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Kesikli Law Firm > Firm Profile

The firm: Kesikli Law Firm, a leading law practice based in Istanbul, Turkey, serves a diverse client base, from global corporations to small, entrepreneurial companies and individuals in a range of transactional, litigious and regulatory matters.  Through its involvement as counsel to investors, contractors, engineers, project developers, trading companies and other project proponents, Kesikli Law Firm established a trustworthy reputation as the provider of tailored legal solutions in the areas of power and energy, real estate and construction law, corporate and commercial law, IP law and employment law on contentious and non-contentious matters.

Contentious and non-contentious legal work
Transactional legal work: Kesikli’s lawyers serve as outsource counsel to companies from very early stage to mature firms, from small to very large in size, all in vibrant and challenging markets including energy, construction, real estate, manufacturing, transportation and financial services.

Dispute resolution: Kesikli provides savvy, strategic, and results-oriented legal representation for both corporate and individual clients in corporate, commercial, construction, real estate and IP litigation. From employment-related lawsuits to complex commercial and construction disputes, Kesikli has the experience and focus that any company or individual needs to protect its assets and enforce its legal rights.

Regulatory advice and representation: Kesikli regularly acts for organizations involved in matters before administrative and regulatory bodies. Kesikli’s hands-on experience coupled with its lawyers’ academic knowledge and business network, enables it to guide its clients in complying with the complex web of laws, regulations, guidelines, policies and procedures in different sectors.

Core practices
Power and energy: Kesikli’s power and energy practice covers a comprehensive range of legal and business matters including the development/financing of green or brown field energy and infrastructure projects, permitting and licensing matters and providing counsel on structuring the contractual and regulatory background of the projects. Kesikli advises on energy market participation and regulatory rules, law of privatisation, acquisitions of energy projects and drafting and negotiation of required contracts. 

EPC and infrastructure projects: Kesikli has extensive experience in EPC and infrastructure projects in Turkey, the Russian Federation, Israel, Turkmenistan, Kazakhstan, Senegal, Ghana, Nigeria, Romania, Namibia, Iraq, Oman, Qatar and Saudi Arabia. Kesikli represents clients in various projects on contentious and non-contentious matters, involving EPC (Engineering, Procurement, Construction) and EPCM (EPC Management) contracts, FIDIC model contracts, equipment supply and erection contracts, construction contracts, electricity sales contracts, natural gas sale contracts, O&M contracts and settlement of disputes.

Corporate and commercial law: corporate law is an area in which Kesikli excels. It’s corporate legal practice is structured to represent clients through every stage of the business life cycle, providing daily legal advice from initial conception and start-up, through trade sale or acquisitions. Kesikli regularly renders legal services to clients on joint ventures, consortium, partnership and share purchase transactions and arrangements. Kesikli advises clients in day-to-day operations as well as drafting, negotiating and terminating a variety of contracts including distribution agreements, licensing agreements, exclusivity agreements, franchising agreements, project development agreements, e-contracts, web-site legal content and other tailor-made contracts. 

Intellectual property law: Kesikli is experienced in all aspects of IP protection, including idea development, trademark, trade secret, copyright infringement matters; and licensing arrangements.

Public tenders law: Kesikli provides legal support when evaluating public tender laws and privatisation procedures as well as possible process scenarios. This support covers qualification criteria, representation in privatisation-related disputes, preparation of complaints and objections; negotiations with privatisation agencies and public authorities; assistance with preparing tender documentation; legal due diligence of target companies; and negotiating privatisation and investment agreements.

Employment Law: Kesikli’s team is well-versed in the intricacies of Turkish employment law, regularly providing counsel on local labour laws and hiring practices, including the consequences of M&As, restructurings, joint ventures and privatisations; termination of employment contracts of employees and executive staff at all levels and resolving any labour disputes.

Competition Law: Kesikli has extensive experience in dealing with the complex issues facing clients in various sectors at the intersection of competition law, antitrust regulations and consumer law. Kesikli advises companies and foreign law firms relating to legal needs on Turkish competition laws and regulations.

Lawyer Profiles

Photo	Name	Position	Profile
	Ms Gul Nevra AYDIN	Senior Associate	View Profile
	Mr Onur Durak	Senior Associate	View Profile
	Dr Jur Omer KESIKLI	Managing Partner	View Profile
	Dr Jur Fulya Teomete Yalabik	Foreign Law Expert	View Profile
	Mr Eren Yeniculha	Associate	View Profile

Focus On

Urban Transformation Projects in Risky Areas

1. Introduction

Turkey’s urbanization, which gained momentum in the late 20th century and continues today, has raised concerns regarding unstructured urban planning, construction in unsuitable regions, and technically deficient buildings. These challenges, exacerbated by Turkey’s location in an earthquake-prone zone, have resulted in severe tragedies during catastrophic earthquakes and floods. The devastating earthquake of 2023 brought these issues to the fore, causing numerous fatalities, immense material damage, and large-scale migrations from affected cities.

