing that even then, the distribution company must show it used due care and took all measures; force majeure classification is tied to Board acceptance upon application. (LEXPERA)

While those regulatory definitions do not automatically decide private-law contract disputes, they can be persuasive evidence in energy litigation—especially where the contract performance is intertwined with regulated obligations.

---

4) Hardship under TBK 138: the four conditions that decide most cases

In energy contracts, TBK 138 becomes the primary weapon when performance is technically possible but economically or legally devastated. The core conditions (in simplified form) are:

1. Extraordinary event after contract formation
2. Unforeseeability (or not reasonably foreseeable)
3. Not attributable to the debtor
4. Severe disturbance of contractual equilibrium such that demanding performance violates good faith
5. No performance yet (or performance with reservation) (Türkiye Sigorta Birliği)

Why energy is tricky:
Many energy contracts already allocate typical risks—FX, inflation, commodity price variability, supply chain disruptions—through indexation, pass-through, or change-in-law clauses. If a risk is clearly allocated, TBK 138 relief becomes harder. Your adaptation strategy must therefore start with the contract’s risk allocation matrix.

---

5) Energy contract types and how force majeure/hardship typically plays out

5.1 EPC and construction contracts (power plants, substations, transmission connections)

Common force majeure triggers

• earthquakes and severe natural disasters affecting site and infrastructure,
• import/export restrictions on critical equipment,
• war-related disruptions and sanctions that block logistics routes,
• governmental shutdowns that halt construction (rare today but relevant historically).

Common hardship triggers

• extraordinary FX shock affecting imported equipment cost,
• abnormal supply-chain inflation beyond “ordinary” escalation,
• financing cost explosion that undermines the payment schedule.

Drafting point that prevents litigation
If your EPC contract has a vague “force majeure” clause that grants time relief but stays silent on cost relief, disputes become predictable. In Turkey, contractors often push for additional cost compensation; owners often resist. The more explicit the clause (time relief, cost relief, termination thresholds, proof standards), the less likely you need TBK 138 litigation.

5.2 Power Purchase Agreements and offtake contracts (including corporate PPAs)

Common force majeure disputes

• curtailment due to grid constraints (is this force majeure or a market risk?),
• delays in commissioning (is the cause truly external?),
• inability to deliver contracted volumes due to equipment failure (attributable vs non-attributable).

Common hardship disputes

• price/tariff becomes disconnected from input costs due to extraordinary macro conditions,
• regulatory changes affecting balancing costs, settlement, or collateral requirements.

Here, the key is to separate physical non-delivery (often force majeure / partial impossibility) from economic pressure (often hardship). Mixing them weakens the legal narrative.

5.3 Fuel supply contracts (natural gas, coal, biomass, LNG arrangements)

Force majeure themes

• export bans, port closures, sanctions, war-related restrictions,
• force majeure declarations upstream in the supply chain.

Hardship themes

• extraordinary price shocks not absorbed by the contract’s indexation formula,
• sudden scarcity that changes logistics costs massively.

Fuel supply disputes often turn on one question: did the contract already allocate this risk through indexation, take-or-pay, destination clauses, or price review mechanisms? If yes, TBK 138 is harder. If no, adaptation becomes plausible.

5.4 O&M contracts and long-term service agreements

Force majeure usually gives time relief; hardship usually targets price review. O&M disputes frequently hinge on whether “increased costs” are ordinary business risks or extraordinary events that distort equilibrium.

---

6) The practical decision tree: which remedy should you pursue?

Step 1: Is performance truly impossible?

• Yes, permanently: TBK 136 termination of obligation is your backbone. (Türkiye Sigorta Birliği)
• Yes, partially: TBK 137 partial release and potential termination rights. (Türkiye Sigorta Birliği)
• No, but extremely burdensome: TBK 138 adaptation/termination route. (Türkiye Sigorta Birliği)

Step 2: What does the contract say?

