Commercial Contracts for Foreigners and International Contract Law in Turkey

Introduction

Türkiye's growing role in international trade and investment has led to an increasing number of commercial relationships between Turkish companies and foreign individuals or businesses. Foreign investors may enter into distribution agreements, supply contracts, service agreements, joint venture agreements, licensing arrangements, construction contracts, franchise agreements, and international sales contracts with Turkish counterparties.

For these transactions, preparing a clear and legally enforceable contract is essential. Questions concerning applicable law, jurisdiction, arbitration, payment obligations, liability, termination, confidentiality, intellectual property, and enforcement may become particularly important when the parties are located in different countries.

Cosmos Legal Law Firm provides legal consultancy to foreign individuals, companies, and investors concerning commercial contracts, international contract law, contract negotiations, dispute resolution, and cross-border transactions in Türkiye.

Turkish Law and International Commercial Contracts

A commercial contract involving a foreign party may contain an international element because the parties are established in different countries, the contractual obligations are performed in different jurisdictions, or the transaction involves cross-border payments or goods.

In such cases, determining the applicable law is one of the most important issues.

Depending on the circumstances, the parties may need to consider Turkish legislation together with the conflict-of-laws rules applicable to the transaction and any relevant international conventions.

Cosmos Legal Law Firm assists international clients in determining which legal framework may apply to their commercial agreements and in structuring contracts accordingly.

Choice of Law in International Contracts

International contracts frequently contain a governing-law clause specifying which country's law will apply to the agreement.

For example, the parties may agree that their contract will be governed by Turkish law, the law of another country, or another legally appropriate framework, subject to the mandatory rules applicable to the transaction.

The choice of law should not be treated as a standard contractual formality. It can affect:

• Contract interpretation;
• Liability;
• Damages;
• Termination rights;
• Prescription or limitation issues;
• Security mechanisms;
• Enforcement;
• Available remedies.

Before signing an international commercial agreement, foreign parties should therefore understand the practical consequences of the selected governing law.

Cosmos Legal Law Firm reviews governing-law clauses and assists clients in negotiating contractual provisions that correspond to the structure and objectives of the transaction.

International Sales and the CISG

International sales transactions involving Türkiye may also raise questions concerning the United Nations Convention on Contracts for the International Sale of Goods (CISG).

Türkiye is a contracting state to the CISG. The Turkish Investment Office's legal guide identifies the CISG among the multilateral instruments relevant to Türkiye's international economic relations. (Türkiye Yatırım Ofisi)

The CISG can provide a uniform legal framework for qualifying international sales of goods between parties located in different contracting states. Nevertheless, whether it applies to a particular transaction depends on the circumstances and contractual arrangements.

Cosmos Legal Law Firm can assist foreign companies in assessing whether the CISG, Turkish law, another national law, or a combination of applicable rules should be considered when drafting an international sales agreement.

Drafting Commercial Contracts for Foreign Clients

International commercial contracts should clearly define the rights and obligations of each party.

Depending on the transaction, a contract may address:

• Identification of the parties;
• Scope of services or products;
• Price and payment terms;
• Delivery obligations;
• Currency;
• Taxes and customs responsibilities;
• Guarantees and warranties;
• Confidentiality;
• Intellectual property rights;
• Data protection;
• Liability and indemnification;
• Force majeure;
• Termination;
• Applicable law;
• Jurisdiction or arbitration;
• Notices and communications;
• Language of the agreement.

A well-structured agreement can help reduce uncertainty and establish a clear framework for handling potential disputes.

Cosmos Legal Law Firm provides contract drafting, review, negotiation, and legal consultancy services for foreign clients conducting business in Türkiye.

Commercial Contracts and Foreign Investors

International investors entering the Turkish market may need several different contractual arrangements at the same time.

An investment project may involve:

• Share purchase agreements;
• Shareholders' agreements;
• Joint venture agreements;
• Distribution agreements;
• Supply contracts;
• Employment agreements;
• Financing agreements;
• Construction contracts;
• Technology and licensing agreements;
• Real estate agreements.

The Turkish Investment Office states that international investors may establish the company forms provided under the Turkish Commercial Code and are generally subject to the same conditions applicable to local investors under the foreign direct investment framework. (Türkiye Yatırım Ofisi)

Consequently, legal planning should consider the investor's corporate structure as well as the individual contracts forming part of the investment.

Contract Negotiation and Legal Due Diligence

Before entering into a major commercial relationship, foreign companies may benefit from legal due diligence concerning their prospective Turkish business partner.

Depending on the transaction, this may include examining:

• Corporate registration;
• Authority of company representatives;
• Existing contractual obligations;
• Litigation and enforcement matters;
• Licences and permits;
• Ownership structures;
• Intellectual property;
• Regulatory compliance;
• Security interests;
• Financial and contractual liabilities.

Cosmos Legal Law Firm assists foreign clients with contract negotiations and legal due diligence in connection with commercial transactions in Türkiye.

Dispute Resolution Clauses

An international commercial contract should also address what happens if the parties cannot resolve a dispute through negotiation.

