Exclusive Jurisdiction in Disputes Arising from Partnership Relations and International Jurisdiction Agreements Considering a Recent Turkish Court of Cassation Decision
Introduction
In disputes between company shareholders, the determination of jurisdiction constitutes a contested area in both doctrine and practice, particularly with respect to the scope and limits of the exclusive jurisdiction rule set forth in Article 14 of the Code of Civil Procedure numbered 6100 (“CCP”). In claims for receivables arising from contracts concluded between parties who are in a partnership relationship, it becomes decisive whether the dispute should be characterized as falling within the scope of the partnership relationship or within the framework of a contractual debt relationship; accordingly, whether the exclusive jurisdiction rule prescribed under Article 14 applies must be determined. This discussion gains further significance where an international jurisdiction agreement or an arbitration agreement exists.
In this article, within the framework of the decision of the Court of Cassation General Assembly of Civil Chambers numbered E. 2024/176 and K. 2025/618 and dated 08.10.2025[1] (the “Decision”), the conditions for the application of the exclusive jurisdiction rule under Article 14 of the CCP to penalty clause claims based on contractual obligations arising from a share purchase agreement, and the position of this rule vis-à-vis international jurisdiction agreements, are examined. The Decision is significant in terms of the criteria it sets out regarding whether shareholder status alone gives rise to exclusive jurisdiction and how the jurisdictional regime should be determined based on the nature of the claim.
Facts of the Case and the Decisions of the First Instance Court, the Regional Court of Appeal, and the Court of Cassation
In the present case, the claimants relied on the penalty clause provisions contained in a standalone share purchase agreement dated 13.05.2015 and in a share purchase agreement of the same date and alleged that the defendant failed to pay the share purchase price and did not fulfill its contractual obligations regarding the development and financing of the company. In this context, they sought a judgment for the annulment of the objection to the enforcement proceeding initiated for the collection of the penalty clause receivable and for the continuation of the proceeding.
The defendant, on the other hand, argued that although the enforcement proceeding had been based on a single contract, the action for annulment of objection relied on two separate contracts and on different penalty clause provisions contained therein. The defendant further asserted that the contracts included a foreign court jurisdiction clause and an arbitration clause, and that therefore the Turkish courts lacked jurisdiction; it also raised substantive law defenses and requested dismissal of the case.
The court of first instance stated that the defendant had raised an arbitration objection as a preliminary objection; however, since the exact date of service of the statement of claim on the defendant could not be determined, it was not possible to establish whether the objection had been submitted within the prescribed time limit, and therefore the arbitration objection was not examined on the merits. The court emphasized that the initiation of the enforcement proceeding before a competent enforcement office constitutes a procedural requirement for an action for annulment of objection. It further held that the parties had merchant status under the share purchase agreement dated 13.05.2015 and that the agreement contained a valid jurisdiction clause designating the London courts as competent for disputes. On this basis, it is concluded that the enforcement proceeding should have been initiated at the place designated under that jurisdiction clause. Accordingly, the court found that there was no valid enforcement proceeding initiated before a competent enforcement office and dismissed the action on procedural grounds due to the absence of a procedural requirement.
Upon appealing against the first instance decision, the Regional Court of Appeal held that the dispute arose from share transfer agreements between company shareholders and that, pursuant to Article 14 of the CCP, the courts and enforcement offices in Ankara, where the company’s headquarters is located, have exclusive jurisdiction. It further emphasized that, under Article 17 of the CCP, the parties may not conclude a jurisdiction agreement in matters subject to exclusive jurisdiction and therefore found reliance on the jurisdiction clause contained in the contract to be unfounded. Nevertheless, on the grounds that no duly initiated enforcement proceeding existed before a competent enforcement office in Ankara, it set aside the first instance decision and dismissed the action.
Upon further appeal against the decision of the Regional Court of Appeal, the relevant Chamber of the Court of Cassation held that the contract contained a clause providing for the resolution of disputes by arbitration. It further stated that the exclusive jurisdiction rule set out in Article 14 of the CCP applies only to actions between parties who have an existing partnership or membership relationship, and that, in the present case, the defendant had not yet acquired shareholder status. Accordingly, it concluded that exclusive jurisdiction could not be invoked and that it was erroneous to render a decision without first examining the defendant’s arbitration objection. On these grounds, it reversed the judgment.
