A glowing digital network map connecting the world to Türkiye over a corporate legal desk, symbolizing international investments, legal authority, and cross-border commercial frameworks.

A Guide to Turkish Corporate Law for Investors: Q&A

by with No Comment Corporate Strategy & Regulatory Updates

Choosing the right corporate structure—Joint Stock Company (JSC- Anonim Şirket) or Limited Liability Company (LLC- Limited Şirket)—is the most critical milestone shaping the future of the investment for international funds, cross-border M&A professionals, General Counsels, and CFOs planning strategic investments in the Turkish market. Local regulations may seem complex to investors from different legal systems; however, the Turkish Commercial Code (TCC) offers global-standard flexibility and a security shield when structured correctly.

To meet expectations regarding investment structuring, risk management, exit strategies, and operations, we have consolidated the JSC and LLC structures from a strategic perspective into a single guide.

I. Basic Corporate Structures and Dynamics

1. Joint Stock Company (JSC): For Large-Scale Funds and Flexible M&A Strategies

The JSC structure stands out due to its corporate governance and flexibility in share transfers, especially when targeting Energy Funds, technology investments, and large-scale M&A operations.

  • Liability Shield: A joint stock company is a company whose capital is definite and divided into shares, and which is responsible for its debts solely with its assets. Shareholders are liable only for the capital shares they have committed and solely to the company. This provides perfect risk isolation for global investors and funds.
  • Minimum Capital: With the Presidential Decree dated 24/11/2023, the updated minimum principal capital is 250,000 TRY, and the initial capital for non-public companies adopting the authorized capital system is 500,000 TRY.
  • Corporate Governance and Internal Directive: Board members are elected to serve for a maximum of three years and can be re-elected unless otherwise stipulated. There is a delegation mechanism that provides a huge advantage in post-M&A integration; the board of directors can be authorized to delegate management partially or entirely based on an internal directive it will issue.
  • Ease of Share Transfer and Exit: Unless otherwise stipulated by law or the articles of association, registered shares can be transferred without any restrictions. The transfer is executed by endorsing the share certificate and transferring its possession.
  • Independent Audit: The financial statements of companies subject to audit are audited by an independent auditor in accordance with the Turkish Auditing Standards published by the Public Oversight, Accounting and Auditing Standards Authority. This builds trust for foreign investors seeking transparency.

2. Limited Liability Company (LLC): For Tight Control and Closed Partnership Structures

The LLC may be preferred for more closed-circuit investments, tight joint ventures, and structures requiring direct control.

  • Single-Member Structuring: Both joint stock companies and limited liability companies can be established with just one person.
  • Public Debt Risk (Attention General Counsels and CFOs): LLC partners are directly liable for public debts (taxes, social security) that cannot be collected from the company, in proportion to their capital shares. Compared to the full liability shield of JSCs, this requires legal and finance departments to conduct extra risk analysis when selecting LLC structures.
  • Management Organ: Unlike JSCs, LLCs do not have a board of directors; management and representation belong to the managers.

3. Structural Changes: Merger, Spin-off, and Conversion

Restructuring companies in Türkiye requires legal vision for Cross-Border M&A Partners:

  • Simplified Merger: If the acquiring company holds all the voting shares of the acquired company, the companies can merge under a simplified procedure. This eliminates the obligations to prepare a merger report, provide the right to examine, and submit the agreement for general assembly approval. This creates tremendous speed and cost advantages in M&A processes.
  • Spin-off (Demerger) Strategies: Companies can be fully or partially spun off. In a partial spin-off, one or more parts of a company’s assets are transferred to other companies, and the shareholders of the transferring company acquire the shares and rights of the acquiring companies. This mechanism is vital in carve-out operations, such as placing specific power plants or licenses under a separate Special Purpose Vehicle (SPV) to sell them.
  • Conversion (Change of Legal Form): You do not need to close the company when the business model changes. The Turkish Commercial Code offers the possibility of “Conversion” without liquidating the assets. A Limited Liability Company (capital company) can easily convert into a Joint Stock Company (another capital company).

II. Frequently Asked Questions (FAQ) for Investors

A. Company Incorporation, Partnership Structures, and Liability (General Counsel & Investor Focused)

1. Can a foreign fund establish a Joint Stock Company (JSC) or Limited Liability Company (LLC) alone in Türkiye? Yes, under Turkish law, both a joint stock company and a limited liability company can be established with only one real person or legal entity.

2. What is our legal status if we establish a contract-based Joint Venture without incorporating a registered company (JSC/LLC) in Türkiye? If you do not establish a registered company, this structure is considered an “Ordinary Partnership” (Adi Ortaklık). Since ordinary partnerships do not have a separate legal personality, the investors (partners) are primarily, unlimitedly, and generally jointly and severally liable for the joint venture’s debts to third parties. Therefore, establishing a JSC or LLC is recommended for risk isolation.

3. What is the most fundamental difference in shareholder liability between a JSC and an LLC? In a JSC, shareholders are liable only for the capital they have committed and solely to the company. While this is also the general rule for LLCs, LLC partners are directly liable for public debts that cannot be collected from the company, in proportion to their capital shares.

4. What exactly is the risk of “Piercing the Corporate Veil,” and in what specific situations is it triggered? It is a legal theory used to bypass the limited liability principle, especially in single-shareholder companies. According to legal doctrine and Supreme Court practices; in cases where the corporate personality is abused—such as mixing company assets with the shareholder’s personal assets, transferring company assets to oneself or relatives, having the company pay personal debts, or intentionally bankrupting the company—the corporate veil can be pierced, leading to the direct liability of the parent fund’s assets.

5. What is the minimum capital amount for joint stock companies? The minimum principal capital is 250,000 TRY, and the initial capital for non-public companies adopting the authorized capital system is 500,000 TRY. (Current figures were increased by the Presidential Decree dated 24/11/2023).

6. Can companies only do business in the sectors specified in their articles of association (Ultra Vires)? No, the Ultra Vires principle has been abolished; commercial companies can be established for any economic purpose and subject not prohibited by law. Transactions carried out by authorized representatives outside the scope of the business generally bind the company; unless it is proven that the third party knew the transaction was outside the scope of business.

7. Is official authority approval required for company incorporation in Türkiye? As a rule, the incorporation of a JSC or amendments to its articles of association do not depend on the permission of any authority; however, certain special joint stock companies whose fields of activity are determined by the Ministry of Customs and Trade are established with permission.

8. What are the formal requirements for the articles of association? The articles of association must be made in writing, and the signatures of all founders or their proxies must be notarized, or the articles of association must be signed directly before the trade registry manager or deputy manager.

9. Who is liable for the contracts we make “on behalf of the company” during the incorporation phase, before registration at the trade registry takes place? A commercial company gains legal personality upon registration with the trade registry. Those who act and undertake obligations on behalf of the company before registration are personally and jointly and severally liable for these transactions and obligations. This period is also called the “pre-company” (ön ortaklık) stage in our law (Prof. Dr. Mehmet Bahtiyar, Ortaklıklar Hukuku).

B. Capital, Funding, and Valuation Strategies (CFO & M&A Partner Focused)

10. What can foreign investors contribute as capital to the company other than cash? Intellectual property rights, movable properties, and real estate that do not have limited real rights, attachments, or injunctions on them, and which can be valued in cash and transferred, can be contributed as in-kind capital.

11. We will contribute valuable real estate in Türkiye as in-kind capital for the target company’s capital increase. Do we need to make a separate official sales contract at the land registry for this transaction? No, there is no need to issue a separate official deed at the land registry or notary during the commitment stage. The provisions of the articles of association containing the commitment to contribute real estate as capital are valid without requiring an official form. However, for the company to dispose of the real estate, it must be registered in the land registry, and the notification for this registration is made ex officio by the trade registry manager.

12. Can an investor contribute a “receivable” from a third party as capital instead of cash? If so, when does their liability end? Receivables can be contributed as capital to JSCs and LLCs. However, a shareholder who transfers their receivable to the company as capital is not relieved of their capital contribution obligation until this receivable is actually collected by the company. If the receivable is not collected in time, an obligation to pay default interest arises.

13. Can know-how, personal labor, or commercial reputation be committed as capital? No, service obligations, personal labor, commercial reputation, and undue receivables cannot be capital in JSCs and LLCs.

14. Who values in-kind capital, and is this valuation final? In-kind capital is valued by experts appointed by the commercial court of first instance where the company headquarters will be located, and the expert decision approved by the court is final.

15. How does the “Authorized Capital System” work for funding flexibility? The authority to increase capital up to the authorized capital ceiling specified in the articles of association can be granted to the board of directors for a maximum of five years. This allows for quick cash injections directly by a board resolution without waiting to convene the general assembly.

16. Can the pre-emptive rights (right to acquire new shares) of existing shareholders be restricted in new share issuances? Yes, provided there are justified reasons (such as acquiring businesses, etc.) and with the affirmative vote of at least sixty percent of the principal capital, pre-emptive rights can be restricted or completely abolished.

17. Can the company buy back its own shares? Yes, provided that it does not exceed one-tenth of its principal or issued capital and that the shares are fully paid up, the company can acquire its own shares for consideration with the authorization of the general assembly.

18. Is a conditional capital increase (Convertible bonds) possible? Yes, it can be decided to increase the capital conditionally by providing creditors or employees with the right to acquire new shares through the exercise of exchange or purchase rights due to bonds or similar debt instruments.

C. Share Transfer, Partnership Control, and Minority Rights (M&A Partner & Investor Focused)

19. Can the transfer of registered shares in JSCs be made more difficult by contract? Yes, the articles of association may stipulate that registered shares can only be transferred with the company’s approval (Vinkulation/Transfer restrictions).

20. In what cases can the company refuse to approve a share transfer? The company may refuse approval by asserting an “important reason” stipulated in the articles of association (e.g., the economic independence of the enterprise) or by offering to acquire the shares at their real value on its own or third parties’ behalf.

21. How are bearer shares transferred in M&A transactions? The transfer of bearer share certificates takes effect against the company and third parties only by the transfer of possession and the notification made to the Central Registry Agency (CRA) by the transferee.

22. As a foreign partner, can we issue bearer share certificates for shares that are not fully paid up? No, bearer share certificates cannot be issued for shares whose prices have not been completely paid; those issued contrary to this provision are invalid.

23. Can minority shareholders directly intervene in the company’s audit processes? Yes, if the right to information and examination has been exercised, the general assembly can be requested to appoint a “special auditor”; if the general assembly refuses, shareholders holding at least one-tenth of the capital may request this appointment from the court.

24. Can the controlling fund (Majority Shareholder) squeeze out a troublesome minority? Yes, if the controlling company holds at least ninety percent of the shares and voting rights, and the minority prevents the operation of the company, acts contrary to the principle of good faith, or acts recklessly, the controlling company can purchase the minority shares at their stock exchange value, if any, or at their actual value, thereby squeezing them out.

25. Can the shareholders’ right to obtain financial information from the company be restricted? No, the shareholder’s right to information and examination cannot be abolished or restricted by the articles of association or by a decision of one of the company organs.

D. Corporate Governance, Board of Directors, and Liabilities (General Counsel & CFO Focused)

26. In a group of companies (Holding) structure, can our parent fund in Germany (Controlling Company) give a strategic instruction that would cause its subsidiary in Türkiye to suffer a loss? As a rule, the controlling company cannot use its control in a way that causes the subsidiary to suffer a loss. However, if this loss is actually compensated within that activity year, or a right to claim equivalent value is granted to the subsidiary by the end of that year at the latest, such an instruction becomes lawful. Otherwise, the subsidiary’s shareholders and creditors may demand compensation for the loss from the controlling company.

27. Our parent fund in Germany has an international reputation that creates intense trust in the Turkish market. Does a special legal liability arise from this “Holding” reputation? Yes, the concepts of “Liability based on trust” and “Group Reputation Liability” exist in Turkish law. In cases where the reputation of the group reaches a level that gives trust to society or the consumer, the controlling company (fund) can be held liable for the trust aroused by the use of this reputation.

28. If two different capital companies we invested in Türkiye purchase each other’s shares (Cross-shareholding), how are voting rights affected? Capital companies holding at least one-fourth (25%) of each other’s shares are considered to be in a cross-shareholding situation, and if this situation is entered into knowingly, only one-fourth of the total votes and other shareholder rights arising from the acquired shares can be exercised (excluding the right to acquire bonus shares); all other shareholder rights are frozen.

29. Is the term of office of board members flexible enough for M&A agreements? Board members are elected to serve for a maximum of three years; unless otherwise stated in the articles of association, the same person can be re-elected, and they can always be dismissed for a just cause.

30. Can board of directors meetings be held electronically from abroad? Yes, provided that it is regulated in the articles of association in capital companies, board of directors meetings can be held entirely in an electronic environment, or some members may participate electronically in a physical meeting.

31. Can the board of directors delegate its powers to professional local managers? Yes, based on a provision in the articles of association and an “internal directive” prepared accordingly, company management can be partially or entirely delegated to one or more members or third parties.

32. Can board members conduct transactions with the investor fund company? A board member cannot conduct any transaction with the company on behalf of themselves or someone else without obtaining special permission from the general assembly; otherwise, the transaction may be considered void.

33. Can CFOs and managers borrow cash from the company? No, board members who are not shareholders and their relatives cannot borrow cash from the company, and the company cannot provide bailment, guarantee, or collateral in favor of these persons.

34. How is the non-compete obligation for managers applied in Turkish law? Board members cannot engage in commercial transactions falling within the company’s field of activity on their own or another’s behalf, nor can they enter a competing company as a partner with unlimited liability without the permission of the general assembly.

35. Can the damages caused by board members to the investor or the company be insured? Yes, the damage that members may cause to the company due to their fault can be insured at a price exceeding twenty-five percent of the company capital; this serves as a safeguard regarding corporate governance principles.

