Distribution and Agency Arbitration in Turkey: Termination, Commission and Exclusivity Claims

Introduction

Distribution and commercial agency agreements play a central role in the entry of foreign products and services into the Turkish market. International manufacturers frequently appoint Turkish distributors, commercial agents, dealers or sales representatives to establish a customer network, promote products, obtain orders and provide local market support.

These commercial relationships may continue for many years and require significant investment. A Turkish distributor may establish warehouses, employ a sales team, create an after-sales service network and invest heavily in marketing the supplier’s brand. A commercial agent may introduce hundreds of customers, negotiate sales and develop a valuable customer portfolio for a foreign principal.

When the relationship ends, disputes may arise concerning:

• Unpaid commissions;
• Sales concluded shortly after termination;
• Customer portfolio compensation;
• Wrongful or immediate termination;
• Minimum purchase obligations;
• Exclusivity;
• Territorial restrictions;
• Online and passive sales;
• Remaining inventory;
• Marketing investments;
• Post-termination non-compete obligations;
• Continued use of trademarks and confidential information.

For domestic and cross-border commercial relationships, arbitration may provide an effective method of resolving these disputes. Distribution and agency arbitration in Turkey allows parties to choose specialist arbitrators, determine the procedural language, protect commercially sensitive information and obtain an award capable of enforcement in Türkiye or abroad.

However, agency and distribution agreements are not legally identical. Turkish law contains detailed statutory rules governing commercial agents, including commission rights, exclusivity, termination, equalisation compensation and post-contractual non-compete obligations. Exclusive distribution agreements are structured differently and are also subject to Turkish competition law.

A valid arbitration strategy must therefore begin by correctly classifying the commercial relationship.

What Is a Commercial Agency Agreement under Turkish Law?

Article 102 of the Turkish Commercial Code defines a commercial agent as an independent person who, based on a contract, undertakes on a continuous professional basis to act as an intermediary in contracts concerning a commercial enterprise or to conclude those contracts on behalf of the merchant within a defined territory or region.

The agent must not occupy a legally dependent position comparable to an employee, sales officer or commercial representative. Where the agency provisions do not contain an applicable rule, the Turkish Commercial Code refers, depending on the type of authority, to the Turkish Code of Obligations provisions governing brokerage, commission and mandate.

The principal characteristics of a commercial agency relationship are therefore:

• Continuity;
• Independence;
• Acting for the principal’s commercial enterprise;
• Intermediation or conclusion of contracts;
• Operation within an agreed territory, region or customer group;
• Remuneration commonly based on commission.

An agent does not ordinarily purchase the principal’s goods for resale. The sales contract is generally concluded between the principal and the customer, either directly or through the agent acting with the required authority.

The agent normally earns a commission for generating or facilitating the transaction.

What Is a Distribution Agreement?

A distributor generally purchases products from the supplier and resells them in its own name and for its own account.

Unlike a commercial agent, the distributor commonly:

• Becomes the owner of the supplied products;
• Assumes the commercial risk of resale;
• Determines its own customer relationships;
• Issues its own invoices to customers;
• Earns a resale margin rather than a commission;
• Bears inventory and credit risk;
• Maintains its own distribution organisation.

Unlike commercial agency, exclusive distribution is not governed by a dedicated named-contract chapter containing a complete statutory regime. The rights and obligations of the parties are primarily determined by the contract, the Turkish Code of Obligations, commercial law, competition law and any statutory provisions capable of application to the particular relationship.

Nevertheless, Article 122(5) of the Turkish Commercial Code expressly provides that the rules concerning the agent’s equalisation claim may also apply to exclusive distributorship and similar continuous contractual relationships granting monopoly rights, provided that application would not be inequitable.

The title selected by the parties is not always decisive. An agreement described as a “distribution agreement” may operate economically as an agency relationship where the intermediary does not buy the goods, bears no resale risk and concludes transactions for the supplier.

An arbitral tribunal may therefore examine the actual structure of the relationship rather than relying only on the heading of the contract.

Why Is the Agency–Distribution Distinction Important?

Correct classification affects several major legal questions.

These include:

• Whether statutory commission rules apply;
• Whether the intermediary has a right to information and account inspection;
• Whether statutory notice periods apply;
• Whether customer portfolio compensation may be claimed;
• Whether the principal must pay compensation for a post-termination non-compete restriction;
• Whether the intermediary bears the risk of customer non-payment;
• Whether resale-pricing and competition rules apply;
• How damages should be calculated.

