This country-specific Q&A provides an overview of Litigation laws and regulations applicable in Turkey.
What are the main methods of resolving commercial disputes?
Traditionally, main commercial dispute resolution methods in our jurisdiction are court litigation and arbitration.
That being said, mediation has recently gained a particular importance. First introduced in 2013 as a voluntary alternative dispute resolution method, since 2019, mediation became a precondition for filing a commercial lawsuit for monetary claims.
In addition, it is also common for parties to resolve commercial disputes in out-of-court settlements. In this regard, pursuant to Article 35/A of the Attorney Law No. 1136, a settlement agreement signed by the parties and their attorneys has the power of judgement.
What are the main procedural rules governing commercial litigation?
The main procedural rules governing commercial litigation are set forth in the Turkish Commercial Code (“TCC”) and the Code of Civil Procedure. (“CCP”).
Provisions of the TCC determine which claims are considered as arising out of a commercial relation, in consideration of the subject matter and/or quality of the parties.
In principle, the commercial courts of first instance are competent civil courts of special jurisdiction for resolving disputes between merchants within the scope of the TCC. However, there are exceptions to the rule. For instance, when it comes to commercial conflicts regarding patent infringement claims, protection of trademarks and others subject matters falling within the scope of the Intellectual Property Code, the specialized courts of intellectual and industrial property rights are competent in Istanbul, Ankara and Izmir and the civil courts of first instance are competent in other regions.
The CCP sets out the rules regulating the course and conduct of civil court proceedings. The five main stages of a commercial proceeding following mandatory mediation process (if applicable) is (i) the exchange of submissions, (ii) preliminary proceedings, (iii) examination of the facts, (iv) oral hearings and (v) the verdict.
The TCC also provides that for disputes valued up to 100 000 TL, a simplified trial procedure shall be applied. This implies, for instance, that stages of (ii) preliminary proceedings and (iii) examination of the facts can be performed within the same hearing.
While the procedural rules regulating domestic arbitration are found in the CCP, International Arbitration Code (No. 4686) sets out procedural rules relating to international arbitration. It should also be noted that for commercial litigations involving at least one foreign element, the Turkish International Private and Procedural Law (No. 5718) complements the CCP.
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
Turkish Law follows the principle of three instances for civil and commercial litigation.
Final judgements concerning immaterial rights may be appealed at each stage following the scheme described below. For monetary claims, value of the dispute is relevant for determining to what extent the judgement is appealable. Please note that those values are annually revaluated and revised. Below are the reference amounts effective as of January 2020 until the end of the year:
For monetary claims up to 5390 TL, judgements of the court of first instance are final. For amounts exceeding 5390 TL, judgements may be appealed before regional courts of appeal within two weeks following their notification or delivery to parties.
For monetary claims up to 72.070 TL, judgements of the regional court of appeal are final. For amounts exceeding 72.070 TL, judgements of the regional courts of appeal may be appealed before the Court of Cassation within two weeks following their notification or delivery to parties.
The Court of Cassation is the court of last resort for commercial litigation. The court’s control is limited to overseeing correct application of the law to the facts.
How long does it typically take from commencing proceedings to get to trial?
Appearance at the court comes after completion of the exchange of submissions. In the ordinary procedure, each party is entitled to two submissions in order to clarify factual and legal grounds for their claims/defences. It may take from three to six months to get to trial.
However, if the simplified trial procedure is applicable, each party is entitled to one submission. Therefore, time frame between commencement of the proceeding and the first trial will be shorter than the aforementioned hypothesis.
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
In principle, court hearings are public. This open court principle, as a fundamental element of the right to a fair trial, has a constitutional value (Article 141 of the Constitution), in parallel with the Article 6 of the European Convention on Human Rights. The court can only order hearings to be held in private for public morality and/or public security reasons. However, in a commercial lawsuit, we are of the opinion that it is unlikely to have recourse to these exceptions.
For documents filed at court, it should be noted that parties and their lawyers can examine and make copies of all submitted documents without any restriction. Moreover, lawyers admitted to the Turkish Bar Association can examine court files even if they do not represent one of the parties. However, they cannot obtain copies.
What, if any, are the relevant limitation periods?
Pursuant to the Turkish Code of Obligations (“TCO”), the general limitation period is ten years from the date when the claim is due.
