Choosing Governing Law and Jurisdiction in a Turkish Commercial Contract: A Guide for Foreign Businesses

In most cross-border commercial contracts connected to Türkiye, you are free to choose a foreign governing law and a foreign court or arbitration seat — and Turkish law will usually respect that choice. The freedom is real but not unlimited: certain Turkish mandatory rules apply no matter what your contract says, some local disputes cannot be sent abroad, and a foreign judgment or award only becomes useful in Türkiye once a Turkish court recognises and enforces it. This guide explains how to draft these clauses well, where the limits sit, and how to keep your contract enforceable where your counterparty's assets actually are.

The Short Answer: You Usually Can Choose, Within Limits

If your contract has a genuine foreign element — a foreign party, cross-border performance, payment in another currency, or assets abroad — Turkish private international law lets the parties decide which country's law governs the agreement and where disputes are resolved. The starting point is party autonomy: your choice is honoured.

Three boundaries shape that freedom, and the rest of this guide walks through each:

• Mandatory rules and public policy can override the law you chose (covered below).
• Jurisdiction — agreeing on a foreign court is not the same as agreeing on the governing law, and some disputes must stay in Türkiye.
• Enforcement — winning abroad is only half the job if your counterparty's money and assets are in Türkiye.

Getting all three aligned at the drafting stage is what our work on commercial contract drafting and review is built around. The clauses are short; the consequences are not.

Governing Law: When You May Choose a Foreign Law

Governing law (sometimes called applicable law or choice of law) decides which country's substantive rules interpret your contract — how obligations are read, when a breach occurs, what remedies apply, and how damages are measured. Under MÖHUKMÖHUKTurkish Private International Law Act No. 5718The Turkish statute that decides which country's law applies to a cross-border matter, and how foreign judgments are recognised and enforced here.Glossary → art. 24, the parties' express choice comes first.

Two features of Turkish law often surprise foreign businesses, both in their favour:

• No connection required. You do not need a link between the chosen law and the transaction. A German seller and a Turkish buyer can choose English law to govern their supply contract even if nothing else touches England. The choice itself is what matters.
• Partial and changed choice are possible. Parties can choose a law for the whole contract or, in principle, for part of it, and can agree to change the governing law later, provided third-party rights are not prejudiced.

If you make no choice at all, MÖHUK art. 24 falls back to the law of the party that renders the characteristic performance, or more broadly to the law most closely connected with the contract. For an international sale that is often the seller's law — but relying on a default rule means surrendering certainty you could have locked in.

When Turkish Mandatory Rules Override Your Choice

Choosing a foreign law does not switch off every Turkish rule. Some rules apply directly regardless of the governing law because they protect interests the Turkish legal order treats as non-negotiable. These are called directly applicable rules (doğrudan uygulanan kurallar), and alongside them sits the public-policy (kamu düzeni) exception.

In commercial practice, the areas most likely to override or qualify your chosen law include:

• Competition law. The Law on the Protection of Competition No. 4054 applies to conduct affecting markets in Türkiye whatever law governs the contract. A distribution or licensing agreement under foreign law still has to respect Turkish competition rules.
• Certain protective regimes. Specific consumer, employment, agency, and currency or capital-control rules can apply as mandatory law where the relationship touches Türkiye, even under a foreign governing-law clause.
• Public policy. A foreign-law result that a Turkish court considers manifestly incompatible with fundamental Turkish legal principles can be set aside on those grounds.

Jurisdiction: Choosing the Court (and What Stays in Türkiye)

Governing law and jurisdiction are different choices, and confusing them is a common drafting error. Governing law says which rules decide the merits; jurisdiction says which court hears the case. You can pick English law but a Turkish court, or Turkish law but a foreign court — they are separate clauses doing separate jobs.

Turkish procedural law recognises jurisdiction agreements. For domestic disputes, the parties can agree on a competent Turkish court in writing in matters that are not subject to exclusive jurisdiction, under the Code of Civil Procedure (HMKHMKCode of Civil Procedure No. 6100The rulebook for how a civil case actually runs in Türkiye — which court, which steps, which deadlines, and what evidence counts.Glossary →, Law No. 6100, art. 17). For international disputes, MÖHUK allows the parties to confer jurisdiction on the courts of a foreign country, again subject to limits.

Some matters cannot be sent abroad. Disputes over rights in Turkish real estate, certain matters tied to the Turkish commercial registry, enforcement (icra) proceedings located in Türkiye, and other areas of exclusive Turkish jurisdiction stay with Turkish courts whatever your clause says. For ordinary commercial claims — supply, services, distribution, shareholder arrangements with a foreign element — a foreign-court clause is usually effective.

Choice of Court vs. Arbitration Clauses

For cross-border contracts touching Türkiye, the choice between a foreign court and arbitration is frequently the most consequential clause in the whole agreement — because it decides how easily you can turn a win into recovered money.