For example, a true agent may claim commission under Articles 113 to 116 of the Turkish Commercial Code. A distributor ordinarily earns profit through the difference between the purchase and resale prices and cannot simply characterise that margin as statutory agency commission.

Both an agent and an exclusive distributor may potentially seek equalisation compensation, but the legal analysis and evidence may differ substantially.

Legal Framework for Distribution and Agency Arbitration in Türkiye

The principal legal sources include:

• Turkish Commercial Code No. 6102;
• Turkish Code of Obligations No. 6098;
• Turkish International Arbitration Law No. 4686;
• Articles 407 to 444 of the Turkish Code of Civil Procedure;
• Competition Law No. 4054;
• Block Exemption Communiqué No. 2002/2 on Vertical Agreements;
• The applicable institutional arbitration rules;
• The distribution or agency agreement.

Domestic arbitration seated in Türkiye is governed by the Code of Civil Procedure where the dispute does not contain the foreign element defined under the International Arbitration Law. International arbitration containing a qualifying foreign element and seated in Türkiye is principally governed by International Arbitration Law No. 4686.

Most disputes between a foreign manufacturer and a Turkish agent or distributor will contain a foreign element.

The parties may, for example, agree on:

• Turkish law as the governing substantive law;
• Istanbul as the seat of arbitration;
• English as the arbitration language;
• ISTAC Rules;
• A sole arbitrator or three-member tribunal.

The governing law of the distribution agreement should be distinguished from the law governing the arbitration procedure.

Are Distribution and Agency Disputes Arbitrable?

Most disputes arising from commercial agency and distribution agreements concern monetary or contractual rights that the parties may dispose of freely.

Potentially arbitrable claims include:

• Unpaid commissions;
• Wrongful termination damages;
• Equalisation compensation;
• Minimum purchase claims;
• Outstanding invoices;
• Exclusivity breaches;
• Post-termination non-compete compensation;
• Inventory repurchase obligations;
• Marketing contribution claims;
• Confidentiality breaches;
• Trademark-use disputes;
• Contractual penalties.

Article 408 of the Code of Civil Procedure excludes disputes arising from rights in rem over immovable property and matters not subject to the parties’ free disposition. Ordinary commercial agency and distribution claims do not normally fall within these excluded categories.

Public-law matters remain outside the tribunal’s authority. For example, an arbitral tribunal may examine whether a resale-pricing obligation breaches the parties’ contract or causes damages, but it cannot replace the Turkish Competition Authority or annul an administrative competition-law fine.

The Arbitration Agreement Must Be in Writing

Article 412 of the Turkish Code of Civil Procedure requires the arbitration agreement to be in writing.

The requirement may be satisfied through:

• A signed contract;
• A separate arbitration agreement;
• Letters or electronic communications;
• An uncontested assertion of an arbitration agreement in pleadings;
• Incorporation by reference to another document containing an arbitration clause.

The law also recognises the separability of the arbitration clause. A challenge to the validity or termination of the main distribution agreement does not automatically eliminate the arbitration agreement.

This is particularly important in termination disputes. A principal cannot generally avoid arbitration merely by arguing that the distribution agreement was terminated before the claim was filed.

The arbitration clause should expressly cover disputes concerning:

• Formation;
• Classification;
• Validity;
• Performance;
• Commission;
• Exclusivity;
• Competition restrictions;
• Termination;
• Equalisation compensation;
• Post-termination obligations.

Exclusivity in Commercial Agency Agreements

Article 104 of the Turkish Commercial Code establishes an important default rule.

Unless otherwise agreed in writing:

• The principal may not appoint more than one agent in the same territory or region for the same line of business;
• The agent may not act for several competing commercial enterprises within the same territory or region.

Agency exclusivity therefore operates as a statutory default unless the parties modify it through a written agreement.

An agency agreement should state clearly:

• The territory;
• The customer group;
• The relevant products or services;
• Whether the principal may sell directly;
• Whether online sales are excluded;
• Whether key accounts are reserved;
• Whether group companies may appoint separate agents;
• Whether the agent may represent competing products.

Disputes frequently arise where the principal makes direct sales into the agent’s territory and refuses to pay commission.

The agreement should not merely describe the agent as “exclusive.” It should explain what exclusivity means in practice.

Commission Rights during the Agency Relationship

Article 113 provides that an agent may claim commission for transactions concluded during the agency relationship:

• Through the agent’s own efforts; or
• With third parties previously introduced by the agent for transactions of the same nature.