E. Structural Changes: Mergers, Spin-offs, and Conversions (M&A Strategies)

36. While merging the target company (JSC) by acquisition, are we obliged to give shares from our own company to the partners of the target company, or can we provide their exit solely by paying them cash (cash-out)? The Turkish Commercial Code allows stipulating in the merger agreement that only a severance payment (cash) is given instead of allocating shares to the partners. In this way, you can squeeze out the partners of the target company via cash payment (squeeze-out via merger) without integrating them into the new structure.

37. Is it legally possible for an ordinary partnership in our portfolio to acquire a Joint Stock Company (capital company) we are targeting? No, the law does not allow this. Ordinary/personnel companies can only merge with capital companies on the condition that they are the “acquired” (merged) company; meaning the acquisition of capital companies by personnel companies is legally prevented.

38. Can we spin off a Joint Stock Company (JSC) that is our subsidiary and transfer its assets to a newly established ordinary/personnel company? No. While regulating valid spin-offs, the law permits capital companies and cooperatives to be divided only into capital companies and cooperatives. Spinning off into personnel companies is prohibited[cite: 1].

39. For the sake of flexibility, can we convert an existing JSC or LLC into an ordinary/personnel company? No. The Turkish Commercial Code explicitly prohibits the conversion of capital companies and cooperatives into personnel companies. A capital company can only convert into another capital company or a cooperative.

40. What happens to the debts of the target company in mergers by acquisition (Universal Succession)? With the registration of the merger in the trade registry, all assets and liabilities of the acquired company automatically pass to the acquiring company.

41. Does the personal liability of former partners for the past debts of the acquired company end immediately? No, the liabilities of the partners who were liable before the merger continue for three years starting from the announcement of the merger decision.

42. We acquired 100% shares of the target company. What options are there to speed up the merger? If the acquiring company owns all the voting shares of the acquired company, the “Simplified Merger” procedure applies.

43. What is the operational and legal advantage of a simplified merger? The obligation to prepare a merger report is lifted, the requirement to provide an examination right to partners is not applied, and the merger agreement can be registered without being submitted for general assembly approval.

44. We only want to sell a specific power plant (Carve-out). Is a partial spin-off possible? Yes, a “Partial Spin-off” without liquidation can be executed by transferring one or more parts of a company’s assets in exchange for acquiring shares.

45. Can we convert our Limited Liability Company into a Joint Stock Company to reduce legal risks? Yes, via the Change of Legal Form (Conversion) procedure, a transition from LLC to JSC can be made without liquidating the company and while preserving its economic identity.

F. Financial Reporting, Audit, and Dividend Distribution (CFO Focused)

46. According to which standards are the financial statements of our subsidiary in Türkiye prepared? The financial statements of joint stock companies must be prepared in accordance with the Turkish Financial Reporting Standards (TFRS/TMS) published by the Public Oversight, Accounting and Auditing Standards Authority.

47. Who appoints the independent auditor? The auditor is elected by the company’s general assembly before the end of each fiscal period; in group companies, the group auditor is appointed by the general assembly of the parent company.

48. Can the entire profit (Net Profit) be distributed as a dividend to the shareholder fund? No, five percent of the annual profit must be set aside as a “general legal reserve” until it reaches twenty percent of the paid-in capital. Dividend distribution cannot be determined unless legal reserves are set aside.

49. What are the legal consequences if the auditor issues an adverse opinion on the financial statements? If an adverse opinion is given, the board of directors must call the general assembly to a meeting within four business days from the delivery of the opinion letter, and the general assembly elects a new board of directors; meaning the report directly affects the continuity of management.

50. Can dividends or preparation period interest paid in bad faith be reclaimed later? Yes, shareholders who receive dividends or interest, and managers who receive profit shares unjustifiably and in bad faith are obliged to return them, and this right is subject to a five-year statute of limitations.

On a dark navy blue matte background, gold foil Arabic calligraphy 'Mecelle-i Ahkâm-ı Adliye' above a modern abstract geometric scale symbol representing global trade.

Article 20 of the Mecelle: Legal Analysis of the Principle “Damage Shall Be Removed”

by with No Comment Mecelle Series

1. The Maxim, Its Essence, and Islamic Foundations

The Maxim: الضرر يزال Damage shall be removed (Zarar izale olunur)

The Essence of the Maxim: This maxim dictates that a damage that has occurred cannot be left uncompensated legally; to establish justice, that damage must absolutely be removed (eliminated). The grievance of the injured party must be addressed, and the equilibrium that existed before the unlawful situation must be restored.

Islamic Foundations: This principle is derived from the Hadith “There is no harming and no reciprocating harm” (Lâ darara ve lâ dırâr), which forms the bedrock of Islamic tort law. As the great jurist Ali Haydar Efendi points out in his commentary Dürerü’l-Hükkâm (Vol. 1, p. 79), there is a subtle distinction between def-i zarar (preventing damage before it occurs) and izale-i zarar (removing damage that has already occurred). Article 20 focuses specifically on the compensation (daman/tazmin) of damage that has already materialized.

2. Strict Liability, Conditions, and Practical Examples

Ex Lege Effect (Liability Arising Without Explicit Contractual Terms): The most striking legal consequence of this rule is that the obligation to remove damage arises spontaneously from the mandatory nature of the law (ex lege), without needing to be explicitly written in the contract between the parties. Even if commercial parties forget to include an indemnity clause, this maxim fills the contractual silence when a tort or breach occurs.

Strict Liability (Absence of Fault): A critical aspect of this maxim is that it does not strictly require “fault” or “negligence” to trigger compensation. In Islamic law, tort liability is generally based on strict liability (objective responsibility). For instance, Mecelle Article 92 states that a person who directly destroys another’s property is liable for the damage even if it was not intentional. The focus is on the material loss suffered by the victim, not the mental state of the perpetrator.

Practical Examples:

  • Option of Defect (Khiyar al-Ayb): A hidden defect in a purchased good that emerges later constitutes a damage to the buyer. As Ali Haydar Efendi indicates, this damage must be removed. Even without a specific warranty clause, the buyer automatically gains the right to return the good or demand a price reduction proportionate to the defect.
  • Prevention of Interference: Physical damage to one’s property or unjust occupation is immediately halted, and the destruction is compensated, regardless of any prior agreement.

3. Legal Philosophy and the “Certainty” (Yaqin) Barrier

The limits of the “Damage is removed” maxim are drawn by another fundamental philosophical pillar of the Mecelle, Article 4: “Şek ile yakîn zâil olmaz” (Certainty is not dispelled by doubt).

For a damage to be legally removable (compensable), it must have actually occurred, its boundaries must be clear, and it must be certain (yaqin). While the Mecelle clearly states that damage shall be removed, it underlines that this damage must be an actual, certain one. The compensation of future, unrealized damages whose occurrence depends on probability (such as future lost profits) is fundamentally not possible. This principle is one of the pillars of Islamic law, prioritizing certainty and refusing to reward uncertainty (gharar/shakk). The Mecelle refuses to disrupt the certain material status quo for the sake of a doubtful future scenario.

4. Projections in Modern Law, Consequential Losses, and Arbitration

While Western legal systems and Turkish law theoretically allow for the recovery of lost profits (lucrum cessans) and similar items under “positive damages,” these systems, recognizing that this may contradict natural justice, have subjected forward-looking damages to a series of heavy criteria.

The Complexity of Proof and Calculation in Turkish Law: Although the compensation of “lost profit” (as positive damages) is possible in Turkish law, its method and calculation are subject to highly complex procedures.

  • Definition of Positive Damages: The General Assembly of Civil Chambers of the Supreme Court of Appeals (Yargıtay HGK, E. 1990/13-392, K. 17.01.1990) defined positive damages as arising when the creditor waives performance and demands compensation, noting that the contract is not terminated; rather, the right to performance is replaced by the right to compensation for positive damages.
  • Contractual Rescission (Dönme) Situation: In construction contracts, if the contractor fails to perform, the employer may rescind the contract (Turkish Code of Obligations Art. 473). Because this involves rescission, the recoverable damage is “negative damage” (menfi zarar), meaning the employer generally cannot claim positive damages. Conversely, if performance becomes impossible due to a reason attributable to the employer (TCO Art. 485/2), the path is opened for the contractor to claim positive damages upon rescission (as supported by the 15th Civil Chamber, Yargıtay 15. HD, E. 2014/3199, K. 2015/1875).
  • The Calculation Labyrinth: The formula for calculating lost profit is virtually a labyrinth. The Yargıtay (HGK, E. 2010/244, K. 2010/260, T. 12.05.2010) formulated lost profit as: “found by deducting from all the probable income the injured party would have earned had the contract been fulfilled, all the mandatory expense items… the rights saved due to the premature termination, and the total amount of earnings the party made (or deliberately avoided making) from other work during this period.”

US and Anglo-Saxon Law: Expectancy Damages: In US contract law, positive damages are referred to as “expectancy damages,” consequential damages and lost profit is a fundamental component of this compensation. The legal system aims to close the gap between the creditor’s current position and the position they would have been in had the breached contract been fully performed. However, to legitimize this compensation, strict criteria are applied:

  • Proving Lost Profits: Courts require that the profit be calculable with “reasonable certainty”; abstract or speculative estimates are rejected.
  • The Foreseeability Rule (Hadley v. Baxendale): If the breaching party could not have reasonably foreseen this loss of profit at the time the contract was formed, the damage cannot be compensated.
  • Duty to Mitigate: The injured party is obligated to minimize the damage by making reasonable efforts.

The Middle Eastern Context: Saudi Arabia and Iran: The Mecelle’s cautious approach to future damages remains highly relevant in modern Middle Eastern jurisdictions.

  • Saudi Arabia: Historically, consequential losses have been rejected. With the Saudi Civil Transactions Law (CTL) enacted in 2023, the principle of pacta sunt servanda (freedom of contract) has been strengthened. Courts strictly adhere to contractual provisions where parties exclude consequential damages.
  • Iran: In the Iranian legal system, damages must be direct and certain. The recovery of consequential losses and lost profits is highly restrictive, aligning with traditional Islamic legal principles.

Industry Practice: The Relevance of Mecelle’s Provisions: Today, in almost all energy, infrastructure, and EPC contracts globally, parties deliberately insert “Exclusion of Consequential Loss” (ECL) clauses. International corporations voluntarily waive these rights to avoid the protracted litigation and complex calculations caused by the uncertainty of “lost profits.” This proves that the Mecelle’s “only actual and certain damage is removed” approach is de facto applied through contracts in modern mega-projects and is accepted as the most reliable risk allocation method.

5. The Long Road Leading to the Same Conclusion and the Practicality of Liquidated Damages

Western legal systems have attempted to solve the “uncertainty (future profit)” that the Mecelle wholly rejects by navigating a long judicial road, but in most cases, they have reached the exact same conclusion (rejection). After all, how much profit will be made is a forward-looking uncertainty (shakk).

Particularly, the practical counterpart of the “foreseeability” rule put forward in the Hadley v. Baxendale decision in US law remains quite weak. While it might seem logical in one aspect for parties to explicitly consult and draft potential future damages and lost profits from the outset, in practice, it is nearly impossible to transfer this to a contract. It is difficult to draw the boundaries of such a clause that could be added as a “guarantee of mistrust,” and it is hard to find a counterparty who will accept these conditions; even if found, such a speculative risk would need to be insured, and its massive costs would ultimately be reflected back to the employer. Ultimately, in the event of a dispute, claiming compensation based on this clause will often not be directly possible and will require a long, complex trial filled with expert reports.

Therefore, instead of trying to design and impose hypothetical lost profits in a contract; setting a clear and calculable liquidated damages clause to achieve the goal of running the contract smoothly within the specified time is seen as a much fairer, more practical, and more certain solution in commercial life.

References

Freshfields Bruckhaus Deringer, The recovery of damages under Saudi law: understanding the basics.

Ali Haydar Efendi, Dürerü’l-Hükkâm Şerhu Mecelleti’l-Ahkâm, Vol 1.

Yargıtay HGK., E. 2010/244 K. 2010/260 T. 12.05.2010.

Yargıtay HGK., E. 1990/13-392 K. 17.01.1990.

Yargıtay 15. HD., E. 2014/3199 K. 2015/1875.

Turkish Code of Obligations (TCO), Articles 473 and 485/2.

CMS Expert Guide to Consequential Loss Clauses in the Energy Sector: Iran.

CMS Expert Guide to Consequential Loss Clauses in the Energy Sector: Saudi Arabia.

DLA Piper, Overview of the new Saudi Arabia Civil Transactions Law (August 2023).

Hadley & Anor – Baxendale & Ors [1854] EWHC J70

corporate executives shaking hands over international legal documents with the Istanbul skyline in the background.

Debt Recovery in Türkiye: Step-by-Step Procedure and Case Studies

by with No Comment Debt Collection

In cross-border trade, the legal process is conducted transparently, swiftly, and in a results-oriented manner to ensure the recovery of rightful receivables. The professional roadmap and past successes in collection operations against debtors in Türkiye are detailed below.

Step-by-Step Procedure for International Debt Recovery

1. Comprehensive Document Request and Review The process begins by requesting all supporting documents regarding the origin and nature of the debt (invoices, contracts, correspondence, waybills, etc.). These submitted documents are meticulously examined by expert teams to confirm the strength of the legal foundation.

2. Financial Analysis of the Debtor Company Before taking legal steps, in-depth research is conducted on the debtor company or individual in Türkiye. The most realistic picture is presented by analyzing the debtor’s asset status, commercial registry, and whether the receivable has actual collection viability.

3. Creditor-Friendly Contract and Power of Attorney Stage To avoid putting extra financial stress on a company already suffering from uncollected debts, a fair and non-coercive service agreement is prepared for both parties. Upon reaching an agreement, a standard power of attorney is obtained to conduct official transactions in Türkiye, formally initiating the process.

4. Debt Recovery via Communication (Amicable Settlement Stage) Before resorting directly to legal action, priority is given to a culture of conciliation. The debtor is contacted to notify them of the existence of the debt and its legal consequences; the goal is to carry out the collection swiftly and cost-effectively, without the need for litigation or enforcement proceedings.