• Does it define force majeure and hardship separately?
• Does it require notice within a strict period?
• Does it impose mitigation obligations?
• Is there a negotiation/escalation clause as a condition precedent to arbitration or court?
• Is there a change-in-law clause that captures regulatory shifts?

Step 3: Choose the least destructive path first

In energy disputes, preserving project continuity is often more valuable than “winning” on paper. As a strategy:

1. Issue a reservation-of-rights notice (protect TBK 138 condition).
2. Start structured renegotiation (with defined timeline and data).
3. Prepare for interim measures if cash flow or termination risk is immediate.
4. File adaptation lawsuit/arbitration only when negotiations fail or time is running out.

---

7) How an adaptation lawsuit works in practice (and what you can realistically obtain)

An “adaptation lawsuit” (uyarlama) under TBK 138 is not a free rewrite of the contract. Courts usually aim to restore equilibrium with minimal intervention, consistent with good faith and the assumed risk distribution.

Typical adaptation outcomes in energy disputes

• Price adjustment (temporary or permanent, often formula-based)
• Indexation mechanism revision (e.g., adding a component, changing a benchmark)
• Time extension for payment milestones or delivery schedules
• Quantity rebalancing (especially where partial performance is economically linked)
• Termination if adaptation is not feasible (particularly where equilibrium cannot be restored)

TBK 138 explicitly prioritizes adaptation; termination is the fallback if adaptation is not possible. (Türkiye Sigorta Birliği)

The “reservation of rights” trap

If a party continues performance for months without a clear reservation, the opposing side will argue that the party “accepted the risk” and waived TBK 138 relief. In energy, this is common when suppliers keep delivering under pressure to avoid license or market penalties. The safest practice is a well-documented reservation and a renegotiation record.

---

8) Evidence that wins or loses energy adaptation cases

Energy adaptation disputes are evidence-heavy. Judges and experts will ask:

(a) Foreseeability

• Was the event genuinely extraordinary, or was it a known volatility risk in Turkey?
• Were there earlier market signals, regulatory consultations, or warnings?

(b) Causation and attribution

• Did the claimant’s own decisions (hedging choices, procurement strategy, financing structure) significantly contribute?
• Could the claimant mitigate with reasonable measures?

(c) Economic model and equilibrium distortion

You need to show the contract’s baseline equilibrium and how the event destroyed it:

• original cost assumptions,
• financing terms and base case,
• procurement contracts and escalation,
• margins and risk premium logic,
• post-event cost and revenue trajectory.

Pro tip: A persuasive adaptation file is built like a project finance memo:

• a timeline,
• a risk allocation table,
• a before/after financial comparison,
• expert opinions (engineering + finance),
• and a narrowly tailored remedy request.

---

9) Force majeure clauses in energy contracts: what sophisticated clauses include

A robust force majeure clause in an energy contract typically covers:

1. Definition with examples relevant to energy (earthquake, grid collapse, sanctions, embargo, export bans, war disruptions, pandemics, major cyber incidents).
2. Causation requirement (event must directly prevent performance).
3. Notice procedure with strict timeline + content.
4. Mitigation duty (reasonable steps).
5. Relief: suspension of obligations, time extension, and whether cost relief applies.
6. Termination threshold (e.g., if force majeure continues beyond X days).
7. Allocation of third-party claims (subcontractors, suppliers).
8. Evidence package requirement (official notices, port closure documents, sanctions lists, technical reports).

Key point:
If your clause grants time relief but explicitly denies cost relief, you may still attempt TBK 138 for hardship—but the other side will argue the contract allocated that cost risk. The clause and TBK 138 must be drafted as a coherent system, not as separate islands.

---

10) Change in law and regulatory force majeure: a special energy dimension

Energy projects are uniquely exposed to regulatory risk. Some events that “feel” like force majeure are actually change-in-law events:

• new technical standards requiring retrofits,
• licensing procedural changes that delay permits,
• market settlement or balancing rule changes increasing costs,
• restrictions on foreign currency payments or financing.