Where the agent has been allocated a particular territory or customer group, the agent may also claim commission on transactions with customers in that territory or group even where the individual transaction was concluded without the agent’s direct contribution, subject to the statutory rules protecting a previous agent’s rights.

This may create significant disputes where the principal:

• Receives orders directly through its website;
• Sells through an affiliated company;
• Concludes framework agreements at headquarters;
• Supplies customers introduced by the agent through another channel;
• Reclassifies customers as international or key accounts.

The tribunal must identify:

1. Whether the customer falls within the allocated territory or group;
2. Whether the transaction occurred during the agency relationship;
3. Whether a previous agent has a competing commission entitlement;
4. Whether the agreement validly excluded or modified a particular commission right;
5. Whether the principal structured the transaction to avoid commission.

Commission on Transactions Completed after Termination

Termination does not automatically eliminate every commission right.

Under Article 113(3), the former agent may claim commission for a transaction concluded after the relationship ends where:

• The agent mediated or substantially prepared the transaction through its efforts and the transaction was concluded within an appropriate period after termination; or
• The customer’s offer concerning a transaction capable of generating commission reached the agent or principal before the agency relationship ended.

Where equity requires, commission may be shared between the former and succeeding agents.

Post-termination commission disputes commonly concern:

• Long sales cycles;
• Tenders;
• Subscription renewals;
• Framework supply agreements;
• Pharmaceutical or medical product approvals;
• Construction equipment orders;
• Sales negotiated before termination but signed later.

The contract should define the post-termination commission period, but contractual wording should be assessed together with mandatory statutory protections.

When Does the Agent Earn Commission?

Article 114 links the agent’s commission entitlement to performance of the underlying transaction.

The agent generally earns commission when and to the extent that the transaction is performed. Parties may modify the timing, but the law protects the agent’s entitlement in specified circumstances.

If it becomes certain that the third party will not perform the transaction, the commission right may fall and amounts already paid may have to be returned. By contrast, if the principal fails to perform the transaction, the agent may retain the commission right unless non-performance results from circumstances not attributable to the principal.

This distinction becomes relevant where the principal:

• Refuses to deliver products;
• Cancels an accepted order;
• Cannot obtain export approval;
• Terminates the customer contract;
• Grants an unjustified discount;
• Claims that the customer did not complete payment.

The principal should not be able to eliminate the agent’s commission merely by voluntarily refusing to perform a transaction generated by the agent.

Commission Amount, Payment and Audit Rights

If the agreement does not specify the amount of commission, Article 115 refers to the commercial custom in the agent’s location and, where no custom exists, to determination according to the circumstances.

Article 116 provides that earned commission must be paid no later than three months after it arises and, in any event, when the agency agreement ends.

The agent may request information necessary to determine whether commission is due and how it must be calculated. The agent may also request copies of relevant accounting records and, where justified doubt exists, may inspect the relevant books and documents personally or through an expert. Terms departing from these protections to the agent’s detriment are invalid to that extent.

In arbitration, commission claims may require production of:

• Customer invoices;
• Order records;
• Sales ledgers;
• Credit notes;
• Return records;
• Distributor reports;
• Customer relationship management data;
• Affiliate sales records;
• Commission calculations;
• Bank records.

The tribunal may adopt confidentiality measures to protect customer names, pricing and commercially sensitive accounting information.

Termination of Agency Agreements

Article 121 provides that either party may terminate an agency agreement of indefinite duration by giving three months’ prior notice.

A fixed-term agency agreement may be terminated at any time for just cause. If the parties continue performing a fixed-term agreement after its stated expiry, the relationship becomes indefinite.

The existence of just cause is highly fact-specific.

Possible allegations may include:

• Repeated failure to achieve reasonable contractual targets;
• Non-payment or concealment of collected funds;
• Unauthorised representation of competitors;
• Serious confidentiality breaches;
• Corruption or compliance violations;
• Persistent failure to provide products;
• Unilateral reduction of the agent’s territory;
• Systematic non-payment of commission;
• Conduct destroying commercial trust.

A minor or isolated breach will not necessarily justify immediate termination.

The tribunal may consider:

• The seriousness of the breach;
• Whether the breach was capable of remedy;
• Whether written warnings were given;
• Whether the terminating party previously accepted the conduct;
• Whether termination was proportionate;
• The parties’ course of dealing.

