Introduction
International construction contracts in Turkey are legally complex, commercially sensitive and heavily dependent on proper contract management. Turkey has a strong construction sector, active contractors, infrastructure projects, energy investments, real estate developments, industrial facilities, transportation projects, hospitals, ports, airports and public-private partnership projects. Turkish contractors are also highly active abroad, while foreign investors, employers, lenders, engineering companies and subcontractors regularly participate in Turkey-related construction projects.
Construction projects create a unique risk profile. Unlike ordinary sale or service contracts, construction contracts usually involve long project timelines, technical specifications, site conditions, permits, design responsibility, subcontractors, variation orders, delay events, price escalation, payment certificates, performance guarantees, advance payment guarantees, defects liability, acceptance procedures and complex dispute resolution mechanisms. A small drafting mistake at the beginning may become a multimillion-dollar dispute at the end of the project.
Under Turkish law, construction contracts are generally treated as a form of contract for work, known as eser sözleşmesi. The Turkish Code of Obligations regulates contracts for work under Articles 470 to 486. Article 470 defines a contract for work as a contract where the contractor undertakes to create a work and the employer undertakes to pay a price in return.
International construction contracts connected with Turkey may also involve FIDIC forms, public procurement legislation, Turkish private international law, international arbitration law, Turkish enforcement law, bank guarantees, insurance, labor law, zoning and permitting rules, environmental regulations and tax obligations. Therefore, parties should not treat a Turkey-related construction contract as a purely technical document. It is both an engineering roadmap and a legal risk allocation instrument.
1. Legal Framework of Construction Contracts in Turkey
There is no single independent “Construction Contracts Code” in Turkey. The primary legal basis is the Turkish Code of Obligations, particularly the provisions on contracts for work. In circumstances where the construction contract is silent, the Turkish Code of Obligations and other relevant Turkish laws may fill the gaps. International construction arbitration sources also state that there are no distinct regulations concerning construction contracts as a separate category, and that Articles 470 to 486 of the Turkish Code of Obligations are the main statutory framework for construction contracts.
The Turkish Commercial Code may also become relevant where the parties are merchants, where commercial books, company authority, negotiable instruments, unfair competition, transportation or corporate issues arise. Public projects may involve Public Procurement Law No. 4734 and Public Procurement Contracts Law No. 4735. International arbitration may be governed by International Arbitration Law No. 4686 where the dispute has a foreign element and Turkey is the seat of arbitration, or where the parties choose the application of that law.
The legal framework may therefore differ depending on whether the project is private or public, domestic or international, employer-designed or contractor-designed, lump sum or unit-price, FIDIC-based or bespoke, and court-based or arbitration-based.
2. Types of International Construction Contracts Used in Turkey
International construction projects in Turkey may be structured through different contract models. The most common include:
Lump sum contracts.
Unit price contracts.
Cost-plus contracts.
EPC contracts.
Design-build contracts.
Turnkey contracts.
Construction management contracts.
Subcontract agreements.
Joint venture agreements.
Public-private partnership contracts.
FIDIC-based contracts.
Each model allocates risk differently. In a lump sum contract, the contractor often bears greater risk for quantities and cost overruns, unless variation or hardship provisions apply. In a unit price contract, the final contract price may depend on measured quantities. In an EPC or turnkey contract, the contractor may assume broad responsibility for design, procurement, construction, testing and completion.
The contract type must match the project. For example, using a rigid lump sum structure for a project with uncertain ground conditions, incomplete design or unstable import costs may create disputes. Similarly, using a vague cost-plus model without audit rights may expose the employer to uncontrolled cost claims.
3. FIDIC Contracts in Turkey
FIDIC forms are widely used in international construction practice and are also relevant in Turkey-related projects. FIDIC contracts are especially common in large infrastructure, engineering, industrial, energy and internationally financed projects. International commentary notes that FIDIC forms are mainly used in public procurement projects in Turkey, although public procurement contracts are also subject to Turkish Public Procurement Law No. 4734 and Public Procurement Contracts Law No. 4735.
