Arbitration Agreements under Turkish Law: Validity, Scope and Drafting Requirements

Introduction

An arbitration agreement is the legal foundation of every arbitration proceeding. Without a valid agreement to arbitrate, an arbitrator or arbitral tribunal will generally have no authority to determine the dispute. For this reason, the drafting, interpretation and enforcement of arbitration agreements are among the most important subjects in Turkish arbitration law.

Businesses operating in Turkey frequently include arbitration clauses in commercial contracts involving construction, energy, international trade, distribution, technology, transportation, corporate transactions, shareholder relations, joint ventures, finance and insurance. Arbitration may offer specialist decision-makers, procedural flexibility, confidentiality and international enforceability.

These advantages can only be obtained where the arbitration clause is legally valid and sufficiently clear. An incomplete, optional, contradictory or poorly drafted arbitration clause may generate extensive jurisdictional disputes before the tribunal can consider the merits of the case.

Under Turkish law, arbitration agreements are principally regulated by:

• The Turkish International Arbitration Law No. 4686;
• Articles 407 to 444 of the Turkish Code of Civil Procedure No. 6100;
• The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards;
• The rules of the arbitration institution selected by the parties.

The applicable statutory regime depends mainly on whether the dispute contains a foreign element and whether the legal seat of arbitration is located in Turkey.

This guide explains the definition, validity and scope of arbitration agreements under Turkish law, including the written-form requirement, arbitrability, clear consent, incorporation by reference, separability, competence-competence, court proceedings and common drafting mistakes.

What Is an Arbitration Agreement?

An arbitration agreement is an agreement through which the parties submit all or part of the disputes arising from a defined legal relationship to an arbitrator or arbitral tribunal instead of national courts.

Article 412 of the Turkish Code of Civil Procedure defines an arbitration agreement as an agreement to refer all or part of existing or future disputes arising from a contractual or non-contractual legal relationship to an arbitrator or arbitral tribunal. The agreement may appear as a clause in the main contract or may be executed as a separate contract.

Article 4 of the Turkish International Arbitration Law contains a substantially similar definition. It permits parties to refer all or some disputes arising from an existing legal relationship, whether contractual or non-contractual, to arbitration.

An arbitration agreement may therefore take two principal forms:

Arbitration Clause

An arbitration clause is included in the main commercial contract before any dispute has arisen.

For example:

Any dispute arising out of or in connection with this Agreement shall be finally resolved by arbitration.

Submission Agreement

A submission agreement is a separate arbitration agreement concluded after the dispute has already arisen.

For example, parties involved in pending commercial litigation may agree to discontinue the court proceedings and submit the dispute to arbitration. Article 412 of the Code of Civil Procedure expressly allows parties to agree to arbitration during court proceedings, in which case the court file may be transferred to the relevant arbitrator or tribunal.

Domestic and International Arbitration Agreements

The legal requirements governing arbitration agreements are largely similar under domestic and international arbitration law, but the applicable statute must still be identified correctly.

Domestic Arbitration

The domestic arbitration provisions of the Turkish Code of Civil Procedure apply where:

• The dispute does not contain the foreign element defined by the International Arbitration Law; and
• The seat of arbitration is in Turkey.

Article 407 establishes this scope expressly.

International Arbitration

The Turkish International Arbitration Law generally applies where:

• The dispute contains a statutory foreign element; and
• The seat of arbitration is located in Turkey.

A foreign element may arise because the parties have places of business in different countries, contractual performance takes place abroad, foreign capital is involved or the transaction includes cross-border movement of capital, goods or services.

The nationality of the parties is not the only determining factor. An arbitration between two Turkish companies may still qualify as international where the commercial transaction has a sufficient cross-border character.

Consent Is the Foundation of Arbitration

Arbitration is based on consent.

A party cannot ordinarily be forced to arbitrate merely because arbitration would be commercially convenient or because another company within the same corporate group signed an arbitration agreement.

The arbitration agreement must establish that the relevant parties intended to exclude the jurisdiction of national courts and refer the dispute to arbitration.