Damages for Wrongful Termination

A party that terminates an agency agreement without just cause or without complying with the three-month notice requirement must compensate the other party for loss arising from the failure to complete transactions already commenced.

Article 121 therefore creates a damages remedy separate from equalisation compensation.

Potential claims may include:

• Commission that would have been earned during the notice period;
• Loss on transactions already being negotiated;
• Costs incurred for pending customer projects;
• Wasted marketing expenditure;
• Reasonable demobilisation costs;
• Contractual penalties, where valid.

Equalisation compensation and wrongful termination damages serve different purposes.

Wrongful termination damages compensate loss caused by breach of the termination rules. Equalisation compensation concerns the continuing benefit that the principal obtains from the customer portfolio developed by the agent.

A claimant should calculate and plead these heads of loss separately to avoid double recovery.

Equalisation or Customer Portfolio Compensation

Article 122 establishes the agent’s equalisation claim, commonly referred to in Turkish practice as denkleştirme tazminatı or customer portfolio compensation.

Following termination, the agent may request appropriate compensation where:

1. The principal continues to obtain substantial benefits from new customers introduced by the agent;
2. Because of termination, the agent loses commission that it would have earned from transactions with those customers; and
3. Payment is equitable in light of the circumstances.

The statutory cap is the average annual commission or other payments received by the agent during the final five years of the relationship. If the relationship lasted less than five years, the average for the actual period is used.

The cap is not an automatic award. The claimant must first establish the statutory conditions.

Relevant evidence may include:

• Customer lists before and after the appointment;
• New customer acquisition records;
• Repeat purchase data;
• Sales growth;
• Commission records;
• Customer retention;
• Contract renewal rates;
• Principal’s continued sales;
• Brand and market contributions;
• Agent’s own contribution to customer loyalty.

When Is Equalisation Compensation Unavailable?

Article 122 denies the claim where:

• The agent terminates the agreement without conduct by the principal justifying termination; or
• The principal terminates for just cause based on the agent’s fault.

An agent that voluntarily leaves a profitable relationship without a legally sufficient reason may therefore lose the equalisation claim.

The right cannot be waived in advance. It must be asserted within one year following termination of the contractual relationship.

A clause stating that the agent “waives all present and future portfolio compensation” when signing the original agreement will not necessarily eliminate the statutory right.

However, once the relationship has ended and the claim has arisen, the parties may negotiate a settlement based on the facts of the specific dispute.

Equalisation Compensation for Exclusive Distributors

Article 122(5) expressly extends the equalisation rule, where not inequitable, to exclusive distribution and similar continuous relationships granting monopoly rights.

This does not mean that every distributor automatically receives compensation.

A distributor seeking equalisation should generally be prepared to establish that:

• The relationship was continuous and sufficiently exclusive;
• The distributor created or substantially expanded a customer base;
• Customer information or access remained available to the supplier after termination;
• The supplier continued to benefit from those customers;
• The distributor lost the opportunity to continue earning profit from the portfolio;
• An award is equitable.

A distributor acting as an independent reseller without transferring customer value to the supplier may face greater difficulty establishing the claim.

The tribunal should examine the practical relationship, including:

• Direct customer contacts retained by the supplier;
• Customer data shared during the agreement;
• Warranty or registration databases;
• E-commerce data;
• Supplier access to end users;
• Brand loyalty;
• Distributor investment.

Exclusivity Claims in Distribution Agreements

An exclusive distribution agreement may grant the distributor:

• An exclusive territory;
• An exclusive customer group;
• Exclusive rights for specific products;
• Protection against direct sales by the supplier;
• Protection against appointment of other distributors;
• Rights concerning online sales or marketplaces.

The agreement should explain whether exclusivity prevents:

• Appointment of another distributor;
• Direct sales by the supplier;
• Sales by affiliates;
• Cross-border sales;
• Passive customer requests;
• Sales to reserved accounts;
• Public tenders;
• Internet sales.

Terms such as “exclusive distributor for Turkey” are often insufficient by themselves.

A detailed clause should specify which sales generate:

• A commission or compensation;
• A resale right;
• A territorial infringement claim;
• An exception from exclusivity.

Competition Law and Vertical Distribution Agreements

Distribution agreements are vertical agreements because the parties generally operate at different levels of the production or distribution chain.

