1. Introduction: Can Foreign Companies Bring Lawsuits in Türkiye?
As international trade continues to expand, commercial relationships between foreign companies and businesses operating in Türkiye have become increasingly common. Contracts, the supply of goods and services, distribution agreements, investment activities, and cross-border business arrangements may give rise to legal disputes between parties established in different countries.
When a foreign company seeks to bring a claim against a Turkish company for outstanding payments, damages, or a breach of contract, an important question arises: Which country’s courts have jurisdiction to resolve the dispute?
The fact that a company is incorporated in a foreign country does not prevent it from bringing legal proceedings before Turkish courts. However, a foreign company’s right to initiate proceedings in Türkiye and the question of whether Turkish courts have international jurisdiction over the particular dispute are two distinct legal issues.
In this regard, the rules governing international jurisdiction under Turkish law are particularly important, especially Law No. 5718 on Private International Law and International Civil Procedure (PIL Law) and the Code of Civil Procedure No. 6100.
2. What Is the International Jurisdiction of Turkish Courts?
International jurisdiction refers to the set of rules determining which country’s courts are competent to hear a dispute involving a foreign element.
For example, where a company incorporated in Germany enters into a commercial agreement with a Turkish company based in Istanbul, a dispute concerning outstanding payments may raise the question of whether proceedings should be brought in Germany or Türkiye. This issue must primarily be assessed under the applicable rules of international jurisdiction.
Article 40 of the Turkish PIL Law provides the fundamental framework for determining the international jurisdiction of Turkish courts. Under this provision, the international jurisdiction of Turkish courts is determined by the domestic rules governing territorial jurisdiction.
Rather than establishing a separate and comprehensive jurisdictional system for every dispute involving a foreign element, this provision generally refers to the territorial jurisdiction rules under Turkish domestic law.
Accordingly, when determining whether a dispute may be heard by Turkish courts, both the general and special jurisdiction rules under the Code of Civil Procedure and the specific international jurisdiction provisions of the PIL Law must be taken into consideration.
3. General Jurisdiction in Lawsuits Brought by Foreign Companies
Under Article 6 of the Turkish Code of Civil Procedure, the general rule of territorial jurisdiction provides that the court at the defendant’s place of residence at the time the action is brought has jurisdiction.
This rule is also relevant when foreign companies initiate proceedings against Turkish companies.
For example, a company incorporated in France may wish to bring a claim for outstanding payments against a Turkish company domiciled in Türkiye, alleging that the latter has breached a commercial agreement. Unless a special jurisdiction rule or a valid jurisdiction agreement provides otherwise, the court at the defendant’s place of residence will generally have jurisdiction.
It is important to note that the claimant’s status as a foreign company does not, by itself, determine which court has jurisdiction. Under the general jurisdiction rule, the defendant’s place of residence is the primary connecting factor.
Nevertheless, special jurisdiction rules may apply depending on the nature of the dispute. Therefore, identifying the defendant’s registered office alone may not always be sufficient.
4. Jurisdiction in Contractual Disputes
One of the most common sources of disputes in international commercial relationships is the failure to perform contractual obligations.
For instance, a foreign company may fail to make payments under a supply agreement concluded with a Turkish manufacturer or may refuse to accept goods as agreed in the contract. Such circumstances may give rise to contractual claims.
In these cases, Article 10 of the Turkish Code of Civil Procedure becomes relevant. Under this provision, claims arising from contractual obligations may also be brought before the court at the place where the contract is to be performed.
Accordingly, where the place of performance is located in Türkiye, Turkish courts may have international jurisdiction, depending on the circumstances of the case.
For example, if a supply agreement between an Italian company and a Turkish company specifies İzmir as the place of delivery, the jurisdiction of the courts in İzmir may be considered in relation to disputes arising from that agreement.
However, determining the place of performance is not always straightforward. The contractual terms, the parties’ agreed delivery and payment arrangements, and the nature of the relevant obligation must be examined together.
For this reason, clearly specifying the place of performance in international commercial contracts is important in preventing potential jurisdictional disputes.
5. Choice-of-Court Agreements and the Selection of Foreign Courts
In international commercial contracts, parties may wish to determine in advance which courts will resolve any disputes that may arise between them. For this purpose, jurisdiction clauses are frequently included in commercial agreements.
For example, a Turkish company and a company incorporated in the Netherlands may agree that disputes arising from their distribution agreement will be submitted to the Dutch courts.
Under Turkish law, the selection of foreign courts in disputes arising from contractual relationships involving a foreign element is governed by Article 47 of the PIL Law.
Under this provision, parties may agree to submit disputes arising from their contractual relationships involving a foreign element to the courts of a foreign state, provided that the matter is not subject to the exclusive jurisdiction of Turkish courts. The jurisdiction agreement must be evidenced in writing.
Nevertheless, the selection of a foreign court does not automatically exclude the jurisdiction of Turkish courts in every circumstance. Pursuant to Article 47 of the PIL Law, Turkish courts may hear the dispute where the designated foreign court declines jurisdiction or where no jurisdictional objection is raised before the Turkish courts.
Furthermore, Turkish law provides specific protective rules for certain categories of disputes. The jurisdiction rules set out in Articles 44, 45, and 46 of the PIL Law concerning employment, consumer, and insurance contracts cannot be displaced by an agreement between the parties.
Therefore, jurisdiction clauses included in international commercial contracts should not be regarded as automatically valid solely because they reflect the parties’ intentions. The subject matter of the agreement, the legal status of the parties, and the relevant statutory restrictions must all be considered.