The parties’ intention should be:

• Clear;
• Definite;
• Binding;
• Unconditional;
• Capable of practical implementation.

Turkish Court of Cassation practice emphasises that the intention to arbitrate must not create uncertainty, contradiction or confusion. A clause that leaves it unclear whether arbitration is mandatory may not effectively exclude court jurisdiction.

For this reason, mandatory wording should be preferred.

A strong clause may state:

All disputes arising out of or in connection with this Agreement shall be finally resolved by arbitration.

The word “shall” demonstrates a binding obligation.

By contrast, clauses using expressions such as the following may create uncertainty:

• “The parties may submit disputes to arbitration.”
• “Disputes may be resolved by arbitration if the parties agree.”
• “The parties may consider arbitration.”
• “Either arbitration or court proceedings may be used.”

These formulations may indicate that a later agreement is required before arbitration can begin.

Written-Form Requirement

Under both Turkish domestic and international arbitration law, the arbitration agreement must be in writing.

The written-form requirement is interpreted broadly and is not limited to a traditionally signed contract.

Article 412 of the Code of Civil Procedure provides that the requirement may be satisfied where the arbitration agreement is contained in:

• A written document signed by the parties;
• Letters exchanged between the parties;
• Telegram, telex or fax communications;
• Electronic communications;
• Court pleadings in which one party alleges a written arbitration agreement and the other party does not object;
• A document incorporated into the principal contract by reference.

Article 4 of the International Arbitration Law contains the same basic methods of satisfying the written-form requirement.

Accordingly, an arbitration agreement may potentially be established through:

• A signed commercial contract;
• An electronically signed agreement;
• An exchange of emails;
• An accepted purchase order;
• General conditions incorporated into the contract;
• A framework agreement referring to separate contractual conditions;
• Undisputed court pleadings.

Nevertheless, the safest method remains a clearly drafted arbitration clause contained in a properly signed agreement.

Relying only on informal correspondence may create disputes concerning:

• Whether final consent was reached;
• Whether the sender had authority;
• Whether the arbitration terms were sufficiently definite;
• Whether the relevant terms were attached or accessible;
• Whether conflicting standard terms existed.

Electronic Arbitration Agreements

Electronic commercial contracting is increasingly common.

Turkish arbitration legislation expressly recognises arbitration agreements recorded electronically. The written-form requirement may therefore be satisfied through electronic communications, provided that the exchange demonstrates a clear agreement to arbitrate.

Relevant electronic evidence may include:

• Email correspondence;
• Electronic signatures;
• Online contract platforms;
• Digitally accepted terms and conditions;
• Electronic purchase orders;
• Document-management records.

The parties should preserve evidence demonstrating:

• The complete text of the arbitration clause;
• The date of acceptance;
• The identity of the accepting person;
• The authority of that person;
• The version of the terms accepted;
• The method through which the clause was made accessible.

A hyperlink to general terms may not always be sufficient if the incorporation process does not clearly establish acceptance. The contract should expressly identify the relevant document and confirm that it forms part of the agreement.

Incorporation by Reference

An arbitration clause does not always have to be written directly into the signed principal contract.

A valid arbitration agreement may arise where the contract refers to another document containing an arbitration clause with the intention of making that document part of the agreement. This principle is expressly recognised under both Article 412 of the Code of Civil Procedure and Article 4 of the International Arbitration Law.

Documents incorporated by reference may include:

• General terms and conditions;
• Standard construction conditions;
• Charterparty terms;
• Industry rules;
• Framework agreements;
• Tender documents;
• Institutional rules;
• Related contracts.

The reference should be clear and specific.

A clause stating that “the supplier’s general conditions apply” may generate disagreement where:

• Several versions of the conditions exist;
• The conditions were never delivered;
• The arbitration clause was not reasonably accessible;
• The parties exchanged conflicting standard terms;
• The principal contract contains a court-jurisdiction clause.

The contract should identify the incorporated document by name, version and date wherever possible.

Authority to Conclude an Arbitration Agreement

The person signing the arbitration agreement must have legal authority to bind the party.