Decision on Resistance
In its decision on resistance, the Regional Court of Appeal stated that the finding in the reversal decision of the relevant Chamber of the Court of Cassation, that the defendant did not yet have shareholder status as of the contract date, did not correspond to the case file. It held that, based on the share transfer agreement and the general assembly attendance list, it was established that the parties were shareholders as of the contract date. Accordingly, it concluded that the reversal was based on a material error and decided not to comply with it. It was further stated that the share transfer agreement to which the parties were jointly bound did not contain an arbitration clause and that, with respect to the other agreement containing an arbitration clause, the arbitration objection constituted a preliminary objection and could no longer be examined because it had not been raised at the appeal stage. On these grounds, it maintained its prior reasoning and rendered a decision on resistance.
Assessment of the Court of Cassation General Assembly of Civil Chambers
Upon the appeal by the parties’ counsel against the decision on resistance rendered by the Regional Court of Appeal, the dispute was brought before the Court of Cassation General Assembly of Civil Chambers. It first clarified that the dispute concerned an action for annulment of objection and that, for this reason, the court’s review must be limited to the contract relied upon in the enforcement request; provisions contained in other contracts that were not invoked as the basis of the enforcement proceeding cannot be taken into account in resolving the dispute.[2]
The Court of Cassation General Assembly of Civil Chambers further made it clear that the rules governing the competence of enforcement offices and those governing the international jurisdiction of courts must be distinguished. It stated that compulsory enforcement constitutes an exercise of state sovereignty, and, therefore, Article 47 of the Code of Private International Law and International Civil Procedure numbered 5718 (“PILC”) cannot be applied directly to the competence of enforcement offices. Accordingly, even if the parties have designated a foreign court as competent, the creditor may still initiate enforcement proceedings before enforcement offices in Türkiye; this fact alone does not render the proceeding invalid. However, once the dispute proceeds to the litigation stage and a jurisdictional objection is duly raised, the court will assess the international jurisdiction agreement only in terms of its own jurisdiction. In this respect, the General Assembly held that the first instance court’s approach, treating the enforcement proceeding as invalid on the ground that a foreign enforcement authority was competent, was not legally sound.
Another key distinction emphasized in the Decision is the difference between exclusive jurisdiction rules under domestic law and the concept of exclusive international jurisdiction in international procedural law. It was further stated that the cases of exclusive jurisdiction regulated under the CCP do not automatically give rise to exclusive international jurisdiction. Exclusive international jurisdiction concerns limited subject matters that directly implicate state sovereignty and where the recognition of a foreign court judgment would be objectionable on grounds of public policy. Not every rule of exclusive jurisdiction can be characterized as exclusive international jurisdiction. Within this framework, it was accepted that the mere existence of an exclusive jurisdiction rule under domestic law does not, by itself, invalidate an international jurisdiction agreement concluded by the parties under Article 47 of the Code of PILC. Accordingly, the Decision found that the Regional Court of Appeal’s approach, which set aside the international jurisdiction agreement based on the exclusive jurisdiction rule in Article 14 of the CCP, lacked legal foundation.
Another decisive assessment in the Decision is the determination that the finding of the relevant Chamber of the Court of Cassation that the defendant did not yet hold shareholder status was not consistent with the case file. It was established that, as of the contract date, the parties were shareholders in the same company. At the same time, the Court of Cassation General Assembly of Civil Chambers emphasized that the dispute was not of a nature that would give rise to an amendment to the company’s articles of association or to the trade registry records, and that the claimants sought only the collection of a penalty clause receivable based on contract. It therefore concluded that penalty clause claims between shareholders cannot be regarded as a category of disputes falling within the state’s sphere of exclusive international jurisdiction. According to the General Assembly, there is no obstacle to the application of an international jurisdiction agreement in a receivable claim of this nature. Accordingly, the approach that set aside the jurisdiction agreement based on exclusive jurisdiction under domestic law and that dismissed the action by relying on the competence of the enforcement office was not considered legally sound.
In conclusion, the Court of Cassation General Assembly of Civil Chambers held that the solution should be determined by evaluating the international jurisdiction agreement contained in the contract underlying the enforcement proceeding and the defendant’s jurisdictional objection based on that agreement within the framework of preliminary objections. It therefore reversed the decision on resistance rendered by the Regional Court of Appeal on different grounds.