This unfortunate event emphasized the pressing need for livable spaces in Turkey that meet modern environmental requirements and urbanization models. As a result, urban transformation measures have been implemented with the goal of swiftly and effectively transitioning living areas in the country towards safety and structured planning.

Urban transformation in Turkey is mainly divided into three models: (i) direct transformation of identified risky buildings, (ii) comprehensive transformation of risky areas, and (iii) creation of reserved building areas for future construction. The term “risky area” denotes regions that require total transformation, while “reserved building area” refers to the development of new urban spaces that meet modern living requirements.

Urban transformation projects in risky areas are conducted under the auspices of Law No. 6306 on the Transformation of Areas Under Disaster Risk (“Urban Transformation Law”) and the Implementing Regulation of Law No. 6306 (“Regulation”). These legal instruments were designed to involve owners of risky properties in the transformation process, allowing them to decide the timeline, model, and specifications of the projects managed by contractors. However, disputes between property owners and contractors stalled progress, leading to an amendment in the Urban Transformation Law in 2019.

With the amendment, the Republic of Turkey’s Ministry of Environment, Urbanization, and Climate Change (“Ministry”) has been empowered to ex officio undertake and perform urban transformation projects, along with the authority to assign independent contractors for actual construction projects.

The government’s ex officio authority was already in place before the amendment, provided through the expropriation/urgent expropriation authorities of the government. However, the use of this right created further disputes and prolonged the transformation processes. The amendment rectifies this by granting the government direct authority to intervene in the transformation process.

The Ministry’s ex officio authority now extends beyond transformation projects or properties in risky areas, reserved building areas, or projects on independent risky buildings. A new definition in the Urban Transformation Law broadens the Ministry’s authority, allowing it to exercise its ex officio right in areas where buildings are at risk of demolition, where buildings have collapsed or are severely damaged, or where there is a risk of severe damage due to ground shifts, landslides, floods, rock falls, fires, explosions, etc.

2. Urban Transformation Process in Areas Designated As Risky

The process of urban transformation in risky areas generally comprises the following stages:

The term “risky area” is defined by the Urban Transformation Law as an area declared by the President of the Republic of Turkey (“President”) that: (i) poses a risk of life and property loss due to its ground conditions or the nature of its settlement or construction, (ii) experiences disruptions to public order or safety that interrupt or disturb everyday life, (iii) suffers from inadequate planning or infrastructure services, (iv) contains buildings that violate zoning legislation or are structurally or infrastructurally impaired, or (v) has at least 65% of its total buildings in violation of zoning legislation or constructed without a building license (even if licenses may have been obtained after construction completion).

2.1 Identification of the Risky Area

The power to designate an area as a “risky area” lies solely with the President. However, the Ministry is responsible for identifying and examining potential areas, compiling a report on the identified area, and presenting this report to the President for approval. Furthermore, property owners of buildings within a potential area also have the right to petition the Ministry to designate their area as a “risky area.”

According to announcements made by a Minister in April 2023, more than 3.3 million residences have undergone a transformation as of that date, with the transformation process for an additional 250,000 residences still in progress.

2.2 Property Owners’ Decision: The 2/3 Rule

Although urban transformation legislation allows public authority to directly engage in urban transformation processes and execute these projects independently or via contracted contractors, the primary rule outlined in the legislation advocates for project execution based on the mutual agreement of property owners.

Both Article 6 of the Urban Transformation Law and the corresponding Regulations stipulate that a minimum of a 2/3 majority of shareholders of parcels or lots within risky areas must agree to reconstruct a new building on the parcels or lots. They must also decide to enter into a contract with the contractors using a flat-for-land method or a different type of construction agreement. Therefore, for independent contractors intending to conduct urban transformation projects in risky areas and even on risky buildings not located within these areas, it is crucial to negotiate with at least a 2/3 majority of shareholders to initiate construction projects.

A policy aimed at the timely completion of transformation projects is in place, allowing the government to intervene when minority shareholders (representing at least 1/3 of the shares) do not participate in or oppose the transformation decisions made by others. The Urban Transformation Law regulates a unique system for the shares of the minority shareholder, prioritizing majority shareholders to acquire the shares of the minority shareholders.

If the majority shareholders fail to acquire these shares, the Ministry will acquire them on behalf of the Treasury. The acquisition process under Article 6/1 of the Urban Transformation Law includes the following steps:

1. The Ministry evaluates the fair market value of the minority shareholders’ shares.
2. The evaluated shares of the minority shareholders are auctioned off to shareholders who have entered into an agreement for the transformation project. The sale price cannot be less than the fair market value.
3. For transformation projects taking place in risky areas, if the shares cannot be sold to the shareholders who entered into an agreement, the Ministry will purchase and hold the shares on behalf of the Treasury.