5. Initiation of the Legal Process via Enforcement Proceeding Without Judgment If communication and reconciliation efforts fail, or if the situation requires urgency, official collection procedures are initiated directly before the Execution Offices of the Republic of Türkiye via an enforcement proceeding without judgment (ilamsız icra takibi). According to Turkish Execution and Bankruptcy Law procedures, any person or institution claiming a receivable can initiate a proceeding directly at the execution office with supporting documents (invoices, contracts, email approvals, etc.), without waiting for lengthy court processes or requiring a court decision (judgment). Following this application, a legal “Payment Order” is sent to the debtor by the execution office.

6. Notification of the Payment Order and Execution of Attachment Procedures After the payment order sent by the execution office is officially notified to the debtor, a legal period for objection and payment (typically 7 days) begins. If the debtor does not make a valid objection to the debt and fails to make the payment within this legal period, the enforcement proceeding becomes final. With the finalization of the proceeding, the right of attachment, granted to the creditor by law, is immediately activated. Actual and electronic attachments (liens/garnishments) are placed on identified bank accounts, movable/immovable properties, vehicles, and the debtor’s rights (receivables) held by third parties, thereby executing the actual collection.

7. Management of Execution Costs Due to legal procedures in Türkiye, the statutory fees and expenses payable to the execution offices are initially covered by the creditor. However, since these payments hold the status of legal expenses, they are added to the case file account upon successful collection and are ultimately recovered from the debtor and refunded to the creditor.

8. Uninterrupted and Transparent Communication Being across borders does not mean being disconnected from the process. Every development, from the document review stage to the attachment procedures and final collection, is regularly reported; continuous contact is maintained from the beginning to the end of the process.

9. Nationwide Enforcement Across Türkiye Without Geographical Boundaries Thanks to the advanced digital judicial infrastructure (UYAP), physical distance barriers are entirely eliminated regardless of which city or region of Türkiye the debtor is located in. There is no need to travel to or be physically present in the debtor’s city to initiate enforcement proceedings. Official proceedings and attachment orders are transmitted instantly to anywhere in Türkiye digitally through authorized execution offices, ensuring the process is executed swiftly and seamlessly without being hindered by geographical boundaries.

Sample Case Studies: How Are Receivables Collected in Türkiye?

It is crucial to see how legal processes conclude in practice to understand the transparency of the procedure. Here are examples of international debt collections successfully finalized across various sectors:

  • Digital Marketing and Advertising (Breach of Service Contract): A European-based digital advertising agency signed a contract to manage the global market advertisements of an e-commerce company in Türkiye. Although advertising campaigns had begun and budgets were spent, the Turkish company avoided paying the service fee. After confirming the debtor’s bank accounts were active, an enforcement proceeding without judgment was initiated. Upon the notification of the execution order, realizing that its commercial reputation would be damaged, the debtor paid the principal amount in a single lump sum, along with all execution costs.
  • Industry and Manufacturing (Unpaid Raw Material Export): An Asian raw material supplier exported a large volume of fabric raw materials to a textile manufacturer in Türkiye. The goods were used, but no payment was made despite the invoice due date passing. After preliminary negotiations failed, an enforcement proceeding was initiated. Due to the debtor’s failure to object to the payment order, an attachment was applied to the machinery in the production facility and the company’s bank accounts; the debtor was forced to pay the debt along with statutory interest and costs.
  • E-Commerce and Supply Chain (Unpaid Dropshipping Fee): A Far East-based supplier provided thousands of dollars worth of products to an e-commerce seller in Türkiye to be shipped directly to overseas customers. Although the products reached the end consumers and the Turkish seller earned revenue from the platform, the supplier’s invoices remained unpaid. Enforcement proceedings were initiated using sales data on the platform and cargo delivery records. Faced with the prospect of their local bank accounts and digital wallets being blocked following the notification of the payment order, the debtor settled the entire balance at once.
  • Information Technology (Software Development Fee): A North American software company delivered a custom CRM software for a holding company in Türkiye, but the holding delayed the final 40% payment for months. Before initiating enforcement proceedings, the holding’s legal department was contacted. The potentially high court costs were clearly explained, and the receivable was collected through a settlement without the need to file a lawsuit.
  • Health Tourism (Intermediary Agency Payment Breach): A UK-based health tourism agency directed patients to an aesthetics clinic in Türkiye, and the medical services were successfully completed. However, the clinic did not pay the commission fees stipulated in the contract to the overseas agency. The debt amount was clarified by matching the invoices of the payments received by the clinic from the patients, and enforcement proceedings were initiated. To prevent an attachment on the clinic’s bank accounts and avoid jeopardizing its health tourism authorization certificate, the debt was collected in full before the objection period expired.
  • International Logistics and Transportation (Freight Receivable): A Middle East-based logistics firm transported the goods of a Turkish exporter, but the freight invoice was not paid. As the debtor company was identified as an active exporter, enforcement proceedings were initiated, creating the risk of an attachment annotation being placed on their customs transactions. Fearing the suspension of its export operations, the debtor made the full payment before the objection period ended.
  • Consulting and Engineering (Project Design Fee): A UK architectural firm delivered the designs for a luxury residential project, but the Turkish contractor refused to pay the fee. Although the debtor objected to the payment order sent after the initiation of enforcement proceedings, a lawsuit for the annulment of the objection was filed with the delivery protocols; the court ruled in favor of the creditor, and the receivable was collected along with a 20% execution denial compensation (penalty).
  • International Education Consulting (Agency Fees): A language school in Canada enrolled numerous students through an education consulting agency in Türkiye, but the agency did not transfer the collected tuition fees to the school. Legal evidence was gathered via subcontracts and payment receipts, and an enforcement proceeding without judgment was initiated. To prevent the suspension of the company’s operations, the debt was transferred to the school’s accounts along with statutory legal costs.
  • Wholesale Trade (Collection Issue After Partial Payment): A European wholesaler sent cosmetic products to a retail chain, but the payment for the last shipment was not made. The fact that partial payments had been made strengthened the legal ground. Upon being notified that an attachment would be applied to the stock in the stores and POS devices, the company paid the entire debt along with late interest.
  • Gaming and Software Industry (Independent Developer Receivable): An independent game developer living in Eastern Europe delivered 3D models to a mobile game studio in Türkiye but could not receive payment. It was determined that a direct attachment could be sent to the debtor studio’s mobile app revenues, and this risk was communicated to the company management. Unwilling to risk an account block, the studio paid the entire debt without the need for a lawsuit.
  • Machinery and Industry (Unfounded Objection): A Germany-based machinery manufacturer installed an industrial machine in a factory in Türkiye, but the final installment was not paid under the pretext of a “calibration issue.” Enforcement proceedings were initiated with a “Flawless Delivery Protocol,” and following the notification of the payment order and the warning of an attachment on the production lines, the debtor company abandoned its unfounded objections and deposited the final installment along with all costs.
  • Tourism and Hospitality (Unpaid Agency Commissions): A travel agency in the Gulf region sent tourists to a luxury hotel in Türkiye but could not receive its commission fee at the end of the season. Prior to the new season, enforcement proceedings were initiated to place an attachment on the hotel’s bank accounts and tour operator receivables. Unable to risk a cash flow bottleneck, the hotel management was forced to pay the debt with statutory interest.

FAQ (Frequently Asked Questions)

Q: Do I need to travel to Türkiye or be physically present for the debt recovery process?

A:No, there is no need to be in Türkiye. Everything can be executed seamlessly and entirely remotely through a standard power of attorney. Thanks to the advanced digital judicial system (UYAP), execution and attachment procedures against a debtor located anywhere in Türkiye are initiated and concluded electronically.

Q: Is a court judgment required to start enforcement proceedings?

A: No. Under Turkish Execution and Bankruptcy Law, an “enforcement proceeding without judgment” can be initiated directly using supporting documents that prove the debt—such as invoices, contracts, email correspondence, and delivery records (CMR, etc.)—without needing a prior court decision.

Q: Who is responsible for the legal costs paid to the execution office?

A: Initially, statutory fees and expenses are covered by the creditor to open the execution file. However, upon successful collection, all these legal costs, along with statutory interest, are entirely recovered from the debtor and refunded to the creditor.

Q: What happens if the debtor makes an unfounded objection to the payment order?

A: If the debtor halts the enforcement proceeding with a baseless objection, an “annulment of objection” lawsuit is filed in the competent courts. If the objection is proven to be unjustified, the debtor is penalized and ordered to pay a minimum 20% execution denial compensation in addition to the principal debt.

Q: What if we don’t know exactly which city the debtor is located in within Türkiye?

A: Through official commercial registry records, MERSIS (Central Registration System), and tax ID numbers, the debtor’s legal notification addresses, active bank accounts, assets, and operating regions are identified via authorized execution offices. All procedures are centrally managed regardless of geographical boundaries.

Q: How long does the debt recovery process typically take?

A: The timeframe varies depending on the debtor’s financial status and whether they exercise their right to legal objection. While amicable settlements or undisputed enforcement proceedings (driven by the pressure of attachment) can yield results within a month, the process may be extended according to the court’s schedule if a lawsuit is required due to an unfounded objection.

On a dark navy blue matte background, gold foil Arabic calligraphy 'Mecelle-i Ahkâm-ı Adliye' above a modern abstract geometric scale symbol representing global trade.

Article 5 of the Mecelle: Legal Analysis of the Principle “The Fundamental Principle is That a Thing Shall Remain as It Was”

by with No Comment Mecelle Series

The Maxim, Its Essence, and Islamic Foundations

The Maxim: الأصل بقاء ما كان على ما كان The fundamental principle is that a thing shall remain as it was (Bir şeyin bulunduğu hâl üzere kalması asıldır)

The Essence of the Maxim:

Unless there is definitive evidence to the contrary regarding a right, ownership, or any legal situation, its current state is legally presumed to continue. The burden of proof falls on the party alleging that the current situation has changed. This principle is a fundamental procedural rule that prevents the established order from being disrupted by unfounded claims.

Islamic Foundations: In Islamic legal methodology, this principle is formulated through the doctrine of “Istishab” (the presumption of continuity). Meaning “association” or “seeking a link” lexically, istishab is used as a term to mean the continuation of the existence of something that previously existed, and the continued non-existence of something that did not exist. In a general sense, istishab is defined as the continued validity of a legal ruling that existed in the past, unless there is legal evidence to the contrary.

Regarded as the last of the Sharia evidence, istishab is resorted to only when no other evidence is found. Despite being viewed as a weak proof, istishab provides jurists with latitude in doubtful situations and helps them resolve matters quickly and easily. As Dr. Ahmet Akman points out, istishab serves a protective function for the indication of the previous evidence regarding the existing ruling. In this sense, among the Hanafis, istishab has an averting (protective) nature rather than a proving one, and it does not make a positive contribution to the acquisition of new rights.

2. Causes, Limits, Conditions, and Practical Examples

Istishab is not an absolute material reality, but a procedural shield valid until proven otherwise. As stated in Osman Şahin’s study, five basic principles have been derived from the istishab rule.

Limits and Conditions:

  • Requirement of Certainty (Yaqin): The principle that “certainty is not dispelled by doubt” is directly related to istishab. It means that the absence of a thing whose existence is known with certainty cannot be decreed due to subsequent doubt and hesitation unless there is contrary evidence.
  • Limit of Defense (Averting): While istishab is accepted as a proof for leaving what exists as it is, it is not accepted as a proof to establish something or a right that does not exist.
  • Collapse by Contrary Evidence: Istishab is resorted to only as long as there is no other contrary evidence.

Practical Examples:

  • The Missing Person (Mafqud): Regarding the rights belonging to a missing person whose status of being alive or dead is unknown, the rulings applied to the living are applied unless there is evidence of their death, and their assets are not distributed among the heirs. However, the missing person cannot benefit from istishab in acquiring a new right (proving), such as inheriting from someone else.
  • Absence is the Original State for Accidental Attributes: If a customer who buys an animal on the condition that it is free of defects later claims that the animal is sick and the seller denies this, the burden of proof is on the customer because the illness is an accidental attribute.

3. Legal Philosophy and Universal Logic

The philosophical core of this maxim is the concept of legal certainty. If there were no presumption of protecting the status quo, every right in commercial and social life would constantly be shaken by baseless claims. Under the principle of “freedom from liability is the original state,” which is derived from the rule, it is fundamental that people are born free of liability and debt. It is mandatory for the claimant to present evidence for a person to be indebted or liable. Through this mechanism, the law protects the system against unfounded claims.

4. Projections in Civil Law

The principles derived from istishab constitute the cornerstones of modern law.

  • Presumption of Possession: A person who physically holds a movable property (possessor) is presumed to be its owner until proven otherwise. It is fundamental that the actual state of the property continues.
  • Freedom of Contract: The rule that “the original state in things is permissibility” corresponds to the principle in modern law that everything not prohibited is free. Unless there is evidence that it is legally corrupt or void, the validity of every transaction or contract made is decreed.

5. International Trade and Judicial Applications: The Debate on Arbitration and Interim Measures

In cross-border trade and international arbitration, it is essential to protect existing ownership or possession under the rule that “the fundamental principle is that a thing shall remain as it was.” However, decisions on interim (provisional) measures are a judicial intervention that constitutes an exception to this istishab principle. An interim measure obtained by a claimant—who asserts that a right belongs to them but the property is under the counterparty’s control—before fully proving their claim can prevent the possessor from benefiting from the current situation (istishab). The limits of this exceptional intervention and how the damages will be compensated are a matter of debate in arbitration rules.

