Legal Protection of Arab Investors and Investment Disputes in Turkey

Türkiye is an important destination for many Arab investors who are interested in real estate, business, trade, manufacturing, tourism, technology, and other sectors. Istanbul in particular attracts investors from many Arab countries, with a significant number of investors entering Türkiye through Istanbul Airport.

Foreign investors may, however, encounter legal problems involving contracts, companies, real estate, business partners, payments, licensing, taxation, or other commercial matters.

Understanding the available legal protections and knowing how to respond to an investment dispute can be important for Arab citizens investing in Türkiye.

Can Arab Citizens Invest in Türkiye?

Foreign nationals, including Arab citizens, can invest in Türkiye subject to the applicable laws and sector-specific rules.

Depending on the investment, an Arab citizen may:

• Establish a company.
• Become a shareholder in a Turkish company.
• Purchase certain real estate.
• Enter into commercial agreements.
• Establish a business.
• Invest in various permitted sectors.
• Participate in joint ventures.

The legal requirements can vary depending on the type and size of the investment.

What Legal Risks Can Foreign Investors Face?

An investment may involve several different areas of law.

Common legal issues may include:

• Breach of contract.
• Disputes between shareholders.
• Real estate disputes.
• Failure to deliver goods or services.
• Unpaid debts.
• Misrepresentation.
• Fraud allegations.
• Corporate management disputes.
• Licensing problems.
• Employment disputes.
• Tax-related legal issues.

A legal review before making an investment can help identify contractual and regulatory issues.

Why Are Investment Contracts Important?

A properly drafted contract can define the rights and obligations of the parties.

For an Arab investor, a commercial or investment agreement may address:

• Investment amount.
• Payment terms.
• Ownership percentages.
• Management rights.
• Profit distribution.
• Responsibilities of each party.
• Termination conditions.
• Confidentiality.
• Dispute resolution.
• Applicable law.

Clear contractual provisions can be particularly important when the parties are from different countries.

What If an Arab Investor Has a Dispute With a Turkish Business Partner?

Disputes between investors and local business partners can arise for different reasons.

For example, the parties may disagree about:

• Ownership percentages.
• Profit distribution.
• Management decisions.
• Company funds.
• Additional investment requirements.
• Transfer of shares.
• Business expenses.
• Termination of the partnership.

The first step is generally to review the company's documents, partnership agreement, correspondence, financial records, and other relevant evidence.

What If the Investor Has Paid Money but the Investment Was Not Completed?

An Arab investor may transfer money for a property, company, project, or other investment and later discover that the transaction has not been completed as agreed.

In such circumstances, the legal options depend on:

• The contract.
• Payment records.
• The reason the transaction failed.
• The obligations of the other party.
• Evidence of the transaction.
• Whether there is a contractual or statutory claim.

Bank transfer records and written agreements can be particularly important.

What If the Investor Believes They Have Been Defrauded?

Investment fraud can involve false information about a company, property, project, investment opportunity, or expected financial return.

If an Arab investor believes that fraud has occurred, it is important to preserve evidence such as:

• Contracts.
• Bank transfer receipts.
• Emails.
• Messages.
• Advertisements.
• Company information.
• Property documents.
• Names and contact information of the relevant parties.

Depending on the circumstances, civil, commercial, or criminal legal procedures may be considered.

What If the Investment Involves Real Estate?

Real estate is one of the areas in which foreign investors frequently require legal assistance.

Before purchasing property, an investor may need to examine:

• Title deed records.
• Ownership.
• Existing restrictions.
• Mortgages or liens.
• Building status.
• Zoning issues.
• Sales contract.
• Payment arrangements.
• Completion and delivery obligations.

A legal review can help identify potential problems before the transaction is finalized.

What If the Investment Is Made Through a Turkish Company?

Some Arab investors establish a Turkish company before making their investment.

In such cases, the investor may need to consider:

• Company structure.
• Shareholding.
• Articles of association.
• Management powers.
• Shareholder agreements.
• Tax obligations.
• Employment issues.
• Commercial contracts.
• Licensing requirements.

The legal structure should reflect the actual investment relationship and the investor's objectives.

Can an Arab Investor Protect Their Shareholding?

Shareholders may have rights arising from Turkish corporate law and the company's constitutional documents.

Potential disputes may concern:

• Unauthorized transfer of shares.
• Management decisions.
• Dividend payments.
• Shareholder meetings.
• Company assets.
• Minority shareholder rights.
• Corporate records.

The specific rights available depend on the company structure and applicable legislation.

What If a Business Partner Transfers Company Assets Without Consent?

If an investor believes that company assets have been improperly transferred or used, the matter may require an urgent legal review.

