Turkiye: Force Majeure - Hardship in relation to Conflict and Sanctions

Sanctions imposed by Turkiye are generally taken in the form of administrative decisions. Such decisions are taken by the President of Republic of Turkiye or the relevant governmental authorities against a country or a person and are binding on both the administrative authorities and the courts in Turkiye. In other words, the administration may impose penalties against those who violate sanctions and the courts are required to take sanctions into account when evaluating the fate of the any legal relationship.

In terms of contracts, there are two articles of the Turkish Code of Obligations (“TCO”), which are applicable to circumstances such as war: Impossibility of Performance and Hardship.

Impossibility of Performance 

TCO - Article 136: If the performance of a debt becomes impossible due to reasons for which the debtor cannot be held responsible, the debt expires.

Hardship: 

TCO - Article 138: In case an extraordinary situation, which was not foreseen and cannot be expected to be foreseen by the parties at the time of the contract, arises due to a reason for which the debtor cannot be held responsible and changes the existing facts at the time of the contract to the detriment of the debtor to the extent that it is contrary to the rules of good faith, and the debtor has not yet fulfilled his debt or fulfilled without prejudice his rights arising from the hardship of performance, the debtor has the right to ask the judge to adapt the contract to the new conditions, or to withdraw from the contract if this is not possible. In perpetual contracts, the debtor uses the right of termination instead of the right of withdrawal as a rule.

Under Turkish law, force majeure is a reason that cuts the causal link and thus relieves the debtor from liability. If the debtor proves force majeure, he/she will not be liable for the resulting damage. Events such as war, revolution, coup, rebellion etc. could be cited as examples of force majeure. However, the implementation of force majeure will need to be specified on a case-by-case basis. Going forward, as to conclude, if performance is not objectively possible, war and/or sanctions could constitute force majeure.

Due to the principle of freedom of contract under Turkish law, parties are free to regulate force majeure clauses.

However, even if a contract does not include a specific force majeure clause, the relevant provisions of the TCO mentioned above (i.e. Article 136 and Article 138) would still be applicable to the relationship between the parties arising from the contract in question.

Under Turkish law, “force majeure” and “unforeseen circumstances” are separate concepts. Force majeure presents greater severity and inevitability compared to unforeseen circumstances. While force majeure is an event that takes place outside the business and activity of the responsible person, unforeseen circumstances could also be caused internally. Finally, although force majeure always cuts the causal link, the unforeseen circumstances may not always cut the causal link on its own. In this case, the unforeseen circumstances would constitute one of the common causes leading to the harmful result.

According to the International Private and Civil Procedure Law No. 5718, the enforcement of a foreign court's civil verdict for civil law matters that have become definite under the respective foreign state’s law shall be subject to enforcement orders to be rendered by the competent Turkish court.

As per Article 54 of Law No. 5718, the following requirements are required for the enforcement of a foreign court's verdict:

1. The state of the foreign court shall exercise reciprocity in terms of enforcement with Turkiye;
2. The verdict shall not have been rendered on matters that are in the exclusive scope of the jurisdiction of the Turkish courts; 
3. The verdict shall not have been rendered by a court declaring itself competent although a genuine relationship does not exist between the court and the subject matter or parties (if challenged by the defendant facing enforcement);
4. The verdict shall not be explicitly contrary to public order;
5. The defendant whom enforcement is requested against shall be duly summoned and represented before the court renders the verdict as per the respective foreign state’s laws;
6. The verdict shall not be rendered in the defendant’s absence contrary to the respective foreign state’s laws; and
7. The defendant shall not object to enforcement before the Turkish court based on the grounds mentioned above. 

As explained in the first question, sanctions decisions taken by the President of the Republic of Turkiye or the administration against a country or a person are binding on both administrative authorities and the courts in Turkiye. Therefore, executing the obligations arising from a contract, which falls within the scope of a sanction decision, would be deemed as a violation of the relevant decision. In addition, not executing an obligation arising from such a contract would not be deemed as failing to execute since there is legislative justification.

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