Assessment and Conclusion
The Court of Cassation General Assembly of Civil Chambers determined that, in an action for annulment of objection, the review is limited to the contract relied upon in the enforcement request and that arbitration or jurisdiction clauses contained in contracts that were not invoked as the basis of the enforcement proceeding must be excluded from consideration. It further concludes that compulsory enforcement is based on the state’s sovereign authority and that international jurisdiction agreements do not eliminate the competence of enforcement offices. However, once the dispute is brought before a court and an objection concerning international jurisdiction is duly raised, that objection must be examined by the court.[3]
The Court of Cassation General Assembly of Civil Chambers further stated that exclusive jurisdiction rules under domestic law and the concept of exclusive international jurisdiction in international procedural law have different legal characteristics.[4] The Decision explains that the cases of exclusive jurisdiction provided under the CCP do not automatically result in exclusive international jurisdiction, and that exclusive international jurisdiction relates only to limited categories of disputes that are directly connected to the exercise of state sovereignty. Within this framework, it was concluded that the mere existence of an exclusive jurisdiction rule under domestic law does not invalidate an international jurisdiction agreement.
The Decision also establishes that not every dispute between shareholders falls within the scope of exclusive international jurisdiction. It states that the mere fact that the parties hold shareholder status does not by itself give rise to exclusive international jurisdiction. In the present dispute, the claim was not aimed at creating an amendment to the company’s articles of association or to the trade registry records but concerned a penalty clause receivable based on contract. [5] For this reason, the dispute was considered not to fall within a category of exclusive international jurisdiction that would displace an international jurisdiction agreement.
In conclusion, the Decision determines that an action for annulment of objection must be examined only within the limits of the legal basis of the enforcement proceeding; that international jurisdiction agreements do not affect the competence of enforcement offices; and that the concepts of exclusive jurisdiction under domestic law and exclusive international jurisdiction must be distinguished, with this distinction being decisive for the validity of international jurisdiction agreements. It is further accepted that not every dispute between shareholders falls within the scope of exclusive international jurisdiction and that shareholder status alone does not give rise to exclusive jurisdiction under domestic law or exclusive international jurisdiction.
- Court of Cassation General Assembly of Civil Chambers, File 2024/176, Decision 2025/618, Date: 08.10.2025 https://www.lexpera.com.tr/ictihat/yargitay/e-2024-176-k-2025-618-t-08-10-2025 ( Access Date: 08.02.2026)
- The Decision explains, with reference to the Court of Cassation General Assembly of Civil Chambers decision numbered File 2022/1269 and Decision 2023/1106 dated 15.11.2023, that an action for annulment of objection derives its legal basis from the Enforcement and Bankruptcy Code No. 2004. It is stated that this type of action, although strictly linked to enforcement proceedings and situated within enforcement law, results in a final judgment by examining the underlying substantive legal relationship. The dependency of the action on the enforcement proceeding applies not only to the amount of the receivable but also to its legal source.
- The Decision emphasizes that the competence of enforcement offices may be reviewed by the court hearing the action for annulment of objection. See also Üstündağ, Saim: İcra Hukukunun Esasları, 8th Edition, İstanbul, 2004, p.81-82.
- For detailed information on this issue, see Nomer, Ergin: Milletlerarası Usul Hukuku, 2nd edition, İstanbul, Beta, 2016, p.129.
- With respect to the CCP, according to Postacıoğlu/Altay, both actions brought by a legal entity against its shareholders or members and actions brought by shareholders or members against the legal entity must be filed before the court at the place where the legal entity has its headquarters. Postacıoğlu, İlhan E. / Altay, Sümer: Medenî Usûl Hukuku Dersleri, 8th edition, İstanbul, Vedat Kitapçılık, 2020, p.133.
All rights of this article are reserved. This article may not be used, reproduced, copied, published, distributed, or otherwise disseminated without quotation or Erdem & Erdem Law Firm's written consent. Any content created without citing the resource or Erdem & Erdem Law Firm’s written consent is regularly tracked, and legal action will be taken in case of violation.
Other Contents
The Grand General Assembly for the Unification of Judgments of the Court of Cassation (the “Assembly”), by its Decision dated 8 May 2026, numbered 2021/8 E. and 2026/1 K. (the “Decision”), examined the divergence in case law as to whether a claim not included…
One of the fundamental elements of the right to a fair trial is the right to access a court. The right to access a court encompasses not only the ability of individuals to bring a dispute before a court of first instance, but also their ability to effectively pursue…
Mediation was introduced into the Turkish legal system in 2012 as a voluntary dispute resolution mechanism and has produced successful outcomes over time.
