Introduction

The execution of a share purchase agreement and completion of an acquisition do not necessarily bring an M&A transaction to an end.

Some of the most significant disputes arise months or even years after closing.

A buyer may discover an undisclosed tax liability. The seller may claim that deferred consideration has not been paid. The parties may disagree over completion accounts, earn-out calculations or working capital. A former shareholder may be accused of breaching a non-compete undertaking. Investors may also become deadlocked over the management of the acquired company.

For this reason, dispute planning should begin while the transaction documents are being negotiated rather than after a conflict has already arisen.

In cross-border Turkish M&A transactions, arbitration is frequently preferred for substantial contractual disputes. Depending on the circumstances, disputes may be resolved through Turkish courts, domestic arbitration, international arbitration or specialist expert determination.

The appropriate mechanism depends on the type of dispute.

A dispute over whether a seller breached a warranty may require legal interpretation and arbitration. A dispute over the calculation of closing working capital may be better referred to an independent accounting expert. A challenge concerning the validity of a Turkish corporate resolution may involve mandatory Turkish corporate-law procedures.

The transaction documents should distinguish among these categories from the beginning.

Why Do M&A Disputes Arise?

M&A agreements attempt to allocate risks concerning a business whose financial and legal position continues to evolve.

Even extensive due diligence cannot eliminate uncertainty.

Disputes commonly arise because the buyer and seller have different understandings of:

• The financial condition of the target;
• The meaning of contractual definitions;
• Historical liabilities;
• Disclosure made during due diligence;
• Post-closing performance;
• Purchase price calculations;
• Seller liability limitations;
• Buyer conduct following completion.

Other disputes arise not because the agreement is unclear but because one party alleges that important information was deliberately withheld.

The legal strategy may differ significantly where the claim concerns an innocent warranty breach compared with fraud or intentional concealment.

Share Purchase Agreement Disputes

The Share Purchase Agreement (“SPA”) is usually the principal source of post-closing M&A claims.

Common disputes concern:

Purchase price

Whether the buyer paid the correct amount or whether an adjustment is required.

Representations and warranties

Whether statements made by the seller concerning the target were correct.

Indemnities

Whether an identified liability falls within a specific seller indemnity.

Conditions precedent

Whether a party was entitled to refuse closing.

Pre-closing covenants

Whether the seller operated the company in accordance with the agreed restrictions between signing and closing.

Post-closing obligations

Whether transitional services, non-compete restrictions, deferred payments or other continuing obligations have been performed.

The wording of the SPA therefore becomes central once litigation or arbitration begins.

Warranty Breach Claims

Warranty claims are among the most common post-closing acquisition disputes.

Suppose the seller warrants that:

all material tax liabilities of the target have been properly declared and paid.

Two years after closing, the Turkish tax authorities impose a substantial assessment relating to a pre-closing period.

The buyer may argue that the warranty was false and seek compensation from the seller.

Similar disputes may concern:

• Undisclosed litigation;
• Employment liabilities;
• Tax exposure;
• Intellectual property ownership;
• Invalid licences;
• Undisclosed debt;
• Related-party transactions;
• Environmental liabilities;
• Data protection violations;
• Material customer contracts.

The buyer must normally establish that the relevant contractual statement was inaccurate and that the breach caused recoverable loss under the SPA.

Disclosure Disputes

The seller may respond that the relevant matter was disclosed before signing.

This creates one of the most common disputes in warranty litigation:

Was the issue adequately disclosed?

Suppose the seller uploads 15,000 documents to a virtual data room.

One document contains a reference to a possible TRY 30 million tax assessment.

After closing, the assessment materialises.

The seller may argue:

“The document was in the data room. The buyer knew about the risk.”

The buyer may respond:

“The risk was never specifically disclosed and could not reasonably have been identified from thousands of documents.”

The answer may depend heavily on how the SPA defines Disclosed, Fairly Disclosed or Buyer’s Knowledge.

A well-drafted agreement should specify whether disclosure occurs through:

• The disclosure letter only;
• The data room;
• Public registries;
• Due diligence reports;
• Actual buyer knowledge.

Leaving the issue undefined significantly increases litigation risk.

Specific Indemnity Disputes

An indemnity differs from an ordinary warranty because it frequently concerns a known risk.

For example, due diligence may reveal a pending tax investigation.

The seller and buyer agree:

The Seller shall indemnify the Buyer against all losses arising from the tax investigation relating to the financial years 2023–2025.

A dispute may later arise over:

• Whether a particular tax assessment falls within the indemnity;
• Whether interest and penalties are covered;
• Whether professional costs are recoverable;
• Whether the buyer was required to challenge the assessment;
• Who controls the defence;
• Whether the seller approved a settlement.

Specific indemnities should therefore define the covered risk precisely.

Tax Indemnity Disputes

Tax claims deserve particular attention because assessments relating to pre-closing periods may arise years after an acquisition.

A tax covenant may allocate responsibility for liabilities based on whether the relevant economic event occurred before or after closing.

Disputes may arise where a tax liability relates partly to both periods.

For example, a transaction may have begun before closing but generated income after closing.

The SPA should regulate:

• Pre-closing tax periods;
• Straddle periods;
• Tax inspections;
• Defence of assessments;
• Settlement authority;
• Tax refunds;
• Tax benefits;
• Interest and penalties.

Notification procedures are also important.

A seller may argue that it is not responsible because the buyer failed to notify it promptly after receiving an assessment.

Completion Accounts Disputes

Completion accounts are a major source of post-closing M&A disagreements.

Under this mechanism, an estimated purchase price is paid at closing and the final price is calculated later based on figures such as:

• Cash;
• Debt;
• Working capital;
• Transaction expenses.

The disagreement may concern calculation rather than legal liability.

For example:

Seller calculation:

Closing Debt: EUR 4 million

Buyer calculation:

Closing Debt: EUR 6.5 million

The EUR 2.5 million difference may depend entirely on whether certain items qualify as “Debt” under the SPA.

Accounting Dispute or Legal Dispute?

This distinction is extremely important.

Assume the parties disagree over whether an unpaid employee bonus should be treated as Debt.

There may be two different questions:

1. What is the amount of the unpaid bonus?
2. Does the SPA definition of Debt include that bonus?

The first may be an accounting question.

The second may require contractual interpretation.

If the SPA sends “all completion account disputes” to an accountant, the parties may later disagree over whether that accountant has authority to interpret the contract.

A properly drafted dispute clause should distinguish:

accounting determinations from legal disputes concerning interpretation of the SPA.

Independent Expert Determination

Completion account disputes are frequently referred to an independent accounting firm.

The SPA should specify whether the accountant acts as an:

• Expert; or
• Arbitrator.

This distinction can materially affect procedural rights and the ability to challenge the determination.

The agreement should also regulate:

• Appointment;
• Independence;
• Information access;
• Written submissions;
• Scope of authority;
• Cost allocation;
• Deadline;
• Binding effect.

The expert should generally decide only the disputed calculation rather than reopening the entire purchase price.

Working Capital Disputes

Working capital adjustments frequently generate disagreement because small accounting classification changes can materially affect the final price.

Typical disputed items include:

• Customer receivables;
• Doubtful debts;
• Inventory reserves;
• Supplier payables;
• Employee accruals;
• Deferred revenue;
• Customer advances.

The transaction documents should include detailed accounting principles and, where appropriate, sample calculations.

A formula alone is often insufficient.

Locked-Box and Leakage Disputes

Locked-box acquisitions create a different type of post-closing claim.

The purchase price is fixed by reference to historical accounts, and the seller undertakes not to extract value from the target between the locked-box date and closing.

Disputes therefore frequently concern Leakage.

Potential leakage may include:

• Dividends;
• Shareholder payments;
• Management fees;
• Repayment of shareholder loans;
• Related-party transactions;
• Transfer of assets below market value.

The buyer may seek reimbursement on a one-for-one basis.

The seller may argue that the payment constituted Permitted Leakage.

Detailed schedules identifying permitted payments substantially reduce later disputes.

Earn-Out Disputes

Earn-outs are among the most dispute-prone M&A mechanisms.

The seller receives additional consideration if the target achieves specified post-closing performance.

The commercial problem is obvious:

After closing, the buyer controls the company, but the seller’s purchase price depends on the company’s performance.

Suppose the earn-out depends on EBITDA.

After closing, the buyer:

• Hires 40 new employees;
• Increases marketing expenditure;
• Charges group management fees;
• Changes accounting methods.

EBITDA decreases and no earn-out becomes payable.

The seller may argue that the buyer deliberately manipulated the company to avoid payment.

The buyer may argue that these were legitimate business decisions.

Drafting Earn-Out Protection

Earn-out provisions should therefore regulate:

• Calculation methodology;
• Accounting principles;
• Reporting;
• Access to records;
• Related-party transactions;
• Group charges;
• Business transfers;
• Extraordinary expenditure;
• Changes to accounting policies.

The buyer should retain legitimate management freedom.

The seller should receive protection against conduct primarily intended to deprive it of the agreed earn-out.

Deferred Consideration Disputes

Deferred consideration differs from an earn-out because the amount is already fixed.

For example:

EUR 15 million at closing;

EUR 5 million eighteen months later.

A dispute may arise where the buyer refuses to pay the second instalment because it claims damages for warranty breaches.

The central question becomes whether the buyer has a contractual set-off right.

An SPA should expressly state whether warranty claims may be deducted from:

• Deferred consideration;
• Earn-out payments;
• Escrow balances.

Without clear wording, the seller and buyer may have fundamentally different expectations.

Escrow Disputes

Escrow is intended to prevent disputes over enforcement but can itself become the subject of disagreement.

For example, EUR 3 million may remain in escrow for warranty claims.

Before the release date, the buyer sends a notice claiming EUR 2 million.

The seller argues that the notice is invalid.

The escrow agent may then be unable to release the disputed amount until the underlying claim is resolved.

The escrow agreement should align precisely with the SPA regarding:

• Claim notices;
• Release;
• Disputed amounts;
• Partial payment;
• Final determination.

Fraud and Intentional Concealment

Some post-closing disputes go beyond ordinary warranty breaches.

A buyer may allege that the seller intentionally concealed material information.

Examples may include deliberately hiding:

• Tax investigations;
• Fraudulent accounting;
• Employee liabilities;
• Related-party transactions;
• Regulatory violations;
• Litigation;
• Undisclosed debt.

This can materially change the legal analysis.

Contractual provisions limiting seller liability may not necessarily provide the same protection where intentional misconduct or fraudulent concealment is established.

Under Turkish law, contractual freedom is also subject to mandatory restrictions concerning exclusion of liability for serious wrongful conduct.

Consequently, fraud claims should be distinguished from ordinary contractual warranty claims.

Liability Caps and Baskets

Sellers frequently negotiate contractual limits on liability.

For example:

General warranty cap: 20% of Purchase Price

Fundamental warranty cap: 100%

De minimis: EUR 25,000

Basket: EUR 250,000

Disputes may arise over whether a claim falls within the general cap or an exception.

Specific indemnities may sit outside the general cap.

Fraud claims may also be treated differently.

The SPA should establish a clear hierarchy.

Time Limits for Claims

M&A agreements frequently impose contractual periods for bringing claims.

Different periods may apply to:

• General warranties;
• Fundamental warranties;
• Tax claims;
• Environmental claims;
• Specific indemnities.

A buyer should record these deadlines immediately after closing.

One of the most avoidable M&A disputes is a claim becoming contested because the buyer sent notification after the contractual deadline.

Statutory limitation rules under Turkish law should also be considered separately from contractual notification periods.

Claim Notices

An SPA may require the buyer to provide written notice containing details such as:

• Nature of claim;
• Relevant warranty;
• Facts;
• Estimated loss;
• Supporting documentation.

Highly technical notice provisions can become a litigation strategy.

Instead of defending the merits, the seller may argue:

“The claim notice did not satisfy the SPA.”

The notification clause should protect the seller from vague claims without turning legitimate claims into procedural traps.

Third-Party Claims

Many post-closing claims begin with proceedings brought by someone outside the transaction.

Examples include:

• Tax authority assessment;
• Employee lawsuit;
• Customer claim;
• Regulatory investigation;
• Supplier dispute.

The buyer may seek indemnification from the seller.

The seller may request participation in the defence because it ultimately bears the financial exposure.

The SPA should regulate:

• Notice;
• Access to information;
• Selection of lawyers;
• Defence strategy;
• Settlement authority;
• Costs.

Neither party should be permitted to manage the dispute in a way that unfairly prejudices the other.

Shareholders’ Agreement Disputes

Not every M&A dispute involves the SPA.

Where the buyer acquires less than 100% of the target, disputes may arise under the shareholders’ agreement.

Typical issues include:

• Board appointments;
• Reserved matters;
• Capital increases;
• Future financing;
• Dividend policy;
• Share transfers;
• Founder obligations;
• Related-party transactions;
• Information rights.