Authority issues may arise where the agreement is signed by:

• A company employee;
• A branch manager;
• A commercial representative;
• An agent;
• An attorney;
• A director acting without the required corporate approval;
• A joint venture participant;
• A representative acting beyond the scope of a power of attorney.

The existence and scope of authority should be analysed under the law applicable to the representation and corporate relationship.

Companies should confirm that:

• The signatory is authorised;
• Any required board or shareholder approval has been obtained;
• Signature limitations are respected;
• Joint-signature requirements are satisfied;
• Powers of attorney cover the conclusion of arbitration agreements.

An arbitral award may later face annulment or enforcement objections if the arbitration agreement was signed by a person without authority.

Law Governing the Arbitration Agreement

The law governing the arbitration agreement may be different from:

• The law governing the principal contract;
• The law governing the arbitration procedure;
• The law of the arbitration institution;
• The law of the country where enforcement is requested.

Under Article 4 of the International Arbitration Law, the arbitration agreement is valid where it complies with the law chosen by the parties to govern that agreement or, in the absence of such a choice, Turkish law.

Parties may therefore reduce uncertainty by addressing the governing law of the arbitration agreement expressly.

For example:

The arbitration agreement contained in this clause shall be governed by Turkish law.

This may be particularly useful where:

• The principal contract is governed by foreign law;
• The seat is in Turkey;
• Several related contracts use different governing laws;
• The validity of the arbitration clause may be disputed.

Arbitrability under Turkish Law

A valid arbitration agreement can only cover disputes that are legally capable of settlement by arbitration.

Article 408 of the Turkish Code of Civil Procedure provides that disputes arising from rights in rem over immovable property and matters not subject to the parties’ free disposition are not arbitrable.

Most ordinary commercial disputes are generally arbitrable, including claims concerning:

• Contractual payments;
• Supply agreements;
• Construction contracts;
• Distribution agreements;
• Share purchase agreements;
• Joint ventures;
• Commercial services;
• Technology contracts;
• Insurance;
• International sales;
• Transportation.

More careful analysis is required for matters involving:

• Ownership and other rights in rem over Turkish immovable property;
• Civil status;
• Criminal liability;
• Administrative sanctions;
• Bankruptcy status;
• Certain corporate-status disputes;
• Mandatory rights that cannot freely be waived;
• Rights directly affecting non-parties.

A dispute connected with real estate is not automatically non-arbitrable.

For example, a contractor’s claim for payment under a construction contract may be arbitrable even though the project concerns a building. A direct claim seeking determination of title to the property is legally different.

Arbitrability should therefore be assessed by examining the claim and requested relief, not merely the industry or factual background.

Scope of the Arbitration Agreement

An arbitration agreement may cover all disputes arising from a legal relationship or only specifically identified categories.

Turkish legislation expressly permits parties to refer all or part of their disputes to arbitration.

The scope depends primarily on the wording selected by the parties.

Narrow Arbitration Clauses

A narrow clause may cover only:

• Interpretation of the contract;
• Calculation of the price;
• Technical disputes;
• Specific payment claims;
• Particular contractual provisions.

For example:

Disputes concerning the calculation of the purchase price shall be resolved by arbitration.

This clause may not cover termination, fraud, damages or other contractual claims.

Broad Arbitration Clauses

A broad clause may state:

Any dispute, controversy or claim arising out of or in connection with this Agreement, including its formation, validity, interpretation, performance, breach, termination or consequences of termination, shall be finally resolved by arbitration.

This wording is designed to cover a wider range of disputes, including:

• Contractual claims;
• Restitution;
• Unjust enrichment;
• Pre-contractual liability;
• Misrepresentation;
• Related tort claims;
• Termination consequences;
• Claims concerning validity.

The phrase “arising out of or in connection with” is commonly used to reduce disputes concerning scope.

Contractual and Non-Contractual Claims

Turkish arbitration law permits arbitration agreements to cover disputes arising from contractual or non-contractual legal relationships.

This is important because commercial disputes are not always pleaded solely as breach-of-contract claims.

A claimant may also rely on:

• Unjust enrichment;
• Tort;
• Pre-contractual misconduct;
• Abuse of rights;
• Misrepresentation;
• Breach of confidentiality;
• Unlawful interference.