Turkish Competition Authority Communiqué No. 2002/2 provides a block exemption framework for qualifying vertical agreements. Following the 2021 amendment, the exemption generally applies where the supplier’s market share in the relevant market does not exceed 30%, subject to the other conditions and excluded restrictions contained in the Communiqué.

Falling outside the block exemption does not automatically mean that the entire agreement is unlawful. It means that the agreement may require an individual assessment under Turkish competition law.

The tribunal should therefore distinguish between:

• Eligibility for block exemption;
• Individual exemption;
• Actual competition-law infringement;
• Contractual consequences of an infringement;
• Regulatory powers of the Competition Authority.

Resale Price Maintenance

A supplier may recommend a resale price or determine a maximum price, provided that the recommendation or maximum does not operate in practice as a fixed or minimum resale price because of pressure or incentives.

Preventing the distributor from determining its own resale price is a serious restriction that removes the agreement from the benefit of the block exemption.

Problematic conduct may include:

• Threatening termination for price reductions;
• Withholding rebates;
• Monitoring and punishing discounting;
• Requiring approval for customer prices;
• Fixing minimum advertised prices;
• Compensating distributors that follow a fixed price.

A distribution arbitration may involve a claim that termination was based on the distributor’s refusal to comply with unlawful resale-price instructions.

The tribunal may need to examine emails, price lists, rebate systems, internal communications and evidence of pressure.

Active and Passive Sales

Turkish competition guidance distinguishes between active and passive sales.

Active sales include direct marketing, customer visits, targeted advertising and establishing a sales outlet or warehouse in another distributor’s exclusive territory.

Passive sales generally involve responding to unsolicited customer requests. General advertising and most ordinary internet sales are treated as passive sales.

A supplier may, within the applicable framework, restrict active sales into an exclusively allocated territory or customer group. Restrictions on passive sales are generally treated as serious restrictions excluding the agreement from the block exemption.

The contract should therefore avoid broad provisions stating that the distributor may “under no circumstances sell outside the territory.”

Such wording may improperly restrict:

• Unsolicited customer requests;
• Online sales;
• General website access;
• Delivery to customers outside the territory;
• Passive cross-border sales.

In-Term Non-Compete Obligations for Distributors

Under Communiqué No. 2002/2, a non-compete obligation imposed on the buyer for an indefinite period or for more than five years does not benefit from the block exemption.

An obligation capable of tacit renewal beyond five years is generally treated as indefinite for this purpose, subject to the specific facility-related exception in the Communiqué.

A distributor non-compete may require the distributor:

• Not to purchase competing products;
• Not to manufacture competing goods;
• To purchase most of its requirements from the supplier;
• Not to represent competing brands.

The precise economic effect matters more than the label. A minimum purchase obligation may function as a non-compete obligation where it effectively forces the distributor to source the great majority of its requirements from one supplier.

Post-Termination Non-Compete Obligations for Agents

Commercial agents are subject to a special statutory rule under Article 123 of the Turkish Commercial Code.

A post-termination non-compete agreement must:

• Be in writing;
• Be contained in a document signed by the principal and delivered to the agent;
• Last no longer than two years;
• Be limited to the agent’s former territory or customer group;
• Be limited to the subject matter of contracts handled by the agent.

The principal must pay appropriate compensation to the agent for the restriction. Provisions contrary to Article 123 are invalid to the extent that they operate against the agent.

The parties should not confuse this two-year agency rule with the competition-law rules applicable to distributors.

Post-Termination Non-Compete Obligations for Distributors

Under the vertical block exemption framework, post-term non-compete obligations generally fall outside the exemption.

A limited exception exists where the restriction:

• Does not exceed one year after termination;
• Concerns goods or services competing with the contract products;
• Is limited to the facility or land from which the buyer operated during the agreement; and
• Is necessary to protect know-how transferred by the supplier.

This is a block exemption analysis, not a statement that every longer restriction is automatically void in every context.

A broader restriction may require individual competition and contract-law assessment. The tribunal should examine proportionality, market effects, legitimate interests and the nature of the transferred know-how.

Minimum Purchase and Sales Target Disputes

Distribution agreements often require the distributor to meet annual:

• Purchase quantities;
• Revenue targets;
• Market share targets;
• Customer acquisition targets;
• Marketing expenditure commitments;
• Inventory levels.

Disputes may arise over whether the target was:

• Binding or indicative;
• Conditional on adequate supply;
• Adjusted for currency or market changes;
• A condition of exclusivity;
• A ground for immediate termination;
• Waived through previous conduct.