The dispute may therefore concern continuing corporate governance rather than the historical acquisition.

Deadlock Disputes

Joint ventures and 50/50 structures are particularly vulnerable to deadlock.

A deadlock may arise where shareholders cannot agree on:

• Budget;
• Business plan;
• CEO appointment;
• Financing;
• Major investment;
• Exit.

A poorly drafted agreement may leave the company unable to take important decisions.

Deadlock mechanisms may include escalation to senior executives, mediation, buy-sell mechanisms or ultimate exit procedures.

The mechanism should be established before the relationship deteriorates.

Share Transfer Disputes

Post-acquisition shareholder disputes may involve:

• Right of first refusal;
• Tag-along rights;
• Drag-along rights;
• Call options;
• Put options;
• Founder vesting;
• Good-leaver and bad-leaver provisions.

The contractual mechanism must also be capable of implementation under Turkish corporate law.

An arbitral tribunal may determine contractual obligations between shareholders, but certain formal corporate actions may still require implementation through Turkish corporate procedures.

Non-Compete Disputes

Sellers frequently agree not to compete with the transferred business after closing.

A dispute may arise concerning:

• Geographic scope;
• Duration;
• Business scope;
• Indirect competition;
• Investment in competitors;
• Recruitment of employees.

The buyer may seek damages or urgent injunctive relief.

Restrictive covenants should be proportionate to the legitimate business interest associated with the acquisition.

Overly broad restrictions may face enforceability or competition-law issues.

Confidentiality and Trade Secrets

Former owners may retain substantial information concerning:

• Customers;
• Pricing;
• Suppliers;
• Technology;
• Employees;
• Business strategies.

M&A documents generally contain continuing confidentiality obligations.

Where information is being disclosed or used unlawfully, damages may not provide sufficient protection.

The injured party may therefore seek urgent interim relief.

Turkish Courts or Arbitration?

One of the most important decisions in an M&A agreement is the dispute resolution mechanism.

Large Turkish and cross-border acquisitions frequently use arbitration because it offers:

• Ability to choose specialist decision-makers;
• Procedural flexibility;
• Neutrality;
• Greater flexibility regarding language;
• International enforceability.

Turkish International Arbitration Law No. 4686 applies to qualifying disputes involving a foreign element where Turkey is the seat of arbitration or where application of the statute has been selected in the circumstances specified by the Law. The statute also excludes certain matters that are not arbitrable, including disputes concerning rights in rem over immovable property located in Turkey and matters not subject to the parties’ free disposition. (Türkiye Büyük Millet Meclisi)

Not every corporate dispute can therefore be resolved simply because an SPA contains an arbitration clause.

International Arbitration in Turkish M&A

A foreign investor purchasing a Turkish company may choose arbitration for SPA disputes.

Possible institutional frameworks include:

• ICC arbitration;
• ISTAC arbitration;
• Other international arbitral institutions;
• Ad hoc arbitration.

The parties must separately choose:

Institution

Which arbitration rules apply?

Seat

Which jurisdiction provides the procedural legal framework?

Language

English is frequently chosen in international transactions.

Number of arbitrators

One or three.

Governing law

Turkish law, English law or another permitted law depending on the contract and conflict-of-laws analysis.

These concepts should not be confused.

For example, the parties may agree on:

ICC Arbitration – Seat Istanbul – English Language – Turkish Governing Law.

ISTAC Arbitration

The Istanbul Arbitration Centre (“ISTAC”) provides institutional arbitration for both domestic and international disputes.

ISTAC confirms that parties may submit disputes to the institution simply by agreeing that disputes will be resolved under the ISTAC Arbitration Rules. (İstanbul Tahkim Merkezi)

This can be particularly useful for M&A agreements involving Turkish companies where the parties wish to use a Turkish institutional framework while retaining arbitration rather than court litigation.

ISTAC proceedings may also accommodate online hearings, including remote witness and expert examination under its published procedures. (İstanbul Tahkim Merkezi)

Arbitration Clause Drafting

An arbitration clause should not simply state:

“All disputes shall be resolved by arbitration.”

The clause should generally identify:

• Arbitral institution;
• Applicable rules;
• Seat;
• Number of arbitrators;
• Language.

The SPA should also consider whether related agreements contain consistent clauses.

A transaction may contain:

• SPA;
• Shareholders’ agreement;
• Escrow agreement;
• Transitional services agreement;
• Founder agreement.

