A Glance at Commercial Lawsuits (CLs) in Turkey
Commercial lawsuits in Turkey are governed by the Turkish Commercial Code (TCC) and are handled under the civil litigation system. These lawsuits typically involve disputes arising from commercial transactions, such as contracts, business partnerships, competition, intellectual property, or financial transactions. If you’re dealing with commercial issues, understanding the legal process and types of disputes is essential.
Here’s a detailed breakdown of CLs :
1.Types of CLs
CLs can be broadly categorized into several areas, including but not limited to:
- Contract Disputes: Disagreements arising from commercial contracts such as sales, services, partnerships, and supply agreements.
- Debt Recovery: Disputes related to unpaid debts, loans, or outstanding invoices.
- Intellectual Property Disputes: Cases concerning the protection of trademarks, patents, copyrights, or trade secrets.
- Shareholder Disputes: Disagreements between partners or shareholders in a company, often related to corporate governance, share transfer, or dividend distribution.
- Franchise Disputes: Conflicts between franchisors and franchisees regarding terms of agreements, performance expectations, and breach of contract.
- Employment Disputes: Issues related to employer-employee relationships in the commercial context, including wage disputes, termination, or labor violations.
- Antitrust and Competition Issues: Legal action against businesses engaging in unfair competition, monopolistic practices, or violations of Turkey’s Competition Law.
- Company Liquidation and Bankruptcy: Disputes related to company insolvency, liquidation, or bankruptcy, often involving creditors and asset distribution.
- Agency and Distribution: Legal conflicts between agents, distributors, and manufacturers concerning agency agreements or distribution contracts.
2.Commercial Courts
CLs are usually handled by specialized courts known as Commercial Courts (Ticaret Mahkemesi). These courts are part of the regular judiciary system, but they specialize in commercial matters. Their function is to handle complex business disputes efficiently.
- Jurisdiction: Commercial courts have jurisdiction over cases involving Turkish Commercial Code, including disputes between companies or individuals engaged in commercial activities.
- Location: These courts exist in most major cities, including Istanbul, Ankara, Izmir, and others. In areas where no commercial court exists, the case may be heard in a Civil Court of First Instance.
3.Key Procedures in CLs
The process of filing and pursuing a CL generally follows these steps:
Step 1: Filing a Lawsuit (Davacı)
Complaint: The plaintiff (the party initiating the lawsuit) must file a written complaint (known as a “dava dilekçesi”) with the appropriate commercial court. This document must include:
- The parties involved (plaintiff and defendant).
- A summary of the dispute.
- The legal grounds for the lawsuit.
- Evidence supporting the claim.
Filing Fee: There is a fee for filing the lawsuit, which depends on the nature and value of the claim.
Step 2: Summoning the Defendant (Davalı)
After the lawsuit is filed, the court will issue a summons to the defendant, notifying them of the lawsuit and the required response.
The defendant has a set period (typically two weeks) to submit a response (cevap dilekçesi) to the court.
Step 3: Preliminary Hearing (İlk Duruşma)
After receiving the defendant’s response, the court will set a date for a preliminary hearing.
During this session, the judge will review the case and attempt to clarify the points of dispute. If necessary, additional documents, testimonies, or evidence may be requested.
Step 4: Evidence and Witness Testimonies
- Evidence: Each party may present evidence to support their claims, including written contracts, invoices, emails, or witness testimony.
- Witnesses: If witnesses are involved, they may be called to testify. Commercial courts typically require that any evidence be presented early in the process, and new evidence may not be allowed later on.
Step 5: Court Hearings and Legal Arguments
The court will schedule multiple hearings to review the evidence and listen to the legal arguments from both sides.
Lawyers for both parties will be given an opportunity to present their case, focusing on the application of Turkish Commercial Code to the facts.
Step 6: Judgment (Karar)
Once the court has reviewed all the evidence, it will issue a verdict (karar). This can take several months to several years, depending on the complexity of the case.
The judgment can either accept or reject the claims made by the plaintiff.
If the lawsuit is successful, the court may order the defendant to:
- Pay damages or compensation.
- Fulfill obligations under the contract.
- Cease illegal activities (e.g., trademark infringement).
Step 7: Appeal Process (İstinaf Temyiz)
If a party disagrees with the judgment, they can appeal the decision to a higher court (usually an Appellate Court).
In some cases, the final decision can be appealed to the Supreme Court of Appeals (Yargıtay).
Step 8: Enforcement of the Judgment (İcra)
If the judgment is in favor of the plaintiff, and the defendant refuses to comply, the plaintiff can initiate enforcement proceedings. These are conducted by the Enforcement Offices (İcra Dairesi), which can seize assets or enforce payment of the judgment.
4.Time Limits for CLs
Statute of Limitations: CLs are subject to a statute of limitations. The general time limits are:
- 5 years for claims related to commercial contracts (e.g., unpaid debts, damages).
- 10 years for claims related to property rights, infringements, and intellectual property rights.
Time starts from the date the dispute occurred or when the claimant became aware of the issue.
5.Alternative Dispute Resolution (ADR)
In addition to formal litigation, Alternative Dispute Resolution (ADR) mechanisms, such as mediation and arbitration, are commonly used to resolve commercial disputes.
Arbitration is frequently used in commercial contracts, especially those with an international element, as it provides a quicker and more flexible way to resolve disputes without going through the court system.
The Istanbul Arbitration Center (ISTAC) is one of the main institutions for arbitration.
6.Enforcement of Foreign Commercial Judgments
Foreign judgments may be enforced under the reciprocity principle. This means that a foreign judgment can only be enforced if the country where the judgment was made also recognizes and enforces Turkish judgments.
For enforcement, the foreign judgment must be recognized by a Turkish court, and the party seeking enforcement must apply to the Turkish Court of First Instance for recognition and enforcement.
7.Legal Costs and Attorney Fees
The costs of a CL depend on the complexity of the case, the value of the claim, and whether the case goes to trial or settlement.
Typically, the losing party in a CL may be ordered to pay court costs and attorney fees for the prevailing party, though this is not always the case.
Commercial lawsuits in Turkey are an essential part of the legal framework for businesses, helping to resolve disputes related to contracts, debt recovery, intellectual property, and other commercial matters. Understanding the legal process, types of lawsuits, and procedures for filing and resolving disputes can help businesses navigate the legal landscape effectively. If you’re involved in a commercial dispute in Turkey, it’s advisable to consult with a local lawyer who is familiar with Turkish Commercial Code and can guide you through the litigation or alternative dispute resolution process. Please feel free to contact us for more information and further inquiries about our unique services. You can also subscribe to Tacirsoft Hukuk Bilgi Sistemi, that is Turkey’s only Corporate Law and Organized Industrial Zones Law database.