One would reasonably expect the question of whether foreign parties must sign their contracts with Turkish clients in Turkish to have a simple yes or no answer. Unfortunately, this is not so for Turkish lawyers. The problem has two sides, and it has not yet been resolved.
The Wording of the Law
In 1926, three years after the national assembly proclaimed Turkey a Republic, it passed a law making the use of Turkish mandatory in commercial enterprises. The reason for the law, coming after the founding of the nation state, is clear. Its wording, however, is not. The first article of the Law requires Turkish entities and enterprises in Turkey to use Turkish in their transactions, contracts, correspondence, accounts and books. For example, if two Turkish entities sign a contract in Turkey, the Law requires them to do so in Turkish. The second article, on the other hand, requires foreign companies and enterprises to use Turkish, but only in their correspondence, transactions and communications with Turkish enterprises and Turkish citizens, and in the documents and books they must submit to state authorities and offices. The first article, which applies to Turkish entities and enterprises, mentions "contracts", while the second article, which applies to foreign ones, does not.
This is where the ambiguity lies. The matter is further complicated by the question of whether the lawmakers left out contracts on purpose. This has led to differing views that frustrate a client's reasonable expectation of a yes or no answer.
The Approach of the Courts
Second, the courts that interpret and apply the Law have not resolved the problem either. On the contrary, they have made it harder for Turkish lawyers to advise their clients. It is common for foreign parties to sign their contracts with Turkish parties in English or another foreign language, yet there are only a limited number of cases in which the courts have considered and discussed the Law.
There are several reasons for this, but it is widely accepted that the law requiring the use of Turkish served a purpose at a particular point in history and is now outdated and irrelevant.
For this reason, in most cases the parties do not invoke the Law. This consensus may explain why there are few decisions interpreting and applying the Law even though it remains in force. More importantly, where the courts have considered and discussed the Law, their decisions have been inconsistent, especially regarding contracts between foreign and Turkish parties.
In 2013, a decision of the Court of Cassation, the final court of appeal in civil and criminal matters, caused "chaos" when its 11th Civil Chamber held that an arbitration clause in a contract signed in English between a foreign party and a Turkish party was invalid. The Chamber stated that foreign parties must sign their contracts with Turkish parties in Turkish. This precedent was not followed in other decisions of the 11th Chamber or by other chambers of the Court of Cassation. Still, this single decision was more than enough to make foreign parties worry that they might not be able to enforce their contracts with Turkish parties unless those contracts were in Turkish. More recently, in 2020, the same 11th Chamber of the Court of Cassation held that the Law does not apply to contracts between a foreign party and a Turkish party, and that such parties are not required to sign their contracts in Turkish. The decision does not explain why the 2013 decision was now implicitly overruled, but the current interpretation of the Law leans toward the enforceability of contracts in a foreign language where a foreign party is involved. Even more recently, in 2021, a Regional Court of Appeal decision adopted the same interpretation of the Law.
Practical Advice
To return to the question posed at the outset, the problem is less worrying for foreign parties today, but it is not settled. Negotiating a contract in English, having to translate it into Turkish once the terms are agreed, and even having to negotiate the translation itself can be frustrating, time-consuming and costly. Nevertheless, since the possible sanction under the Law is the invalidity of the contract, it may still be wise to take every possible interpretation of the Law into account and to sign contracts, or at least foreign jurisdiction clauses, in Turkish until the recent precedent becomes well established.