The supplier may not be able to rely on a missed sales target where it:

• Failed to supply sufficient products;
• Increased prices unexpectedly;
• Delivered defective goods;
• Appointed competing channels;
• Withheld marketing support;
• Prevented online sales;
• Lost necessary regulatory approvals.

The tribunal should consider causation and the parties’ reciprocal performance rather than examining the numerical target in isolation.

Inventory and Stock Repurchase after Termination

A terminated distributor may hold substantial inventory bearing the supplier’s brand.

The agreement should regulate:

• Whether the distributor may sell remaining stock;
• The length of the sell-off period;
• The supplier’s repurchase right or obligation;
• Repurchase pricing;
• Treatment of obsolete or damaged goods;
• Spare parts;
• Warranty obligations;
• Marketing materials;
• Return transportation.

Turkish law does not create a universal automatic stock repurchase rule for every distribution agreement.

A repurchase obligation may arise from:

• Express contractual wording;
• The circumstances of termination;
• Good-faith requirements;
• Wrongful termination;
• Legitimate reliance created by the supplier;
• The need to avoid unjust enrichment.

A distributor claiming the full resale value of inventory should account for its acquisition cost, actual condition, marketability and any opportunity to sell the stock.

Trademark, Brand and Intellectual Property Issues

Distribution and agency agreements commonly give the intermediary a limited right to use the supplier’s:

• Trademarks;
• Trade name;
• Product images;
• Advertising materials;
• Software;
• Technical documentation;
• Domain names.

The contract should state:

• Permitted use;
• Territory;
• Marketing approval process;
• Domain-name ownership;
• Social media accounts;
• Use after termination;
• Return or destruction of materials;
• Transfer of local registrations.

After termination, the supplier may seek urgent protection against continued trademark use. The distributor may argue that a limited sell-off period is necessary for remaining inventory.

These questions should be addressed expressly rather than left to general interpretation after the relationship ends.

Customer Data and Confidential Information

Modern distribution relationships generate valuable commercial data, including:

• Customer contact information;
• Purchase history;
• Pricing;
• Tender information;
• Sales forecasts;
• Marketing strategies;
• Technical information;
• Dealer networks.

The contract should distinguish between:

• Data owned independently by the distributor;
• Data collected on behalf of the supplier;
• Personal data subject to Turkish data protection law;
• Confidential business information;
• Customer information required for warranty and product safety.

A customer portfolio claim may depend heavily on whether the supplier retained and used the distributor’s customer data after termination.

Interim Measures in Agency and Distribution Arbitration

Urgent measures may be necessary where one party threatens to:

• Terminate access to ordering systems;
• Appoint a replacement distributor immediately;
• Transfer inventory;
• Disclose customer information;
• Continue unauthorised trademark use;
• Destroy commission records;
• Collect receivables belonging to the other party.

Under Article 414 of the Code of Civil Procedure, a tribunal in domestic arbitration may order interim measures and evidence preservation. Turkish courts may enforce qualifying tribunal measures and may provide direct assistance where the tribunal cannot act effectively or in time.

Court assistance may be necessary where:

• The order must bind a third party;
• Bank accounts or receivables must be attached;
• An ex parte measure is required;
• Physical seizure is necessary;
• A public registry must act.

ISTAC also provides an emergency arbitrator mechanism for qualifying urgent requests before constitution of the main tribunal. Its decisions are binding on parties that consented to the mechanism.

Evidence in Distribution and Agency Arbitration

The outcome frequently depends on long-term commercial records.

Relevant evidence may include:

• The original agreement and amendments;
• Sales reports;
• Commission statements;
• Customer lists;
• Invoices;
• Order history;
• CRM records;
• Marketing expenditure;
• Sales targets;
• Price instructions;
• Territory maps;
• Termination notices;
• Warning letters;
• Meeting minutes;
• Distributor stock reports;
• Emails and messaging records.

The parties should preserve records as soon as termination becomes foreseeable.

A foreign principal should not assume that a summary prepared by its headquarters will be sufficient. The tribunal may require transaction-level data to verify commissions, direct sales and continuing customer benefits.

Expert Evidence and Damages

Experts may be required to calculate:

• Unpaid commission;
• Lost profit during the notice period;
• Customer portfolio value;
• Remaining inventory;
• Marketing investment loss;
• Competition-law market shares;
• Price effects;
• Interest.

Equalisation compensation requires a separate analysis from ordinary lost-profit damages.