FIDIC forms provide detailed mechanisms for engineer determinations, claims, variations, extension of time, payment certificates, defects, suspension, termination and dispute boards. However, FIDIC clauses should not be copied without Turkish law review. Certain provisions may need adaptation to Turkish mandatory law, public procurement rules, tax rules, foreign currency restrictions, public authority approvals or enforcement practice.
For example, FIDIC-based claim notice periods may be decisive in international arbitration. A contractor that fails to notify an extension-of-time claim within the contractual period may lose or weaken the claim. Similarly, an employer that fails to follow contractual procedures for defects, delay damages or termination may face wrongful termination allegations.
4. Public Construction Contracts and Procurement Rules
Public construction projects in Turkey may be subject to a special legal regime. The Public Procurement Law No. 4734 governs procurement procedures, while the Public Procurement Contracts Law No. 4735 regulates contracts concluded after procurement. The Public Procurement Law requires a procurement proceedings dossier to be kept for procurements, including approval documents, tender documents, notices, tenders and other submitted documents.
Public construction contracts may limit party autonomy more than private contracts. Termination, price adjustment, additional works, penalties, guarantees, delays and dispute resolution may be regulated by mandatory public procurement rules. In public procurement projects, the contractor cannot assume that FIDIC or a bespoke clause will override mandatory Turkish public law requirements.
Foreign contractors participating in Turkish public projects should carefully review tender documents, administrative specifications, technical specifications, draft contract, guarantee requirements, price adjustment rules and dispute resolution mechanisms before bidding. A claim that could be negotiated in a private project may be much harder to pursue in a public contract if the statutory framework does not allow flexibility.
5. Essential Clauses in Turkey-Related Construction Contracts
A well-drafted international construction contract in Turkey should regulate the following issues clearly:
Scope of works.
Design responsibility.
Site possession.
Permits and licenses.
Technical specifications.
Employer’s obligations.
Contractor’s obligations.
Project schedule.
Milestones.
Completion date.
Variation mechanism.
Payment terms.
Price adjustment.
Retention.
Advance payment.
Performance guarantee.
Delay damages.
Defects liability.
Insurance.
Force majeure.
Hardship.
Suspension.
Termination.
Subcontracting.
Claims procedure.
Dispute board.
Arbitration or court jurisdiction.
Governing law.
Language priority.
Notices.
Evidence and records.
Each of these clauses may later become the center of a dispute. Construction contracts should be drafted not only for project execution but also for future claim management.
6. Scope of Work and Technical Specifications
The scope of work is the foundation of a construction contract. Many disputes arise because the employer believes that certain works were included in the contract price, while the contractor argues that they are additional works requiring a variation.
The contract should clearly define drawings, specifications, bills of quantities, employer’s requirements, contractor’s proposals, design documents, performance criteria and document hierarchy. If there is inconsistency between drawings, specifications and bill of quantities, the contract should state which document prevails.
In international projects, language discrepancies can be serious. A Turkish version and English version may not match. Technical terms may be translated incorrectly. Therefore, the contract should identify the governing language and provide a document priority clause.
7. Site Conditions and Ground Risk
Site condition risk is one of the most disputed issues in construction contracts. Unexpected ground conditions, underground utilities, contamination, archaeological findings, access restrictions, neighboring property issues and geotechnical problems may cause delay and additional cost.
The contract should state whether the contractor has inspected the site, whether the employer provides geotechnical reports, whether the contractor may rely on employer-provided data, and who bears unforeseen physical condition risk. If the employer provides inaccurate site data, the contractor may claim additional time and cost depending on contract wording and Turkish law principles.
A foreign contractor should never rely solely on tender documents without independent site due diligence where the contract places risk on the contractor. Conversely, an employer should avoid broad representations about site conditions unless supported by reliable technical investigation.
8. Design Responsibility
Design responsibility must be allocated with precision. In traditional employer-designed contracts, the employer or its designer provides the design, while the contractor builds according to that design. In design-build or EPC contracts, the contractor may assume responsibility for design sufficiency, fitness for purpose, coordination and performance.
Disputes often arise where the employer provides a preliminary design but the contractor develops detailed design. The parties may later disagree whether a defect is a design defect, workmanship defect or employer instruction problem.
The contract should regulate design review, approval, design liability, professional negligence, design changes, coordination responsibility, BIM models, intellectual property in design documents and consequences of employer comments or approvals. Employer approval should not automatically release the contractor from design responsibility unless the contract says so.
9. Project Schedule and Delay Claims
Delay claims are among the most common construction disputes in Turkey-related projects. Delay may be caused by late site handover, late design approval, permit delays, variation orders, employer interference, subcontractor failure, adverse weather, force majeure, import delays, financing problems, labor shortages or contractor inefficiency.
A contractor claiming extension of time must prove the delay event, causation, effect on the critical path, compliance with notice requirements and mitigation efforts. International construction arbitration sources note that Turkish law generally treats disruption as breach of contract and that the contractor must show evidence of what progress was disrupted, where or when damage occurred, the additional cost and the causal link.
The contract should require a baseline schedule, regular updates, delay notices, contemporaneous records, critical path analysis, recovery plans and employer responses. Without proper project records, delay claims become difficult to prove.
10. Extension of Time
Extension of time is the main contractual remedy for excusable delay. It protects the contractor from delay damages where completion is delayed by events for which the contractor is not responsible. It also gives the employer a revised completion date.
The extension-of-time clause should define compensable delay, excusable non-compensable delay, concurrent delay, notice periods, supporting documents, engineer or employer determination, and dispute procedure.
A common drafting mistake is failing to distinguish between time relief and cost relief. Some events may entitle the contractor to additional time but not additional payment. Others may entitle both time and cost. The contract should state this clearly.
11. Liquidated Damages and Delay Penalties
Construction contracts often include delay damages or penalties for late completion. Under Turkish law, penalty clauses may be enforceable, but excessive penalties may be subject to judicial reduction in certain circumstances. In international contracts, delay damages should be commercially reasonable, clearly calculated and linked to defined milestones or completion dates.
The contract should state whether delay damages are the employer’s exclusive remedy for delay or whether the employer may claim additional damages. It should also regulate caps, grace periods, partial completion, sectional completion and delay caused by the employer.
Contractors should be cautious where delay damages are uncapped or apply to several overlapping milestones. Employers should ensure that delay damages are enforceable and not drafted ambiguously.
12. Variation Claims and Additional Works
Variation claims are another major source of construction disputes. A variation may involve a change in scope, design, quantity, quality, sequence, method, site condition, employer requirement or statutory obligation.
The contract should define who may issue variations, whether oral instructions are valid, how price adjustment is calculated, how time impact is assessed, and whether the contractor must proceed before price agreement. If the contractor performs additional works without written instruction, it may later struggle to prove entitlement.
From the employer’s perspective, unauthorized additional work claims can be controlled by requiring written variation orders. From the contractor’s perspective, the contract should protect the right to payment where urgent or instructed works are performed but formal paperwork is delayed.
13. Payment Claims and Interim Certificates
Payment disputes are common in Turkey-related construction projects. Contractors may claim unpaid progress payments, variations, price escalation, prolongation costs, retention release, advance payment recovery or final account balances. Employers may withhold payment due to defects, delay, incomplete documents, set-off, back charges or guarantee claims.
The contract should regulate payment applications, supporting documents, measurement, certification, payment deadlines, objections, set-off rights, retention, advance payment deduction, tax, VAT, foreign currency, bank charges and consequences of late payment.
In FIDIC-based contracts, payment certificates and engineer determinations may play an important role. In bespoke contracts, parties should create a clear certification mechanism. If payment depends only on employer discretion, the contractor may face serious cash-flow risk.
14. Price Escalation and Currency Risk
International construction projects in Turkey may be exposed to inflation, currency fluctuation, raw material price increases, freight costs and import duties. Long-term projects are particularly vulnerable.
A price escalation clause should identify which costs may be adjusted, which index applies, how often adjustment occurs, whether foreign currency components are treated separately, and whether there is a cap. Without a price escalation clause, the contractor may need to rely on hardship principles under Turkish law, which are subject to strict conditions.
Foreign currency restrictions may also affect some Turkey-related contracts, depending on the parties and contract type. International projects should be reviewed carefully for currency compliance, especially where both parties are Turkish residents or where payment obligations are linked to foreign currency.
15. Force Majeure and Hardship
Force majeure and hardship clauses are essential in international construction contracts. War, earthquakes, pandemics, sanctions, embargoes, customs restrictions, port closures, labor shortages, government decisions and supply chain disruptions may affect project performance.
Under Turkish law, impossibility of performance and excessive difficulty of performance are regulated separately. Force majeure may excuse non-performance if performance becomes impossible for reasons not attributable to the debtor. Hardship may allow adaptation where extraordinary and unforeseeable events make performance excessively burdensome, subject to strict conditions.
The contract should define force majeure events, notice requirements, mitigation duties, suspension rights, extension of time, cost entitlement and termination if the event continues. Hardship should be treated separately, especially for price escalation, currency collapse, raw material increases and sanctions-related cost changes.
16. Suspension and Termination
Suspension and termination clauses must be drafted carefully. The contractor may need the right to suspend works for non-payment, late site handover, permit failure or employer breach. The employer may need the right to suspend for safety, funding, redesign or contractor default.
Termination may occur for contractor default, employer default, prolonged force majeure, insolvency, corruption, abandonment of works, excessive delay, failure to provide guarantees or convenience termination.
Under Turkish law, construction contracts as contracts for work may also involve statutory termination concepts. For example, legal commentary notes that under Article 484 of the Turkish Code of Obligations, the employer may terminate a contract for work without cause by compensating the contractor, including payment for work done and damages incurred due to termination.
Wrongful termination is one of the highest-risk events in construction disputes. A party terminating without proper contractual or legal basis may become liable for damages, lost profit, demobilization costs, guarantee disputes and arbitration costs.
17. Acceptance, Taking-Over and Defects
Acceptance is a key stage in construction projects. It may determine transfer of risk, commencement of defects liability period, release of retention, reduction of guarantee amounts and limitation periods for defect claims.
Under Turkish contract-for-work principles, delivery and acceptance are closely linked to defect liability. Commentary on Turkish contracts for work notes that the contractor’s liability for defects is affected by delivery and acceptance, and that the employer’s acceptance may have important consequences for the contractor’s obligations.
The contract should distinguish between mechanical completion, substantial completion, taking-over, provisional acceptance, final acceptance and defects liability. It should also regulate punch lists, testing and commissioning, operation manuals, as-built drawings, training, warranties and latent defects.
Employers should not accept works without recording defects. Contractors should obtain written acceptance records to avoid indefinite liability.
18. Defects Liability and Warranty Claims
Defect claims may concern workmanship, design, materials, equipment, performance tests, waterproofing, structural defects, MEP systems, fire safety, façade works or non-compliance with specifications.
The employer should notify defects in accordance with the contract and Turkish law. The contractor should have an opportunity to inspect and remedy. The contract should regulate repair, replacement, cost of remedying, employer’s right to engage third parties, emergency repairs, latent defects and warranty periods.
Expert evidence is usually essential in defect disputes. Parties should preserve photographs, test reports, site records, correspondence, inspection minutes and expert determinations.
19. Performance Guarantees and Advance Payment Guarantees
Bank guarantees are central to Turkish and international construction practice. Employers often require bid bonds, performance guarantees, advance payment guarantees and warranty guarantees. Contractors may request payment guarantees or escrow mechanisms from employers.
A guarantee may be conditional or payable on first demand. The wording determines risk. A contractor may face abusive calls if the performance guarantee is unconditional. An employer may face weak security if the guarantee requires a final court judgment before payment.
The main contract and guarantee text must be consistent. They should regulate expiry, extension, reduction, partial calls, return, governing rules and dispute procedure. In international projects, URDG 758 may be considered for demand guarantees if expressly incorporated.
20. Subcontracting Risks
Large construction projects often involve subcontractors, suppliers, consultants and nominated subcontractors. The main contractor may remain liable to the employer even where delay or defect is caused by a subcontractor.
The main contract should regulate whether subcontracting requires employer approval, whether nominated subcontractors are permitted, and whether subcontractor delay entitles the contractor to time or cost. The subcontract should be back-to-back with the main contract where appropriate.
Subcontractor insolvency, poor performance or non-payment may cause major project disruption. Contractors should include step-in rights, performance security, defect obligations, insurance and dispute resolution clauses in subcontracts.
21. Insurance in Construction Projects
Construction contracts should include robust insurance provisions. Common policies include contractor’s all risks insurance, third-party liability insurance, professional indemnity insurance, employer’s liability insurance, workers’ compensation-related coverage, equipment insurance, marine cargo insurance and delay-in-start-up insurance.
The contract should define insured parties, policy limits, deductibles, exclusions, beneficiaries, proof of insurance, renewal obligations and consequences of non-compliance. Insurance should match project risks. A policy that excludes design liability may be insufficient for design-build projects.
22. Claims Management and Notice Requirements
Construction claims require discipline. The contractor or employer should give timely notices, maintain records, quantify claims and follow contractual procedures. Failure to comply with notice requirements may weaken or bar claims, especially under FIDIC-based contracts.
A claim file should include:
Contract clauses.
Notice letters.
Site diaries.
Progress reports.
Schedules.
Photos and videos.
Meeting minutes.
Correspondence.
Variation orders.
Payment certificates.
Cost records.
Expert reports.
Delay analysis.
Weather records.
Procurement records.
Labor and equipment logs.
International construction arbitration is evidence-intensive. Contemporaneous documents are usually more persuasive than after-the-fact narratives.
23. Dispute Boards and Engineer Determinations
Many international construction contracts use dispute boards, dispute adjudication boards or engineer determinations. These mechanisms aim to resolve disputes during the project before they escalate to arbitration.
FIDIC contracts commonly include structured claim and dispute mechanisms. Dispute boards may provide interim binding decisions, depending on the contract. If a party ignores the dispute board process, it may face admissibility or jurisdiction objections in arbitration.
Turkey-related projects using FIDIC should adapt dispute board provisions to the governing law, project size, language, seat of arbitration and enforcement strategy. Small projects may not justify a standing board, while large infrastructure projects may benefit significantly from one.
24. Turkish Courts or Arbitration?
Construction disputes may be resolved before Turkish courts or arbitral tribunals depending on the contract. Turkish courts may be appropriate where the project, parties, evidence and assets are in Turkey. However, complex international construction disputes often benefit from arbitration because of confidentiality, technical expertise, procedural flexibility and international enforceability.
International Arbitration Law No. 4686 applies to international arbitration seated in Turkey and to arbitration where the parties agree to its application. Domestic arbitration is generally governed by the Turkish Code of Civil Procedure.
Arbitration is especially attractive where the employer or contractor is foreign, the project is financed internationally, the contract is FIDIC-based, expert evidence is complex, or enforcement may be needed outside Turkey.