Security and Discretion within the Framework of the ICC and International Arbitration Act (MTK):

  • According to Article 6/II of the International Arbitration Act (MTK) of Türkiye, the arbitrator or arbitral tribunal may make the issuance of an interim injunction or interim attachment conditional upon the provision of appropriate security.
  • Similarly, Article 28/I of the ICC Arbitration Rules stipulates that the arbitral tribunal may make any interim or conservatory measure subject to appropriate security being furnished by the requesting party.
  • However, in the ICC Rules, no other conditions (such as rightfulness, urgency, etc.) are mentioned for the arbitral tribunal to grant interim legal protection measures other than security. The absence of any regulation in this regard has been a conscious choice so that the arbitral tribunal can decide according to each specific case. When determining these conditions, ICC arbitral tribunals generally take precedent decisions given in previous proceedings (urgency, risk of significant harm, prima facie case, etc.) as an example.
  • Criticism: It is debatable whether claims of being right at first glance (prima facie) and irreparable harm are sufficient to change a main principle like “the continuation of the existing state” (istishab). Leaving these conditions solely to precedent decisions may undermine the principle of legal certainty. Therefore, it would be beneficial to explicitly state the objective conditions required for granting interim measures in the text of the ICC Arbitration Rules.

ICSID Rules and the Lack of Security:

  • According to Article 47 of the ICSID Arbitration Rules dated July 1, 2022, the arbitral tribunal may recommend provisional measures to protect the rights of the parties, preserve the status quo until the dispute is resolved, or restore it.
  • However, the term “security” is not even included in the relevant ICSID rules (Article 47).
  • Criticism: If an interim measure turns out to be unjustified, the damage suffered by the party whose status quo is disrupted and whose commercial activity is wrongfully halted can reach massive proportions. While the istishab principle (protecting the existing right) is suspended by the interim measure, the failure to secure damages is a deficiency. It is considered that the lack of explicit provision for security practice in the ICSID rules constitutes a contradiction to the istishab principle used to protect the state of possessing an existing right.

Recommendation:

Security is a highly critical insurance for compensating unjustified damages that may arise as a result of interim legal protection measures. We believe that arbitration rules (such as ICC, ICSID, etc.) should set the necessary conditions for granting interim measures—which change the status quo by breaking the istishab presumption—so clearly that it leaves no room for interpretation, including making a certain amount of security mandatory.

References

[1] Akman, Ahmet, “İstishab (Serahsî Özelinde Usûl-Füru’ Karşılaştırması)”, İslam Hukuku Araştırmaları Dergisi, issue 32, 2018, pp. 105-124.

[2] Şahin, Osman, “İslâm Hukuk Metodolojisinde İstishab”, O.M.Ü. İlahiyat Fakültesi, pp. 489-516.

[3] Sarıgül Ata, Bersun, “ICC ve ICSID Tahkim Kuralları Uyarınca Geçici ve Koruyucu Tedbirler”, BÜHFD, Vol. 10, Issue 2, July 2024, pp. 397-418.

On a dark navy blue matte background, gold foil Arabic calligraphy 'Mecelle-i Ahkâm-ı Adliye' above a modern abstract geometric scale symbol representing global trade.

Article 17 of the Mecelle: Legal Analysis of the Principle “Hardship Begets Facility”

by with No Comment Mecelle Series

The Maxim, Its Essence, and Islamic Foundations

The Maxim: المشقة تجلب التيسير Hardship begets facility (Meşakkat teysîri celb ider)

The Essence of the Maxim: The difficulty and hardship (su’ubat) encountered in a legal matter pave the way for its facilitation (tashil) and alleviation (tahwin). As the great legal scholar Ali Haydar Efendi profoundly expounded in his masterpiece Dürerü’l-Hükkâm, it is essential for the law to flex and provide latitude (wus’ah) during times of distress. This principle ensures that the law transcends being a rigid and purely formalistic set of rules, enabling it to respond to commercial and social needs.

Islamic Foundations: This principle is one of the fundamental universal maxims of Islamic legal methodology (Usul al-Fiqh), known as Al-Mashaqqah tajlib al-taysir. It derives its legal basis from the text (nass) “Allah intends for you ease and does not intend for you hardship” (Surah Al-Baqarah: 185). In fiqh terminology, this situation is embodied in the institution of “Ruhsah” (dispensation/exemption). As accurately defined by Ali Haydar Efendi, a ruhsah is “that which is secondarily legislated upon an excuse”. Although the law establishes strict rules (azimah) as a general principle, in cases where the application of these rules becomes impossible or excessively burdensome, the fiqh dispensations (ruhsahs) underscored by Ali Haydar Efendi come into play.

Causes, Limits, Conditions, and Practical Examples

The “hardship” that requires the law to be flexible is not the subjective difficulty that contracting parties fall into as a result of their own faults, lack of foresight, or ordinary commercial risks. This boundary is strictly drawn in Islamic law by the doctrine of “Umum al-Balwa” (general and widespread affliction) and substantiated with practical examples (furu’) by Ali Haydar Efendi.

Limits and Conditions:

  • Social Impact (Generality): The hardship must not affect just one individual, but must be a macro-level crisis (such as war, famine, or economic depression) that affects the market or society in general.
  • Inevitability (Necessity): It is required that avoiding, taking precautions against, or being protected from the emerging crisis is practically or commercially impossible.
  • No Conflict with Mandatory Rules: The facility to be provided must not take on a nature that completely abolishes the fundamental mandatory rules (jus cogens) of the law.

Practical Examples from the Mecelle: Ali Haydar Efendi analyzes the sub-branches (furu’) of Article 17 through the following concrete commercial examples:

  • Lapse of the Option of Inspection (Khiyar al-Ru’yah): Seeing the outside of a pile of wheat or looking at only a portion of a fabric that is uniform inside and out is sufficient to purchase that good. The buyer’s right to rescind the contract on the grounds of not seeing every single piece lapses. Since examining the entire batch is a hardship that would bring commercial life to a halt, according to Ali Haydar Efendi’s analysis, such a reasonable inspection is deemed legally sufficient, thereby providing facility (taysir).
  • Option of Condition (Khiyar al-Shart) and Option of Payment (Khiyar al-Naqd): The condition that the contract can be terminated if payment is not made within a certain period (khiyar al-naqd), and the granting of the right of withdrawal within a certain period (khiyar al-shart), are exceptional flexibilities created to prevent payment difficulties and commercial grievances that the parties might face. Ali Haydar Efendi grounds the legitimacy of these exceptions directly on Article 17.

Legal Philosophy and Universal Logic (The Philosophical Core)

The primary objective of the law is to establish order; however, this order must not turn into an obstacle that brings social and commercial life to a standstill. The principle that hardship begets facility forms the foundation of legal pragmatism. If the literal application of a strict rule creates a bottleneck (hardship) to a degree that destroys the inherent economic purpose of the contract or transaction, the system must produce an exception from within itself. This philosophy expresses the law’s preference to flex rather than break, in accordance with the principle of sustainability.

Projections in Modern Law (Modern Legal Equivalents)

This maxim continues to exist in contemporary legal systems as principles of the law of obligations and consumer law.

Reflections in Turkish Law:

  • Hardship / Excessive Difficulty of Performance (TCO Article 138): If an extraordinary event, which was unforeseeable by the parties at the time the contract was made, arises and does not result from the debtor’s fault, and demanding performance has become so burdensome as to violate the rules of good faith, the debtor may request the adaptation of the contract. This article is the modern codification of the Umum al-Balwa concept.
  • Mitigation of the Scope of Liability (TCO Article 114): The rule that the judge evaluates liability more leniently if the transaction provides no benefit to the debtor (e.g., courtesy transport, gratuitous mandate) is based on the logic of providing flexibility (taysir) in hardship.

Civil Law:

  • The principle of Clausula Rebus Sic Stantibus (validity as long as circumstances remain the same) and the theory of Imprévision (unforeseeability) in French law grant the judge the authority to adapt the contract to prevent its ruin in cases of excessive difficulty of performance.

Common Law:

  • The doctrines of Frustration of Purpose and Commercial Impracticability provide flexibility to the parties in the event that performance becomes objectively and excessively burdensome.

Contracts for the International Sale of Goods (CISG):

  • In the context of the Duty to Examine the Goods, the buyer is expected to examine the goods within as short a period as is practicable in the circumstances. Similar to the option of inspection (khiyar al-ru’yah) example in the Mecelle, microscopic examinations that would stall commercial life are not demanded.

International Trade and Judicial Applications

Risk allocation, force majeure, and hardship clauses in international trade are the areas where the philosophy of relieving hardship is most intensely applied. Arbitral tribunals separate the concept of hardship from subjective damages and evaluate it within a narrow and objective framework (by the standards of Umum al-Balwa).

Independence of the Arbitration Agreement and Claims of Impossibility:

  • Impossibility and frustration are put forward as a legal basis in objections directed at the substantive validity of arbitration agreements.
  • However, courts and arbitral tribunals, pursuant to the “separability presumption,” accept that the arbitration clause maintains its validity even in situations where the foundation of the commercial contract has collapsed or its performance has become impossible.
  • Supporting this rule, in the Unionmutual Stock Life Ins. Co. of Am. v. Beneficial Life Ins. Co. decision, the court ruled that the defendant’s attempt to rescind the entire contract based on frustration of purpose would not eliminate the arbitration clause. The Commonwealth Edison Co. v. Gulf Oil Corp. decision also confirms this situation.
  • In the context of arbitration procedure, a genuine state of impossibility or frustration is strictly limited to objective disruptions beyond the parties’ control, such as the death of an arbitrator specifically named in the arbitration agreement or the cessation of the selected arbitral institution’s existence.

Force Majeure and Hardship Practice in International Arbitration (ICC) Awards: When examining the arbitral awards rendered within the International Chamber of Commerce (ICC), it is observed that arbitral tribunals tie hardship to objective, societal, and inevitability parameters.

  • While evaluating force majeure, arbitral tribunals strictly require the criteria of the event’s unforeseeability (imprévisibilité), irresistibility (irrésistibilité), and insurmountability (insurmontabilité).
  • Valid macro-level hardship (force majeure) scenarios accepted include armed conflicts (conflit armé), natural disasters (catastrophes naturelles), and state interventions (fait du prince).
  • Within the scope of the frustration of the contract, macro-level crises (Umum al-Balwa) affecting the entire market, such as the hostage-taking of site personnel, extraordinary increases in steel prices, and foreign exchange crises (contrôle des changes), have been taken into consideration by arbitral tribunals.
  • In hardship applications adapting the contract to changing circumstances, the UNIDROIT principles are taken as the basic reference, aiming to keep the contract alive (taysir). In disputes involving commercial contracts where companies based in Türkiye are parties, arbitral tribunals also resort to softening strict performance rules with such precedent ICC criteria.

References

[1] Ali Haydar Efendi, Dürerü’l-Hükkâm Şerhu Mecelleti’l-Ahkâm (Commentary on the Mecelle). [2] Gary B. Born, International Arbitration: Law and Practice, Wolters Kluwer Law & Business, 2012. [3] Jean-Jacques Arnaldez, Yves Derains, Dominique Hascher, Collection of ICC Arbitral Awards 2008-2011, Wolters Kluwer / ICC Publication, 2013.

MAYKANAT global standards - Legal architecture for maritime commerce, energy transition, and complex arbitration.

Hidden Defects and the Status Quo: A Timeless Legal Philosophy for Cross-Border Trade

by with No Comment Mecelle Series

In the huge web of global supply chains, certainty is one of the most valuable currency. When thousands of solar panels, chips, phones, equipment are shipped from Asia to Europe or when highly calibrated automotive spare parts cross multiple borders, the presumption of their condition at any given moment dictates the allocation of millions of dollars in liability.

Behind the modern framework of cross-border trade lies a timeless legal philosophy regarding the “status quo” and the burden of proof. This philosophy, deeply rooted in the 19th-century Ottoman civil code, the Mecelle, perfectly mirrors the fundamental principles of modern English, Swiss, and Chinese commercial law, and is continuously validated by international arbitral tribunals today.

The Philosophical Core: Soundness as the Ultimate Presumption

To understand the architecture of modern commercial risk, one must look at two foundational maxims from the Mecelle:

Article 9: “Non-existence is the fundamental presumption for accidental attributes.” (Sıfat-ı ârızada asıl olan ademdir.) Article 10: “What is established at a certain time is presumed to continue unless there is evidence to the contrary.” (Bir zamanda sabit olan şeyin, hilafına delil olmadıkça bekasıyla hükmolunur.)

In legal philosophy, “soundness” or “functionality” is the essential attribute of a commercial good. A solar panel is inherently meant to generate electricity; a machine is meant to operate. Therefore, a defect—whether a micro-crack in a photovoltaic cell or a metallurgical flaw in an engine spare part—is an accidental attribute.

Because the law presumes the absence of accidental attributes, the burden of proof inevitably falls on the party claiming the defect. If a buyer accepts delivery of goods without immediate objection, the “status quo” of soundness is legally established.

Modern Equivalents in Global Jurisdictions

This preservation of the status quo is not merely a historical artifact; it is the beating heart of contemporary international law. When a manufacturing hub in Türkiye exports industrial equipment globally, the contracts are governed by diverse legal regimes that reflect this exact philosophy:

  • English Law (Sale of Goods Act 1979): Under English common law, the burden remains strictly on the buyer to prove that a hidden defect existed at the time of delivery. The landmark House of Lords decision in Lambert v Lewis [1982] perfectly illustrates this. The court ruled that while an implied warranty of fitness continues for a reasonable time, the buyer must conclusively prove that the failure (in this case, a defective towing coupling) was due to an inherent flaw present at delivery, rather than subsequent wear, tear, or improper maintenance.
  • Swiss Law (Code of Obligations – OR): Swiss law imposes a strict duty on the buyer to inspect the goods and notify the seller immediately (Art. 201 OR). If the defect is hidden and manifests later, the presumption of continuity works against the buyer unless they can definitively trace the defect back to the manufacturer’s domain.
  • Chinese Law (PRC Civil Code): China’s Civil Code (Article 621) explicitly limits the time frames for claiming hidden defects. If a buyer of electronic components fails to notify the seller of a defect within the agreed inspection period, the law establishes an irrebuttable presumption that the goods were sound and conforming.

The Battlefield of International Arbitration (CISG Precedents)

In international arbitration governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG), the Mecelle’s 10th Article comes to life through CISG Article 36(1). This article states that the seller is liable for any lack of conformity existing at the time when the risk passes to the buyer, even if the defect becomes apparent later.

