Turkey: Presidential Order No. 85 Amending Decree No. 32 On The Protection Of The Value Of The Turkish Lira

Last Updated: 28 September 2018
Article by Acar & Ergonen

As a result of the recent dramatic decrease in the value of Turkish Lira against foreign currencies, the Decree No. 32 on the Protection of the Value of the Turkish Lira dated August 07, 1989 ("Decree No. 32") has been amended by the Presidential Order No. 85 ("Presidential Order"), which was published on the Official Gazette dated September 12, 2018 and entered into force on the very same date ("Effective Date").

Presidential Order aims to increase the value of the Turkish Lira against foreign currencies, and sets forth certain effective yet legally questionable restrictions on the future as well as current agreements:

According to the amendments introduced by Presidential Order to Decree No.32, except for certain cases to be determined by the Ministry of Treasury and Finance ("Ministry"), prices/fees as well as any other payment obligations cannot be determined as or indexed to a foreign currency in Certain Agreements (as listed below) to be executed by and between the residents in Turkey at any time falling after the Effective Date.

In addition, Presidential Order has also introduced amendments to Decree No.32 with regard to Certain Agreements which have already been executed by and between the residents in Turkey at any time falling before the Effective Date. Accordingly, except for certain cases to be determined by the Ministry, the relevant clauses regarding the prices/fees as well as any other payment obligations determined as or indexed to a foreign currency in such agreements must be negotiated by the parties again and re-determined in Turkish Lira within 30 days following the Effective Date (until October 13, 2018).

Presidential Order has introduced the above restrictions to Decree No.32 only in relation to Certain Agreements which are stipulated as (i) sale and purchase agreements related to movable and immovable properties, (ii) all kinds of rental agreements related to movable and immovable properties including vehicle rental and financial leasing, (iii) leasing agreements, (iv) employment agreements, (v) service agreements and (vi) work agreements. Although, the Ministry has been authorized by Presidential Order to determine the exceptions to such restrictions, the issue has not been clarified yet. Therefore, until certain exemptions are rendered by the Ministry, any types of transactions which are legally construed as Certain Agreements will be subject to the restrictions introduced by Presidential Order. In terms of the scope of the Certain Agreements, it can be argued that Certain Agreements are agreements which are "legally defined in the relevant laws"[*] and therefore it does not cover atypical agreements.

As referred to above, Presidential Order has stipulated a transition period of 30 days enabling the parties of Certain Agreements executed before the Effective Date to re-negotiate the payment obligations determined as foreign currency and convert them into Turkish Lira; however any foreign exchange rate on which such conversion will be made has not been dictated nor advised. Considering the short transition period that parties have to re-negotiate the most essential provision of an agreement as well as the high level of conflict of interest, this legal gap is very likely to cause disputes between the parties rather than mutual compliance with the legislation.

Moreover, as it is explicitly stated in Presidential Order, the restrictions will only be applicable if the Certain Agreements are executed by and between the residents in Turkey, (it is construed as "regardless of their nationality"), which, as a first thing, draws attention to importers residing in Turkey, since they will no longer be able to reflect the prices that they pay to purchase the goods or services in the foreign market when they sell the same in the local market.

It is controversial as to whether the transactions conducted in breach of the Presidential Order will be null and void. Some argue that it is indeed null and void due to breach of mandatory rules; while others argue that the persons who do not comply with the obligations stipulated by the Presidential Order will be subject to an administrative fine from TRY 6.306,- to TRY 52.601,- (updated figures) according to Article 3 of Law No.1567 on the Protection of the Value of the Turkish Lira.

Footnote

[*] Sale and purchase agreements are defined as agreements in which the seller undertakes to deliver an item and transfer its ownership to the buyer in consideration for a sale price which the buyer undertakes to pay to the seller as per Article 207 of the Turkish Code of Obligations numbered 6098 ("TCO").

Rental agreements are defined as agreements in which the landlord or lessor grants a right to use an object to the tenant or lessee in consideration for the rental which the tenant or lessee undertakes to pay to the landlord or lessor as per Article 299 of TCO.

Leasing agreements are defined under Article 3 of Financial Leasing, Factoring and Financing Companies Law ("Leasing Law"). According to its legal definition, financial lease means, provided that it is based on a financial lease agreement, any of the following transactions conducted for the purpose of financing of a lessee by a lessor who is authorized under the Leasing Law or relevant legislation: (i) transfer of the title of the leased property to the lessee at the end of the lease term; or (ii) granting the lessee a right to purchase the leased property for a price under its actual value at the end of the lease term; or (iii) leasing in the event that the lease term is longer than the eighty percent of the economic life of the leased property or that the aggregate current value of the rental payments to be made according to the lease agreement is higher than the ninety percent of the actual value of the leased property.

Employment agreements are defined as agreements in which the employee undertakes to perform work in subordination to the employer in consideration for the remuneration which the employer undertakes to pay to the employee under Article 8 of Labor Law numbered 4857 ("Labor Law").

Service agreements are defined as agreements in which the employee undertakes to work in the service of the employer for a limited or unlimited period and the employer undertakes to pay him a salary based on the amount of time he works (time wage) or the tasks he performs (piece work) under Article 393 of TCO. Please note that the legal provisions of TCO related to service agreements apply to the agreements which are executed with the employees who are not subject to Labor Law.

Work agreements are defined as agreements whereby the contractor undertakes to deliver a work and the customer undertakes to pay him for that work under Article 470 of the TCO.

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.

Authors
 
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
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must 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.

Disclaimer

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.

General

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