If each document uses a different dispute resolution mechanism, one commercial conflict may produce several parallel proceedings.

Multi-Contract M&A Disputes

Suppose the buyer alleges that the seller:

• Breached the SPA warranty;
• Failed to provide services under the TSA;
• Violated the shareholders’ agreement.

If the SPA uses ICC arbitration, the TSA uses Turkish courts and the shareholders’ agreement uses ISTAC arbitration, the dispute becomes procedurally fragmented.

Transaction counsel should therefore coordinate dispute clauses across the entire document suite.

Where appropriate, the agreements may permit consolidation or joinder within the applicable arbitral framework.

Interim Measures

M&A disputes sometimes require urgent protection before the final dispute is resolved.

Examples include preventing:

• Transfer of disputed shares;
• Dissipation of assets;
• Use of trade secrets;
• Breach of non-compete obligations;
• Disposal of escrow funds.

Turkish arbitration law recognises a role for interim judicial protection in arbitration-related disputes.

The need for interim relief should therefore be considered when choosing the seat and dispute mechanism.

Emergency Arbitration

Institutional rules may provide an additional option before the full arbitral tribunal is constituted.

ISTAC provides an Emergency Arbitrator procedure for cases requiring urgent protection before the arbitral tribunal receives the file.

According to ISTAC, the emergency arbitrator is appointed within two working days after receipt of the application and is generally required to render a decision within seven days. (İstanbul Tahkim Merkezi)

This can be particularly useful where an M&A dispute requires immediate intervention.

For example, a former founder may allegedly be about to transfer valuable intellectual property or breach a transaction-related restrictive covenant.

Evidence in M&A Arbitration

M&A disputes are often document-intensive.

Relevant evidence may include:

• SPA drafts;
• Disclosure letters;
• Data room files;
• Due diligence reports;
• Financial models;
• Board minutes;
• Emails;
• WhatsApp communications;
• Accounting records;
• Regulatory correspondence.

Transaction teams should therefore maintain a complete closing archive.

Once litigation begins, reconstructing which version of a disclosure schedule was provided three years earlier may be surprisingly difficult.

Data Room Preservation

The parties should preserve the final state of the virtual data room.

Important information includes:

• Documents uploaded;
• Upload dates;
• Folder structure;
• Buyer access;
• Final disclosure contents.

A seller may later rely on the data room to demonstrate disclosure.

A buyer may rely on the same evidence to demonstrate that the alleged information was never provided.

An authenticated archive should therefore be created at signing or closing.

Expert Evidence

Many M&A disputes require expert evidence.

Experts may address:

• Company valuation;
• Accounting;
• Working capital;
• Lost profits;
• Tax;
• Industry practice.

The legal question and financial question should be separated carefully.

For example, an arbitrator may determine that the seller breached a warranty.

A valuation expert may then quantify how that breach affected the value of the target.

Quantifying Loss

Determining damages in M&A disputes can be complex.

Assume the buyer paid EUR 100 million for a company and discovers an undisclosed EUR 5 million liability.

The buyer may argue that its loss is EUR 5 million.

But another claim may involve a loss of company value.

Suppose the seller misrepresented the number of recurring customers.

The buyer may argue that the company was worth EUR 20 million less than the agreed purchase price.

The SPA should define recoverable loss where possible.

Loss of Share Value

A particularly important issue is whether damages should reflect:

• Liability suffered by the target;
• Direct loss suffered by the buyer;
• Reduction in share value.

The correct approach depends on the wording of the contract and facts of the case.

If the target incurs a TRY 10 million tax liability, the economic effect on a 100% shareholder may be different from the effect on a buyer owning only 40%.

The claim should therefore be structured according to the actual contractual protection provided by the SPA.

Mitigation

The seller may argue that the buyer failed to minimise its loss.

For example, the buyer may have had an opportunity to challenge a tax assessment successfully but simply paid it.

The SPA may impose an express duty to take reasonable mitigation steps.

However, a buyer should not be forced to undertake commercially irrational litigation merely to preserve an indemnity claim.

No Double Recovery

M&A agreements commonly prohibit double recovery.

Assume an undisclosed debt:

1. Reduced the completion price by EUR 1 million; and
2. Also constitutes a warranty breach.

The buyer should generally not recover the same EUR 1 million twice.

Likewise, insurance or third-party recoveries may need to be considered.

The agreement should expressly regulate these interactions.