The limitation for tort claims is two years from the date on which the claimant becomes aware of the tortious act, the damage, the person committing it and in any case, ten years from the date of commitment of the tortious act.
There may also be longer or shorter limitations depending on the nature of the claim. For example, the TCO provides that the limitation period is five years for claims related to lease payments, interest on principal, professional negligence, from the date when the claim is due.
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
The TCC provides that commercial disputes where the subject matter is a debt or indemnity claim requiring the payment of a sum of money will be subject to mandatory commercial mediation. As a consequence, application for mediation is a condition for bringing a legal action before Turkish courts.
Non-compliance is sanctioned by procedural dismissal of the case.
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
Commercial proceedings commence by directly filing a statement of claim before the competent court. This can also be done electronically via Turkish e-justice platform UYAP. All submissions shall be directly addressed to the court, which will serve the opposing party.
How does the court determine whether it has jurisdiction over a claim?
The court’s determination of jurisdiction will be primarily based on an ex officio examination of the subject matter and quality of the parties in the light of the rules set by the TCC and CCP, in order to determine whether it is the right forum for hearing the case. This examination can be done at any stage of the proceedings.
When it comes to territorial competence, the CCP’s provisions will be applied. Furthermore, it should be noted that territorial objection shall be raised as a first defence, in the absence of which, the party shall be deemed to accept the territorial jurisdiction of the court.
How does the court determine what law will apply to the claims?
The CCP requires ex officio application of the rules of conflict of laws. The judge shall determine whether Turkish law or a foreign law is applicable based on the facts of the case. Foreign law may be applicable either by application of the rules of conflict of laws or a choice of law clause. The judge is required to clarify the content of the applicable foreign law and if necessary, can have recourse to the assistance of the parties. However, a foreign law carrying effects contrary to the Turkish public order may be set aside.
In what circumstances, if any, can claims be disposed of without a full trial?
Court proceedings at first instance may be terminated without review of the merits if the procedural requirements are not met (such as non-compliance with the mandatory mediation application).
At regional court of appeals, it is also possible for the court to decide without holding a hearing, under circumstances regulated by the article 353 of the CCP. Article 356 of the CCP also states that if the opposing party fails to attend the hearing without any just cause or fails to pay court expenses, a judgement can be rendered based on existing documents, provided that the case does not require conduction of further investigations.
What, if any, are the main types of interim remedies available?
The court can grant interim remedies if it is necessary for the protection of the disputed rights. The claimant party must provide satisfactory evidence showing that (i) its claim is based on just grounds and (ii) likelihood of irreparable and significant damage. . A reasonable deposit amount will often be required from the claimant to secure rights of the defendant. The court may decide on any kind of suitable interim remedy. It can for example order performance or avoidance of a specific action, temporary seizure in banks accounts, freezing of an immovable asset or transfer of the disputed goods to a trustee.
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
Once a statement of claim is submitted to the court, the defendant will in principle have two weeks from the date of reception to submit its response petition, with a possibility of extension of one month under ordinary procedure and two weeks under the simple procedure.
The parties are in principle entitled to submit any written document supporting their claims. The Court may set a specific and reasonable timetable for submission of supporting documents during the proceedings.
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
The court may order litigant parties or any third party to disclose documents which are deemed to be necessary for clarifying the case. Legal ground of privileges (such as professional secrecy) granting exemption from giving testimony as witness could constitute a legitimate basis for refusal.
How is witness evidence dealt with in commercial litigation (and, in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
Under Turkish Law, witnesses give oral evidence during the court proceedings. Lawyers of the parties and the judge can address direct questions to witnesses. While there is no provision of law prohibiting their submission, a deposition would not have the same probative value since it does not allow a formal examination by the court.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
Expert reports are not only permitted but often required. In most cases, independent experts will be appointed by the court either ex officio or upon request of the parties, particularly when there is need to clarify technical aspects of the case. The parties are free to provide private expert reports. While such reports can serve as support to parties’ claims, they do not have an equivalent probatory value to court-appointed and independent expert’s reports.
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
For appeal of final decisions, please see our answer to question 3.
In principle, interim decisions can only be appealed with the final judgement.