A clause covering only disputes “under the contract” may create arguments that related non-contractual claims fall outside arbitration.

Parties seeking comprehensive coverage should refer expressly to contractual and non-contractual disputes connected with the commercial relationship.

Separability of the Arbitration Agreement

The arbitration agreement is generally treated as legally independent from the principal contract.

This is known as the separability principle.

Article 412 provides that a party cannot challenge the arbitration agreement merely because the main contract is invalid or because the arbitration agreement concerns a dispute that had not yet arisen.

Article 422 further provides that the arbitration clause must be evaluated independently from the other contractual provisions. A tribunal’s conclusion that the principal contract is invalid does not automatically invalidate the arbitration agreement.

The International Arbitration Law contains the same basic principle.

Separability allows arbitrators to determine claims that the principal contract:

• Was never validly formed;
• Was induced by fraud;
• Was terminated;
• Is unenforceable;
• Was rescinded;
• Has expired.

Without separability, a party could avoid arbitration simply by alleging that the entire contract was invalid.

Competence-Competence

The competence-competence principle means that arbitrators may rule on their own jurisdiction.

Article 422 authorises the arbitrator or arbitral tribunal to determine objections concerning the existence or validity of the arbitration agreement. Jurisdictional objections must normally be raised no later than the statement of defence, while objections that the tribunal has exceeded its authority must be made immediately.

A jurisdictional objection may concern:

• Absence of an arbitration agreement;
• Invalidity of the agreement;
• Lack of authority;
• Whether a party is bound;
• Whether the dispute falls within the clause;
• Whether the subject matter is arbitrable;
• Whether procedural preconditions were satisfied.

The fact that a party participated in the appointment of an arbitrator does not, by itself, eliminate its right to challenge jurisdiction.

The tribunal may decide the objection as a preliminary issue and continue the proceedings if it concludes that it has jurisdiction.

Turkish courts may still examine jurisdiction at legally defined stages, including:

• A court action where a party raises an arbitration objection;
• An action to set aside the award;
• Recognition and enforcement proceedings.

Arbitration Objection before Turkish Courts

A party may file court proceedings despite an arbitration agreement.

Under Article 413 of the Code of Civil Procedure, the opposing party may raise an arbitration objection. If the arbitration agreement is not invalid, ineffective or incapable of performance, the court must accept the objection and dismiss the lawsuit on procedural grounds. Raising the objection does not prevent the arbitration from continuing.

The arbitration objection should be raised within the applicable procedural period as a preliminary objection.

The defendant should submit:

• The arbitration agreement;
• The principal contract;
• Incorporated terms;
• Evidence of authority;
• The relevant institutional rules;
• An explanation showing that the court claim falls within the clause.

Failure to raise the objection correctly may allow the court proceedings to continue.

The court may examine whether:

• A written arbitration agreement exists;
• The parties are bound;
• The claim falls within its scope;
• The clause is valid;
• The mechanism can operate;
• The dispute is arbitrable.

Interim Measures Do Not Necessarily Waive Arbitration

Parties sometimes preserve access to national courts for urgent interim measures.

An arbitration clause may provide:

Nothing in this clause prevents either party from applying to a competent court for interim or conservatory relief.

Such wording does not necessarily create a contradiction.

Applying to a court for:

• Interim attachment;
• Interim injunction;
• Preservation of evidence;
• Protection against asset transfers;
• Measures affecting third parties;

does not ordinarily mean that the party has abandoned arbitration.

The distinction should be made clear: the merits are finally determined through arbitration, while courts retain a limited supportive role for urgent or coercive measures.

Multi-Tier Arbitration Agreements

Commercial agreements frequently require the parties to complete negotiation or mediation before commencing arbitration.

A multi-tier clause may contain:

1. Written notice of dispute;
2. Negotiation between project representatives;
3. Escalation to senior management;
4. Mediation;
5. Final arbitration.

These clauses may promote settlement, but unclear drafting may produce jurisdictional or admissibility objections.