Arbitration in Türkiye

Arbitration (tahkim) is a private dispute-resolution process where the parties appoint arbitrators whose decision (the award) is binding. International commercial arbitration seated in Türkiye is governed by a dedicated statute.

Why arbitration often wins for cross-border deals

• Easier cross-border enforcement. A foreign arbitral award enforces in Türkiye through the New York Convention (see the next section), which sets narrow, predictable grounds for refusal. A foreign court judgment enforces through MÖHUK's recognition regime, which includes a reciprocity requirement that can be harder to satisfy.
• Neutral forum. Neither party litigates on the other's home turf, which both sides often prefer.
• Confidentiality and specialist arbitrators for technical or industry-specific disputes.

Where a court clause may still suit you

• Smaller or domestic-leaning deals where arbitration's cost is disproportionate.
• Cases needing fast interim relief or where you expect to rely heavily on enforcement measures (icra) inside Türkiye, where Turkish courts are directly involved anyway.

Enforcing a Foreign Court Judgment in Türkiye (Tanıma / Tenfiz)

A foreign court judgment has no automatic legal effect in Türkiye. Before you can seize a Turkish counterparty's assets on the strength of, say, a London or New York judgment, a Turkish court must first recognise it (tanımaTanımaRecognition of a foreign judgment in TürkiyeThe court decision that makes a foreign judgment legally effective in Türkiye as proof — without, by itself, making it enforceable.Glossary →) or order its enforcement (tenfizTenfizEnforcement of a foreign judgment in TürkiyeThe Turkish court decision that makes a foreign judgment enforceable in Türkiye — the step that lets you actually collect.Glossary →) in a separate proceeding.

The core conditions a Turkish court checks include:

• Reciprocity. There must be reciprocity between Türkiye and the country whose court issued the judgment — based on a treaty, a statutory provision, or de facto practice. This is one of the most decision-driving requirements and is highly country-specific.
• Finality. The foreign judgment must be final and enforceable under the law of its origin.
• Public policy. The judgment must not be manifestly contrary to Turkish public policy (kamu düzeni).
• Defence rights. The defendant must not have been deprived of a proper opportunity to be heard before the foreign court.
• No exclusive Turkish jurisdiction. The matter must not be one reserved to the exclusive jurisdiction of the Turkish courts.

Because the court does not re-hear the merits, you cannot use the recognition case to relitigate the dispute — but the conditions above give a determined debtor several openings to resist. That risk is precisely why many businesses with Turkish-side assets prefer arbitration.

Enforcing a Foreign Arbitral Award (New York Convention)

Foreign arbitral awards enjoy a more favourable enforcement route in Türkiye than foreign court judgments, and this is often the deciding factor in clause design.

The practical advantages over a court judgment are:

• No general reciprocity hurdle of the same kind. The Convention's framework, applied by its many member states, governs enforcement, rather than the case-by-case reciprocity analysis required for court judgments.
• Narrow refusal grounds. A Turkish court can refuse enforcement only on the specific bases the Convention allows — for example, an invalid arbitration agreement, a denial of the right to present one's case, an award exceeding the scope of the submission, or a conflict with Turkish public policy.
• No review of the merits. As with judgments, the court does not re-decide who was right; it checks the limited conditions and enforces.

Once you hold a recognised judgment or an enforceable award, actual recovery runs through Turkish enforcement proceedings. That stage — turning a paper win into money — is where our debt collection and enforcement work comes in.

Drafting a Clause That Actually Holds Up

The dispute-resolution and governing-law clauses are usually the last thing negotiated and the first thing tested when something goes wrong. A few principles keep them robust for a Türkiye-connected deal:

• Separate the two choices clearly. One sentence for governing law, one clause for forum. Do not let "the laws and courts of [country]" do double duty ambiguously.
• Match the forum to where the money is. If recovery will happen against Turkish assets, weigh arbitration (New York Convention) against a foreign court (MÖHUK reciprocity) deliberately.
• Respect the carve-outs. Keep real estate, registry, and other exclusively-Turkish matters out of any foreign-forum clause, or the clause fails on those points.
• Plan for mandatory rules. Where Turkish competition, agency, employment, or consumer rules will apply regardless, build the contract to comply rather than assuming the foreign law overrides them.
• Specify arbitration details. Seat, institution and rules, language, number of arbitrators — leave none of these to chance.
• Get the corporate authority right. Confirm the signatory has authority to bind the company; jurisdiction clauses signed without proper corporate authority can be contested.

The structure of the entity behind the contract matters too — liability, signing powers, and how cleanly a dispute can be brought all flow from it, as our guide on choosing between a sole proprietorship and an LLC explains. If you are negotiating a cross-border commercial contract connected to Türkiye, our team can pressure-test your governing-law, jurisdiction, and enforcement clauses before you sign. Contact Lexin Legal to review your draft with English-speaking Turkish lawyers.

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