A Guide on Commercial Litigation (CLi) in Turkey
Commercial litigation in Turkey refers to the process of resolving business-related disputes through the Turkish courts, primarily focusing on commercial law matters. The Turkish legal system provides a structured framework for addressing disputes between companies, business partners, investors, and other entities engaged in commercial activities. These disputes can involve contracts, debt recovery, intellectual property, mergers, acquisitions, and other business-related conflicts.
Here’s a detailed overview of CLi in Turkey:
1.Key Features of CLi in Turkey
- Specialized Courts: Commercial Courts (Ticaret Mahkemesi) handle commercial disputes in Turkey. These courts are specialized in commercial law and are part of the regular judiciary system. They are tasked with resolving cases involving companies, business contracts, trade, and commerce.
- Civil Litigation System: CLi falls under the civil litigation system, governed primarily by the Turkish Civil Procedure Code (HMK), the Turkish Commercial Code (TTK), and other relevant laws. In particular, commercial contracts, intellectual property rights, company law, and debt recovery are central to commercial disputes.
2.Types of Commercial Disputes in Turkey
CLi can arise from a wide range of issues, including:
- Contract Disputes: Disagreements over terms of a commercial agreement, breach of contract, non-performance, or disputes involving terms of sale, service agreements, distribution contracts, etc.
- Debt Recovery: Disputes over unpaid invoices, loans, or debts arising from business transactions, including collection actions against individuals or entities.
- Partnership and Shareholder Disputes: Issues arising between business partners or shareholders, such as the termination of partnerships, disputes over profits, equity distribution, or management control.
- Intellectual Property Disputes: Cases related to patents, trademarks, copyrights, and trade secrets protection.
- Competition Law Violations: Violations of Turkey’s Competition Law (anti-trust issues, monopolistic behavior, unfair trade practices).
- Mergers and Acquisitions: Disputes arising during the merger or acquisition process, such as disagreements on valuations, warranties, and other transaction-related issues.
- Employment and Labor Disputes: Conflicts between employers and employees, often involving wrongful termination, wage disputes, and workplace conditions in a commercial setting.
- Insolvency and Bankruptcy: Cases involving the liquidation or insolvency of businesses, or disputes with creditors during bankruptcy proceedings.
3.Jurisdiction for Commercial Disputes
- Commercial Courts: Commercial disputes are typically handled by Commercial Courts (Ticaret Mahkemesi), which have exclusive jurisdiction over commercial cases, including corporate matters, contracts, and intellectual property.
- Civil Courts: If no commercial court exists in a particular region, civil courts of first instance may handle commercial cases.
- Alternative Dispute Resolution: In some cases, disputes can be settled outside of court through arbitration or mediation, particularly if specified in the contractual agreement between the parties.
4.Steps in CLi in Turkey
The process of CLi typically follows these steps:
Step 1: Filing the Complaint (Dava Dilekçesi)
Initial Complaint: The plaintiff (the party initiating the lawsuit) files a written complaint (dava dilekçesi) with the relevant Commercial Court. The complaint should include:
- The names of the parties involved.
- A summary of the facts of the case.
- The legal grounds for the lawsuit.
- Any evidence that supports the claim.
Court Fee: There is a filing fee for initiating the lawsuit, calculated based on the nature of the case and the claim’s value.
Step 2: Summons and Response
After the complaint is filed, the court sends a summons to the defendant, informing them about the lawsuit and asking them to respond.
The defendant has a set period (usually 2 weeks) to submit a written response (cevap dilekçesi) to the court, explaining their defense or counterarguments.
Step 3: Preliminary Hearing (İlk Duruşma)
The court will then schedule a preliminary hearing where the judge reviews the case and sets the agenda.
During this session, the judge may try to mediate a settlement or clarify certain issues to streamline the litigation process.
If necessary, the court will schedule additional hearings for further review.
