As it is known, Article 26 of the Turkish Code of Obligations numbered 6098 a("TCO") is regulated as "the parties can freely determine the content of an agreement within the limits stipulated in the law", therefore the principle of freedom of agreement between the parties is valid. However, in accordance with the Article 27 of the TCO, agreements that are contrary to the mandatory provisions of the law, morality, public order, personality rights or whose subject is impossible will be deemed to be null and void.
In addition to the mandatory provisions on restrictions within the scope of the freedom of agreement regulated by the TCO, Law numbered 805 Regarding Compulsion of Usage of Turkish by Commercial Enterprises ("Law") provides for certain criteria regarding the language of the agreements to be concluded between the parties.
a. With Regard to Turkish Companies
Pursuant to Article 1 of the Law, Turkish companies are required to use Turkish language in their transactions, agreements, communications, accounts and ledgers within the borders of Turkey.
Therefore, it is compulsory for Turkish companies to arrange the agreements in Turkish.
b. With Regard to Foreign Companies
In accordance with Article 2 of the Law, foreign companies and institutions are obliged to arrange their correspondence and transactions in Turkish in terms of documents to be submitted to the Turkish official authorities. At the same time, there is an obligation to arrange the correspondence and transactions between foreign companies and institutions and Turkish companies/Turkish citizens in Turkish.
On the other hand, in accordance with the Article 3 of the Law, should the foreign companies and institutions use a foreign language together with the Turkish, the Turkish text should be prevail and the signatures should be put under the Turkish text, even if the signature is under the text arranged in a foreign language the Turkish text will be valid.
It is seen that while the legislator has used the word "agreements" in the article 1 of the Law and only the words "correspondence" and "transactions" in the Article 2 of the same Law for the foreign companies. While this is the case, it is understood that there is an exception to the arrangement of agreements in Turkish language within the scope of the provision regarding foreign companies regulated in Article 2 of the Law.
However, there are contradictory opinions in both the doctrine and the case law of the Supreme Court, and it is argued that the word "transactions" included in the Article 2 of the Law also includes the the meaning of "agreements" regulated in the Article 1. In this case, it can be said that the using the term "transactions" and "agreements" separately in the Article 1 of the Law while using only the term "transactions" with the meaning which includes "agreements" contradicts the usual course of events.
In this context, in the last decision of the 11th Civil Department of the Supreme Court numbered 2012/4088 E. and 2013/3972 K. and dated 04.03.2013, stated that "Agreements should be signed in Turkish as per the Article 2 of the Law." It shows that the Article 2 of the Law also includes the agreements and therefore foreign companies and institutions have to prepare agreement in Turkish.
As it can be seen, while Article 1 of the Law contains a clear regulation in terms of Turkish language compulsion, since the term "agreement" is not regulated in the Article 2 variously from Article 1 of the Law, and the word "transactions" may also include agreements and with the reason that the Supreme Court supports this opinion, there are different opinions and contradiction in the doctrine regarding the Article 2 of the Law.
3. Legal Sanctions
What sanctions will the companies and institutions face in case of actions against the provisions of the Law mentioned above?
In this context, it is stated in Article 4 of the Law that these documents and transactions will not constitute a provision in favor of the parties acting in contradiction with the provisions of Articles 1 and 2 of the Law.
On the other hand, in the decision of the 11th Civil Chamber of the Supreme Court numbered 2015/11036 E. 2016/9260 K. and dated 01.12.2016, it was stated that "It should be accepted that the arrangement of the agreement in English does not prevent the claimant from paying the service costs payed to the defendant in return for the agreement, as well as the payment of some services provided between the parties under the contract."
In addition to these, pursuant to Article 7 of the Law, a judicial fine, not less than a hundred days, is imposed on the person who violates the above-mentioned provisions.
Within the scope of the explanations above, although the conclusion of the agreements and correspondences in foreign language between Turkish companies are prohibited by article 1 of the Law, most companies are currently in violation of this article in practice and conclude agreements in a foreign language. In addition, while there are different opinions and Supreme Court decision within the scope of Article 2 of the Law, the companies arrange the agreements in a foreign language or arrange it bilingual and determine that the foreign language will be prevail. In practice, it is observed that other than private companies even public companies sign agreements in a foreign language.
As a result, it is clear that the parties have to conclude the agreements in comply with the 1st and 2nd articles of the said Law, since the Law is in force. In this context, since Article 1 of the Law is not open to interpretation, it will be in contradiction with Article 1 of the Law should Turkish companies and institutions arrange the agreements in a foreign language, and the sanctions included in the Law will be applied to the parties. However, since the regulation in Article 2 of the Law is still controversial, it will be appropriate to arrange the agreements in Turkish as well as the foreign language in any case and to determine that Turkish will be prevail in order to avoid any risk.
Originally published 20th May 2020
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