International tribunals demand rigorous proof from the buyer to break the presumption of soundness. This is heavily supported by established case law:

  • The Vigevano Precedent (Tribunale di Vigevano, Italy, 12 July 2000): In this landmark CISG ruling regarding defective vulcanized rubber used in manufacturing, the court explicitly analyzed the burden of proof. The tribunal ruled that under the CISG framework, it is a general principle of international law that the party relying on a non-conformity (the buyer) bears the absolute burden of proving that the defect existed exactly at the moment the risk transferred.
  • CISG Advisory Council Opinion No. 11: To unify global arbitration standards, the CISG Advisory Council confirmed that the burden of proving a hidden defect lies squarely with the buyer. If a buyer installs imported solar panels and they suffer a 30% drop in output two years later, the buyer cannot rely on circumstantial evidence. They must utilize forensic engineering to prove the degradation was an inherent manufacturing flaw, ruling out accidental attributes arising after delivery (e.g., micro-cracks from turbulent ocean transit, improper grid connection, or weather anomalies).
  • ICC Arbitration Practices on Heavy Machinery: In numerous unrecorded but procedurally identical ICC arbitrations concerning industrial machinery, tribunals consistently reject buyer claims if they fail to bridge the temporal gap. If a machine works flawlessly during the initial commissioning but fails months later, the presumption of continuity (Mecelle Art. 10) dictates that the machine was sound at delivery. The buyer must overcome this by proving a hidden metallurgical or software defect existed prior to shipment.

Strategic Takeaways for Cross-Border Commerce

Executives, general counsel, and global investors operating in or through Türkiye, understanding this philosophical baseline is critical. The allocation of the burden of proof is not just a procedural rule; it is a vital commercial strategy.

When architecting cross-border agreements, companies must:

  1. Define the Defect: Clearly articulate in the contract what constitutes a “manufacturing defect” versus “normal degradation” or “wear and tear.”
  2. Establish Immediate Baselines: Implement rigorous, documented inspection protocols (such as independent SGS testing) at the exact moment risk transfers to lock in the “status quo” of soundness.
  3. Draft Precise Warranties: Create explicit warranty clauses that address the timeline, burden of proof, and necessary forensic methodology for claiming hidden defects.

The party that controls the narrative of the status quo controls the outcome of the dispute. From the ancient caravans of the Silk Road to the modern mega-ships transporting renewable energy infrastructure, the fundamental rule remains unchanged: The law protects the established continuity, and those who claim the contrary must bear the weight of absolute proof.

MAYKANAT global standards - Legal architecture for maritime commerce, energy transition, and complex arbitration.

Complete Guide to Living and Investing in Türkiye

by with No Comment Uncategorized

CONTENTS

  1. INTRODUCTION
  2. OVERVIEW
  3. GEOGRAPHY / CLIMATE
  4. HISTORY OF THE COUNTRY
  5. CULTURE
  6. LANGUAGE
  7. LIVING EXPENSES
  8. DRIVING
  9. BANKS
  10. WORKING DAYS AND HOURS
  11. PUBLIC AND RELIGIOUS HOLIDAYS
  12. POSTAL/COURIER SERVICES
  13. TRANSPORTATION
  14. COMMUNICATION
  15. HEALTH SYSTEM
  16. PHARMACEUTICAL SERVICES
  17. HEALTH INSTITUTIONS
  18. SOCIAL SECURITY SYSTEM
  19. INSURANCE
  20. BUSINESS SETUP PROCESS
  21. TAX SYSTEM
  22. CUSTOMS GUIDE
  23. LEGAL PROCEEDINGS
  24. IMPORTANT PAGES AND APPS
  25. IMPORTANT NUMBERS

INTRODUCTION

Türkiye continues to attract the attention of the world with its natural riches. Every year millions of tourists come to the country for reasons such as holidays, health visits. Again, thousands of foreign companies are established every year, thousands of foreign employees start their business life in Türkiye, thousands of people prefer Türkiye to spend the rest of their lives in Türkiye. We have prepared this post for those who want to live in Türkiye, we have tried to be a guide that will be useful for everyone who comes to Türkiye for short or long term. We tried to bring together what is daily life like in Türkiye, what you need to know in the legal and tax system, how the health system works, how to open a bank account, what are the working and rest days and many more useful information.

Of course, these are short information, you need to come and see and live to get more detailed information. Our door is always open to you, we are happy to answer any questions you may have.

OVERVIEW

Türkiye is a bridging country between Asia and Europe. Türkiye, where four seasons can be experienced at the same time, is a place with very rich historical, cultural and economic resources. The history of the country dates back to the first years when civilization began. The cultural accumulation brought by this historical past has made Türkiye a center of attraction. Istanbul, which was the capital of the Eastern Roman and Ottoman Empires, and cities such as Ankara, Izmir, Antalya, Bursa, Konya, Sivas, Gaziantep and Diyarbakır are almost a cultural feast.

Türkiye closely follows the cultural, commercial and technological developments in the world. In these respects, foreigners’ access to life and services in the country is becoming increasingly easy. Foreigners will be able to get used to Türkiye in a short time in many respects. However, there are also challenging factors for foreigners such as foreign language speaking rate, legal, economic and cultural differences. Now let’s consider in detail what foreigners coming to Türkiye need to know.

GEOGRAPHY / CLIMATE

Türkiye is positioned in an area that offers both climate diversity and geopolitical importance. The total area of Türkiye is calculated as 783,562 square km. Most of Türkiye’s territory is located in the geography called Anatolia, which is the last western extension of the Asian continent. Its land neighbors are, from south to west, Syria, Iraq, Iran, Armenia, Georgia, Bulgaria and Greece. Since Türkiye is surrounded by seas on 3 sides, it can also be defined as a peninsula. The Black Sea in the north, the Aegean Sea in the West and the Mediterranean Sea in the south are the seas that are the coast of Türkiye.

All of Türkiye experiences spring, summer, autumn and winter climates, but the prominence of the climate may vary according to the regions. The northern coast is generally rainy; while the central and eastern parts are dry in summer and cold in winter; The southern and western parts are warm in summer and mild in winter. One of Türkiye’s major cities, Istanbul is located in the northwest and has a generally mild, humid climate. The capital Ankara is located in the central part and has a generally cool climate. Izmir is located in the west of the country and has a mild climate.

HISTORY OF THE COUNTRY

Türkiye is a country whose geographical history and political history go back a long time. Traces of this history can be found throughout the country. The first settlements in Anatolia date back to the Old Stone Age. The archaeological site called Göbeklitepe, which is estimated to date back to around 9,600 BC, is known as the oldest man-made. Çayönü is an ancient settlement estimated to have been founded between 8200 and 6000 BC. Çatalhöyük in Central Anatolia, which is thought to date back to 7500 BC or 5700 BC, dates from the Polished Stone Age and Copper Age periods. The territory of Türkiye has been home to many civilizations and empires, large and small, such as the Hittites, Urartians, Phrygians, Lydians, Assyrians, Ancient Greek sites, Armenians, Persians, Byzantines, Seljuks, Ottomans.

A new era began with the Republican regime declared on October 29, 1923, and the Republican regime wanted to carry out the political, economic, religious and cultural accumulation it had inherited from the Ottoman Empire with a new and modern style of administration. Mustafa Kemal Atatürk, the founder of the new regime and the country, implemented many arrangements between 1923 and 1938 as a westward orientation. The country, where political and economic fluctuations were intensely experienced afterwards, experienced great economic acceleration especially after the 1990s with the goals of full transition to free market economy and EU membership.

CULTURE

In Türkiye, the depth and diversity of the country’s history has nurtured cultural richness. It is possible to find artifacts from many different languages and cultures throughout the country. In western cities, which are seen as the modern face of the country, a secular and western-oriented culture is experienced. As you go to the central, coastal and eastern parts, it is possible to encounter different cultures. The dominant culture in the country is Turkish-Islamic culture. This culture exhibits a structure that tries to synthesize the teachings of Turkishness with Islamic values and is based on the Central Asian Turkish-Islamic culture. Especially in the southeastern regions of the country, Kurdish culture is dominant. Again, in these regions, especially in places such as Mardin, Urfa and Hatay, Arabic culture is also encountered. The northern parts of the country have traces of Turkish, Laz and Georgian cultures.

Cities that receive migration such as Istanbul, Ankara, Izmir, Antep and Bursa exhibit a multicultural structure. Historical and cultural diversity is intense in these cities. It is also possible to come across traces of Armenian and Greek culture, which is considered as a minority here.

LANGUAGE

The official language of Türkiye is Turkish. The language spoken is also largely Turkish. However, Kurdish is the main language and spoken language, especially in the southeastern region. The knowledge of foreign languages of the country is at an intermediate level. In industrialized big cities such as Istanbul, Izmir, Ankara, Kocaeli, Bursa, the number of people who speak English language is higher than in other cities. Nevertheless, language is seen as an important obstacle for foreigners. Especially in small Anatolian districts, towns and villages, the number of people who can speak a foreign language is quite limited.

Turkish is considered among the difficult languages to learn. Some of the foreigners who want to learn Turkish take private lessons. In some places, such as TÖMER, certified Turkish education is provided. Although learning Turkish may seem difficult at first, it is possible to make rapid progress once you begin to understand what is spoken. Especially foreigners who are in daily life and participate in social activities catch the flow of language in a short time. Thanks to the warm-bloodedness of the Turkish people, it is very easy to find a person and topic to talk about everywhere.

LIVING EXPENSES

Despite the economic problems experienced in recent years, Türkiye is still among the most affordable countries with living expenses. According to Livingcost.org research, the cost of living per person in Türkiye is 515 dollars and is about 2 times cheaper than the world average. In this survey, Türkiye ranks 181st among 197 countries according to the cost of living and 79th best place to live. It is stated that it is a country. The Numbeo survey confirms this finding, according to which living expenses in Istanbul, including rent for one person, are 514 USD per month. In Ankara, a month’s living expenses for a single person are as low as approximately 410 USD including rent. The monthly living expenses of a single person in Türkiye are at the same level as Ankara expenses.

The average after-tax wage in Türkiye is 555 USD per month per year, which is enough to cover a person’s monthly living expenses. It is stated that the cost of living by the average standards for a family of 4 is about 1300 USD per month. According to a study conducted in 2021, the average monthly income of a qualified foreigner working in Türkiye (Istanbul) is around 3000 USD.

DRIVING

Traffic in Türkiye flows on the right hand side of the world, so the driver’s side in vehicles is on the left. Foreigners can use the vehicle for a maximum of six months from the date of entry into the country in Türkiye with the driver’s licenses obtained from foreign countries.

At the end of six months, in order to be able to drive, it is obligatory to replace the driver’s licenses obtained from foreign countries with the Turkish driver’s license.

Without prejudice to the relevant laws and the provisions of bilateral and multilateral agreements, the procedures and principles regarding the replacement of driver’s licenses obtained from foreign countries with Turkish driver’s licenses are determined by the General Directorate of Population and Citizenship Affairs.

According to the provisions of the Convention on Road Traffic, to which Türkiye is a party, the Contracting Parties to this Convention have mutually undertaken to accept each other’s driving licenses as valid.

It is not possible to convert driver’s licenses obtained from other countries into Turkish driver’s licenses. These people are required to obtain a driver’s license again under the conditions valid in Türkiye.

BANKS

The establishment of banks and the initiation and conduct of banking activities in Türkiye are regulated by the Banking Law, which entered into force on November 1, 2005, and the secondary legislation enacted accordingly.

The Banking Act applies to:

  • (i) Banks established in Türkiye,
  • (ii) branches of foreign banks in Türkiye,
  • (iii) representative offices of foreign banks in Türkiye,
  • (iv) financial holding companies.

The regulatory authority of the banking sector in Türkiye is the Banking Regulation and Supervision Agency (BRSA), a public legal entity with administrative and financial autonomy that was established in June 1999 and began its activities in 2000.

Bank Establishment

According to the Banking Law, only certain types of banks can be established in Türkiye. These are deposit banks, participation banks and development and investment banks. Permission must be obtained from the BRSA for both the establishment and operation of a bank.

For example, a bank can only be established as a joint stock company, must meet capital adequacy requirements and meet certain eligibility criteria regarding its shareholders and board members.

Foreign banks can open branches in Türkiye. Opening a branch by a foreign bank is very similar to establishing a bank in Türkiye. A branch of a foreign bank has the right to carry out all banking activities specified under the Banking Law and is treated like a Turkish bank licensed by the BRSA. A foreign bank may also open a representative office in Türkiye instead of a branch; however, a special license must be obtained from the BRSA. A representative office is not allowed to engage in business transactions or engage in revenue-generating activities in the Turkish market.

Currently, there are fifty-eight banks in Türkiye.

Opening a Bank Account

How can foreigners open a bank account in Türkiye? Foreigners can open a bank account in Türkiye. Foreigners must fulfill some conditions in order to open a bank account in Türkiye. In order for foreigners to open a bank account in Türkiye, it may be necessary to go to the nearest bank branch. Even if you want to open an account online, you may be asked to apply to the bank branch. A valid residential address and mobile phone number may be required for password processing.

Documents required to open a bank account in Türkiye:

Requested documents may subject to changes. In general, the documents required to open a bank account are:

  1. A valid passport
  2. Foreigner’s identification number or tax number
  3. Documents proving residence (invoices for residence in Türkiye, etc.)
  4. Residence permit
  5. Türkiye phone number

In addition, some additional documents may be requested, it is useful to contact the bank where you decided to open an account to find out.

Banks offering services in different languages:

ENGLISH: ZIRAAT BANK, VAKIFBANK, IS BANKASI, GARANTI BBVA, YAPI KREDI, HSBC

GERMAN: DEUTSCHE BANK

FRENCH: SOCIETE GENERALE TÜRKİYE

CHINESE: ICBC

ARABIC: KUVEYT TURK, ALBARAKA TURK

WORKING DAYS AND HOURS

Working days in public service places and public institutions in Türkiye are 5 days a week. Public institutions are closed on Saturdays and Sundays. Banks, schools, municipalities, enforcement offices, bar associations, courthouses in Türkiye are closed on Saturday and Sunday.