The expert should identify:

• The relevant customer cohort;
• Historical commissions or margins;
• Expected customer retention;
• Future benefits to the principal;
• Adjustments required by equity;
• The statutory cap.

A distributor should not simply apply the agent’s five-year commission average without first establishing that Article 122(5) applies to the relationship.

Drafting an Effective Arbitration Clause

ISTAC’s model clause provides that disputes arising out of or in connection with the contract will be finally resolved under the ISTAC Arbitration Rules. ISTAC recommends that parties also specify the seat, language, number of arbitrators and governing law.

An expanded clause may provide:

Any dispute, controversy or claim arising out of or in connection with this Agreement, including any dispute concerning its formation, classification, validity, interpretation, performance, commissions, sales targets, exclusivity, competition restrictions, termination, equalisation compensation, post-termination obligations or damages, 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 parties should also address:

• Emergency arbitration;
• Confidentiality;
• Electronic service;
• Expert determination of commission calculations;
• Consolidation with guarantee or trademark disputes;
• Court applications for interim measures;
• Fast-track arbitration for smaller monetary claims.

Under ISTAC’s currently published framework, fast-track arbitration applies to qualifying disputes not exceeding TRY 5,000,000 and is designed to result in a final award through a sole arbitrator within three months, subject to the applicable rules.

Multi-Party and Related Contract Risks

A distribution structure may involve:

• The foreign manufacturer;
• A regional parent company;
• The Turkish distributor;
• Sub-distributors;
• Dealers;
• Guarantors;
• Logistics companies;
• Trademark owners;
• Group companies.

The distribution agreement’s arbitration clause does not automatically bind every connected company.

The parties should coordinate dispute resolution provisions in:

• Parent guarantees;
• Trademark licences;
• Supply agreements;
• Sub-distribution agreements;
• Service agreements;
• Settlement agreements.

A manufacturer may win an arbitration against the distributor but still require separate court proceedings against a guarantor that never consented to arbitration.

Annulment of Turkey-Seated Awards

A Turkey-seated arbitral award is not subject to an ordinary appeal on the commercial merits.

Under Article 439 of the Code of Civil Procedure, a domestic award may be set aside only on limited grounds, including:

• Invalid arbitration agreement;
• Improper tribunal constitution;
• Jurisdictional excess;
• Material procedural irregularity;
• Violation of equality or the right to be heard;
• Non-arbitrability;
• Public policy.

The court should not ordinarily recalculate commissions, reclassify customers or reconsider the tribunal’s interpretation of exclusivity merely because the losing party disagrees with the result.

International Enforcement

Distribution and agency disputes commonly involve parties and assets in different countries.

A Turkish distributor may obtain an award against a foreign manufacturer, while a foreign supplier may seek enforcement against the Turkish distributor’s bank accounts, inventory, receivables or company shares.

The New York Convention establishes common standards for recognition of arbitration agreements and enforcement of foreign and non-domestic arbitral awards. Enforcement may be refused only on the limited grounds specified by the Convention, including invalidity of the arbitration agreement, lack of due process, excess of jurisdiction, non-arbitrability and public policy.

An asset strategy should begin before the arbitration is commenced.

Practical Contract Checklist

A distribution or agency agreement connected with Türkiye should address:

1. Whether the intermediary is an agent or distributor;
2. The products and services covered;
3. The territory and customer groups;
4. Whether exclusivity applies;
5. Whether the supplier may sell directly;
6. Treatment of online and passive sales;
7. Reserved or key accounts;
8. Commission or resale-margin structure;
9. Commission on post-termination transactions;
10. Information and audit rights;
11. Sales targets and minimum purchases;
12. Pricing and competition-law compliance;
13. Contract duration and renewal;
14. Notice periods;
15. Just-cause termination events;
16. Equalisation compensation;
17. Post-termination non-compete obligations;
18. Inventory and sell-off rights;
19. Customer data and confidentiality;
20. Trademark use;
21. Governing law;
22. Arbitration institution;
23. Seat and language;
24. Interim protection;
25. Enforcement location.

Frequently Asked Questions

Can an agency dispute be arbitrated in Türkiye?

Yes. Commission, termination, equalisation and other contractual agency disputes are generally capable of arbitration where a valid written arbitration agreement exists.

Can a distribution dispute be referred to ISTAC?

Yes. Parties may include an ISTAC arbitration clause in their distribution agreement and specify Istanbul or another location as the legal seat.

What is the main difference between an agent and a distributor?

An agent generally intermediates or concludes sales on behalf of the principal and earns commission. A distributor generally purchases products and resells them in its own name, earning a resale margin and assuming inventory risk.

Is an agency relationship automatically exclusive?

Unless otherwise agreed in writing, Article 104 prevents the principal from appointing multiple agents in the same territory for the same line of business and prevents the agent from representing competing enterprises in that territory.

Can an agent claim commission after termination?

Yes, in circumstances specified by Article 113, including transactions substantially prepared by the agent and concluded within an appropriate period after termination.

How long is the notice period for an indefinite agency agreement?

Article 121 provides a statutory three-month notice period. Immediate termination remains possible where just cause exists.

What is equalisation compensation?

It is compensation that may be payable where the principal continues to benefit substantially from customers introduced by the agent while the agent loses future commission and payment is equitable.

Can an exclusive distributor claim customer portfolio compensation?

Potentially. Article 122(5) extends the equalisation rule to exclusive distributorship and similar monopoly-granting continuous relationships where application is not inequitable.

Can equalisation compensation be waived in the original contract?

The agent cannot waive the claim in advance. The right must be asserted within one year after termination.

Can the supplier fix the distributor’s resale price?

A supplier may generally recommend a price or impose a genuine maximum price, but it must not turn the price into a fixed or minimum resale price through pressure or incentives.

Can the distributor be prohibited from selling outside its territory?

Certain active sales into another exclusively allocated territory may be restricted within the applicable competition-law framework. Passive sales and ordinary responses to unsolicited customer requests generally cannot be prohibited if the agreement is to benefit from block exemption.

How long can an agent’s post-termination non-compete last?

The statutory maximum is two years, and the principal must pay appropriate compensation. The restriction must also satisfy the written-form, territory and subject-matter requirements.

How long can a distributor’s post-termination non-compete last?

For block exemption purposes, the principal exception permits a restriction of up to one year where it is limited to the former facility, concerns competing products and is necessary to protect transferred know-how. A broader restriction requires separate legal analysis.

Can interim protection be obtained before the arbitral tribunal is appointed?

Potentially. The parties may use court remedies or, where applicable, an emergency arbitrator procedure.

Can a foreign arbitral award be enforced in Türkiye?

A qualifying foreign award may be recognised and enforced under the New York Convention or applicable Turkish private international law, subject to limited refusal grounds.

Conclusion

Distribution and agency arbitration in Turkey provides an effective dispute resolution mechanism for disagreements concerning commissions, exclusivity, termination, customer portfolio compensation, sales targets and post-contractual obligations.

The first and most important step is to classify the relationship correctly.

A commercial agent acts continuously and independently for the principal by mediating or concluding contracts and generally earns commission. A distributor purchases products and resells them in its own name and at its own commercial risk.

Turkish law provides detailed statutory protection for agents.

These protections include:

• Default territorial exclusivity;
• Commission on transactions generated by the agent;
• Commission on certain post-termination transactions;
• Information and accounting inspection rights;
• Notice and just-cause termination rules;
• Equalisation compensation;
• Compensation for post-termination non-compete restrictions.

Exclusive distributors may also benefit from customer portfolio compensation under Article 122(5), but the claim is not automatic. The distributor must establish the continuing benefit transferred to the supplier and the equity of compensation.

Distribution agreements are also subject to Turkish competition law. Contractual provisions concerning resale prices, territorial protection, passive sales, internet sales and non-compete obligations should be reviewed before the agreement is implemented.

A provision that appears commercially reasonable may remove the agreement from the block exemption or expose the parties to competition-law risk.

The arbitration clause should cover the full lifecycle of the relationship, including:

• Classification;
• Commission;
• Direct sales;
• Exclusivity;
• Competition restrictions;
• Termination;
• Equalisation compensation;
• Inventory;
• Post-termination conduct.

All guarantees, trademark licences and related agreements should contain compatible dispute resolution provisions.

Once termination becomes foreseeable, both parties should preserve customer lists, sales data, commission records, inventory reports, price communications and marketing evidence. These documents frequently determine whether termination was justified and whether compensation is payable.

For foreign manufacturers, Turkish agents, exclusive distributors and international commercial groups, specialised Turkish arbitration counsel can assist with contract drafting, competition-law compliance, termination strategy, interim measures, commission claims, portfolio compensation and enforcement of arbitral awards.