THE REQUIREMENT OF CLARITY AND PRECISION OF THE JURISDICTION CLAUSES

24.12.2018

 

Jurisdiction, which means the authority given to a court to hear a case within a particular geographic area,  is one of the appearances of the right of sovereignty of the state.

As a result of the sovereignty right, State courts have jurisdiction over matters inside that state and in a transaction with no foreign element involved it will not necessary to determine the courts which are to have jurisdiction in the event of a dispute.

However the question of “  which state’s courts should exercise the case” comes up in case the dispute involves “ a foreignness element”.

Within this scope, for the contracts which are complicated by a foreignness element, it is very essential for the parties to determine the courts which are to have the jurisdiction in the event of a dispute.

In this article, by exemplifying with the applicable legislation and Supreme Court decisions,we shall provide you with an explanation regarding how the Turkish Law Sytstem regulates the rules for the “jurisdiction clauses” in the contracts which include “a foreignness element”

In case the civil matter includes a “foreignness element”,  which means that at least one party is not Turkish, The Code of International Private Law and Civil Procedure numbered 5718,  which provides certain procedural provisions in order to determine the jurisdiction of the court, shall be applicable.

Within this scope, the Article 40 of the Law no 5718 regulates that “The international jurisdiction of the Turkish courts shall be determined by the domestic jurisdiction rule” .

The “domestic jurisdiction rules”  referred to in the article  40,  are regulated under the provisions of Code of Civil Procedure dated October 1, 2011 and numbered 6100.

In accordance with Article 17 of the Law no 6100, the parties( limited to merchants or public legal entities may) may authorize one or more courts to hear a dispute arising out of the contract by writing  “ a jurisdiction clause” into the main contract or with a separate contract which is attributed to main contract. Article 18 of Civil Procesural Law also states that the chosen local court in the jurisdiction clause must be clearly stated.

In addition to these provisions, in case of a foreignness element Turkish law allows and respects the choice of the parties to determine foreign courts as the courts with juristion.

 According to Article 47 of the International Private Law and Civil Procedure Law numbered 5718 ,

Article 47- (1) Except in cases where the jurisdiction of a court is determined according to exclusive jurisdiction of specific court principles, the parties may agree on jurisdiction of a court of foreignness state in a dispute that contains a foreignness element and arises from obligatory relations. The agreement is invalid unless it is proved by written evidence. The competent Turkish court shall have jurisdiction only if the foreignness court decides that it has no jurisdiction or if a plea as to jurisdiction is not presented in Turkish courts.

As it is seen in the article 47 of International Private Law No. 5718 , except the cases where the jurisdiction of a court is determined according to exclusive jurisdiction of specific court principles, the parties may agree on jurisdiction of a court of foreign state in a dispute that contains a foreignness element and arises from obligatory relations.

However, in continuation of article 47, the Law regulates that ; The agreement is invalid unless it is proved by written evidence.

 Further to this article , according to Article 18 of Law no 6100 in order to provide the validity, it is mandatory that  “jurisdiction clause” must “clearly” and “precisely determine” the parties to determine the courts which are to have the jurisdiction in the event of a dispute.

Within this scope, the jurisdiction of the court of a foreign state which is authorized by a jurisdiction agreement, should be directly  and clearly specified  in terms of the article 47 of International Private Law.

As explained below; it is not enough for the validity of jurisdiction clause  just to determine the state where the case shall be heard. The name of the court to hear the dispute has to be clear and definite as well.

The clause of clarity of the court of foreign state which is authorized by a jurisdiction agreement depending on the regulation in the article 17 and 18 of Code of Civil Procedure, should be sought in terms of the article 47 of International Private Law. For the acceptance of that the chosen court is determined, the competent court should be mentioned by its name.

In one of the latest awards given by Istanbul 16th Regional Court, it is ruled that a jurisdiction clause that provided that disputes between Turkish and foreign counterparties are to be heard before the ‘English Courts’ was invalid and in order for a jurisdiction clause to be valid and enforceable, the name of the particular English court must be expressly set out.

According to the decision of the Regional Court, Articles 17 and 18 require ‘precision’, in that the name of the foreign court must be expressly stipulated. The court also stated that it is not right that the court accepted the jurisdiction clause which is that in case the parties do not agree the dispute shall be referred to the courts of England and which does not bear the principle of “clarity”  without taking into account these points, and rendered a decision in writing.

 The latest practices of 11th Civil Chamber of Supreme Court are in the same direction. According to the common practice of the Supreme Court,  the dispute must be submitted to the Turkish courts, rather than to the chosen courts unless otherwise the name of the court is clearly determined and specified in the jurisdiction clauses

In addition to this, even though the jurisdiction clause is valid, sometimes is is not possible to make an objection regarding jurisdiction because of the general principle of good faith.

Even though there is a  valid jurisdiction agreement, if the case has been filed in  the court where the defendant is domiciled, the defendant will not be able to object to the jurisdiction of the court in accordance with the rules of good faith. In such a case, it is accepted contrary to the good faith rules that the plaintiff has an objection to jurisdiction although the plaintiff will be able to express himself better in his own country.

In this regard, in its decision dated  25.11.2015 and numbered E.2015/5517, K.2015/12591, 11th Civil Chamber of Supreme Court decided in a case that;

“ the proceedings had been initiated before an Istanbul Court, that Istanbul is where the defendant resided and that the defendant would be expected to defend its rights “better” before a court in its place of residence as opposed to a court in a foreignness country.”

 In this decision, 11th Civil Chamber of Supreme Court applied “principle of good faith” which is codified in Turkish Civil Code Article 2 and means that “Everyone must follow the principles of good faith when exercising their rights and fulfilling their debts/obligations”

Within this scope, despite the clearly written and valid jurisdiction clauses agreed by the parties to bring proceedings in the chosen court , the case can be filed before the court which has the jurisdiction where the defendant is domiciled.

To sum up briefly , it is clear that Turkish Law  recognises and practices both jurisdiction agreements or clauses which determine foreign courts as the competent court in case the contract where the dispute arises from contains a “foreignness element”

However, a clear and definite wording  should be  applied in order to prevent any ambiguity or discrepancy while writing the jurisdiction clauses.At this point, it will be enough just to make a determination on of which state courts shall be entitled to hear the case and the name of the foreign court  must be written clearly.

Unless there is valid jurisdiction clause on which the parties clearly and precisely agree and  even though parties object to the jurisdiction of the courts within the relevant time after the lawsuit is filed before a Turkish local court,  the court decides that the  dispute must be submitted to the Turkish courts, rather than to the chosen courts.

 

Att. Semra Gürçal 

 

Bibliography:


1. Supreme Court 11th Civil Chamber decision no. E.2015/5517, K.2015/12591, dated 25.11.2015

2. The award of 16th Civil Chamber of Regional Court No. 2017/2431 E. 2018/1988 K.