As of 1 January 2018, mediation became a mandatory precondition to litigation in certain disputes arising from labor law; as of 1 January 2019…
The Court of Cassation General Assembly on Civil Matters (“General Assembly”), by its decision dated 08.10.2025 and numbered 2024/572 E. and 2025/607 K. (“Decision”), in the dispute brought before it, prior to examining the merits of the matter, discussed and assessed as a preliminary issue whether the…
Article 326 of the Turkish Code of Civil Procedure No. 6100 (“CCP”) stipulates that, where the parties are each partially successful in the proceedings, litigation costs shall be allocated between them in proportion to their respective degrees of justification…
One of the most significant safeguards afforded by the right to a fair trial is the right of access to a court. Moreover, one of the essential components of the right of access is the ability of individuals to make effective use of appellate and other legal remedies…
The Turkish Constitutional Court (“TCC”), in its decision dated 17 June 2025 and numbered E.2024/237, K.2025/137 (“Decision”), decided that significantly reshapes civil procedural law. The Court annulled the phrase “…and this decision shall be binding on the other court” contained in Article 166(1) of the Code...
With its decision dated 22.05.2024 and numbered 2022/31465 E. (“Decision”) published in the Official Gazette dated 22.10.2024 and numbered 32700, the Constitutional Court examined the claim that the decision to deem the case as not filed due to the failure to complete the addresses and identification numbers...
Under the principle of “procedure precedes substance” prevailing in Turkish law, the correct determination of the period for filing a lawsuit is crucial. In its decision dated 02.05.2024 numbered 2020/13187 E. and 02.05.2024 K. (“Decision”), the Constitutional Court examined the claim that the right of access...
The Code of Civil Procedure (“CCP”) regulates the judicial procedure in our jurisprudence and foresees prescription periods at each stage. Prescription periods constitute a form of sanction that causes the loss of the use of the right for the party who does not comply with the time limit...
The concept of intervention has fundamental differences in administrative trial procedure compared to civil procedure. These differences are critically important in terms of the intervenor’s right to seek legal remedies in the administrative trial procedure. As is known, there are two ways to become a plaintiff in an...
With its decision dated June 8, 2023 on the application numbered 2019/17969, the Constitutional Court, as published in the Official Gazette numbered 32331 on October 6, 2023 (“Decision”), considered the rejection of a lawsuit for an unquantified debt related to the payment of labor dues due to the absence of a legal...
The Grand General Assembly of the Unification of Jurisprudence ("GGAUJ") ruled with the Decision of the Grand General Assembly of the Unification of Jurisprudence dated 28.04.2023 numbered 2021/5 E. 2023/2 K. ("Decision") that if the legal remedy period is erroneously indicated longer in the decision in...
The issue of proving damages in cases related to the excess damages is frequently subject to the examination and evaluation of both the Supreme Court and different chambers of the Court of Cassation. With its decision dated 29.03.2022 and numbered 2021/928 E. 2022/401 K., the Court of Cassation General...
Under Turkish law, the term “limits of certainty” refers to monetary limits to the rights of appeal and cassation. While it is possible to appeal to a higher court against the decisions of the courts of the first instance and the courts of appeal where the amount of the claim or the value of the case is above these...
The Court of Cassation General Assembly of Civil Chambers and the Chambers of the Court of Cassation both issued opinions on whether a lawsuit filed for not due receivables should be dismissed with or without prejudice by the court on the grounds that the time of performance has not yet come, and whether the...
In general terms, the amendment of pleading is accepted as an exception to the prohibition of expanding and amending claims and defenses. With the amendment of pleading, the parties can partially or completely correct or amend the procedural actions that they could not perform due to the prohibition...
The possibility of appellate review of questions of fact, as well as of law, was introduced into Turkish law with an amendment made in the abrogated Civil Procedure Code No. 1086, through Law No. 5239 dated 26.09.2004. However, the Regional Courts of Appeal, which are the courts...
Recently, the requirements of unquantified debt lawsuits have been subjected to the examination and review of the Court of Cassation. The Court of Cassation General Assembly of Civil Chambers, in its decision dated 07.07.2021 and numbered 2021/485 E. 2021/971 K. (“Decision”), examined whether...
In a state where the rule of law prevails, legal remedies are indispensable to eliminate judicial errors through the supervision of court decisions. However, legal disputes must be settled at some point and decisions must be finalized. In this Newsletter, appellate procedures against final court decisions will be...