For interim remedies, an objection can be submitted to the court upon delivery or having heard the decision (if the decision has been rendered in abstentia), within one week. The decision upon objection is appealable before regional courts of appeal. Appealing before the Court of Cassation is not possible.
If an interim remedy was rejected by the court of first instance, it is possible to appeal the decision before regional courts of appeal without going through the objection procedure.
What are the rules governing enforcement of foreign judgments?
A foreign judgement or arbitral award can be enforced in Turkey if (i) the judgement is final and binding within the jurisdiction that rendered the judgement, (ii) Turkish courts do not have an exclusive jurisdiction with regard to the subject matter, (iii) the judgement does not oppose to the Turkish public order, (iv) there is a conventional agreement or a de facto reciprocity on enforcement of foreign judgments between Turkey and the country where the foreign judgment was rendered.
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side?
The costs of litigation can be recovered from the losing party. However, the recoverable amount may be lower than the actual legal fees incurred. For instance, lawyer fees will be calculated based on minimum tariffs of the Turkish Bar Association.
An exception to the rule : If the mediation procedure has ended due to the failure of one of the parties to participate to the first meeting without just cause, the failing party will have to bear fully costs of litigation even in the event that the final judgement is in its favour.
What, if any, are the collective redress (e.g. class action) mechanisms?
Collective/class actions are not available under Turkish Law, at least not in the Common Law sense. The CCP provides the possibility of group actions, allowing associations and other legal entities to file actions on their own behalf to protect the rights of their members or groups they represent. That being said, it should be noted that the main idea is the prevention or rectification of an unlawful situation; therefore, claimant(s) (which must be a legal person) cannot claim compensation for damages on behalf of their members.
What, if any, are the mechanisms for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings?
Any person with legitimate interest may submit an intervention application to the court in order to join in support of a claimant or a defendant. The court shall decide in consideration of whether the legal position of that person justifies such intervention for protection of its legal interests.
As a result of the procedural economy principle, the CCP provides possibility of consolidating two sets of related proceedings, if both actions are within the scope of the court’s subject matter jurisdiction.
Are third parties allowed to fund litigation? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
Litigation funding is not statutorily regulated under Turkish Law. Considering absence of any restrictive provision of the law, a third party may in principle finance litigation costs. Such agreements shall be deemed to be valid in application of the contractual freedom principle, as long as they comply with general provisions of the TCO.
What, in your opinion, is the main advantage and the main disadvantage of litigating international commercial disputes?
One of main advantages of litigating international commercial disputes in Turkey is its arbitration-friendly legislation and presence of numerous efficient arbitration institutions. Moreover, presence of bilateral treaties and de facto reciprocity practices with a high number of jurisdictions constitute a promise of security for enforcement of judgements rendered by Turkish jurisdictions in foreign countries.
The main disadvantages are (i) long processing times due to workload of the courts and (ii) lack of possibility to plead in any other language than Turkish. Therefore, any document which is not in Turkish must be translated, which may be a source of inconvenience.
What, in your opinion, is the most likely growth area for disputes for the next five years?
Regulations regarding protection of personal data are relatively new in Turkey.
The Personal Data Protection Law (No. 6698) came into force in 2016. It had impacts in all almost fields of law and posed unprecedented legal challenges. Although some big steps are already taken by businesses in order to comply with its provisions, considering the constant evolution of the cyber law, we estimate that new challenges will keep occupying agenda of legal practitioners.
What, in your opinion, will be the impact of technology on commercial litigation in the next five years?
An ambitious judicial reform plan has been announced by the executive branch that projected establishment of digital enforcement offices. Although the details are not communicated to public yet, we deduct that the tendency goes towards intensification of use of digital means in the judiciary organisation.
How have the courts in your jurisdiction dealt with the COVID-19 pandemic and have you seen particular types of disputes arise as a result of the pandemic?
In response to the health crisis caused by the COVID-19 outbreak, all time limits regarding arising of a right, its exercise and extinction were suspended with respect to civil, administrative and criminal procedural laws from March 13, 2020 until June 15, 2020 (expected). Also, hearings could not take place during that period.
Considering the pandemic’s economic implications in the world and in our society, as well as recent correspondences we had with our clients, we expect contractual disputes to mark the post COVID-19 era in our jurisdiction.
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