Step 4: Presentation of Evidence
Evidence Submission: Both parties must submit their evidence (documents, emails, contracts, etc.) at the earliest opportunity.
Evidence submitted later may be excluded unless approved by the judge.
Witness Testimonies: If applicable, witnesses can be called to testify in court to support the claims made by either party.
Step 5: Court Hearings
After the initial hearings, the court schedules a series of hearings where both parties can argue their case.
Legal Arguments: Lawyers for both sides present their arguments, referring to relevant Turkish law and applying it to the facts of the case.
The court may call experts or order further investigation if necessary.
Step 6: Judgment (Karar)
Once all the evidence is presented, the judge will issue a judgment (karar), which can either be in favor of the plaintiff or defendant. The judgment will typically include:
- Damages: If the defendant is found liable, the court may award damages, compensation, or order the fulfillment of contractual obligations.
- Injunctions: The court may issue an injunction or restraining order in cases where it is necessary to prevent harm (e.g., in intellectual property or unfair competition cases).
Step 7: Appeal Process (İstinaf – Temyiz)
If either party is dissatisfied with the judgment, they can file an appeal to a higher court (usually an Appellate Court).
The appeal process involves a review of the legal reasoning, not the factual findings.
Supreme Court Appeal: In some cases, a final appeal can be made to the Supreme Court of Appeals (Yargıtay).
Step 8: Enforcement of the Judgment (İcra)
If the plaintiff wins the case and the defendant fails to comply with the judgment (e.g., payment of damages), the plaintiff can request enforcement proceedings. These are handled by Enforcement Offices (İcra Dairesi), which can seize assets, garnish wages, or otherwise enforce the court’s decision.
5.Alternative Dispute Resolution (ADR)
- Arbitration: Many commercial contracts include an arbitration clause, which mandates that disputes be resolved through arbitration instead of court litigation. This can often be a faster, more flexible process. Istanbul Arbitration Center (ISTAC) is one of the most prominent arbitration bodies in Turkey.
- Mediation: Mediation is a less formal and cost-effective alternative to court trials. It involves a neutral third party helping the parties reach an amicable agreement. Turkey has a growing mediation framework, particularly for business and commercial disputes.
6.Cost and Duration of CLi
- Costs: The cost of CLi can vary depending on the complexity of the case, the value of the claim, and whether the case involves expert witnesses, multiple parties, or other complex factors.
- Court Fees: Filing fees are generally calculated based on the value of the claim. Legal fees can also add to the cost, and the losing party may be required to pay these fees as well.
- Duration: The duration of a commercial lawsuit can vary. Simple cases may take around 6 months to 1 year, but complex disputes (e.g., mergers, intellectual property, or shareholder disputes) may take several years, particularly with the appeal process.
7.Enforcement of Foreign Judgments
Recognition and Enforcement: Foreign judgments can be enforced under the reciprocity principle, meaning that a foreign court’s decision can be recognized and enforced if the country where the judgment was issued provides reciprocal enforcement of Turkish judgments.
The process of recognition and enforcement involves applying to a Turkish court to have the foreign judgment approved and converted into a local ruling.
8.Legal Representation in CLi
In Turkey, attorneys specializing in commercial law play a critical role in navigating the complexities of litigation, advising clients on strategy, gathering evidence, and representing clients in court.
Legal counsel is crucial for understanding Turkish commercial law, procedural rules, and managing cross-border disputes, especially for international businesses.
Commercial litigation in Turkey is a crucial aspect of the country’s legal system, addressing disputes arising from business transactions, contracts, and commercial activities. Understanding the process, from filing a claim to the appeal process, is essential for businesses involved in disputes. While litigation can be time-consuming and costly, alternative dispute resolution methods like arbitration or mediation offer quicker and more flexible solutions. Please feel free to contact us for more information and further inquiries about our unique services. You can also subscribe to Tacirsoft Hukuk Bilgi Sistemi, that is Turkey’s only Corporate Law and Organized Industrial Zones Law database.