25. ISTAC Arbitration for Construction Disputes
The Istanbul Arbitration Centre, known as ISTAC, provides institutional arbitration services for domestic and foreign parties. ISTAC states that for arbitration to be administered by ISTAC, it is sufficient for parties to agree that disputes shall be settled by arbitration under the ISTAC Arbitration Rules.
ISTAC also provides a model arbitration clause stating that disputes arising out of or in connection with the contract shall be finally settled through arbitration under the Istanbul Arbitration Centre Arbitration Rules.
For Turkey-related construction contracts, ISTAC may offer a local but internationally structured forum. Parties should still specify seat, language, number of arbitrators, governing law and emergency arbitrator or expedited arbitration options where appropriate.
26. ICC, LCIA and Other International Arbitration Forums
International construction contracts involving Turkey may also choose ICC, LCIA, Swiss Arbitration Centre, SCC, DIAC or ad hoc UNCITRAL arbitration. The best institution depends on project value, parties’ locations, language, financing documents, technical complexity and enforcement needs.
The arbitration clause should avoid contradictions. A common mistake is including both “Istanbul courts shall have jurisdiction” and “all disputes shall be resolved by arbitration.” If courts are intended only for interim measures, the contract should say so expressly.
The clause should also bind relevant parties. In construction projects, disputes may involve employer, contractor, subcontractor, designer, guarantor, parent company and insurer. If each contract has a different dispute forum, parallel proceedings may arise.
27. Enforcement of Foreign Arbitral Awards in Turkey
If a construction arbitral award is rendered outside Turkey and the losing party has assets in Turkey, enforcement may be required before Turkish courts. Recognition and enforcement of foreign arbitral awards in Turkey are governed by the New York Convention and Law No. 5718 on International Private and Procedural Law. Turkish arbitration sources state that Law No. 5718 regulates enforcement of foreign arbitral awards between Articles 60 and 62, while the New York Convention is also a major source.
Turkey has made reciprocity and commercial reservations under the New York Convention. Turkish courts generally do not review the merits of the arbitral award; they examine limited refusal grounds such as invalid arbitration agreement, due process violation, excess of authority, non-arbitrability and public policy.
For construction creditors, enforcement strategy should be planned before arbitration begins. The location of bank accounts, receivables, project assets, machinery, real estate and parent company guarantees may determine real recovery.
28. Interim Measures and Precautionary Attachment
Interim measures can be decisive in construction disputes. A party may need to stop an abusive guarantee call, preserve evidence, prevent disposal of equipment, secure receivables, freeze assets, protect the site or prevent transfer of project documents.
Even where arbitration is chosen, Turkish courts may be relevant for interim measures. The contract should preserve the right to seek interim relief from competent courts without waiving arbitration.
For payment claims, precautionary attachment may be considered if the legal requirements are satisfied and the debtor has assets in Turkey. For technical disputes, evidence preservation may be more urgent than monetary attachment.
29. Evidence and Expert Reports
Construction disputes are technical. Courts and arbitral tribunals often rely on experts for delay analysis, defects, valuation, quantum, engineering standards, site conditions and measurement.
Parties should keep records from day one. A contractor should not wait until arbitration to reconstruct costs. An employer should not wait until termination to document delay or defects. Site diaries, daily reports, progress photos, inspection minutes and correspondence are critical.
In Turkey-related disputes, Turkish-language documents and official records may need translation. Foreign-language technical documents may need certified translation in court proceedings. In arbitration, translation requirements depend on the arbitration language and tribunal directions.
30. Practical Drafting Checklist
Before signing an international construction contract in Turkey, parties should check:
Is the contract private or public?
Does Turkish law apply?
Is FIDIC used, and has it been adapted?
Who bears design responsibility?
Who bears site condition risk?
Are permits clearly allocated?
Is the scope of work complete?
Is the document hierarchy clear?
Are delay and extension-of-time procedures precise?
Are variation rules workable?
Are payment procedures clear?
Is price escalation addressed?
Are force majeure and hardship clauses project-specific?
Are guarantees conditional or on-demand?