The government’s commitment to completing transformation projects promptly and avoiding a state of uncertainty in risky areas is evident through its willingness to intervene by acquiring the shares of minority shareholders if the majority shareholders cannot. By acquiring the minority shareholders’ shares, the transformation projects can proceed more efficiently.

2.3 Agreement Between Property Owners and Contractors: Prerequisites For Contractors To Conduct Urban Transformation Projects In Risky Areas

Once a minimum quorum of 2/3 of shareholders or property owners has been reached, transformation projects can be undertaken by independent contractors (or public enterprises). An agreement, typically titled “Promise of Sale of Immovable Property and Construction Agreement in Return of Flat” (“Agreement”), is entered into between the property owners and contractors for the transformation project. In this Agreement, the contractor pledges to complete the construction in line with the requirements of the Urban Transformation Law and the technical specifications mutually determined by the parties, in exchange for the transfer of ownership of specified parts of the building from the property owners to the contractor. The Agreement must also specify the rules of partition.

Contractors undertaking urban transformation projects in risky areas must meet certain requirements outlined in the relevant legislation as part of the general intent of the Urban Transformation Law and related legislation. The practices that contractors may encounter under the Urban Transformation Law and Regulation during the initiation and continuation of construction projects are as follows:

2.3.1 Possession of a Contractor’s License

Article 5 of the Classification and Registration Building Contractors Regulation stipulates that the construction of all buildings requiring a construction permit in Turkey must be carried out by and under the responsibility of a contractor or a joint venture of contractors, who possess legal or real personality and must have a license number. As buildings in risky areas are subject to a construction permit, all contractors wishing to undertake an urban transformation project must possess or apply for a contractor’s license that enables them to perform the work and conduct the construction activities for these types of projects.

Article 8 of the Urban Transformation Law similarly mandates contractors to have a contractor’s license by enumerating the requirements for obtaining one, which include:

1. Financial Sufficiency
2. Technical Sufficiency
3. Minimum Work Experience

Accordingly, contractors should apply for a contractor’s license from the 15 different groups of licenses (A, B, B1, C, C1, D, D1, E, E1, F, F1, G, G1, H, Temporary Group) considering the specifics of the transformation project they are undertaking. The required license group depends on the size and square meters of the building planned to be constructed in the risky area.

2.3.2 Insurance and Warranty Obligations

As part of the policy to complete the transformation efficiently and minimize the risk of infringing the rights of property owners, Article 8 of the Urban Transformation Law mandates that, besides the license obligation, contractors conducting transformation projects in risky areas must have one of the following insurance policies or warranties:

1. A building completion insurance policy covering the risk of the contractor’s failure to completevthe construction project.
2. A warranty provided by the contractor to the Ministry, calculated based on the building construction area according to the existing zoning plan or the proposed zoning plan;
3. 1. 10% of the approximate cost of the building in areas with a construction area of up to 50 thousand square meters.
   2. For projects with a construction area over 50 thousand square meters;

• • • 10% of the approximate cost of the building for the first 50 thousand square meters of the construction area.
    • 8% of the approximate cost of the building for the construction areas between 50 – 75 thousand square meters.
    • 6% of the approximate cost of the building for the construction areas between 75 – 100 thousand square meters.
    • 4% of the approximate cost of the building for the construction areas over 100 thousand square meters.

There are two options for contracting companies to carry out projects in risky areas: they can either provide the guarantee detailed above, or they can procure building completion insurance, the scope, conditions, and application principles of which are determined by the Ministry of Treasury and Finance. Contracting companies can commence construction by choosing one of these two options.

2.3.3 Contractor Sales Limitations

The 10% Rule and Municipal Approval Requirement.

Upon obtaining relevant insurance policies or providing warranties to the necessary authorities, contractors must evacuate buildings located in risky areas and initiate the transformation process by commencing construction. Typically, these contractors plan to pre-sell properties, which will eventually be theirs upon project completion, as a financial strategy to fund current and future projects.

Nonetheless, for projects in risky zones, contractors’ rights to sell properties to third parties prior to project completion are restricted. As stipulated in Article 13 of the Urban Transformation Law, contractors may sell their properties based on the progress level of construction, and only with municipal permission. Therefore, contractors desiring to pre-sell must first apply to the municipality for approval. On receiving the contractor’s application, the municipality must carry out the following actions upon receiving an application from the contractor to sell properties:

1. Gauge the construction progress and calculate the completion percentage, using credible and verifiable measures.
2. Permit the contractor to sell properties up to but not exceeding 10% of the project’s completion ratio. This limit helps protect the property owners’ interests and ensure the completion of the project.
3. Require full approval from all property owners for sales exceeding the 10% ratio. This ensures that all owners agree with the pace of construction and the plan to sell properties before the completion of the project.