The clause should specify:

• How notice is given;
• Who participates;
• The duration of negotiation;
• When the period begins;
• Whether mediation is mandatory;
• When arbitration may commence;
• Whether urgent relief remains available.

The procedure should not allow one party to prevent arbitration indefinitely by refusing to participate.

Arbitration Agreements in Multiple Contracts

Complex transactions often involve several related contracts.

Examples include:

• A share purchase agreement;
• A shareholders’ agreement;
• A guarantee;
• A loan agreement;
• A supply agreement;
• An EPC contract;
• A subcontract;
• A licence agreement.

If each agreement contains a different dispute resolution clause, the parties may face parallel arbitration and court proceedings.

Common inconsistencies include:

• Different arbitration institutions;
• Different seats;
• Different languages;
• Different numbers of arbitrators;
• Arbitration in one contract and court litigation in another.

The dispute resolution provisions should be reviewed at transaction level.

Where related disputes may need to be resolved together, the contracts should use compatible arbitration clauses and institutional rules permitting consolidation or joinder.

Assignment, Successors and Non-Signatories

The transfer of a contract or receivable may raise questions concerning whether the arbitration agreement also transfers to the assignee.

Similarly, disputes may involve:

• Corporate successors;
• Guarantors;
• Parent companies;
• Subsidiaries;
• Directors;
• Agents;
• Subcontractors;
• Third-party beneficiaries.

Arbitration remains based on consent. Corporate connection alone does not automatically make every related person a party to the arbitration agreement.

The tribunal must examine:

• The wording of the contracts;
• The nature of the transfer;
• Applicable law;
• Conduct demonstrating consent;
• Incorporation or assumption provisions;
• The legal status of successors.

Parties may reduce uncertainty by including clear accession, assignment and successor provisions.

Pathological Arbitration Clauses

A pathological arbitration clause is a defective clause that creates uncertainty or cannot operate as drafted.

Common defects include:

• Naming a non-existent institution;
• Referring to one institution but another institution’s rules;
• Providing for both exclusive court jurisdiction and mandatory arbitration;
• Using optional language;
• Failing to identify the legal relationship;
• Requiring an even number of arbitrators;
• Naming an unavailable person as permanent arbitrator;
• Establishing an impossible appointment mechanism;
• Using inconsistent clauses in related contracts;
• Referring disputes to “international arbitration” without further detail.

Courts and tribunals may attempt to preserve a sufficiently clear intention to arbitrate. Nevertheless, corrective interpretation cannot be guaranteed.

A defective clause may result in:

• Preliminary litigation;
• Delayed tribunal constitution;
• Increased costs;
• Conflicting proceedings;
• Annulment arguments;
• Enforcement objections.

ISTAC Model Arbitration Clause

The Istanbul Arbitration Centre publishes the following model clause:

Any disputes arising out of, or in connection with the present contract shall be finally settled through arbitration under the Istanbul Arbitration Centre Arbitration Rules.

ISTAC also recommends that parties consider specifying:

• The seat of arbitration;
• The language;
• The number of arbitrators;
• The law applicable to the merits;
• Whether the Emergency Arbitrator Rules will apply.

A more detailed clause may state:

Any dispute, controversy or claim arising out of or in connection with this Agreement, including any matter concerning its formation, validity, interpretation, performance, breach, termination or consequences of termination, shall be finally resolved under the Istanbul Arbitration Centre Arbitration Rules. The seat of arbitration shall be Istanbul, Türkiye. The tribunal shall consist of three arbitrators. The language of arbitration shall be English. Turkish law shall govern the merits of the dispute. The arbitration agreement contained in this clause shall be governed by Turkish law.

The clause should be adapted according to:

• The value of the transaction;
• The expected complexity;
• The nationality of the parties;
• The location of evidence;
• The location of enforceable assets;
• The likely need for interim measures.

International Recognition of Arbitration Agreements

The New York Convention is not limited to enforcement of arbitral awards. It also establishes an international framework for recognition of arbitration agreements.

UNCITRAL explains that contracting states undertake to give effect to qualifying arbitration agreements and recognise and enforce awards rendered in other states.