Are insurance obligations adequate?
Is defects liability clear?
Is termination balanced?
Is the dispute board mechanism workable?
Is arbitration clause complete?
Is enforcement strategy considered?
Are notices and records properly regulated?
This checklist is not theoretical. Each point reflects a common source of construction disputes.
Conclusion
International construction contracts in Turkey require careful legal, technical and commercial planning. The primary Turkish legal framework is based on the contract-for-work provisions of the Turkish Code of Obligations, but large projects may also involve Turkish commercial law, public procurement rules, FIDIC forms, bank guarantees, insurance, zoning, tax, labor law, international arbitration and enforcement law.
The most common disputes concern delay, disruption, variations, payment, defects, termination, guarantees, force majeure, hardship and final account claims. These disputes are usually won or lost through contract wording and contemporaneous evidence. A party that gives timely notices, maintains project records, follows claim procedures and preserves technical evidence will have a stronger position in negotiation, court or arbitration.
Arbitration is often preferred in international construction contracts because it offers neutrality, flexibility, confidentiality and technical expertise. ISTAC, ICC and other institutions may be suitable depending on the project. However, arbitration clauses must be drafted precisely, and enforcement in Turkey should be considered from the beginning.
A construction contract is not merely a project document. It is a risk allocation system. In Turkey-related international construction projects, the best legal protection is created before excavation begins: through clear scope, balanced risk allocation, proper security, workable claims procedures, strong records and an enforceable dispute resolution mechanism.
Frequently Asked Questions
What law governs construction contracts in Turkey?
Construction contracts are generally treated as contracts for work under Turkish law. The main provisions are Articles 470 to 486 of the Turkish Code of Obligations. Article 470 defines the contract as one where the contractor undertakes to create a work and the employer undertakes to pay a price.
Are FIDIC contracts used in Turkey?
Yes. FIDIC forms are used in Turkey-related international construction projects, especially large infrastructure and public procurement-related projects. However, they should be adapted to Turkish law and project-specific requirements.
Can construction disputes in Turkey be resolved by arbitration?
Yes. International construction disputes may be resolved by arbitration if the parties have a valid arbitration agreement. International Arbitration Law No. 4686 applies to international arbitration seated in Turkey and arbitration where its application is agreed.
What is ISTAC arbitration?
ISTAC is the Istanbul Arbitration Centre. It provides institutional arbitration services for domestic and foreign parties, and parties may use ISTAC arbitration by agreeing that disputes will be settled under the ISTAC Arbitration Rules.
What are the most common construction claims in Turkey?
Common claims include delay, disruption, extension of time, variations, additional works, unpaid progress payments, price escalation, defects, guarantee calls, wrongful termination, force majeure and final account disputes.
How should delay claims be proved?
Delay claims should be supported by notices, updated schedules, critical path analysis, site records, correspondence, progress reports, photos, cost records and evidence showing causation between the event and delay.
Are bank guarantees common in Turkish construction projects?
Yes. Performance guarantees, advance payment guarantees, bid bonds and warranty guarantees are commonly used. The wording is critical because guarantees may be conditional or payable on first demand.
Can foreign arbitral awards from construction disputes be enforced in Turkey?
Yes. Foreign arbitral awards may be enforced in Turkey under the New York Convention and Law No. 5718, subject to limited refusal grounds. Turkey has reciprocity and commercial reservations under the New York Convention.
What is the biggest legal risk in international construction contracts in Turkey?
The biggest risks are unclear scope, weak variation procedures, poor notice discipline, inadequate project records, ambiguous delay clauses, abusive guarantee calls, defective termination and poorly drafted arbitration clauses.
What should foreign contractors check before signing a construction contract in Turkey?
Foreign contractors should review governing law, payment security, permit responsibility, design risk, site condition risk, price escalation, force majeure, tax, foreign currency rules, claim notice periods, dispute resolution and enforcement strategy.
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