Possible mechanisms include:

• Turkish courts;
• Foreign courts, where legally appropriate;
• Domestic arbitration;
• International arbitration;
• Mediation;
• Multi-step dispute-resolution mechanisms.

The Turkish Investment Office notes that foreign investors may use domestic or international arbitration where the relevant investment agreement contains an arbitration clause and the applicable legal requirements are satisfied. (Invest in Türkiye)

For international commercial contracts, the drafting of the dispute-resolution clause can therefore be particularly important.

Cosmos Legal Law Firm advises clients on jurisdiction and arbitration clauses and assists with dispute-resolution strategies arising from international commercial relationships.

International Arbitration and Commercial Disputes

International arbitration can be relevant where parties from different countries wish to resolve their disputes through an arbitral tribunal rather than ordinary court proceedings.

Türkiye's legal framework permits international arbitration in circumstances meeting the applicable requirements. The Turkish Investment Office also notes the availability of institutional arbitration rules, including those associated with the Istanbul Arbitration Centre (ISTAC). (Invest in Türkiye)

When drafting an arbitration clause, parties should carefully consider matters such as:

• Seat of arbitration;
• Applicable arbitration rules;
• Number of arbitrators;
• Language of proceedings;
• Governing law;
• Scope of the arbitration agreement;
• Interim measures;
• Enforcement of the eventual award.

Cosmos Legal Law Firm provides legal assistance concerning arbitration clauses, international commercial arbitration, and cross-border dispute resolution.

Enforcement of Contractual Rights

Having a contract does not by itself guarantee that a party will voluntarily comply with its obligations.

If a contractual dispute arises, the appropriate legal remedy depends on the agreement, applicable law, type of obligation, and dispute-resolution mechanism.

Potential remedies may involve:

• Negotiation;
• Mediation;
• Court proceedings;
• Arbitration;
• Interim legal measures;
• Debt collection;
• Enforcement proceedings;
• Recognition and enforcement of foreign judgments or arbitral awards.

Cosmos Legal Law Firm assists foreign clients in evaluating these options and pursuing the appropriate legal procedure.

Foreign Companies Establishing Business Relationships in Türkiye

Foreign companies may establish different forms of business presence in Türkiye. The official Investment Office explains that international investors may establish company types recognized under the Turkish Commercial Code, while foreign companies may also establish liaison offices subject to the relevant conditions. (Türkiye Yatırım Ofisi)

Where documents are issued outside Türkiye, additional formalities can also become relevant. Official guidance indicates that certain foreign-issued documents may need to be notarised and apostilled or otherwise authenticated and subsequently officially translated and notarised in Türkiye. (Türkiye Yatırım Ofisi)

Cosmos Legal Law Firm assists foreign businesses with the legal documentation required for their commercial activities and contractual relationships in Türkiye.

Legal Services Provided by Cosmos Legal Law Firm

Cosmos Legal Law Firm provides a broad range of legal services concerning commercial and international contracts in Türkiye.

These services may include:

• Drafting commercial contracts;
• Reviewing existing agreements;
• Contract negotiations;
• International sales agreements;
• Distribution and agency agreements;
• Joint venture agreements;
• Shareholders' agreements;
• Service and supply contracts;
• Licensing and technology agreements;
• Franchise agreements;
• Construction and investment contracts;
• Governing-law analysis;
• Jurisdiction and arbitration clauses;
• Contractual risk analysis;
• Legal due diligence;
• Commercial dispute resolution;
• Litigation and arbitration;
• Recognition and enforcement procedures.

For foreign clients, Cosmos Legal Law Firm can also coordinate contractual matters with broader corporate, investment, immigration, property, tax, and regulatory requirements where these issues are connected with the underlying transaction.

Why Contractual Planning Matters

A commercial agreement should not only describe the transaction but also anticipate potential problems.

Important questions include:

• What happens if one party fails to pay?
• Which law governs the agreement?
• Where will a dispute be resolved?
• In which language will the proceedings take place?
• What happens if the exchange rate changes?
• Who bears customs and tax obligations?
• Can either party terminate the agreement?
• How will confidential information be protected?
• Who owns intellectual property created during the relationship?
• How will a judgment or arbitral award be enforced?

Addressing these questions before signing can provide greater contractual clarity for both Turkish and foreign parties.

Conclusion

Commercial relationships involving foreign parties require careful consideration of contract law, conflict-of-laws rules, international sales law, corporate law, dispute resolution, and enforcement mechanisms. Türkiye's legal framework provides various mechanisms for international investors and businesses, while international instruments such as the CISG may also become relevant depending on the transaction. (Türkiye Yatırım Ofisi)

Cosmos Legal Law Firm provides legal consultancy and representation for foreign individuals and companies concerning commercial contracts, international contract law, contract drafting, negotiations, legal due diligence, international sales, arbitration, litigation, and cross-border dispute resolution in Türkiye.

For foreign businesses entering into contractual relationships with Turkish companies, obtaining legal advice before signing the agreement can help clarify the applicable legal framework and establish appropriate mechanisms for managing contractual risks.