Commercial Litigation: Resolution of Commercial Disputes under Turkish Law

Commercial litigation refers to specialized types of lawsuits that enable the judicial resolution of disputes between commercial enterprises and merchants. Commercial cases differ from general civil litigation due to special procedural rules, faster resolution mechanisms, and the appointment of specialized judges. The provisions of the Code of Civil Procedure No. 6100 (CCP) and the Turkish Commercial Code No. 6102 (TCC) regulate the procedures and principles of commercial litigation, with different applications particularly envisaged for commercial receivables claims, contract breach disputes, inter-company debt cases, and attorney fee calculations.

Table of Contents

• What is the definition and scope of commercial litigation? Which disputes are considered commercial cases?
• How are competent and authorized courts determined in commercial litigation? What is the role of specialized courts?
• How does the evidence collection and presentation process work in commercial receivables cases?
• What are the limitation periods in commercial litigation and how are they applied?
• How are litigation costs and fees calculated in commercial cases?
• How do alternative dispute resolution methods and mediation processes work in commercial litigation?

What is the definition and scope of commercial litigation? Which disputes are considered commercial cases?

Commercial litigation is regulated in Articles 4 and 5 of the TCC and refers to specialized lawsuits concerning the judicial resolution of disputes related to commercial enterprises. According to TCC Article 4, commercial litigation is divided into two categories: absolute and relative commercial cases. Absolute commercial cases arise from matters regulated in the TCC (bills of exchange, maritime trade, transportation, etc.) and do not require the parties to be merchants. Relative commercial cases, on the other hand, arise from matters related to the commercial enterprises of both parties.

Essential Elements of Commercial Litigation

TCC Article 4 has systematic significance in determining the nature of commercial litigation.

For absolute commercial cases, it is not required that the parties be merchants; merely arising from matters regulated in the TCC is sufficient for the case to acquire commercial character.

For relative commercial cases, firstly, the matter must arise from the commercial enterprises of both parties. According to TCC Article 12, a merchant is a person who operates a commercial enterprise, even partially, in their own name. The owner of a commercial enterprise can be a natural person, and commercial companies (joint-stock company, limited liability company, limited partnership, general partnership) also directly acquire merchant status. Secondly, the subject matter of the dispute must be related to the commercial enterprise. This connection is evaluated considering the subject of the contract, the nature of the transaction, or the purpose of the parties. Thirdly, the dispute must arise from a legal relationship; disputes of a criminal or administrative nature are not considered within the scope of commercial litigation.

Types and Examples of Commercial Litigation

Commercial receivables claims are the most common type in commercial litigation. They include all monetary claims such as non-payment of goods or services, invoice receivables, negotiable instrument receivables (promissory notes, checks, bills of exchange), endorsement receivables, and commission receivables. For example, a claim filed by a supplier company to collect payment for goods delivered to a buyer company is a commercial receivables case.

Contract breach cases are filed when one party to commercial contracts (purchase, service, work, agency, commission, distributorship) fails to fulfil their obligations. Claims for contract termination, damages, specific performance, and price reduction due to defects and deficiencies fall into this category. In international commercial law, CISG (Vienna Sales Convention) provisions may apply in cases of breach of commercial sales contracts.

Corporate law disputes are also within the scope of commercial litigation. Disputes between partners, profit distribution disagreements, annulment of board decisions, nullification or cancellation of general assembly decisions, share transfer disputes, and company dissolution and liquidation cases are heard in commercial courts. Cases arising from company contracts or partnership relations are also commercial in nature.

Cases based on negotiable instruments (promissory notes, checks, bills of exchange) are regulated in the third book of the TCC and are commercial cases. Claims based on instruments, instrument cancellation cases, and allegations of forgery are within this scope.

How are competent and authorized courts determined in commercial litigation? What is the role of specialized courts?

Jurisdiction in commercial litigation is determined according to TCC Article 5. As a rule, commercial cases are heard in commercial courts of first instance. According to TCC Article 5/1, cases considered commercial litigation fall within the jurisdiction of commercial courts of first instance, regardless of their subject and amount. This regulation ensures that commercial disputes are evaluated by specialized judges.

Jurisdiction of Commercial Courts of First Instance

Commercial courts of first instance are specialized courts according to Law No. 5235 on the Establishment, Duties and Powers of First Instance Courts in the Judicial Judiciary and Regional Courts of Appeal. These courts hear commercial receivables cases, cases arising from corporate law, cases concerning negotiable instruments, commercial enterprise transfer cases, and competition protection cases. In determining jurisdiction, the subject of the case and the status of the parties are important, and the commercial nature of the dispute is determined within the framework of TCC Article 4 (with the distinction between absolute/relative commercial cases).

However, some commercial disputes fall within the jurisdiction of different courts. Consumer courts have jurisdiction in disputes within the scope of the Consumer Protection Law No. 6502. Cases arising from intellectual and industrial property law are heard in intellectual and industrial rights courts, bankruptcy cases in commercial courts of first instance, and concordat requests also in commercial courts of first instance. According to Supreme Court decisions, the nature of the case is considered ex officio in terms of jurisdiction, and cases filed in incompetent courts are rejected at every stage.

Venue Rules and Determination of Venue by Contract

The competent court is determined according to CCP Articles 5 et seq. According to the general venue rule, the court of the defendant's place of residence is competent (actor sequitur forum rei). However, special venue rules also apply in commercial cases. According to CCP Article 10, in receivables cases arising from contracts, in addition to the debtor's place of residence, the court where the contract is to be performed is also competent. In tort cases, courts at the place where damage occurred or where the tort was committed are competent.

In commercial contracts, parties may agree on venue (CCP Article 17). The venue agreement must be in writing and must have been made for disputes arising or to arise from a specific legal relationship. In cases involving foreign elements, according to the Private International Law and Procedural Law Act (MÖHUK) Article 47, parties may also designate foreign country courts as competent by agreement. However, exclusive jurisdiction rules cannot be changed by contract; for example, cases concerning real rights over immovable property are under the exclusive jurisdiction of the court where the property is located.

How does the evidence collection and presentation process work in commercial receivables cases?

Evidence collection and burden of proof in commercial cases show some differences from general legal rules. According to CCP Article 190, parties are under the obligation to prove their claims (burden of proof). Since written evidence and documents are regularly used in commercial relations, documents such as instruments, invoices, waybills, shipping documents, e-mails, and electronic documents are frequently submitted as evidence. According to TCC Articles 64 et seq., merchants are under the obligation to keep books, and these books can be used as evidence in cases.

Written Evidence and Commercial Books

The most common type of evidence in commercial receivables cases is written evidence. Instruments (promissory notes, checks, bills of exchange), invoices, waybills, delivery notes, receipts, current account statements, e-mail correspondence, and WhatsApp messages can be submitted as evidence. According to CCP Article 199, official documents have full probative value, but private documents have full probative value only upon acceptance by the opposing party or rejection of signature denial. The evidentiary value of commercial books is regulated within the framework of TCC Articles 82-86 and CCP Article 222. If kept in accordance with the rules and corroborating each other, they can serve as evidence in favour; if the opposing party has not kept books or if the books are contradictory, they can also be used as evidence against in some cases. When both parties are merchants, mutual evaluation of books is essential.

In electronic commerce transactions, the provisions of the Law on Regulation of Electronic Commerce No. 6563 and the Electronic Signature Law No. 5070 are applied. Documents signed with secure electronic signatures have the same probative value as wet-signed documents. Electronic invoices and e-archive invoice applications have become widespread in commercial transactions, and these documents have strong evidentiary value as they can be verified through the Revenue Administration system. Supreme Court decisions state that e-mail correspondence and communication in messaging applications can also be accepted as evidence, but the identity of the parties and the content must be verified.

Expert Examination and Discovery

Expert examination in commercial cases is a frequently used evidence method, especially in technical matters, examination of accounting records, and damage assessment. According to CCP Articles 266 et seq., the court may resort to expert examination on matters requiring special and technical knowledge. In commercial law disputes, certified public accountants, accounting experts, customs experts, and engineers are appointed as experts. Although the expert report is not binding on the court, it is an important evaluation tool on technical matters.

Discovery, according to CCP Articles 288 et seq., is the court's on-site examination of the disputed event or object. In commercial cases, discovery is conducted to determine manufacturing defects, whether goods are defective, warehouse or factory inspections, and property condition assessments. An expert may also be present during discovery, and the discovery result is recorded in minutes.

What are the limitation periods in commercial litigation and how are they applied?

Limitation period is a legal institution that allows the debtor to be released from performing the debt if the creditor does not claim the debt within a certain period. The Turkish Code of Obligations (TCO) Articles 146 et seq. regulate limitation periods, and the general limitation period for commercial receivables is ten years. However, special limitation periods are provided in the TCC and TCO. The expiration of the limitation period does not eliminate the debt but leads to the court's rejection of the case if the debtor raises the defence.

General and Special Limitation Periods

According to TCO Article 146, the general limitation period is ten years. However, special limitation periods apply to certain receivables. According to TCO Article 147, a five-year special limitation period is provided for receivables such as rental fees, interest and other periodic performances, retail sales prices, and restaurant and hotel fees.

Limitation periods for negotiable instruments are specifically regulated in the TCC. For bills of exchange, the holder's right to sue the drawee expires in three years from the due date of the bill, and the right against the endorser and drawer expires in one year. For promissory notes, the holder must file suit against the payee within three years from the due date of the note, and within one year against the drawer. For checks, according to TCC Article 814, the holder's recourse rights (lawsuit and collection rights) against endorsers, the drawer, and other check obligors expire within three years from the end of the presentation period. These short periods are designed to ensure the rapid functioning of commercial life.

Interruption and Suspension of Limitation Period

According to TCO Article 154, interruption of the limitation period occurs when the debtor acknowledges the debt, the creditor files a lawsuit, initiates enforcement proceedings, or applies to the bankruptcy estate. Upon interruption, the limitation period is reset and begins to run from the beginning. When a lawsuit is filed, the limitation period is deemed interrupted, but a new limitation period begins to run from the finalization of the judgment. In enforcement proceedings, the limitation period is interrupted by service of the enforcement order. Written acknowledgment of the debt by the debtor or payment in instalments is also a cause of interruption.

Suspension of the limitation period is regulated in TCO Article 153, and in cases of force majeure or when the creditor has no reasonable opportunity to assert the claim, the limitation period is suspended, and when the reason ceases, the remaining time continues to run. In mediation processes between parties, application to mediation does not interrupt the limitation period, but the limitation period is suspended during the mediation process (Mediation in Civil Disputes Law No. 6325, Article 16/2).

How are litigation costs and fees calculated in commercial cases?

Litigation costs in commercial cases include expenses incurred for conducting the trial and are calculated according to the Fees Law and CCP provisions. Litigation costs mainly consist of proportional fees, advance costs, notification expenses, expert fees, translation costs, and hearing minutes fees. At the end of the case, as a rule, the losing party covers all litigation costs.

Proportional Fees and Application of the Fees Law

According to the Fees Law No. 492, proportional fees are calculated based on the amount of the lawsuit. For cases with a determinable monetary value, a fee of 6.68% of the claim amount is required. For cases without a determinable value, fixed fees are applied. The filing fee must be paid when the case is filed and must be deposited before the case is accepted. The advance cost is the advance amount requested by the court for expenses to arise during the trial. The advance cost is deposited by the plaintiff, and actual expenses are covered from this amount. At the end of the case, actual expenses are calculated, and the losing party is obligated to pay all litigation costs.

Expert Fees and Other Litigation Expenses

Expert fees are an important expense item in commercial cases. The Expert Fee Tariff published annually by the Ministry of Justice determines the minimum and maximum limits of fees experts will receive. Expert fees vary depending on the nature, complexity, and duration of the work. Notification expenses are fees paid to PTT for serving documents to the parties.

Discovery costs are expenses arising when the court examines the disputed place or object on site. At the end of the case, according to CCP Article 326, litigation costs are imposed on the losing party. For parties benefiting from legal aid, litigation costs are covered by the state.

How do alternative dispute resolution methods and mediation processes work in commercial litigation?

Alternative dispute resolution methods (ADR - Alternative Dispute Resolution) are mechanisms based on speed, flexibility, and confidentiality principles that provide out-of-court resolution in commercial cases. Mediation and arbitration are widely used in resolving commercial disputes. The Mediation in Civil Disputes Law No. 6325 has made mediation mandatory in certain commercial disputes, thereby reducing the workload of courts and encouraging parties to obtain rapid resolution.

Mandatory Mediation and Scope of Application

Mediation has been made mandatory for many commercial cases. Commercial disputes within the scope of mandatory mediation are specified in TCC Article 5/A. Accordingly, in receivables, compensation, objection cancellation, negative determination, and restitution cases involving the payment of a sum of money, prior application to a mediator is a condition for filing suit. However, receivables cases pursued through attachment proceedings specific to negotiable instruments, bankruptcy cases concerning persons subject to bankruptcy, and cases arising from the establishment, management, and dissolution of companies and partnerships are outside the mediation requirement.

The mediation process begins when the plaintiff applies to one of the registered mediators before applying to court. The mediator establishes communication between the parties, manages the negotiation process, and encourages the parties to reach an agreement. In mandatory mediation, the period is six weeks from the date the mediator is appointed and can be extended by the mediator for a maximum of two weeks in mandatory cases (6+2 weeks). If an agreement is reached at the end of mediation, a settlement agreement is prepared, and this agreement has the effect of a court judgment. If mediation fails, the mediator prepares final minutes, and the parties can apply to court.

Arbitration and Resolution of Private Law Disputes Through Arbitration

Arbitration is a special type of adjudication where parties submit the resolution of their dispute to an arbitral tribunal instead of a court. While Articles 407 et seq. of CCP No. 6100 regulate domestic arbitration, the International Arbitration Law No. 4686 regulates international arbitration. Including arbitration clauses or arbitration agreements in commercial contracts is common, particularly in international trade contracts, with applications to institutional arbitration centres such as ICC (International Chamber of Commerce), LCIA (London Court of International Arbitration), and ISTAC (Istanbul Arbitration Center).

The arbitration process is conducted by arbitrators and offers advantages of flexibility, confidentiality, expertise, and rapid conclusion in adjudication. The arbitral award is binding on the parties and is enforceable. According to CCP Article 439, an action to set aside an arbitral award can only be filed in limited cases (such as violation of public order, absence of arbitration agreement, arbitrators exceeding their authority). Recognition and enforcement of international arbitral awards in Turkey are subject to the New York Convention (1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards).

Conclusion

Commercial litigation constitutes a type of lawsuit subject to special regulations in the Turkish legal system and provides judicial resolution of commercial relations. In these cases where TCC and CCP provisions are applied together, notable elements include the jurisdiction and competence of commercial courts of first instance, the special value of commercial books in evidence collection processes, short limitation periods, and the mandatory mediation system. For effective resolution of commercial disputes, it is important for parties to use alternative dispute resolution methods such as mediation and arbitration, provide for jurisdiction and arbitration clauses in contracts, maintain evidence in writing, and pay attention to limitation periods.

The commercial litigation department of GEMS Schindhelm provides comprehensive legal consultancy and representation services to its clients in commercial receivables cases, contract breach disputes, corporate law cases, cases based on negotiable instruments, and international trade disputes. From the filing stage, we represent our clients in all processes including evidence collection, expert examination, mediation, arbitration, and appeal stages, ensuring the protection of their commercial interests.