Settlement of M&A Disputes

Not every dispute should proceed to a final arbitral award.

Commercial settlement can be particularly effective where the parties continue to have relationships through:

• Minority shareholdings;
• Earn-outs;
• Transitional services;
• Supplier agreements.

Settlement may involve:

• Cash payment;
• Reduction of deferred price;
• Release of escrow;
• Share transfer;
• Amendment of earn-out;
• Mutual release.

Any settlement should clearly specify which claims are being released.

Mediation and Med-Arb

The parties may also use mediation before arbitration.

ISTAC provides Mediation-Arbitration (“Med-Arb”) rules under which the parties first attempt to resolve their dispute through mediation and, where settlement is not achieved, move to arbitration. (İstanbul Tahkim Merkezi)

Multi-tier dispute clauses can therefore provide for negotiation or mediation before formal arbitration.

However, procedural steps should be clearly drafted so that they do not create disputes over whether arbitration was commenced prematurely.

Recognition and Enforcement of Arbitral Awards

International investors should consider enforcement at the time the arbitration clause is drafted.

Turkey has an international arbitration framework and is a party to the New York Convention, which provides an international framework for recognition and enforcement of foreign arbitral awards. ISTAC also identifies Turkey as a party to the New York Convention and notes the international arbitration framework established by Law No. 4686. (İstanbul Tahkim Merkezi)

This is one reason arbitration is frequently preferred in cross-border acquisitions where the seller, buyer or relevant assets may be located in different jurisdictions.

The ultimate enforcement strategy should consider where the counterparty’s recoverable assets are located.

Set-Aside Proceedings

An arbitral award is not ordinarily subject to a full appeal on the merits merely because one party believes the tribunal reached the wrong commercial conclusion.

The applicable arbitration law provides limited grounds on which an arbitral award may be challenged.

This is an important advantage and risk of arbitration.

The parties generally obtain a final determination more quickly than a multi-level court appeal process, but they also surrender broad appellate review.

The quality of the tribunal selection is therefore particularly important in high-value M&A disputes.

Choice of Arbitrators

An M&A dispute may involve sophisticated questions concerning:

• Accounting;
• Corporate law;
• Tax;
• Valuation;
• International transactions.

The parties may therefore prefer arbitrators with substantial commercial or M&A experience.

Three-member tribunals are common in large disputes because each side participates in selection and a chair is subsequently appointed under the agreed institutional mechanism.

Smaller claims may justify a sole arbitrator.

Confidentiality

Confidentiality is another reason businesses frequently prefer arbitration for acquisition disputes.

A dispute may involve highly sensitive information concerning:

• Purchase price;
• Company valuation;
• Customer contracts;
• Trade secrets;
• Financial performance;
• Allegations of misconduct.

The confidentiality framework nevertheless depends on the applicable arbitration rules, law and party agreement.

Parties should not assume that every aspect of every arbitration is automatically confidential without reviewing the applicable regime.

Corporate Disputes and Arbitrability

An important limitation in M&A arbitration concerns the distinction between contractual rights and corporate status.

The shareholders may contractually agree that a person must vote in a particular way.

An arbitral tribunal may determine whether that shareholder breached its contractual obligation.

However, questions directly affecting corporate status, registry entries or rights that are not freely disposable may involve mandatory Turkish law and potentially the jurisdiction of Turkish courts.

Law No. 4686 expressly excludes disputes not subject to the parties’ free disposition from its scope. (Türkiye Büyük Millet Meclisi)

Arbitration clauses in shareholders’ agreements should therefore be drafted with Turkish corporate-law limitations in mind.

Parallel Proceedings

An M&A dispute may potentially create several proceedings.

For example:

• Arbitration against seller;
• Corporate action against target;
• Tax proceedings before administrative courts;
• Enforcement proceeding;
• Interim relief proceedings.

The transaction’s dispute strategy should therefore examine the entire dispute rather than treating the SPA arbitration as the only possible case.

Coordination becomes particularly important where findings in one proceeding may affect another.

Governing Law

The governing law and dispute forum are separate choices.

A transaction may provide for:

Turkish law + ICC arbitration

or

Turkish law + ISTAC arbitration

or, in an appropriate cross-border structure,

foreign governing law + international arbitration.

Even where the SPA is governed by foreign law, mandatory Turkish rules may remain relevant to Turkish corporate formalities, share transfers, trade registry matters and other issues governed by mandatory local law.

