Turkey: Strict Conditions Regarding the Use of the 'Organic Link Theory' Reiterated by the Court of Appeals: Extending Liability to Affiliates

"Organic link theory" applies to legal entities and is relied upon by such entities to extend the liability of one legal entity to another when there is an "organic link" between the two that could render both entities as one in terms of exposure to legal liability. Organic link theory has no positive stipulation or declaration under existing Turkish legislation; however, the courts have adopted and applied this theory in their decisions. Resorting to organic link theory has turned into a favored go-to move for extending or spreading liability to more convenient targets in Turkish litigation practice in recent years. For instance, this is a preferred move that is frequently observed in cases that concern foreign companies that have subsidiaries in Turkey, both of which are separate legal entities.

In such cases, the claimants direct their claims to the Turkish subsidiaries of foreign companies, despite the fact that the goods or services subject to their claims were provided to them directly by independent and completely separate foreign companies, or vice versa. This method is often utilized simply because of logistical/administrative expediency or opportunism; for instance, Turkish subsidiaries of foreign companies are usually easier to target, both in terms of the service of official papers and the enforcement of court decisions. In the reverse scenario, claims may be directed against foreign companies, even though it is actually the Turkish subsidiary that is the liable/responsible party for the goods or services that are subject to the claims. Once again, this "defendant shopping" technique might be used simply because suing the foreign entity could be more convenient and advantageous in terms of the enforceability of any final judgments (i.e., collectability of any compensation) due to the superior financial health or resources of the foreign entity. In both instances, the claimants rely on the organic link theory and argue that there is an organic link between the foreign company and its Turkish subsidiary, as a result of which both entities must be deemed a single entity and be held legally liable. The Court of Appeals has handled disputes related to the applicability of the organic link theory in numerous cases.

The 15th Civil Chamber of the Court of Appeals[1] has acknowledged that there must be some sort of close relationship between two separate legal entities, such as an economic or commercial dependence of one on the other, or sharing a common fate, or acting together, for the organic link theory to be applicable. For instance, although it does not provide sufficient proof of an organic link on its own, the fact that two separate companies have the same shareholders could be an indication of an organic link. The General Civil Assembly of the Court of Appeals[2] has ruled that mere similarities between the companies or merely sharing a location or operating at the same address do not provide conclusive proof of an organic link. In another case, however, it was ruled[3] that the fact that two separate companies belonged to the same company group that was managed by a holding company may be considered as evidence of the existence of an organic link between these two companies.

That being said, the precedents clearly illustrate that the organic link theory is based on the prohibition of the abuse of rights and the principle of good faith, which translates to the abuse of the legal protections that separate corporate identities provide in such cases. For instance, in various cases, the Court of Appeals[4] had sought evidence of an intention on the defendant's part to harm the claimant, before agreeing to apply the organic link theory or acknowledging that the legal entity that is not a part of the commercial relationship that is subject to the dispute could also be held legally liable for claims borne of that relationship. Such an intention can manifest itself in, for example, the total transfer of assets to another company, in order to turn the liable company into a hollow shell and make it virtually impossible for the creditor (i.e., claimant) to collect any judgments from that company. Thus, the Court of Appeals requires very strict conditions for the application of the organic link theory and does not allow this concept to be put forward so easily, whenever a claimant wishes to drag yet a third party into a dispute, often merely because it may be more convenient or advantageous for the claimant.

In a recent case, the Court of Appeals reiterated that the organic link theory can only be applied under very strict conditions, which is significant due to the precise wording used in the verdict with respect to this issue. In this case, the plaintiff, a company established in Turkey, brought a lawsuit against the Turkish subsidiary of a multinational company ("TS") and the multinational company ("MNC") itself due to unfair competition claims, and requested monetary compensation from the defendants. Although the commercial relationship was established solely between the plaintiff and the TS, the plaintiff tried to drag the MNC into the litigation by claiming that there was an organic link between these two companies, and that the MNC must therefore be held liable for the anti-competitive acts of the TS. The MNC argued that the case should be dismissed due to lack of standing, as there was no direct or indirect legal relationship between the plaintiff and the MNC. The local court ruled[5] that the legal relationship existed only between the plaintiff and the TS; therefore, it was not possible to hold the MNC responsible by relying on the organic link theory.

The court's reasoning underlying this decision was that there was no evidence proving that the MNC had acted contrary to the principle of good faith by hiding its assets or resorting to similar evasive actions. The plaintiff appealed the decision, but the 11th Civil Chamber of the Court of Appeals upheld[6] the lower court's decision. Thus, by this decision, it has been conclusively established, by virtue of the clear and unambiguous language of the court in its reasoning for relieving the MSN of legal liability, that proof of an intention to harm the claimant's chances of collecting a judgment or executing its rights is a prerequisite for the application of the organic link theory.

[1] 15th Civil Chamber of the Court of Appeals, September 18, 1996, 1996/4034 E., 1996/4502 K.,

[2] General Civil Assembly of the Court of Appeals, April 16, 2003, 2003/9-279 E., 2003/292 K.

[3] 9th Civil Chamber of the Court of Appeals, November 25, 2002, 2002/7086 E., 2002/22210 K.; 19th Civil Chamber of the Court of Appeals, April 7, 2005, 2005/448 E., 2005/3753 K.

[4] 17th Civil Chamber of the Court of Appeals, March 30, 2009, 2009/6139 E., 2009/1827 K.; 17th Civil Chamber of the Court of Appeals, March 24, 2009, 2009/4597 E., 2009/1709 K.; 17th Civil Chamber of the Court of Appeals, November 12, 2009, 2009/5758 E., 2009/7495 K.; 17th Civil Chamber of the Court of Appeals, March 26, 2012, 2012/10906 E., 2012/3592 K.; 17th Civil Chamber of the Court of Appeals, February 3, 2011, 2010/5439E., 2011/685 K.

[5] Istanbul Anadolu 3rd Commercial Court of First Instance, May 12, 2015, 2010/718 E., 2015/369 K.

[6] 11th Civil Chamber of the Court of Appeals, December 12, 2017, 2016/8831 E., 2017/7161 K.

This article was first published in Legal Insights Quarterly by ELIG, Attorneys-at-Law in March 2018. A link to the full Legal Insight Quarterly may be found here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions