General rules for making a contract in Turkmenistan

1) What mandatory elements must a contract between two residents contain?

A contract between two residents in Turkmenistan must contain:

1. The free will of the parties.
2. Their legal capacity.
3. A clearly defined subject matter (content).
4. Compliance with the legal form.
5. Any essential terms specific to the type of contract (price, quantity, rent, pledge terms, etc.).
6. Any conditions one party insists on as necessary for agreement.

2) Is notarization or state registration required for B2B contracts?

Yes. But notarization or state registration requirements depend on the type of B2B contracts. For example, state registration is required for tourism contracts between Turkmen and foreign legal entities; for foreign trade and domestic trade agreements concluded without participation in stock exchange trading. For contracts about land or real estate both state registration as well as  notarization are required.

3) What are the general requirements for the form and language of a contract between residents?

In general, the parties can determine the form of the contract between themselves, and that form must be followed. However, for some contracts, the form is prescribed by law itself; for example, real estate contracts must be concluded in writing and must be notarized. 

A written contract can be concluded by drawing up a document signed by the parties, exchanging documents by mail, telegraph, teletype, electronic, or other means of communication. Regardless of the form of communication used, the main thing is the possibility of determining whether the document being sent comes from the party under the contract.

The parties also decide the language of the contract by themselves. However, when it comes to state registration and notarization, a translation of the contract into the state language (Turkmen) may be required.

4) What are the consequences of non-compliance with the written form of a contract?

A form of a contract may be established either by law or by the terms of the contract itself. The contract is deemed invalid if the form established by law was not complied with when it was concluded. Failure to comply with the form established by the terms shall, in case of doubt, result in the invalidity of the contract.

5) What specific rules apply when contracting with public authorities or state customers?

Contracts with public authorities or state customers are governed by specific legislation, notably the Law of Turkmenistan on Public Procurement. Key requirements typically include a mandatory tender or bidding procedure, strict adherence to established administrative procedures, and often the use of standard contract forms. Failure to follow the prescribed procedural and documentary requirements can easily lead to the contract being deemed invalid or non-executable, making expert legal review crucial before participation.

6) What are the requirements for performance and modification of contracts?

According to civil legislation, the execution of a transaction, as well as changes to its terms, are subject to agreement by the parties to the transaction unless otherwise provided by law.

7) What are the requirements regarding currency and payments in contracts with non-residents?

Monetary transactions between residents and non-residents are carried out in accordance with the legislation of Turkmenistan on the basis of a monetary agreement in national and (or) foreign currency, as agreed by the parties. In the absence of a monetary agreement or relevant regulations therein, transfers of funds are carried out in the national currency or in any other foreign currency at the market rate applicable on the date of the transfer in accordance with the rules of exchange operations.

On the other hand, monetary transactions, in the territory of Turkmenistan, related to the transfer of property and the provision of services between residents and non-residents are carried out only in national currency.

In accordance with the monetary agreement, funds of non-residents are transferred to bank accounts (deposits) opened in their name.

Transfers of funds to bank accounts (deposits) of third parties, individuals and legal entities that are not parties to the monetary agreement are not allowed.

8) Can foreign law be chosen to govern a contract and what are the restrictions?

It is possible to apply foreign law to contracts. This practice is particularly common in commercial agreements. According to the civil legislation of Turkmenistan, individuals and legal entities are free to establish their rights and obligations on the basis of a contract and to determine any contractual terms, including the governing law, if they do not contradict the law. Civil rights may be restricted only on the basis of law for the purpose of protecting morality, health, rights and legitimate interests of others, ensuring the security of society and the state, and protecting the environment.

9) What are the requirements for registration and reporting of cross-border contracts?

Cross-border contracts (Foreign Economic Transactions) in Turkmenistan require mandatory state registration with a designated governmental body. This registration must occur prior to the commencement of execution of the contract. Furthermore, entities must comply with stringent reporting and monitoring requirements related to payments, goods movement, and completion deadlines, which, if mishandled, can result in significant administrative penalties. Of course there are some types of Contracts which can be commenced in a simplified manner.

Authors: Serdar Amanov, Annamenli Rozymyradova, Gulenar Akmyradova