The relevant documents may include:

• Company records.
• Board or shareholder decisions.
• Financial statements.
• Bank records.
• Contracts.
• Asset-transfer documents.

Depending on the facts, civil, commercial, or other legal remedies may be considered.

What Is the Importance of Due Diligence?

Due diligence is an important part of protecting an investment.

Before investing, an Arab investor may consider reviewing:

• The legal status of the company.
• Ownership structure.
• Existing debts.
• Litigation.
• Licenses.
• Contracts.
• Tax obligations.
• Real estate records.
• Regulatory restrictions.

A professional legal review can help identify risks before the investment is completed.

What If the Investor Is Outside Türkiye?

An Arab investor does not necessarily need to be physically present in Türkiye for every legal or commercial procedure.

Depending on the transaction, a properly prepared power of attorney may allow a lawyer or authorized representative to handle certain matters.

This can be particularly useful for investors who live in the Gulf countries or other countries and cannot travel to Türkiye for every transaction.

What If the Investor Has an Entry Ban or Tahdit Code?

An investor may have commercial or property interests in Türkiye while simultaneously facing an immigration restriction.

For example, an Arab investor may own property or shares in a Turkish company but have an entry ban or Tahdit code that prevents or complicates travel to Türkiye.

In such circumstances, the immigration issue and the investment issue should be considered separately.

Legal representation may allow certain commercial matters to be handled without requiring the investor to be physically present, depending on the transaction.

What If the Investor Is Refused Entry at Istanbul Airport?

If an Arab investor arrives at Istanbul Airport and is refused entry, the consequences can extend beyond travel.

The investor may have:

• A company meeting.
• A property transaction.
• A court proceeding.
• A business negotiation.
• A contractual obligation.

The legal basis for the refusal should be identified, particularly if the investor needs to return to Türkiye regularly.

Can Investment Disputes Be Resolved Through Negotiation?

Not every investment dispute needs to proceed immediately to court.

Depending on the circumstances, the parties may consider:

• Negotiation.
• Settlement.
• Mediation.
• Arbitration, where applicable.
• Litigation.

The appropriate dispute-resolution method depends on the contract and the nature of the dispute.

What If the Contract Includes Arbitration?

Some international investment and commercial agreements contain arbitration clauses.

If an agreement provides for arbitration, the dispute may need to be handled according to the relevant arbitration provisions.

Before starting proceedings, the investor should review:

• The arbitration clause.
• Applicable rules.
• Seat of arbitration.
• Governing law.
• Notice requirements.
• Time limits.
• Evidence requirements.

What If the Contract Was Signed in Arabic or English?

International investors often sign contracts in more than one language.

The agreement should clearly identify which language controls if there is a conflict between different versions.

A legal review of the contract before signing can help identify potential problems involving translation and interpretation.

Cosmos Legal Law Firm Services for Arab Investors

Cosmos Legal Law Firm provides legal assistance to Arab investors and foreign nationals investing or conducting business in Türkiye.

Depending on the circumstances, the firm's services may include:

• Investment-related legal advice.
• Company formation.
• Shareholder agreements.
• Commercial contracts.
• Real estate transactions.
• Corporate disputes.
• Debt recovery.
• Contract disputes.
• Investment-related litigation.
• Arbitration and dispute-resolution matters.
• Due diligence.
• Entry-ban and Tahdit-code matters affecting investors.
• Immigration and residence issues.

The firm can review the legal structure of an investment and assist with disputes that arise during the investment process.

Why Should Arab Investors Obtain Legal Advice Before Investing?

Investment decisions can involve significant financial commitments.

Before transferring funds or signing an agreement, an investor may benefit from reviewing:

• The identity and legal status of the contracting party.
• Ownership of the relevant asset.
• The company's financial and legal position.
• Contractual obligations.
• Exit rights.
• Dispute-resolution mechanisms.
• Applicable regulatory requirements.

Early legal review may help identify potential risks before they become disputes.

Conclusion

Arab citizens investing in Türkiye may encounter legal issues involving companies, real estate, commercial contracts, business partners, payments, and investment disputes.

A clear contractual structure, proper due diligence, and professional legal review can be important elements of protecting an investment.

For Arab investors who travel through Istanbul Airport, immigration issues such as entry bans or Tahdit codes may also affect their ability to personally manage their investments in Türkiye.

Cosmos Legal Law Firm provides legal services to Arab investors in Türkiye concerning investment structures, company formation, commercial contracts, real estate, shareholder disputes, debt recovery, litigation, arbitration, and immigration-related issues that may affect foreign investors.

Each investment dispute should be assessed individually based on the contracts, documents, transactions, and applicable Turkish law.