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Legal Aspects of Investment Disputes in Türkiye

Writer's picture: Koca Avukatlık BürosuKoca Avukatlık Bürosu

Türkiye has emerged as a significant hub for both local and international investments, thanks to its strategic location, dynamic economy, and diverse market opportunities. However, as in any investment environment, disputes can arise, posing risks to both investors and stakeholders. This article explores the most common investment disputes in Turkey, the legal framework governing these issues, and the critical role lawyers play in resolving such conflicts effectively.



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Common Investment Disputes in Turkey

Investment disputes in Türkiye often arise in the following areas:

  1. Contractual Disputes: Breaches of investment agreements, joint venture contracts, or construction contracts are frequent sources of contention. These often involve disagreements over terms, delays, or failure to fulfill obligations.

  2. Real Estate Disputes: Türkiye’s booming real estate sector attracts many foreign investors. Disputes typically stem from issues like property title conflicts, zoning restrictions, and fraudulent sales.

  3. Corporate Disputes: Shareholder disagreements, minority shareholder rights, and conflicts regarding mergers and acquisitions are common.

  4. Tax and Regulatory Issues: Investors occasionally face disputes related to taxation, permits, and compliance with Turkish regulatory standards.

  5. Investor-State Disputes: Foreign investors may encounter conflicts with government bodies, including expropriation claims or disagreements over investment incentives.

  6. Employment Disputes: Conflicts related to labor laws, employee rights, and workplace regulations also arise in investment projects.

Legal Framework for Investment Disputes in Türkiye

Türkiye’s investment environment is governed by a robust legal framework aimed at protecting investors and ensuring fair dispute resolution. Key components include:

  • Turkish Civil Code: Governs general contractual and property disputes.

  • Turkish Commercial Code: Addresses corporate disputes, partnerships, and trade-related conflicts.

  • International Arbitration Law: Türkiye is a signatory to the New York Convention, facilitating the enforcement of foreign arbitration awards.

  • Bilateral Investment Treaties (BITs): Türkiye has entered into numerous BITs with other countries to protect foreign investors’ rights.

  • Investment Incentive Legislation: These laws provide guidelines for resolving disputes arising from government-provided incentives.

Resolution Mechanisms for Investment Disputes

Investment disputes in Türkiye can be resolved through several mechanisms, including:

  1. Negotiation and Mediation: Alternative dispute resolution (ADR) methods, such as mediation, are gaining popularity in Türkiye. These approaches offer cost-effective and timely solutions.

  2. Litigation: Turkish courts handle a significant portion of investment disputes. However, litigation can be time-consuming, and foreign investors often prefer other methods due to language barriers and perceived biases.

  3. Arbitration: Arbitration is a preferred method for resolving complex investment disputes. Istanbul’s Arbitration Center (ISTAC) is a growing hub for both domestic and international arbitration cases.

  4. Administrative Remedies: In cases involving government actions, administrative courts provide a venue for redress.

The Role of Lawyers in Resolving Investment Disputes

Lawyers play a pivotal role in navigating the complexities of investment disputes in Turkey. Their expertise is essential in:

  1. Preventive Measures:

    • Drafting clear and enforceable contracts.

    • Conducting due diligence to identify potential risks.

    • Advising on regulatory compliance and local laws.

  2. Dispute Resolution:

    • Representing clients in negotiations and mediations.

    • Preparing robust legal arguments for arbitration or litigation.

    • Ensuring the enforceability of foreign awards in Turkey.

  3. Strategic Guidance:

    • Advising on the selection of appropriate dispute resolution mechanisms.

    • Assisting foreign investors in understanding Turkey’s legal and business environment.

    • Facilitating communication between parties to resolve conflicts amicably.

  4. Advocacy in International Disputes:

    • Representing clients in investor-state disputes under international treaties.

    • Utilizing Turkey’s BITs to protect foreign investments.

Conclusion

Investment disputes are an inevitable part of doing business in a dynamic and growing market like Türkiye. However, with the support of skilled legal counsel and the country’s comprehensive legal framework, investors can resolve conflicts effectively while safeguarding their interests. Lawyers not only facilitate the resolution of disputes but also act as strategic partners in mitigating risks and fostering a stable investment environment.


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