In the private sector, the holiday day is Sunday, and most companies also work on Saturdays. Although the weekly holiday is two days in the public sector, shopping centers, markets, entertainment venues, cafes, restaurants are open all day of the week.

The working hours of public institutions in Türkiye are mostly between 08:00 and 17:00. In the private sector, working hours are mostly between 09:00 and 18:00. However, shopping malls, markets, entertainment venues, cafes, restaurants are mostly open between 09:00 and 22:00.

It is located in places that are open 24/7 in Türkiye. These include gas stations, emergency services, pharmacies on duty, some restaurants.

PUBLIC AND RELIGIOUS HOLIDAYS

Türkiye has 6 public holidays; January 1, April 23, May 1, May 19, July 15, August 30 and October 29.

There are two religious holidays: Ramadan Feast (Eid ul Fitr), Sacrifice Feast (Eid ul Adha). The exact dates of these holidays are differ from 3-5 days according to moon calender and goverment decisons on the length of holiday.

POSTAL/COURIER SERVICES

Postal services in Türkiye are carried out by the General Directorate of Postal Telegraph Organization (PTT), which was established in 1840. It is possible to come across PTT branches, which have a very common distribution network, in almost every district. Official notifications are made through the PTT. PTT also offers special cargo transportation services.

In addition to postal services, many cargo companies operate in Türkiye. It is quite easy to send cargo in Türkiye through branches located in each district or through door-to-door pick-up service. Some of the major cargo companies serving in Türkiye are:

  • Yurtiçi Kargo
  • Mng Cargo
  • Aras Cargo
  • Sürat Kargo

Mail or cargo delivery times of PTT and other cargo companies usually vary between 1 and 2 days between major cities. Cargo deliveries to smaller cities or district centers are between 3-5 days.

TRANSPORTATION

Türkiye is a country where road, railway, airline and sea transportation are together and connected in intercity transportation. The most developed means of transportation among them is the highway. Then come the airlines and railways.

The most widely networked and most used method of transportation in Türkiye is highways. As of December 2022, the total road network in Türkiye has a total road network of 68,761 kilometers. A total of 28,906 km (42 percent) of this road network is divided road, of which 3,633 km are highways.

The second most common method of transportation is airlines. Air transportation, the majority of which is provided by Turkish Airlines (THY) and Pegasus, has shown significant developments in recent years. In 2022, 96% of the aircraft traffic and 87% of the passenger traffic of 2019 were reached.

In 2022 in Türkiye; Tokat New Airport was opened on March 25 and Rize, Artvin Airport was opened on May 14, bringing the number of active airports open to civil air traffic to 57. It is possible to reach many regions of Türkiye with airport connection roads. Türkiye is also among the leading countries in the world in terms of international flight destinations. Turkish Airlines, which has the title of the airline that flies to the most countries in the world, organizes flights to 121 countries.

The railway network in Türkiye is 13,128 km. Approximately 1460 km of this network is a high-speed train line. Finally, the Sivas-Ankara high-speed train line was put into service. Foreigners can buy train tickets online in Türkiye. To buy a train ticket in Türkiye, you need your passport number. You can use the TCDD e-ticket page to buy train tickets.

COMMUNICATION

The electronic communication sector in Türkiye continues to progress as broadband internet-centric. While the number of mobile subscribers in Türkiye exceeded 90 million with an annual increase of 4 million, a significant part of the increase here was due to the increase in the number of 4.5G subscribers, which approached 83 million.

Important GSM operators operating in Türkiye are Türk Telekom, Turkcell, Vodafone. Foreigners can easily get a phone line in Türkiye with the required documents. They can continue to communicate in Türkiye by taking these prepaid lines known as tourist cards. In order to get this line, it is enough to go to any GSM operator branch with one of the following documents in the passport. You can find branches of GSM operators at airports, city centers, shopping centers.

Foreigners who want to get a postpaid line in Türkiye are asked to show a residence based on a residence permit or work permit.

HEALTH SYSTEM

Health services in Türkiye consist of a mix of public and private health services. Türkiye has universal health services under the General Health Insurance (GHI) system. Under this system, all residents registered with the Social Security Institution (SSI) can receive free medical treatment in hospitals contracted with SSI.

It will be beneficial for you to have insurance in order to benefit effectively from the health system during your time living in Türkiye. If you take out private health insurance, you can receive services according to the scope of your insurance policy. Private health insurance is determined by many insurance companies with different scopes and different fees.

General health insurance is the insurances made by the provincial directorates of social security, that is, by the public authority. In order to have general health insurance, it is required to reside in Türkiye for 1 year. However, foreign students studying in Türkiye can obtain general health insurance if they make a claim within three months from the date of first registration to their school, regardless of the one-year residence requirement.

You can apply to the provincial directorates of social security with the following documents to get general health insurance:

  • Residence permit certificate,
  • The original or photocopy of the letter showing the social security status in terms of the general health insurance application obtained from the relevant foreign country Social Security Institution or the labor attaché,
  • Letter of Undertaking (request) form

Foreigners with international protection applications and status, Syrians under temporary protection and persons recognized as stateless are registered in the general health insurance system and their premiums are paid by the state.

PHARMACEUTICAL SERVICES

After the examination, if your doctor thinks you need the medicine, he or she may write you a prescription. You can get your medicines from pharmacies. Many medications, such as antibiotics, are only available by prescription. It is indicated how, at what dose, how often (2 times a day, 12 hours apart, etc.), how long (how many days) to use the drugs and under what conditions they will be stored.

Between 19:00 and 09:00, only pharmacies on duty are on duty. The addresses and telephones of pharmacies near you are indicated in the windows of other pharmacies and published in local newspapers and websites. You can also reach the pharmacies on duty every day through the e-government page.

HEALTH INSTITUTIONS

Turkish health system; Emergency medical services consist of primary, secondary and tertiary health centers.

  • Primary health care services: Provided in Family Health Centers, Community Health Centers, Migrant Health and Voluntary Health Centers.
  • Secondary and tertiary health services: Health facilities where diagnosis, diagnosis and treatment services are provided apart from primary health services. State hospitals that are not training and research hospitals, branch hospitals, oral and dental health centers, private hospitals and medical centers.
  • Tertiary Health Care Institutions: It includes training and research hospitals, branch hospitals and university hospitals affiliated to the Ministry of Health.

As a rule, public hospitals in Türkiye work with the appointment system. You can make an appointment at public hospitals at MHRS Website. Making an appointment reduces your waiting time in hospitals and allows you to receive better quality service. However, university hospitals and private hospitals are not included in the appointment system. In addition, for all kinds of information and appointments, you can get information from the Ministry of Health’s 182 numbers free health line.

SOCIAL SECURITY SYSTEM

The Social Security Law regulates the social security rights of the workers, government officials and self-employed persons and covers the social risks such as (i) work accidents and occupational illnesses, (ii) healthcare, (iii) child birth and child care, (iv) disability, (v) seniority, (vi) death, and (vii) unemployment. The Social Security Institution is the relevant authority.

1. Contributions For Social Insurance And Taxes

The main financing tool of the Turkish social insurance system is the contributions paid by employers and employees along with the state contribution. Contribution of the employees is deducted from the salaries of the employees in specified rates.

EMPLOYEE’S SHARE: 15%

EMPLOYER’S SHARE: 22.5 %

TOTAL: 37.5%

2. General Health Insurance

Under the Social Security Law, employees working with an employment agreement who reşide in Türkiye and foreigners with a residence permit (or work permit) if they do not have national health insurance in another country, and their dependents shall be subject to the general health insurance in Türkiye.

General health insurance is mandatory. General health insurance provides the insured employees with (i) protective healthcare; (ii) healthcare in case of illness including medical examinations, blood and other tests and emergency healthcare; and (iii) childbirth related healthcare. These healthcare services shall be provided by the public and private hospitals and medical institutions in agreement with the SSI within Türkiye and abroad to the general health insurance holders.

3. State Pension

Under Turkish law, there is a compulsory premium contribution for state pension in the amount of 20% along with the disability and death insurance. 9% of this is paid by the employee and 11% is paid by the employer.

The main benefit of the state pension is the retirement salary which employees are entitled to under certain conditions. In order to be entitled to retirement salary, the employee must reach a certain age and have to complete a certain number of working days which may vary depending on the date when they registered with the Social Security Institution for the first time.

Moreover, automatic participation to the Turkish private pension scheme was introduced by a new law amendment entered into force on 1 January 2017. Accordingly, employers must pay 3% of their employees’ income on behalf of their employees in order to cover the private pension of them under the age of 45 and the Turkish State shall provide a one-time only additional subsidy per employee for participating in the private pension scheme.

INSURANCE

Most of the private insurances are not compulsory in Türkiye. Compulsory insurances include road compulsory liability insurance, known as compulsory traffic insurance. In addition, an earthquake insurance policy is requested when subscribing to electricity and water.

Another type of insurance that foreign nationals must take out is foreign health insurance. It is a type of insurance that foreign individuals who will reside in Türkiye for a minimum of 1 year or longer must have compulsory. In other words, it is the health insurance purchased by foreigners who do not have Turkish citizenship to obtain a residence permit or residence permit. It is obligatory to make health insurance within the policy limits in Article 1 of the Circular on Health Insurance to be Made in Visa and Residence Permit Requests dated 10/5/2016 and numbered 2016/16. Additionally, all applicants are required to have a medical insurance that will be valid during their stay in Türkiye.

To get more information about Visa and Residence information, you can see our article on how to issue visas and residence permits in Türkiye at maykanat.com.

BUSINESS/COMPANY SETUP PROCESS

Türkiye’s FDI Law Numbered 4875 is based on the principle of equal treatment and allows international investors to have the same rights and liabilities as local investors.

The conditions for setting up a business and transfer of shares are the same as those applied to local investors. International investors may establish any form of company set out in the Turkish Commercial Code (TCC), which provides for a corporate governance approach that meets international standards, fosters private equity and public offering activities, creates transparency in managing operations and brings the Turkish business environment in compliance with EU legislation as well as with the EU accession process.

Türkiye has initiated reforms with a view to making it easier to do business in order to enhance the investment environment, eliminating red tape in setting up a business and minimizing costs and procedures. To this end, establishing a company is now only carried out at Trade Registry Directorates located in Chambers of Commerce and designed to be a ‘one-stop shop’. The process is completed within the same day.

1. Company Types under TCC and Alternative Forms

There are corporate and non-corporate forms of companies under the TCC, which states that companies may be established under the following types:

a. Corporate forms

  • Joint Stock Company (JSC)
  • Limited Liability Company (LLC)Although some financial thresholds (i.e., minimum capital) and organs differ from each other, the procedures to be followed for establishing a JSC or an LLC are the same.b. Non-corporate forms
  • General Partnership
  • Limited Partnership
  • Partnership Limited by SharesAlthough companies may be established according to these five different types, JSC and LLC are the most common types chosen both in the global economy and Türkiye
2. Steps of Establishing A Company

In this section, the stages to be followed in the establishment of a company in Türkiye will be explained with examples from practice.

a. Preparation Phase

This stage is very important. At this stage, the selection of company partners, capital and company type is completed. The company name and address are determined, the MERSIS registration of the partners is completed, the draft articles of association of the company is prepared. Potential tax numbers for the shareholders is obtained.

b. Pre-Registration Phase

Pursuant to the Trade Registry Regulation, trade registration transactions must be fulfilled through MERSIS (Central Registry Record System). At this stage, the documents and information prepared are entered into the MERSIS system and an appointment is made.

A unique number is given to legal entities that are actively involved in business. Online establishment of new companies is possible on MERSIS, and already-established companies may operate through the system after the transfer of their records.

c. Document Preparation

The following documents are required for registration application at the relevant Trade Registry Directorate:

  • Articles of incorporation signed by all the founders before Trade Registry Directorate authorized personnel or a Notary Public (four copies, one original)
  • In case the foreign partner is a real person: For each real person shareholder, two copies of their passports (translated notarized copy of passport; if residing in Türkiye, notarized residence permit, tax identification number obtained from the tax office.)
  • In case the foreign partner is a legal entity:
    • The Certificate of Activity of the legal entity designated as the shareholder issued by the relevant authority in the investor’s country. The certificate must bear information regarding the current status and signatories of the company.
    • Resolution(s) of the shareholders of the competent corporate organ of legal entity shareholder(s) authorizing the establishment; if there is any specific condition for the prospective company to be incorporated (name of the company, field of activity, etc.) it must be stated in the resolution for the sake of clarity.
    • In case a legal entity is going to be appointed as a member of the board of directors of the prospective company to be incorporated, the name of the real person who will act in the name of the legal entity and the legal entity’s board member’s appointment must be stated within the same or with a separate resolution for the sake of clarity.
    • If the process is going to be followed by an attorney, a notarized copy of a power of attorney authorizing the attorneys who will follow up the application before the competent Trade Registry Directorate and other official authorities in order to proceed with the application (where applicable).
    • Notarized signature declarations (two copies)
    • Notarized identity cards of the company managers (one copy)
  • It should be noted that, except the first item above, all necessary documents that will be issued and executed outside of Turkiye must be notarized and apostilled or alternatively legalized by the Turkish Consulate located in the country of transaction. The original executed, notarized, and apostilled documents must be officially translated and notarized by a Turkish notary.

d. Deposit of Required Capital and Competition Authority Share

0.04% of the company’s capital must be deposited as “Competition Authority Share” into the bank account of this institution. There is no need to go to the bank for this process. Together with other establishment procedures, this fee can be paid at the trade registry directorate. In addition, at least 25% of the shares committed in cash in joint stock companies must be deposited in a bank account opened in the name of the company before the registration of the company.

e. Application to the Trade Registry Office for registration

Upon the application of the founders to the trade registry directorate with the relevant documents, the trade registry directorate completes the registration process. In addition, in the establishment of joint stock and limited liability companies and cooperatives, the commercial books to be kept by these companies shall be certified by the trade registry directorate and given to the relevant person following the registration. It is also possible to carry out the establishment procedures through a representative authorized by a power of attorney.

