A Valid Arbitration Clause in Cross-Border Disputes Under Turkish Law: Core Requirements and Case Law

Abstract:

In disputes involving a foreign element, the enforceability of an arbitration clause under Turkish law hinges on a limited set of requirements rigorously applied by Turkish courts. This article consolidates the key statutory elements under the Turkish International Arbitration Law (Law No. 4686, the “MTK”) and the Turkish Code of Civil Procedure (the “HMK”), and explains how recent Turkish case law addresses (i) the written form requirement, (ii) clear and unequivocal consent to arbitrate, (iii) arbitrability, (iv) the interaction between arbitration and court proceedings, and (v) interim measures in support of arbitration.

1. Determining the “Foreign Element” and the Applicable Legal Regime

The initial step in any Turkish law analysis is to determine whether the dispute qualifies as international—that is, whether it contains a foreign element as defined in Article 2 of the MTK. A foreign element is deemed to exist, inter alia, in the following circumstances:

The domiciles, habitual residences, or places of business of the parties are in different states;
The relevant places of business are located in a different state from the seat of arbitration or the place of substantial performance of the obligation or the relationship with the closest connection;
At least one shareholder has made a foreign capital investment (within the scope of foreign investment incentives) or the contract requires cross-border financing or security arrangements; or
The underlying legal relationship involves the cross-border movement of capital or goods.
Once a foreign element is established, the dispute is generally treated as a matter of international arbitration for the purposes of Turkish law. This classification is not merely procedural; it determines the applicable statutory framework, influences how Turkish courts approach objections to arbitration, and governs the coordination of interim measures with arbitral proceedings.

2. The Written Form Requirement: Formality Through Modern Means

Pursuant to Article 4 of the MTK, an arbitration agreement must be made in writing. Turkish law adopts a broad interpretation of this requirement: it can be satisfied by a signed document, an exchange of communications (letters, faxes, telegrams, etc.), or electronic records that provide reliable evidence of the parties' agreement. The arbitration agreement may take the form of:

an arbitration clause incorporated into the main contract, or
a separate, standalone arbitration agreement.
Practical Implication: In enforcement proceedings and jurisdictional challenges, Turkish courts typically require reliable written evidence of consent. A clause that is ambiguous, contained in inconsistent documents, or not properly documented is significantly more vulnerable to challenge.

3. Clear and Unequivocal Intention to Arbitrate

Even if the agreement is in writing, Turkish courts require that the parties' intention to arbitrate be clear, unequivocal, and free from ambiguity. In practice, the core judicial concern is whether the clause unmistakably ousts state court jurisdiction in favor of arbitration for the specified disputes.

Common drafting pitfalls include:

Mixed references to "courts" and "arbitration" without establishing a clear hierarchy;
Optional arbitration language (e.g., "may refer") where exclusivity is intended;
Vague identification of the arbitral institution or applicable rules.
A well-drafted clause should explicitly state that disputes “shall be finally settled by arbitration” and should avoid language that could be interpreted as preserving general court jurisdiction (except where specifically intended for interim relief or enforcement support).

4. Seat of Arbitration and Applicable Law: The Critical Role of the "Seat"

The seat of arbitration (or legal place of arbitration) determines the procedural lex arbitri and the supervisory jurisdiction for setting aside (annulment) proceedings. Under Article 1 of the MTK, the MTK generally applies to international disputes where the seat is in Turkey or where the parties or the tribunal choose to apply the MTK rules. Importantly, Turkish law also preserves certain court-assistance provisions—particularly concerning interim measures—even when the seat of arbitration is outside Turkey.

Separately, parties must clearly distinguish between:

the procedural law of the arbitration (largely governed by the law of the seat), and
the substantive law governing the contract (the law applicable to the merits).
Conflating these elements in the drafting phase often leads to subsequent disputes, which can be avoided through explicit and precise clause architecture.

5. Arbitrability: A Non-Negotiable Legal Boundary

For an arbitration clause to be valid, it must concern a dispute that is arbitrable under Turkish law—i.e., a matter over which the parties have the power of free disposition. Broadly speaking, Turkish law excludes from arbitration:

Disputes concerning rights in rem over immovable property located in Turkey, and
Disputes concerning matters that are not subject to the parties' free disposition (e.g., certain family law, criminal law, and bankruptcy matters).
This limitation on arbitrability is reflected both in the MTK (for international arbitration) and in Article 408 of the HMK (for domestic arbitration). If the subject matter of the dispute is non-arbitrable, the arbitration clause will not be enforced, regardless of the quality of its drafting.

6. Raising an Arbitration Objection in Court Proceedings

If a party initiates proceedings before a Turkish court in breach of a valid arbitration agreement, the opposing party may raise an arbitration objection (tahkim itirazı). If the court finds that a valid and applicable arbitration agreement exists, it must declare itself incompetent and dismiss the case on procedural grounds, thereby referring the parties to arbitration.