A well-drafted energy contract usually contains:

• a change-in-law clause defining trigger events,
• a cost/time pass-through mechanism,
• a renegotiation window,
• and if deadlock persists, an agreed dispute route.

Regulatory frameworks themselves sometimes recognize force majeure as a justification in administrative timelines (e.g., pre-license duration not counting force majeure periods). (epias.com.tr)
This can help in private disputes when proving that the delay was not attributable and was recognized as extraordinary by authorities.

---

11) Litigation vs arbitration: forum strategy in energy disputes

Energy contracts frequently use arbitration (especially in cross-border deals). The strategic considerations are:

• Speed and interim relief: courts may be necessary for urgent interim measures depending on arbitration seat and enforceability strategy.
• Expert handling: arbitral tribunals may handle technical/economic expert evidence more flexibly.
• Confidentiality: often valuable in energy projects with lenders and regulators watching.
• Enforcement: depends on asset location and counterparty profile.

Whether in court or arbitration, the legal core remains TBK 136–138 logic for impossibility/hardship. (Türkiye Sigorta Birliği)

---

12) A practical “first 10 days” playbook for energy companies

When an extraordinary event hits, the first days determine the legal outcome:

Day 0–2: Preserve rights and evidence

• Send notice under the contract (force majeure / hardship / change-in-law).
• Add reservation of rights language if you must keep performing.
• Start an evidence folder: official announcements, logistics records, supplier notices, technical reports, photos, meeting minutes.

Day 3–7: Build the legal narrative and mitigation record

• Document mitigation steps (alternative suppliers, routing, temporary fixes).
• Build the “why not attributable” file.
• Prepare a quantified impact memo for management and lenders.

Day 8–10: Move into structured renegotiation

• Propose an adaptation model (temporary price band, indexation update, milestone extension).
• Set a short negotiation timetable and escalation path.
• If counterparty refuses, prepare the dispute filing pack.

This process is not only about winning later; it prevents accidental waiver and strengthens interim-relief arguments.

---

13) Frequently asked questions

“Can currency depreciation alone justify adaptation in Turkey?”

Sometimes—but not automatically. You must show the depreciation created an extraordinary and unforeseeable imbalance beyond the assumed risk allocation, and that demanding performance violates good faith. TBK 138 is the basis, but the contract’s indexation and FX clauses will be decisive. (Türkiye Sigorta Birliği)

“If the contract has a force majeure clause, can I still use TBK 138?”

Yes in principle, but the other side will argue that the clause allocates risk and narrows judicial intervention. Your best approach is to show that the clause addresses impossibility/time relief, while the event created a hardship equilibrium collapse not fully allocated.

“Do I need to stop performance to file for adaptation?”

Not necessarily, but if you continue performance, you should do so with an explicit reservation of rights and a documented renegotiation request; otherwise you risk losing TBK 138 leverage. (Türkiye Sigorta Birliği)

“What if the event is recognized as force majeure by an authority?”

That can be strong supporting evidence, especially in regulated energy contexts, but it does not automatically decide private-law contract claims. Still, it helps with unforeseeability and non-attribution narratives. (epias.com.tr)

---

Conclusion: winning energy force majeure and adaptation disputes is about structure, not slogans

In Turkish energy contracts, “force majeure” and “hardship” are not interchangeable. The legal route depends on whether performance became impossible (TBK 136–137) or excessively burdensome (TBK 138). (Türkiye Sigorta Birliği)

Projects that survive extraordinary events usually do three things well:

1. Contract design: clear force majeure, hardship, and change-in-law architecture with measurable remedies.
2. Evidence discipline: a causation-focused record that aligns technical facts with legal standards.
3. Fast, careful action: notice + reservation of rights + mitigation + structured renegotiation before (or alongside) litigation.

When those elements are in place, an adaptation claim becomes a controlled legal tool to restore equilibrium—not a desperate attempt to rewrite history.

---