The Trade Registry Directorate’s authorized personnel will certify the following books during the establishment process:

  • Journal
  • Ledger
  • Inventory book
  • Share ledger
  • Manager’s meeting minutes book
  • General assembly meeting minutes book

f. Complete The Establishment

  • Follow up with the tax office on the Trade Registry Directorate’s company establishment notification.
  • Issue a signature circular before authorized Trade Registry Directorate personnel or notary public.
  • Send some certain documents to electronic format / E-TUYS system, these are:
    • Activity Information Form for FDI
    • FDI Capital Data Form
    • FDI Share Transfer Data Form

TAX SYSTEM

Türkiye has one of the most competitive corporate tax rates among OECD member countries. The Turkish corporate tax legislation has noticeably clear, objective, and harmonized provisions that are in line with international standards. The Turkish tax legislation may be classified under three main headings:

1. Income Taxes

The Turkish tax legislation includes two main income taxes, namely, personal income tax and corporate income tax.

a. Personal Income Tax

Real persons’ income is subject to personal income tax. Income is defined as the net amount of all earnings and revenues derived by an individual within a single calendar year. An individual’s income may consist of one or more of the following income elements:

  • Agricultural profits
  • Business profits
  • Salaries and wages
  • Income from independent personal services
  • Income from immovable property and rights (rental income)
  • Income from movable property (income from capital investment)
  • Other income and earnings

The Turkish income tax scale is progressive, meaning that tax rates increase as one’s income grows. Individual income tax rates vary from 15% to 40%. For details visit the government investment office web page.

When the income elements specified in the Income Tax Law are derived by corporations, taxation is applied to the legal entities of these corporations. Corporate taxpayers defined in the law are as follows:

  • Capital companies
  • Cooperatives
  • Public economic enterprises
  • Economic enterprises owned by associations and foundations
  • Joint ventures

The corporate tax rate in Türkiye for general business income in 2023 is set at 25%. However, for banks and financial institutions such as electronic payment and money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reassurance companies, and pension companies, the tax rate is set at 30%. In addition, exporters will benefit from a reduced corporate tax rate of 5% for their export income.

2. Taxes on Expenditure

a. Value Added Tax (VAT-KDV)

The generally applied VAT (KDV) rates are set at 1%, 10%, and 20% as of July 2023. Commercial, industrial, agricultural, and independent professional goods and services, goods and services imported into the country, and deliveries of goods and services as a result of other activities are all subject to VAT.

b. Special Consumption Tax (SCT)

Four main product groups are subject to SCT (ÖTV) at different tax rates:

  • Petroleum products, natural gas, lubricating oil, solvents, and derivatives of solvents
  • Automobiles and other vehicles, motorcycles, planes, helicopters, yachts
  • Tobacco and tobacco products, alcoholic beverages
  • Luxury productsUnlike VAT, which is applied on each delivery, SCT is charged only once.c. Banking and Insurance Transaction TaxBanking and insurance company transactions remain exempt from VAT but are subject to a Banking and Insurance Transaction Tax. This tax is levied on the income earned by banks, such as loan interest. Although the general rate is 10%, certain transactions, such as consumer loans, are taxed at %15 as of July 2023. Moreover, interest generated on interbank deposits is taxed at a lower rate of 1%. A tax of 0.2% has been introduced for the sales of foreign currency.d. Stamp DutyStamp duty applies to a wide range of documents, including contracts, notes payable, capital contributions, letters of credit, letters of guarantee, financial statements, and payrolls. Stamp duty is levied as a percentage of the value of the document at rates ranging from 0.189% to 0.948% or is collected as a fixed price (a pre-determined price) for some documents.
3. Taxes on Wealth

There are three kinds of taxes on wealth:

  • Property taxes
  • Motor vehicle tax
  • Inheritance and gift taxProperty tax is levied on buildings, apartments, and land owned in Türkiye at a rate of 0.1% to 0.6%, while Contribution to the Conservation of Immovable Cultural Property is levied at a rate of 10% of this property tax. Motor vehicle taxes are collected each year in fixed amounts that vary according to the age and engine capacity of the vehicles. Meanwhile, inheritance and gift taxes are levied at a rate of 1% to 30%.

CUSTOMS GUIDE

1. Passengers

All kinds of goods, vehicles and persons entering and leaving Türkiye can be checked and searched by the customs administration. The limits of the type, quantity and value of the goods you can bring when entering Türkiye as a passenger are determined in the customs legislation. Some items that you can buy or bring with you from the stores located at the land border gate, sea and airports where you will enter Türkiye are also exempt from customs duties. You can bring your watches, tablets, cameras, etc. and products such as alcohol, tobacco, cosmetics, medicines, mobile phones and food with you within the following limits.

Limits set for tobacco products:

  • 600 pieces of cigarettes
  • 100 pieces of cigarillo, each weighing no more than 3 grams
  • 50 cigars
  • 250 grams of minced tobacco
  • 250 grams of pipe tobaccoPassengers under the age of 18 are not eligible for this exemption.

Limits for alcoholic products:

  • 1 liter of alcohol and alcoholic beverages with an alcohol content exceeding 22%,
  • 2 liters of alcohol and alcoholic beverages with an alcohol content not exceeding 22%Passengers under the age of 18 are not eligible for this exemption.

Limits for medicines: You may bring with you a reasonable amount of the medicine you use for your personal treatment, provided that you present a report or prescription.

Limits set for food products: You have the right to bring 1 kilogram each of the tea, coffee, chocolate, sugar products. Meat and dairy products cannot be brought with the passenger.

Limits set for cosmetic products: You can bring cologne, perfume, lavender, essence or lotion and 5 skin care products and make-up materials with you, provided that they do not exceed 600 ml.

Limits set for mobile phone: You can bring 1 mobile phone in three calendar years, provided that you use it with the lines registered to your ID number. The phone is granted an exemption regardless of its value. However, the IMEI registration of the device must be done within 120 days.

2. Vehicles

One of the most curious issues about individual customs procedures is the import of free vehicles. Can you bring your vehicle (trailer with vehicle, motorcycle, automobile, private planes, yacht, boat) you bought abroad to Türkiye for sure? How to earn the right to bring a vehicle to Türkiye? In order to have the right to bring a vehicle to Türkiye, certain conditions must be met. If all of these conditions are met, the vehicle can be brought to Türkiye.

Who can bring a vehicle to Türkiye?

  • Real persons who have resided outside Türkiye for at least 24 months and transferred their settlements to Türkiye,
  • Public servants who have been appointed to national or international positions abroad and returned from these duties,
  • Persons who permanently transfer their place of residence from a foreign country to Türkiye by acquiring Turkish citizenship,They can bring vehicles to Türkiye. No customs duty is charged on the vehicles brought by these people. Only VAT and SCT are charged. These taxes are paid during the import of the vehicle into Türkiye.Upon the death of persons residing outside of Türkiye, their heirs residing in Türkiye also gain the right to bring the vehicle of the deceased. Customs duty, VAT and excise duty are not taken from the vehicles brought by the heirs. It is not possible for persons who transfer their settlements to Türkiye and become Turkish citizens to bring vehicles if they are dual nationals. Within the scope of individual customs procedures, there is another condition regarding the vehicles to be imported: The vehicle must not be older than 3 years of age as of the year of registration abroad in the name of persons, including the model year. These vehicles must also be registered in the name of the person who will bring them in the country where they have been abroad for at least 6 months. Persons cannot make any savings on the imported vehicle unless 12 months have passed. Therefore, the imported vehicle cannot be sold for 12 months and cannot be transferred to anyone else. Within the scope of individual customs procedures, there are certain application periods for vehicles to be brought from abroad. In order to import the vehicle, persons must apply for import to the competent customs authority within these periods with the necessary documents.
3. Household Goods

It is possible to import two types of used household goods into Türkiye exempt from customs duties:

  1. Used household goods brought by persons transporting the place of residence to Türkiye.
  2. Used household goods brought by persons whose place of residence is outside Türkiye to be used in the housing they have acquired by purchasing or renting in Türkiye.
4. Cash and Jewelry

It is not obligatory to declare the cash brought to our country with the passengers from abroad. However, if a declaration is desired, it is obligatory to make a full and complete declaration to the customs officer. Nevertheless; There are cash items that are forbidden to enter our country with the passenger. These are:

  • Personal debts
  • Gift
  • Donation
  • Dowry
  • Money given by the bride and groom to the other party
  • Inheritance
  • Assets of immigrants
  • Loans taken from abroad
  • Raw diamond export costs, etc.This cash can only be brought through banks. There is no harm in bringing cash to our country except for those who are forbidden to enter our country with passengers. If it is determined that the cash, which is forbidden to enter, is brought with the passenger, the cash will be confiscated. In addition to the declaration of the passengers voluntarily, the customs officers may request an explanation of the amount and source of the cash from the passenger. In this case, passengers are obliged to provide a full and accurate explanation. If no explanation is made by the passenger or if it is understood that a false or misleading explanation has been made, an administrative fine of 10% of the undisclosed amount will be applied and all cash will be kept with the passenger. The situation is reported to the public prosecutor’s office and the Financial Crimes Investigation Board. Cash: Turkish Currency, foreign currencies and those providing payment therewith; bonds, policies and checks, traveler’s checks, postal checks, money orders issued by domestic or foreign organizations, etc. documents.

LEGAL PROCEEDINGS

1. Labor Law and the Work of Foreigners

Employee-employer relations in Türkiye are mostly carried out in accordance with the provisions of the Labor Law No. 4857 and the Turkish Code of Obligations No. 6098. In Turkish Labor Law, where the principle of interpretation in favor of the worker is valid, workers generally get positive results if they seek their rights. The main issues to be known in labor law are the types of employment contracts, wages and termination of the employment contract.

Employment contracts are concluded for a definite or indefinite period. These contracts may be full-time or part-time or probationary or other types of contracts in terms of their mode of operation. In addition, business models such as on-call work and remote work are also allowed. Employment contracts with a duration of one year or more must be made in writing. These documents are exempt from stamp duty and all kinds of duties and charges.

One of the essential elements of employment contracts is the payment of wages. Wages, premiums, bonuses and all kinds of rations of this nature are paid in the workplace or in a bank account opened privately. The statute of limitations for wage receivables is five years. For fees not paid on the day, the highest interest rate applied to the deposit is applied. There is also a minimum wage application in Türkiye, according to which the employer provides the employee with the following provisions as determined in the contract or collective bargaining agreement; In cases where there is no provision in the contract, it is obliged to pay the exemplary fee not less than the minimum wage. Workers have the right to at least 24 hours of weekly vacation every week, provided that they perform the work determined per week, they are not made to work on the days of the week holiday, and their wages are paid in full. Again, it is essential not to work on national and general holidays, and in case of work, a daily wage payment must be made.

In general, the working time in Türkiye is a maximum of forty-five hours per week, this period is applied in workplaces by dividing it equally among the days of the week worked. Workers are entitled to at least 14 days of paid annual leave each year according to their seniority.

The termination of the employment contract is subject to certain conditions in Turkish law, and termination that does not comply with these conditions is considered invalid termination. In case of invalid termination, if the other conditions listed in the law are met, the employee may file a reinstatement case and decide to return to work. In the event of an invalid termination, the employer may also have to pay compensation such as severance pay.

Regulations on the working procedures of foreigners in Türkiye are included in the International Labor Force Law No. 6735 and related legislation. Unless otherwise stipulated in bilateral or multilateral agreements to which Türkiye is a party, foreigners must obtain permission before starting to work as a dependent or independent in Türkiye. A work permit or work permit exemption replaces a residence permit in accordance with Article 27 of the Law on Foreigners and International Protection Law No. 6458. The foreigner who has been granted a work permit based on the application made from abroad must come to Türkiye within six months from the date of the start of the validity of the work permit. The work permit of the foreigner who does not come to Türkiye within this period is canceled.

a. Work Permit Applications

Work permit applications are made directly to the Ministry of Labor and Social Security in the country and to the embassies or consulates general of the Republic of Türkiye in the country where the foreigner is a citizen or legally resides abroad. Work permit applications made abroad are forwarded to the Ministry of Labor and Social Security by the embassies or consulates general of the Republic of Türkiye.

The application for a work permit extension shall be made from the date of sixty days before the expiry of the work permit and, in any case, before the expiry of the work permit. Extension applications made after the expiry of this period will be rejected

It is mandatory to obtain prior permission in the evaluation of work permit applications of foreigners who will work in health and education services requiring professional competence. Applications for the extension of such work permits are also subject to the prior permission of the relevant ministry or the Council of Higher Education.

Holders of a temporary protection identity document may apply to the Ministry of Family, Labor and Social Services to obtain a work permit in sectors, business lines and geographical areas (provinces, districts or villages) to be determined by the President of the Republic.

i. Temporary Work Permit

If the application is evaluated positively, the foreigner shall be granted a work permit valid for a maximum of one year in the first application, provided that he / she works in a certain workplace belonging to a real or legal person or public institution or organization or in the workplaces in the same branch of business, provided that the duration of the employment or service contract does not exceed.

If the extension application to be made is evaluated positively, the foreigner is granted a work permit for a maximum of two years in the first extension application and up to three years in the subsequent extension applications depending on the same employer.

ii. Indefinite Work Permit

Foreigners who have a long-term residence permit in Türkiye or a legal work permit for at least eight years can apply for an indefinite work permit. However, the fact that the foreigner meets the application requirements does not provide absolute rights to the foreigner.

The foreigner who has an indefinite work permit benefits from all the rights provided by the long-term residence permit. Foreigners who have an indefinite work permit shall benefit from the rights granted to Turkish citizens, provided that their acquired rights regarding social security are reserved and subject to the provisions of the relevant legislation in the exercise of these rights, except for the regulations in special laws. The foreigner who has an indefinite work permit does not have the right to vote, to be elected and to enter public duties and to perform military service.

iii. Company Partners Work Permit

Established in accordance with the Turkish Commercial Code dated 13/1/2011 and numbered 6102; Foreigners who are a) the director of the limited liability companies who are the company partners, b) the member of the board of directors of the joint stock companies who are the company partners, c) the limited partners of the limited liability companies whose capital is divided into shares, can work by obtaining a work permit.

iv. Independent Work Permit

Foreigners who are members of professional professions may be granted an independent work permit provided that the special conditions specified in other laws are met.

v. Turquoise Card

In line with international labor policy; Turquoise Cards are issued to foreigners whose applications are deemed appropriate according to their level of education, professional experience, contribution to science and technology, the impact of their activity or investment in Türkiye on the country’s economy and employment, and the recommendations of the International Labor Policy Advisory Board and the procedures and principles determined by the Ministry.

The Turquoise Card is issued on the condition that the first three years are a transition period.

vi. Foreign students

Foreign students enrolled in formal education programs in a higher education institution in Türkiye can work provided that they obtain a work permit. Foreign students who are studying at the associate and undergraduate level can apply for a work permit after the completion of the first year of their education and can work part-time in accordance with the Labor Law No. 4857 dated 22/5/2003. These limitations do not apply to graduate students enrolled in formal education programs.

If the foreigner who has completed his/her higher education in Türkiye applies for a work permit within one year from the date of graduation, the application is evaluated in accordance with the principles determined by the International Labor Policy Advisory Board.

vii. Foreign engineers and architects

Foreigners who have completed their education in the engineering and architecture faculties of a higher education institution in Türkiye or in a higher education institution recognized by the relevant country authorities and the Council of Higher Education abroad and have obtained the titles of engineer and architect can practice engineering and architecture professions by obtaining a project-based and temporary work permit.

viii. Work Permit Refusal Decision Appeal and Administrative Litigation

The rejection of the application for work permit or work permit exemption and the cancellation of the documents issued shall be notified to the employer who employs the foreigner or to the foreigner who holds an independent work permit, indefinite work permit or Turquoise Card in accordance with the provisions of the Notification Law No. 7201 dated 11/2/1959.

An appeal against these rejection or cancellation decisions may be filed with the Ministry within thirty days from the date of notification, and if the objection is rejected, an administrative judicial remedy may be applied.

2. Marriage and Divorce Procedures

a. Marriage

In Türkiye, a Turkish citizen and a foreigner or two foreigners who are not citizens of the same state can only marry in front of an authorized Turkish marriage officer.

According to Article 13 of the Private International Law Law: “The national law of each of the parties at the time of marriage shall apply to the license and conditions of marriage. The form of marriage is subject to the law of the place where it is performed. The general provisions of marriage are subject to the common national law of the spouses. If the parties have separate citizenships, the common habitual residential law is applied, and if not, the Turkish law is applied.

With regard to marital property, the spouses may expressly choose one of their customary residential or national laws at the time of marriage; In the event that such a choice has not been made, the common national law of the spouses at the time of marriage shall apply to the marital property, the common habitual dwelling law at the time of marriage in the absence of it, and the Turkish law in the absence of it.

In the liquidation of property, the law of the country in which they are located applies to the immovables.

Two foreigners who are citizens of the same state may marry before the Turkish authorities as well as in front of the representative offices of that state in Türkiye if authorized by their national law.

The applications of foreigners regarding their desire to marry are accepted by the marriage office and the provisions of the Marriage Regulation on the marriage of Turkish citizens are also applied to foreigners. From foreigners within the scope of the Law on Foreigners and International Protection dated 4/4/2013 and numbered 6458; The applications of stateless, refugee, conditional refugee, secondary protection status holders and international protection applicants and foreigners under temporary protection who are in Türkiye other than residence permits are accepted by marriage officers. According to the information and documents in the files kept by the provincial directorates of migration management, whether they have marriage obstacles or not, the provincial migration management directorates determine and a marriage license certificate is issued.

A family certificate is issued to a foreign national man and woman who marry before the competent Turkish authorities, as well as a multilingual marriage certificate upon their request.

b. Divorce

According to Article 14 of the Private International Law Law: “The reasons and provisions for divorce and separation shall be subject to the common national law of the spouses. If the parties have separate citizenships, the common habitual residential law is applied, and if not, the Turkish law is applied.

The common national law of the spouses is applied to the alimony claims between the divorced spouses, the common habitual residential law is applied if the parties are of separate citizenship, and the Turkish law is applied if there is not.

In case of separation and marriage, the common national law of the spouses, in case of separate citizenship of the parties, the common habitual residential law, if not, the Turkish law is applied.

Problems related to custody and custody in divorce are applied to the common national law of the spouses, common habitual residential law if the parties are of separate citizenship, and Turkish law if not.

Alimony claims are subject to the law of the habitual abode of the alimony creditor.

3. Lawsuits And Enforcement Proceedings Of Foreigners

In Türkiye, foreigners have the right to sue and have their debts collected through forced execution. However, the exercise of this right has been subject to the obligation to deposit guarantee, with some exceptions.

a. Guarantee Obligation

The obligation to deposit guarantee depending on the reason for foreignness is regulated in the Law on International Private Law and Procedural Law dated 12.12.2007 and numbered 5718.

According to Article 48, paragraph 1 of the Law; “Foreign real and legal persons who file a lawsuit in the Turkish court, participate in the case or pursue enforcement proceedings must show the guarantee to be determined by the court in order to cover the damages and losses of the other party with the costs of the trial and follow-up.”

In the 2nd paragraph of the said article, which regulates the exemption from collateral; it is submitted that the court will exempt the plaintiff, the respondent or the executor from the security on the basis of reciprocity.

The purpose of reciprocity is to ensure that the same exemption can be granted to Turkish citizens in the state to which the plaintiff, the participant (intervenor) or the foreigner engaged in the execution proceedings belong.

Reciprocity can be achieved in three different ways as contractual, legal and de facto within the scope of Turkish Private International Law.

Contractual reciprocity shall be ensured in the presence of a bilateral or multilateral agreement stipulating exemption from collateral between the Republic of Türkiye and the natural or legal person claimant, intervenor or the state of which the party carrying out the enforcement proceeding is a citizen.

b. Exclusion of Guarantee

Among the sources of international law that offer exemptions for foreigners to deposit guarantee in Türkiye, there are multilateral agreements as well as some bilateral agreements. The multilateral conventions and their provisions are set out below. For bilateral contractual provisions, please visit our maykanat.com address.

i) The Hague Convention on Civil Procedure of 1954:

Article 17 of the Convention provides as follows:

“A citizen of a Contracting State residing in one of the Contracting States and acting as a plaintiff or intervenor before the courts of another State shall not be required to pay any security or deposit, under whatever name, on account of the fact that they are foreigners or have no domicile or domicile in that State. The same rule shall apply to the relief sought from the plaintiff or respondent to cover court costs. Contracts under which the Contracting States provide for the exemption of their nationals from the security deposit without the requirement of residence or from the provision of court costs shall continue to be applied.”

In the letter dated 17.01.2005 and numbered 904.30/2005/KOPR/20078 received from the Ministry of Foreign Affairs; It is stated that the provision of Article 17 of The Hague Convention on Civil Procedure of 1954 was interpreted by J.H.A.Van Loon, Secretary General of the Hague Private International Law Conference at the time, and Christophe Bernasconi, Legal Expert, to include legal persons.

ii) European Residence Convention

Article 9 of the Convention provides as follows:

“1. No security or deposit money of any kind whatsoever shall be demanded from a national of another Contracting Party appearing before the courts of one of the Contracting Parties as a plaintiff or an intervenor, if he has his domicile or habitual abode in the territory of one of the Contracting Parties, either because of his status as a foreigner or because he has no domicile or domicile in that country.

2. The same rule applies to the payment to be made by the plaintiff or respondent in order to secure the costs of the court.

3. Convictions in respect of court costs and other expenses awarded to the plaintiff or respondent who are exempt from guarantees, deposits or payments pursuant to one of the preceding paragraphs or under the law of the country in which the case is heard may be carried out by the competent authority in the territory of one of the other Contracting Parties upon request by diplomatic means, without the need to pay any fees.”

4. Real Estate Purchase/Rental Transactions Of Foreigners

The acquisition of immovable property in Türkiye by foreign real persons is regulated in Article 35 of the Land Registry Law No. 2644. On 18 May 2012, the legislator introduced some amendments to the issue of immovable acquisition of foreign real persons and Article 35 of the Land Registry Law was revised. In general; Provided that the legal limits are complied with, international bilateral relations and the interests of the country require this, the citizens of the country determined by the President of the Republic may obtain immovable and limited in-kind rights from our country within the conditions specified in the legislation.

Foreign trade companies with legal personality established in foreign countries in accordance with the laws of these countries can acquire immovable and limited in-kind rights in Türkiye only if there is a special provision in the laws. Laws with special provisions in the legislation; Turkish Petroleum Law, Tourism Promotion Law and Industrial Zones Law.

It is not possible for all legal entities (foundations, associations, cooperatives, societies, communities, communities, etc.) other than foreign trade companies with legal personality established in accordance with the laws of these countries in foreign countries to acquire immovable property in our country and to establish limited in-kind rights in their favor.

Foreigners can buy immovable property to use as a workplace or residence in Türkiye, provided that they comply with legal restrictions. However, even if it is in different cities, the total area of the immovable properties that a foreigner can buy in Türkiye cannot exceed 30 hectares.

Before the purchase of immovable property by foreigners, it is also necessary to obtain permission from the military authorities in the region. Since it will not be possible to sell the property to foreigners if the immovable in question is located within the security zone, it is important to clarify this issue before payment.

a. Applications

The immovable owner or his authorized representative can apply by going to the Land Registry Directorate with the necessary documents. (applications are usually made before the lunch break, by obtaining the sequence number at the Land Registry Office.) In addition, foreigners who have Turkish citizenship or have a foreigner’s identity number can make an appointment online through the Alo 181 call center or through the e-appointment (https://randevu.tkgm.gov.tr/) and WEBTAPU (webtapu.tkgm.gov.tr) service.

In the applications of real persons of foreign nationality to the relevant land registry directorates for the acquisition of immovable property:

  • Identity documents and/or passports,
  • Residence permits issued from the relevant security directorates of foreigners whose immovable acquisitions are subject to residence permits,
  • In case they make a proxy transaction on the basis of the power of attorneys given from abroad, the original of the power of attorneys together with their translations or have a certified copy with them.

b. Sales Transaction

Documents required for sale:

  • Identity Document or Passport (with translation if necessary)
  • Identity Declaration Form
  • 1 photo.
  • Power of attorney, guardian decision, authorization certificate, etc., if any (If the transaction is to be carried out with the power of attorney issued abroad, the original or certified copy of the power of attorney must be submitted with its translation)
  • The title deed of the immovable property subject to sale is requested if there is one.
  • Valuation report of the property
  • Compulsory earthquake insurance policy
  • Sworn translator (if there is a party who does not speak Turkish)

c. Recommendations

Before the sale contracts are made, issues such as whether the real estate is registered with limited in-kind rights, whether there are any obstacles to its mortgage or sale should be checked from the relevant Land Registry Office.

  • Foreigners who want to buy property in our country should sign and pay legally binding contracts with obtaining information about the immovable property in question at the Land Registry Directorates,
  • It will be appropriate to start their transactions with researching the seller individuals or companies and to work with the individuals or companies that prove that they are serious and reliable.

IMPORTANT PAGES AND APPS

  • Ministry of Foreign Affairs
  • Istanbul Airport
  • Ministry of Justice
  • Ministry of Health
  • Istanbul Metro
  • Istanbul Transportation
  • İstanbul Guide
  • Ministry of Culture and Tourism
  • Türkiye Guide
  • Customs Guide

IMPORTANT NUMBERS

Emergency Assistance Number: 112

        Other Emergency Numbers:

  • 114 National Poison Advisory Center
  • 122 Disaster and Emergency (AFAD) Call Center
  • 158 Coast Guard Hotline and Demand Line
  • 168 Red Crescent Donation and Hotline
  • 177 Forest Fire Alert
  • 182 Central Physician Appointment System
  • 183 Social Support Line: Women and Social Services
  • 187 Natural Gas Leakage
  • 188 Ambulance and Funeral LineBreakdown Notification Numbers:
  • 121 Telephone Breakdown Phone
  • 125 Radio-Tv Breakdown Phone
  • 126 Cable Tv Breakdown Phone
  • 185 İSKİ (Istanbul Water Cut inquiry)
  • 186 Electrical Breakdown
  • 187 Natural Gas Fault PhoneNotice and Complaint Numbers:
  • 150 BİMER
  • 153 Police Call Center Phone
  • 157 Human Trafficking Victims Emergency Help and Warning Line
  • 184 Cigarette Hotline
  • 189 Finance Hotline
  • 181 Environment and Urbanization Line (Alo Noise Complaint Phone)Information, Consultation and Support Numbers:
  • 119 Postal Code Counselling
  • 171 Smoking Cessation Hotline
  • 174 Food Hotline
  • 175 Consumer Hotline
  • 182 Mental Crisis Hotline
  • 184 Health Hotline
  • 191 Anti-Drug Counseling and Support Line

[1] General Directorate of Highways Data Access September 2023

[2] DHMI General Directorate Data Access: September 2023

[3] TCDD General Directorate Access: September 2023

[4] https://livingcost.org/cost/Türkiye

[5] https://www.numbeo.com/cost-of-living/in/Istanbul

[6] https://expatguideTürkiye.com/minimum-wages-paid-to-foreigners-in-Türkiye/

[7] Investing in Turkiye, available on https://www.invest.gov.tr/en/pages/home-page.aspx

** All links are for information and facilitation purposes, there is no commercial relationship.*