Choosing the authorized court when making up international trade agreements on the example of the Turkish law system.

authorized court in the agreement
making business with Turkish partners

When drawing up the agreement between the parties, a very important role is played by such principle of civil law as "freedom of contract". In other words, the partners who make up the contract have the right to determine its conditions, form and content at their own discretion. This principle makes it possible to carry on free economic activity and is a sign of economic liberalism ideology in law.

 

Within this legal freedom, parties of the agreement are entitled to choose the court`s jurisdiction which is going to cover arising disputes and determine the laws of which country will be applied for regulating economic activity and existing legal powers.

The ability to predefine the authorized judiciary in the contract provides important legal protection for the parties and makes it easier to exercise contractual relations in the future.

In our opinion, when preparing international contracts and choosing the authorized court to solve the possible disputes, the primary role is played by evaluation of the opportunities for debt collection provided the judicial authorities of this or that country. In practice, the foreign partners are usually mistakenly insist that in case of disputes arising from the contract it is necessary to apply the jurisdiction of the native country`s courts. However, in many cases, according to the peculiarities of the agreement, such a choice of the authorized court is totally unjustified and only has the psychological basis. The arbitration award of a third country, according to the New York Convention and the relevant provisions should be subsequently recognized and enforced on the territory of Turkey. However, conducting the trial may require significant financial cost, especially if we take into account the costs required for two trials in different countries. At the same time it should be noted that the loss of time in such situation will turn out to be very significant.

In practice, having the court decision of the country there the debtor company and its assets are situated, the lender has all legal grounds to immediately file a lawsuit and recover the debt through the bailiffs service. Being aware of these legal peculiarities, the partners can prevent possible disputes related to the account receivable collection. Also, on the contrary, knowing that the decision of the authorized court of another country on recovering the debt in Turkey is more difficult and takes longer time unfair partner can intentionally provoke controversy.

According to Article 17 of the Civil Procedural Law 6100 of Turkish Republic, to resolve disputes that have arisen or may arise between entrepreneurs or public entities, the authorized court (one or more than one) can be assigned in the agreement. Unless the parties agree otherwise, in the event of a dispute, the legal process can be started only at the authorized court, which is specified in the contract.

According to Article 47 of the 5718 private international law and procedural law, if the particular kind of law disagreement, should not be solved only in the court of a particular country, and one of the parties is represented by the foreign partner, the legal proceedings may take place in any foreign court designated in the agreement. The agreement between the parties must be submitted in writing. In case the court specified in the contract pleads not authorized, or if the defendant will not have objections, proceedings may continue in the Turkish court, which will be recognized as the authorized court, even if the following is not specified in the contract.

Summing up the information given in these two articles, we can conclude that if the court of the Turkish Republic is not listed in the contract as an authorized court, in case of the disputes the trial can not be handled the court of Turkey. However, under certain circumstances, a lawsuit on the recognition and enforcement of a foreign arbitration award may be held on the territory of the Turkish Republic.

In conclusion, we would like to summarize the facts mentioned above. When selecting the authorized judiciary, which will be listed in the international trade agreements, it is necessary to take into account in which country the assets of the partner are and consider the possibility of debt collection through the court with the least financial and time losses. For example, if the enterprise's assets are located in Turkey, when making up a contact, it is advisable to appoint the Commercial Court of Istanbul or Ankara as an authorized court. This will supply the foreign partner with such benefits as: more rapid and efficient procedure of debt collection, lower financial expenses for handling the trial, the ability to apply such an important temporary legal measures as the arrest and the confiscation of property of the debtor.