6. Does the Jurisdiction of Turkish Courts Mean That Turkish Law Will Apply?
One of the most frequently misunderstood issues in international disputes is the distinction between determining the court that will hear a case and identifying the law applicable to the substance of the dispute.
These are two separate legal questions.
The fact that proceedings take place before Turkish courts does not necessarily mean that the dispute will be resolved under Turkish substantive law. A Turkish court may also apply foreign law where required by the relevant conflict-of-law rules.
Article 24 of the PIL Law governs the law applicable to contractual obligations. Under this provision, parties may expressly choose the law governing their contractual relationship. A choice of law that can be clearly inferred from the contractual provisions or the circumstances of the case is also valid.
Where the parties have not made a choice of law, the law most closely connected with the contract will generally apply.
For example, a contract between a Turkish company and a company incorporated in Switzerland may expressly provide that Swiss law governs the agreement. Nevertheless, if Turkish courts have international jurisdiction over the dispute, proceedings may still be brought in Türkiye. The court will determine the applicable law in accordance with the relevant provisions of the PIL Law when examining the substance of the contractual dispute.
This distinction is particularly important from a strategic perspective in international commercial disputes. The fact that the competent court and the applicable law belong to different jurisdictions may directly affect the parties’ rights and obligations throughout the proceedings.
7. Security for Costs: Are Foreign Companies Required to Provide Security When Bringing Lawsuits in Türkiye?
Another important issue concerning foreign companies bringing legal proceedings in Türkiye is the requirement to provide security.
Under Article 48 of the PIL Law, foreign natural and legal persons who initiate legal proceedings, intervene in ongoing proceedings, or commence enforcement proceedings before Turkish authorities are generally required to provide security determined by the court. This security is intended to cover litigation and enforcement costs, as well as potential damages and losses incurred by the opposing party.
However, this obligation is not absolute. Pursuant to the second paragraph of Article 48, the court may exempt a foreign claimant from the security requirement on the basis of reciprocity.
In this context, it is important to determine whether an applicable international treaty exists between Türkiye and the country in which the foreign company is incorporated and whether the relevant conditions of reciprocity are satisfied.
Therefore, it would be incorrect to suggest that every foreign company must provide security when bringing a lawsuit in Türkiye. The conditions for exemption must be assessed in light of the circumstances of the case and the applicable international legal framework.
It should also be noted that the obligation to provide security is a procedural matter distinct from the underlying right to bring legal proceedings.
8. Determining the Competent Court Within the Turkish Judicial System
The possibility of bringing proceedings before Turkish courts also raises the question of which specific court has subject-matter jurisdiction.
While international jurisdiction determines which country’s courts may hear a dispute, subject-matter jurisdiction identifies the type of court within the Turkish judicial system that is competent to examine the case.
For example, where a foreign company brings a claim against a Turkish company concerning a commercial receivable, the competent court may be a Commercial Court of First Instance, depending on the nature of the dispute.
However, not every dispute involving a foreign company automatically falls within the jurisdiction of commercial courts. Whether the dispute qualifies as a commercial case must be assessed by considering the status of the parties, the legal basis of the claim, and the relevant statutory provisions.
Accordingly, three separate questions should be addressed when assessing an international dispute:
- Do Turkish courts have international jurisdiction over the dispute?
- Which type of court has subject-matter jurisdiction within the Turkish judicial system?
- Which territorially competent court in Türkiye should hear the case?
Distinguishing between these questions is essential to avoiding procedural errors.
9. Legal and Procedural Challenges in Disputes Involving Foreign Elements
Proceedings involving foreign companies in Türkiye may present several procedural challenges beyond the determination of the competent court.
In particular, establishing the company’s legal personality and authority of representation, ensuring that documents issued abroad can be used in Turkish proceedings, handling service of process, and determining the content of foreign law may all require careful consideration.
When a foreign company initiates proceedings, it must submit appropriate documentation establishing its legal existence and the authority of the person representing it. Depending on the nature of the documents and the applicable international arrangements, certain formalities may be required, such as an apostille certificate, consular legalisation, or a notarised Turkish translation.
In addition, documents served on defendants and other relevant parties in Türkiye must comply with the applicable procedural requirements. Where the parties are located in different countries, service of process may need to be carried out in accordance with relevant international conventions and domestic legislation.
Where foreign law is applicable, Article 2 of the PIL Law becomes particularly important. Under this provision, Turkish courts must apply Turkish conflict-of-law rules and the foreign law designated by those rules ex officio. The parties may also be requested to assist the court in determining the content of the applicable foreign law.
Proper management of these procedural requirements is essential to reducing unnecessary delays and costs in international commercial litigation.
10. Conclusion: The Importance of Correctly Determining Jurisdiction in International Commercial Disputes
Foreign companies bringing lawsuits in Türkiye is a natural consequence of today’s international commercial environment. However, determining which court may hear such disputes does not depend solely on whether one of the parties is located in Türkiye or whether the relevant contract was signed by a foreign company.
Article 40 of the PIL Law establishes the fundamental framework for determining the international jurisdiction of Turkish courts, while the general and special jurisdiction rules under the Code of Civil Procedure play an important role in assessing individual disputes. In addition, choice-of-court agreements, applicable law, subject-matter jurisdiction, and the security requirements applicable to foreign companies must be examined separately.
In particular, clearly and consistently drafting jurisdiction and choice-of-law clauses in international commercial contracts can help facilitate the resolution of future disputes.
Ultimately, an effective legal strategy in disputes involving foreign elements requires a comprehensive assessment of international jurisdiction rules, applicable law, and procedural requirements. Such an assessment is essential both for foreign companies seeking to exercise their legal rights in Türkiye and for Turkish businesses seeking to manage the legal risks arising from their international commercial relationships.
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