Without unanimous approval from all property owners, contractors cannot sell properties beyond the 10% completion ratio. This rule helps ensure that all property owners have a say in the project and protects their rights and interests.

3. The Ministry’s Ex Officio Authority to Complete Transformation Projects

While it is crucial to consider property owners’ perspectives in urban transformation policies, the completion of urban transformation, particularly in large cities, is critical for Turkey’s societal welfare and national safety, considering the nation’s geological structure and fault line map. Thus, despite property owners’ evaluations being important, the Urban Transformation Law’s Article 6/A amendment dated July 4, 2019, allows the Ministry to undertake urban transformation projects in areas posing a risk of building collapse or where buildings have been significantly damaged due to natural disasters. The Ministry can exercise this power on a wide array of areas defined in the Urban Transformation Law, not specifically restricted to risky buildings or areas.

The ways in which the Ministry’s power is exercised are:

1. The Ministry can perform the transformation projects by itself or through a contractor, without seeking the consent of the owners or related parties.
2. The Ministry can facilitate all land registry and cadastral transactions, including sales, transfers, and liens. Additionally, all kinds of demolition and construction permits and procedures can be executed at the Ministry’s request without needing property owners’ consent.
3. Any existing agreements on transformation projects within the execution area can be terminated without seeking the consent of the involved parties.
4. The Ministry determines the quality and size of the housing and workplaces to be built in the areas. Entitlement studies take into account the existing property’s value and the value of the new structure to be given to the property owner.

4. Case Study: Urban Transformation in The Fikirtepe District

Fikirtepe, a neighborhood in Istanbul’s Kadköy district, is currently hosting one of Turkey’s most expansive urban transformation projects. The district’s central location and an above-average number of unlicensed, derelict buildings spurred the need for urban transformation, initiated in 1999 after the devastating Marmara earthquake. However, despite several starts, projects in the area have never been fully completed due to disputes among property owners and contractors, and financial issues arising from prolonged dispute resolution processes. As a result, the Ministry has decided to use its ex officio authority to expedite the transformation processes, dividing the area into three separate lots. Lot 1, known as the “New Fikirtepe Project,” covers areas where independent contractors have failed to complete transformation projects. The Ministry is now managing these transformations, though it currently only uses its ex officio authority in lot 1, with no restrictions on using it in the remaining lots.

5. Conclusion

The catastrophic earthquake in 2023 that affected at least ten cities in Turkey and resulted in over 50,000 deaths has underscored the urgent need for urban transformation. As many of Turkey’s major cities lie on active fault lines, urban transformation is of crucial importance, especially considering experts’ predictions of an impending major earthquake in Istanbul.

The Urban Transformation Law and its associated regulations provide a framework to ensure that these transformations are carried out in a way that protects the rights of property owners, provides for societal welfare, and upholds the principles of safe and sustainable urban development.

Individual risky building transformations are often conducted through agreements between property owners and independent contractors. However, the role of the Ministry in managing transformations in risky and reserved areas has become increasingly significant. In situations where projects are delayed due to disputes or other complications, the Ministry’s ex officio authority under Article 6/A of the Urban Transformation Law allows it to intervene and ensure the project’s completion.

A prime example of this authority’s use is the New Fikirtepe Project in Istanbul’s Kadköy district, where the Ministry is now managing transformations due to failures by independent contractors. Given the devastating earthquake in 2023 and the predicted future seismic events, it is foreseeable that the Ministry will become more proactive in exercising its authority.

Urban transformation in Turkey is not only a matter of urban renewal and development but also a matter of national safety and resilience in the face of natural disasters. By striking a balance between the rights and interests of property owners and societal needs, the Turkish government aims to create a safer and more sustainable urban environment for its citizens.

In conclusion, as Turkey continues to deal with the aftermath of the 2023 earthquake and prepares for future seismic events, the Urban Transformation Law and its regulations provide an essential framework for managing the necessary transformations. With a focus on ensuring the completion of transformation projects and protecting the rights of property owners, the government has demonstrated a strong commitment to ensuring the safety and welfare of its citizens.

ELECTRICITY STORAGE AND SUPPORT MECHANISMS UNDER TURKISH LAW

I. INTRODUCTION

Turkey’s dynamic regulatory framework, anchored by the Electricity Market Law and its accompanying regulations such as Storage Regulation, License Regulation, and YEKDEM Regulation, unveils a compelling landscape for investors seeking to seize opportunities in the burgeoning electricity storage sector. By embracing a progressive approach, Turkey has established an advantageous environment for the establishment and operation of electricity storage facilities. In this article, we will delve into the essential provisions and notable advantages that await prospective investors who are keen on embarking on electricity storage projects in Turkey.

II. INCENTIVES FOR ELECTRICITY STORAGE PROJECTS

Although “Green Field Projects” and “Brown Field Projects” are not legally defined terms in the applicable law, we will be using these terms for ease of reference and understanding.

In the context of electricity storage, greenfield projects would involve the establishment of new facilities or technologies for storing electricity. In contrast to greenfield projects, brownfield projects involve investments in existing facilities, i.e. increase in the capacity or installation of new units. In the context of electricity storage, brownfield projects for storage would involve utilizing or retrofitting existing infrastructure for storing electricity.

A. Green Field Projects

• Exempted from The Competition Process of YEKA: Under Article 7, sub-article 10, legal entities planning to establish an electricity storage facility can be granted a pre-license by EMRA for establishing a wind and/or solar energy-based power generation facility with a capacity equivalent to the storage facility. This is considered an incentive as new capacities were previously granted through competition process of YEKA.
• Simplified Pre-License Applications: It is provided that the fourth paragraph of Article 7 of the Electricity Market Law (e the criteria applicable to wind and solar energy-based power generation facilities) on the evaluation of pre-license applications for the establishment of electricity generation facilities shall not apply to the generation facilities that fall within the scope of these projects.
• YEK Support Mechanism: These projects may also benefit from the YEK Support Mechanism (YEK Support Mechanism will be explained in depth below.).
• Domestic Contribution Support: These projects may also benefit from Article 6-B of the YEK Law with the amendment dated April 4, 2023. Therefore, domestic contribution support for equipment to be used in electricity storage investments has been regulated as another incentive.

B. Brown Field Projects

• Capacity Increase for Existing Facilities: Sub-article 11 of Article 7 allows legal entities holding a wind and/or solar energy generation license to increase their capacity up to the installed capacity of the electricity storage facility they plan to establish. The capacity increase must not exceed the licensed site boundaries, the existing capacity supplied to the system, and requires a positive connection opinion from TEIAS (Turkish Electricity Transmission Corporation) and/or the relevant distribution company.
• YEK Support Mechanism: Capacity increases under brownfield projects are exempted from the restriction in Article 6/C of the YEK Law, which normally prevents capacity increases from benefiting from the YEK Support Mechanism. In other words, capacity increases through storage activities can qualify for the support mechanism for the electricity supplied to the system (YEK Support Mechanism will be explained in depth below).
• Licensing Exemption: Article 4 of the Electricity Market Law states that certain activities require a license, while Article 14 allows electricity storage activities to be carried out without a license, subject to limits and procedures determined by the Energy Market Regulatory Authority (EMRA).

Furthermore, pursuant to License Regulation, a legal entity engaging in market activities must obtain separate licenses for each activity and each facility where the activities will take place, except for certain exceptions. In this regard, the electricity storage unit within a generation facility, integrated storage units, and auxiliary resource units used in multi-source generation facilities are considered part of the main resource-based facility and can be evaluated under a single license.

C. Incentives That Are Applicable To Both Greenfield And Brownfield Projects

YEK Support Mechanism:

Electricity storage projects (both greenfield projects and brownfield projects) in Turkey can benefit from the YEK Support Mechanism, governed by the Law on the Use of Renewable Energy Resources for Electricity Generation (YEK Law).

• Overall Benefits of the YEK Support Mechanism:
  • Diversity of Supported Energy Sources
  • Reducing Environmental Damages from Fossil Fuels
  • Reducing Energy External Dependency

• Advantages of the YEK Support Mechanism for the Projects:
  • Long Term Support Mechanism: Generation facilities that fall within the scope of YEKDEM are provided with an electricity purchase guarantee at a fixed price for 10 years. This creates a stable investment environment for renewable energy projects and offers investors long-term income security. This can facilitate the financing of renewable energy projects.
  • Payment System Based on Production Forecasts: Generation facilities within the scope of YEKDEM forecast the amount of electricity they generate for the following day in advance. According to these forecasts, the facilities are compensated for their production at a fixed price with a purchase guarantee. The use of this system helps in the planning of electricity generation and the efficient functioning of the energy market.
  • Fixed Prices and Durations:
    • Commissioning: The date of commissioning is when a generation facility is officially put into operation, either partially or completely.
    • Timeframe for YEKDEM Benefits:

1. 1. 1. 1. If a generation facility is fully operational, it can benefit from YEKDEM starting from the date of commissioning.
         2. If a generation facility joins YEK Support Mechanism before it is fully operational, it can benefit from YEK Support Mechanism for ten years from the date it first joins the program.

For facilities that became operational between January 1, 2021, and June 30, 2021, they can benefit from YEKDEM until December 31, 2030, as per a Presidential Decree issued on September 17, 2020.