The enforceability of the arbitration agreement is therefore important at several stages:

• When one party files court proceedings;
• When the tribunal examines jurisdiction;
• When a party seeks annulment;
• When an award is presented for enforcement.

An invalid or unclear arbitration agreement may undermine the entire arbitration process.

Drafting Checklist

Before finalising an arbitration agreement connected with Turkey, parties should determine:

1. Whether the dispute is legally arbitrable;
2. Whether arbitration is suitable for the transaction;
3. Whether the clause uses mandatory language;
4. Whether the covered legal relationship is identifiable;
5. Whether contractual and non-contractual claims are included;
6. Whether arbitration will be institutional or ad hoc;
7. Which institution and rules will apply;
8. The seat of arbitration;
9. The language;
10. The number of arbitrators;
11. The appointment mechanism;
12. The substantive governing law;
13. The law governing the arbitration agreement;
14. Whether emergency relief is available;
15. Whether negotiation or mediation is required first;
16. Whether related contracts use compatible clauses;
17. Whether assignment and successor issues are addressed;
18. Whether future shareholders or affiliates must accede;
19. Whether confidentiality requires express protection;
20. Where the final award is likely to be enforced.

Frequently Asked Questions

Must an arbitration agreement be signed under Turkish law?

A signed written agreement is the safest method, but the written-form requirement may also be satisfied through electronic communications, exchanged correspondence, incorporation by reference or undisputed pleadings.

Can an arbitration agreement cover future disputes?

Yes. Turkish law expressly permits agreements covering disputes that have not yet arisen.

Can parties arbitrate only part of their dispute?

Yes. The parties may refer all or only specified categories of disputes to arbitration.

Can non-contractual claims be arbitrated?

Yes, where the arbitration agreement is drafted broadly enough and the claim is legally arbitrable.

Does invalidity of the main contract invalidate the arbitration clause?

Not automatically. The arbitration agreement is legally separable from the principal contract.

Can the tribunal decide whether it has jurisdiction?

Yes. Turkish law recognises the competence-competence principle.

What happens if one party files a lawsuit despite the arbitration clause?

The opposing party may raise an arbitration objection. If the agreement is valid, effective and capable of performance, the court dismisses the case on procedural grounds.

Can a court grant an interim measure despite the arbitration clause?

Yes. Court applications for urgent interim protection do not necessarily waive arbitration.

Does an arbitration clause bind every company in the same corporate group?

No. Consent and the applicable legal basis must be established separately for each party.

Can an arbitration clause be incorporated through general terms?

Yes, where the contract refers to the document containing the clause with the intention of making it part of the agreement.

Conclusion

Arbitration agreements under Turkish law must be drafted with precision because they determine whether arbitrators or national courts will resolve the dispute.

Both the Turkish International Arbitration Law and the Turkish Code of Civil Procedure recognise arbitration agreements covering all or part of disputes arising from contractual or non-contractual legal relationships.

The agreement must be in writing, but Turkish law recognises several methods of satisfying that requirement, including signed documents, electronic communications, exchanged correspondence, incorporation by reference and undisputed allegations in pleadings.

Validity also requires genuine and unambiguous consent. Optional or contradictory wording may prevent the clause from operating effectively.

The scope of the clause should identify the disputes intended for arbitration. Broad clauses may cover formation, validity, interpretation, performance, breach, termination, restitution and related non-contractual claims. Narrow clauses may leave some claims within the jurisdiction of national courts.

The dispute must also be arbitrable. Claims concerning rights in rem over Turkish immovable property or matters outside the parties’ free disposition cannot generally be resolved through arbitration.

Turkish law recognises both the separability of the arbitration agreement and the tribunal’s authority to rule on its own jurisdiction. Nevertheless, Turkish courts may examine the arbitration agreement when a party raises an arbitration objection or when an award is challenged or presented for enforcement.

The strongest arbitration clauses specify the institution, seat, language, number of arbitrators, governing law and scope of disputes. They also coordinate related contracts, emergency relief, multi-tier procedures, assignment and joinder.

Obtaining legal advice before the contract is signed is significantly more effective than attempting to repair a defective arbitration clause after a dispute has arisen.