In both international and domestic contexts, Turkish courts treat arbitration agreements as binding jurisdictional allocations, provided the essential validity requirements are satisfied.

7. Public Service Concessions Involving a Foreign Element

Under Law No. 4501, disputes arising from certain public service concession agreements that involve a foreign element may also be submitted to international arbitration. In such cases, the MTK framework remains relevant, subject to any applicable public law constraints and the specific statutory conditions for arbitrating concession-related disputes.

Case Law Analysis

A. The Primacy of Turkish Courts Over Interim Measures, Even in Foreign-Seated Arbitrations
Court of Cassation (Yargıtay) 6th Civil Chamber, E. 2022/3529, K. 2022/4699, 12.10.2022

This seminal decision addresses a recurrent practical issue: when a Turkish court grants an interim measure in connection with a dispute pending before a foreign-seated arbitral tribunal, which authority has the power to modify or lift that measure—the Turkish court or the foreign tribunal?

Resolving a conflict among regional appellate courts, the Court of Cassation firmly held that interim measures ordered by Turkish courts remain under the exclusive authority of the Turkish judiciary. Allowing a foreign arbitral tribunal to remove or alter a Turkish court's interim measure would constitute an impermissible encroachment upon Turkish judicial sovereignty. The decision aligns with the logic of Article 6 of the MTK, which stipulates that an application to a Turkish court for interim measures (before or during arbitral proceedings) is not incompatible with the arbitration agreement, while the power of an arbitral tribunal to grant enforceable interim relief is inherently limited—especially where coercive enforcement or effects on third parties are involved.

Doctrinal Significance: The ruling reinforces that interim measures granted by Turkish courts constitute an exercise of state judicial authority, the control and review of which remain exclusively within the domain of Turkish courts, even when the merits of the case are to be decided by an arbitration seated abroad.

B. Enforceability of a Clearly Drafted Clause Identifying the Arbitral Institution
İstanbul Regional Court of Appeal (Bölge Adliye Mahkemesi), 16th Civil Chamber, E. 2023/895, K. 2023/1132, 19.07.2023

In an international franchise dispute, the Istanbul Regional Court of Appeal upheld the first-instance court's decision to accept the arbitration objection and dismiss the lawsuit. The court reiterated the foundational prerequisites for an enforceable arbitration agreement: (i) written form, (ii) a clear and definite intention to arbitrate, and (iii) arbitrability of the subject matter.

The decision underscores that when a contract expressly refers disputes to a specified arbitral institution and the forum is clearly identifiable, Turkish courts are inclined to uphold the validity of the arbitration clause and decline jurisdiction in favor of arbitration.

Practical Significance: This ruling exemplifies the prevailing pro-arbitration stance of Turkish courts, which will enforce arbitration clauses that are drafted with institutional clarity and express exclusive intent, provided the dispute itself is arbitrable.

8. Drafting Guidance: An Enforceability Checklist

To maximize the likelihood of enforceability in cross-border contracts subject to Turkish law scrutiny, an arbitration clause should typically address the following elements:

Broad Scope of Submission: "Any dispute arising out of or in connection with this  contract, including its validity, breach, termination, or nullity."
Mandatory and Final Language: "shall be finally settled by arbitration."
Designated Seat of Arbitration: Specify the city and country.
Arbitral Institution and Rules: e.g., ICC, ISTAC, LCIA, UNCITRAL, with reference to the applicable rules.
Number and Appointment of Arbitrators: A neutral and practical mechanism (e.g., three arbitrators, each party appointing one, and the two party-appointed arbitrators selecting the chairperson).
Language of the Arbitration Proceedings.
Governing Law of the Contract: Explicitly stated and distinguished from the procedural law of the arbitration.
Carve-Out for Court Assistance: Preserve the right to seek interim measures from competent courts and to apply to courts for enforcement of the award, drafted carefully to avoid undermining the exclusivity of arbitration for the merits.

Conclusion:

Under Turkish law, the validity of an arbitration clause in disputes with a foreign element rests on a stable foundation of requirements: the presence of a foreign element (MTK Art. 2), written form (MTK Art. 4), unequivocal intent to arbitrate, arbitrability of the subject matter, and coherent design regarding the seat and procedure. Recent Turkish case law—particularly the 2022 Court of Cassation decision affirming Turkish court authority over interim measures and the 2023 Istanbul Regional Court of Appeal decision enforcing a clear institutional clause—demonstrates a consistent judicial approach: Arbitration agreements are enforced when they are clearly drafted, while Turkish courts retain their role as providers of effective provisional judicial protection where state authority is essential.