• • • Capacity Increases: If a legal entity requests to increase the installed power capacity of their generation facility and it is approved by the relevant authority, the benefits provided by YEK Support Mechanism for the increased capacity may vary:
      • Capacity increases made within the scope of the eleventh paragraph of Article 7 of the Law (unspecified in the provided text) will benefit from YEK Support Mechanism for the remaining term of the facility’s original YEK Support Mechanism benefits.
      • However, legal entities whose installed power increase requests are approved by the authority as of February 28, 2019, and whose license amendments are made within this scope cannot benefit from YEK Support Mechanism for the increased capacity.

Licensing Exemption:

Pursuant to Article 7/1/e of License Regulation, “Market activities carried out within the scope of electricity storage and demand response within the framework of the limits, procedures and principles to be determined by the Board in consultation with the Ministry” is exempted from the license requirement.

III.REQUIREMENTS AND REGULATIONS

1. Integration into Existing Generation Facilities (Brown Field Projects):

Companies holding licenses for power generation or participating in the YEK Support Mechanism can install storage units within their licensed generation facilities, as per Article 5 of the Storage Regulation. The capacity of the storage unit must not exceed the specified capacity in the facility’s license, and it must be installed at the same measurement point as the facility for YEKDEM beneficiaries.

2. Connection and Utilization:

The connection and utilization of integrated storage units, storage units within storage facilities, and stand-alone storage facilities are governed by the provisions outlined in the Electricity Market License Regulation. Unlicensed electricity generation facilities that have received a call letter can establish electricity storage facilities and engage in monthly offsetting for surplus energy, complying with the conditions specified in the Regulation on Unlicensed Electricity Generation.

3. Compliance with Regulations:

Activities carried out through electricity storage units or facilities must comply with the regulations specified in the Storage Regulation. This includes integrating storage units into generation or consumption facilities, establishing detached storage facilities, and grid operators establishing their own storage facilities.

IV. CONCLUSION

In conclusion, Turkey has established a progressive regulatory framework and support mechanisms for electricity storage projects, both in greenfield and brownfield contexts. The incentives provided by the government aim to encourage investments in the electricity storage sector and contribute to the country’s renewable energy goals. Greenfield projects benefit from exemptions in the competition process and simplified pre-license applications, while brownfield projects can increase their capacity within the boundaries of existing facilities. Both types of projects can take advantage of the YEK Support Mechanism, which offers long-term income security through fixed-price electricity purchase guarantees. Additionally, licensing exemptions and regulations ensure the seamless integration, connection, and compliance of storage units and facilities. With these favorable regulations and support mechanisms, Turkey presents attractive opportunities for investors looking to participate in the growing electricity storage market.

Enforcement of Foreign Judgments in Turkey

Foreign court judgments are not directly enforceable in Turkey. According to Art. 50 of Private International Law and Procedure Act numbered 5718 (the “Act”), a final judgment rendered by a foreign civil court can only be enforced in Turkey if a competent Turkish court decides that it is enforceable. Therefore, those holding a foreign court judgment to be enforced in Turkey need to go through a court proceeding to make that court judgment enforceable. As a result of this procedure, if successful, a competent Turkish court will render an enforcement judgment (“exequatur”) with the result of giving enforceability to the foreign court judgment. This article summarizes the conditions for enforcement of a foreign judgment under Turkish Law.

Finality of Judgement

The Act requires the judgment, enforcement of which is sought in Turkey to be final. A foreign court judgment that has not yet been finalized cannot be enforced in Turkey. The issue of whether the judgment has been finalized is determined as per the laws of the country where the judgment was rendered. It is important to note that whether the laws of the country where the judgment was rendered allow court judgments to be executed without being finalized does not make any difference here. Connected with this requirement, according to the Art. 53 of the Act, an official document or certificate confirming the final nature of the judgment enforcement of which is sought must be submitted with the petition initializing the enforcement proceeding.

Reciprocity

According to the Art. 54(1) of the Act, there should be either an agreement, on a reciprocal basis between the Republic of Turkey and the state where the court decision is given (“contractual reciprocity”) or a de facto practice (“de facto reciprocity”) or a provision of law enabling the authorization of the execution of final decisions given by a Turkish court in that state (“legal reciprocity” or “de jure reciprocity)”.

The reciprocity condition, one of the enforcement conditions specified in Article 50 and Article 54 of Law No. 5718 on International Private and Civil Procedural Law (“the IPCPL”), plays a vital role in practice, which must be examined ex officio by the court in the enforcement proceedings. Pursuant to Article 54/a of the IPCPL, enforcement of a foreign court judgment is dependent on “an agreement on reciprocity between the Republic of Turkey and the state where the judgment was issued or the existence of de jure or a de facto practice that enables enforcement of the judgments given by Turkish courts in that state”.

In evaluation of the reciprocity, the first aspect to be considered should be whether there is a treaty or international agreement under which enforcement of foreign judgments is accepted. If Turkey and the state where the judgment in question was granted, are parties to such a treaty or international agreement, this would prove the existence of contractual reciprocity between those two countries. If such a treaty or agreement does not exist, enforcement would still be possible in case of the existence of de jure or de facto reciprocity.

In order for the de jure reciprocity to exist, the enforcement conditions in the law of the country where the judgment was granted and the enforcement conditions regulated in Article 50 of the IPCPL and the following, should be at least equivalent. There will be no de jure reciprocity between Turkey and the states that have legislation that includes provisions that provide for stricter conditions for the enforcement of Turkish Judgments compared to the enforcement conditions for foreign judgments in the IPCPL. In evaluating whether there is de jure reciprocity or not, it would be more appropriate to make a general evaluation rather than requiring the existence of the same enforcement conditions in the laws of both countries.

We would like to mention on the prohibition of examination of merits (revision) at this stage. Contrary to Turkish law, if foreign law adopts the revision system, it is very difficult for de jure reciprocity to exist. Because under Turkish enforcement law, it is forbidden to examine the merits of the case, other than for the purposes of evaluation of whether the conditions in Articles 50 and 54 of the IPCPL are fulfilled. Reopening the merits of the foreign judgments and review of the accuracy of the same are not allowed under Turkish Law .

In summary, an important issue in considering whether there is de jure reciprocity is the existence of provisions that allow the enforcement of foreign court judgments in the laws of the state where the enforcement of the judgment is sought. In this vein, equivalence between enforcement conditions is essential. Differences between the legislation of respective states that do not significantly complicate the enforcement of foreign court judgments do not constitute an impediment regarding de jure reciprocity.

Even if contractual or de jure reciprocity exists, if the judgments of Turkish courts are not enforced de facto by the state where the judgment is granted, the reciprocity is not considered to exist. This would be called a negative de facto practice, and the Turkish Court of Cassation held in its judgments that there is no reciprocity in such cases. On the other hand, to be able to hold that negative de facto practice exists, it should be proved that the courts of the state where the enforcement of the judgment was sought, must have rejected the enforcement of the Turkish court judgment; despite meeting all the conditions of enforcement under the laws of such jurisdiction. If the rejection of the enforcement of the Turkish court judgment is based on valid reasons according to the law of the foreign state, it cannot be concluded that there is no reciprocity on the grounds of negative actual practice. The de facto practice is always important in determining reciprocity. However, it should be kept in mind that the positive de facto practice is always easier to prove.

In order for positive de facto reciprocity to exist, a similar Turkish court judgment must be enforceable in the state where the foreign judgment is issued. Despite an agreement or legal arrangement that establishes reciprocity, the fact that any judgment of Turkish courts has not been enforced yet in practice, because of a lack of request regarding this issue in the relevant state, may not be considered a mere reason for denial of an enforcement lawsuit. At this point, the issue of which date should be taken as a basis has particular importance in order to decide whether there is de facto reciprocity. This issue is controversial in Turkish literature. According to one opinion, the date of the enforcement judgment should be taken as a basis, while another opinion suggests that the filing date of the lawsuit should be.

Another important issue in considering de facto reciprocity relates to the scope of de facto reciprocity. In other words, the question is as to whether there should be a different evaluation based on the subject matter of the lawsuit resulting in the judgment.  For example, assuming that de facto reciprocity exists in family law judgments, will this reciprocity also be applicable to foreign judgments relating to a commercial matter?  There is no consensus in the literature on this issue. An opinion suggests that de facto reciprocity should exist for judgments on the same subject, while another opinion defends that enforcement of any judgment granted by the court in such foreign jurisdiction (regardless of what its subject matter is) should be sufficient to establish reciprocity, as the philosophy underlying the condition of reciprocity requires.

For the purposes of evaluating reciprocity (de jure and de facto), it does not matter whether Turkey recognizes such a specific state whose courts granted the judgment; in contrast to the evaluation of political reciprocity, where the parties to a specific treaty must recognize each other.

If there is no contractual, de jure , or de facto reciprocity between Turkey and the relevant foreign state, the request for enforcement will be rejected.

The question as to whether there is reciprocity between two states is one of the hardest issues in practice because there is no “central information source” to determine reciprocity.

On the other hand, the judge has to examine ex officio and clarify whether the reciprocity exists. It is a very common practice for the Courts to consult with the official authorities about reciprocity matters. However, this method does not always work efficiently in practice and may even lead to inaccurate results. In addition to that, the existence of reciprocity can change over time and the Court of Cassation rules that in each case new research is required to be conducted.

To sum up, it is necessary to examine in detail whether the reciprocity condition is met for the enforcement of foreign court judgments in Turkey. We believe that this examination should not be limited to the legislation and practices in Turkey in order to reach an accurate conclusion.