Foreign-law transaction documents should therefore still be reviewed by Turkish counsel before closing.

Dispute Prevention During Drafting

The most efficient M&A dispute is one that never needs to be litigated.

Many post-closing conflicts can be reduced through precise drafting.

Particular attention should be given to:

• Definitions;
• Accounting principles;
• Disclosure standard;
• Liability caps;
• Claim notification;
• Earn-out rules;
• Expert determination;
• Set-off;
• Escrow;
• Governing law;
• Arbitration clause.

Worked examples can be especially useful for purchase price calculations.

A two-page numerical example may prevent a EUR 5 million completion accounts dispute.

Closing Documentation

Transaction counsel should maintain a complete closing file containing final signed versions of:

• SPA;
• Disclosure letter;
• Shareholders’ agreement;
• Closing certificates;
• Corporate resolutions;
• Escrow agreement;
• Funds flow;
• Data room archive;
• Regulatory approvals.

Drafts should be clearly distinguished from executed documents.

In major disputes, determining precisely which document formed part of the final transaction can itself become contentious.

Post-Closing Claims Calendar

The buyer should create a claims calendar immediately after closing.

It should record:

• General warranty expiry;
• Fundamental warranty expiry;
• Tax claim period;
• Escrow release;
• Earn-out calculation dates;
• Deferred consideration dates;
• Specific indemnity deadlines.

The transaction should then be transferred from the deal team to the legal team responsible for monitoring continuing rights.

Once the acquisition closes, institutional knowledge often disappears as advisers and transaction personnel move to other projects.

Common M&A Dispute Risks in Turkey

Recurring problems include relying on vague warranty language, failing to preserve the data room, using unclear disclosure standards, mixing accounting and contractual disputes, failing to define earn-out methodology, missing contractual notification periods and using inconsistent dispute resolution clauses across transaction documents.

Cross-border deals create additional problems when parties assume that a foreign-law SPA eliminates Turkish mandatory corporate rules or when enforcement strategy is considered only after an award has already been obtained.

Clear allocation of legal, accounting and procedural issues at drafting stage can materially reduce these risks.

Practical M&A Dispute Prevention Checklist

Before signing an M&A agreement involving a Turkish company, the parties should generally:

1. Define the governing law.
2. Select court or arbitration jurisdiction.
3. Identify the arbitral institution, seat, language and tribunal size.
4. Coordinate dispute clauses across all transaction documents.
5. Separate accounting disputes from legal disputes.
6. Establish expert determination procedures.
7. Define warranty and indemnity claims clearly.
8. Set an objective disclosure standard.
9. Determine the consequences of buyer knowledge.
10. Specify caps, baskets and claim periods.
11. Establish claim notification requirements.
12. Regulate third-party proceedings.
13. Define earn-out calculation and buyer conduct.
14. Regulate deferred consideration and set-off rights.
15. Align escrow and SPA claim procedures.
16. Preserve the final data room.
17. Maintain complete closing records.
18. Consider interim and emergency relief.
19. Analyse arbitrability of corporate-law issues.
20. Create a post-closing claims calendar.

Conclusion

M&A disputes in Turkey frequently concern issues that were foreseeable when the transaction documents were negotiated.

Warranty claims, undisclosed liabilities, tax assessments, completion accounts, earn-outs, escrow releases and shareholder deadlocks are recurring sources of post-closing conflict.

Effective dispute planning therefore requires more than inserting a standard arbitration clause at the end of an SPA.

The agreement should identify which disputes belong before arbitrators, which should be determined by an independent expert and which corporate matters may require Turkish court or registry procedures.

For international transactions, Turkey has a statutory international arbitration framework under Law No. 4686. The Law applies to qualifying international arbitrations and expressly recognises important limitations concerning non-arbitrable disputes. (Türkiye Büyük Millet Meclisi) ISTAC also provides institutional arbitration for domestic and foreign parties as well as emergency arbitrator and other specialised dispute-resolution mechanisms. (İstanbul Tahkim Merkezi)

The strongest M&A dispute strategy is nevertheless established before any dispute exists.

Clear disclosure rules, precise price mechanisms, carefully drafted warranties, realistic liability limitations and a coherent dispute resolution structure can materially reduce the cost and uncertainty of post-closing proceedings.

In complex Turkish acquisitions, transaction drafting and dispute strategy should therefore be treated as two parts of the same process.