Exclusive Jurisdiction of Turkish Courts

A further condition (negative) for the enforcement of a foreign court judgment in Turkey is that the judgment being sought to be enforced must not be on matters falling within the exclusive jurisdiction of Turkish courts. According to the High Court of Appeal, exclusive jurisdiction rules are for ensuring that the actions regarding issues regulated with these jurisdiction rules are only tried by Turkish courts (YHGK 04.03.2015, E. 2013/18-1628, K.2015/984). The underlying principle here is preservation of Turkish public order. In this vein, actions regarding real properties in Turkey, bankruptcy proceedings, labour disputes are considered within Turkish courts’ exclusive jurisdiction. It must be noted, however, these are not exhaustive. The Act does not explicitly state which actions fall within exclusive jurisdiction of Turkish courts. Therefore, the competent court will need to consider the underlying principle of jurisdiction rules and to determine whether the foreign court judgment is on a matter within the exclusive jurisdiction of Turkish Courts.

Excessive Jurisdiction of the Foreign Court

Another possible issue that may stand in the way of enforcing foreign court judgments is excessive jurisdiction—if the judgment has been rendered by a court that has deemed itself competent even if there is not a real relation between the court and the subject or the parties of the lawsuit However, in order for this to prevent enforcement decision, the counterparty must have raised its objection on this ground in the main proceedings.

Turkish Public Order

A foreign court judgment cannot be enforced in Turkey if such a judgment explicitly contradicts the public order of the Republic of Turkey. In general, in order for this to constitute a legitimate ground for resisting enforcement of foreign court judgment, the judgment must be contrary to the fundamental rights and freedoms, fundamental principles of international law, due process of law or the right to be heard. However, as the concept of public order is a fluid one, it is not possible to set out exactly what would be contrary to it. This is mitigated by the fact that Art. 54(1)(c) of the Act stipulates explicit contrariness to public order. In other words, not every conflict with Turkish public order would suffice to prevent the enforcement of a foreign judgment. It needs to be an explicit one.

With respect to the issue of public order, it was uncertain whether the fact that the foreign court judgment is without reasoning would contradict with public order of Turkey and different branches of the High Court of Appeals rendered inconsistent decisions regarding this issue. Afterward, it was settled by a decision of the High Court of Appeals’ General Assembly on the Unification of Judgement holding that mere absence of reasoning, per se, does not prevent enforcement of foreign court judgments (YİBGK 10.02.2012, E. 2010/1, K. 2012/1).

Violation of Right to be Heard

If the defendant’s right to be heard was violated, the defendant may resist the enforcement. If the defendant was not duly summoned pursuant to the laws of the state where the judgment was rendered or was not represented before that court, or the court decree was not pronounced in his/her absence or nonappearance in a manner contrary to the relevant laws of such foreign state, then the defendant may resist enforcement of that judgment in Turkey. However, the defendant must raise its objections in this matter before the court handling the enforcement proceedings. The courts are not allowed to consider these factors ex officio.

Satisfaction of the Judgement or Impediment for Enforcement

Finally, the defendant may resist enforcement on the grounds that the judgment has been entirely or partially executed previously or an impediment has occurred preventing its execution. For instance, if the defendant against whom enforcement is to be sought no longer exists (e.g., has been wound up), then, in principle, it will not be possible to execute the foreign court judgment.

Competent Court

The enforcement proceedings should be initiated before a civil court (in Turkish: asliye mahkemesi)”. There are different branches of civil courts. In order to prevent delays, the competent court must be determined at the outset. In this vein, if the judgment enforcement which is sought relates to a commercial dealing between the parties, then commercial courts are competent to hear the case.

After designating what branch of civil courts is competent, the geographic jurisdiction should also be determined. As a principle courts of the place where the defendant’s residence has jurisdiction to hear the enforcement lawsuit. If the defendant does not have a residence in Turkey, then the case needs to be brought where the defendant is based. In case none of these is applicable, then the case may be brought in Ankara, Istanbul, or Izmir.

In conclusion, the enforcement of foreign court judgments in Turkey is a meticulous process that requires careful attention to a series of legal criteria. It is not a direct process and necessitates the verification of a foreign court judgment by a competent Turkish court through the mechanism of an exequatur. The key considerations include the finality of the judgment, its compatibility with the concept of reciprocity, the exclusive jurisdiction of Turkish courts, the absence of excessive jurisdiction from the foreign court, compliance with Turkish public order, and the respect for defendants’ rights. Moreover, the judgment must not be previously enforced or face an impediment to its execution. The enforcement proceedings should ideally be initiated in a civil court where the defendant is based or has a residence. In the absence of such a place, the proceedings can be initiated in Ankara, Istanbul, or Izmir.

Given the intricacies of this process, it is vital for holders of foreign court judgments to seek expert legal advice before initiating the enforcement proceedings in Turkey. The legal landscape in this area remains complex, with potential for evolving jurisprudence and legislative changes, which underscores the importance of obtaining specialized legal guidance.

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