Maritime Disputes: A Comprehensive Examination of LMAA, ISTAC, and Turkish Courts’ Approaches to Maritime Cases - Part 2

The Obligation of Providing Security for Foreign Parties in Lawsuits in Turkey (Cautio Judicatum Solvi)

Security refers to the financial guarantee required from the plaintiff in lawsuits initiated by foreign parties in Turkey to cover the court's litigation expenses and potential damages of the defendant.

In accordance with Article 48(1) of the Turkish Code of Civil Procedure (MÖHUK), "foreign natural and legal persons who file lawsuits, intervene in lawsuits, or carry out enforcement proceedings in Turkish courts must provide the security determined by the court to cover the litigation and enforcement expenses and compensate the other party's loss and damages."

The second paragraph of the same article regulates the exemption from providing security, stating that the court shall exempt the party filing the lawsuit, intervening in the lawsuit, or carrying out enforcement proceedings based on the principle of reciprocity.

Reciprocity aims to extend the same exemption to Turkish citizens in the foreign country of the foreign party filing the lawsuit, intervening in the lawsuit, or conducting enforcement proceedings.

Reciprocity can be established in two ways under Turkish Private International Law: contractual, legal, and factual reciprocity.

Contractual reciprocity will be established when there is a bilateral or multilateral agreement between the Republic of Turkey and the state to which the foreign natural or legal person filing the lawsuit, intervening in the lawsuit, or conducting enforcement proceedings belongs, foreseeing exemption from providing security.

Agreements related to mutual legal assistance (letters rogatory) and exemption from providing security between the Republic of Turkey and other contracting states will also be applicable. Information about the countries with which the Republic of Turkey has such agreements can be obtained from the website of the General Directorate of International Law and Foreign Relations of the Ministry of Justice.[1]

Would it be advisable to enter into an agreement designating a specific court? Is there a system in place for the simplified consideration of smaller claims?

In Turkey, the Istanbul 17th Commercial Court of First Instance is the court that has the most diverse case jurisdiction regarding disputes arising from maritime law. This court operates as a specialized maritime court and has the opportunity to work with numerous experts in the field, including renowned academics and experienced sea captains. It can be agreed upon in the contract signed between the parties that Istanbul courts shall have jurisdiction over any disputes that may arise. In such a case, the court to which the case will be submitted is the Istanbul 17th Commercial Court of First Instance.

Regarding the smaller claims, in the Turkish legal system under the scope of the Turkish Code of Civil Procedure (TCCP), the expedited trial procedure has been regulated as a method that offers a swift and economical resolution for comparatively low-value monetary claims. The expedited trial procedure is a more straightforward and accelerated legal process established for cases that require quicker resolution, involve a shorter examination, and can be concluded through a simpler review. The types of cases subject to the expedited trial procedure are specified in the codes. Within this procedure, parties are not allowed to submit response to response or second response petitions apart from the initial statement of claim and response petitions. In this context, parties are required to clearly present all evidence along with the indication of which fact they relate to in their pleadings, attach their available evidence to their pleadings, and provide information in their pleadings about how documents and files from other locations can be obtained, when necessary.The expedited trial procedure will be applied in cases where the value of the claim does not exceed 1,000,000 Turkish Liras as of 2023.

Could foreign law be selected, or would it be more advisable to recommend the choice of Turkish law?

The Turkish Code of Private International Law (Law No. 5718) allows parties to select a foreign law to govern their contractual relationship, as long as it does not violate public order or mandatory provisions of Turkish law. Turkish courts generally respect the principle of party autonomy in choosing the governing law of their contracts. Therefore, parties in Turkey have the freedom to choose foreign law as the governing law in contracts and agreements, even when the dispute is brought before Turkish courts. This is known as a choice of law or governing law clause. Turkish courts will apply the chosen law to determine the rights and obligations of the parties, interpretation of contractual provisions, and resolution of any disputes arising from the contract.

Please kindly note that while Turkish courts will apply the chosen foreign law, parties may need to provide evidence and expert opinions on the content and interpretation of foreign law to assist the court in its decision-making process. It should be borne in mind that this may affect the speed of the proceedings and may bring along certain consequences of the judge's failure to apply accustomed law. It should be emphasized that the language to be used in the proceedings conducted in Turkish courts shall be exclusively Turkish.

It is surely more preferable to agree on Turkish Law to be applied considering that legal context will not be necessary to deliver to the court. Turkish Commercial Core was announced in 2011 and several amendments were added so far and in compliance with the major liberal countries’ law systems.

Would disputes not involving a Turkish party or having no direct relation to Turkey be accepted for consideration if Turkish courts are agreed upon?

If the parties agree to the jurisdiction of Turkish courts in their contract, Turkish courts generally have the authority to consider and adjudicate disputes, even if they do not involve a Turkish party or have no direct relation to Turkey. The principle of party autonomy allows parties to choose the jurisdiction and governing law for their contracts, even if they are not directly connected to the chosen jurisdiction.

In general, which of the two options would be considered more suitable and appropriate for a foreign shipowner and Turkish counterparts?

Although Turkish courts particularly the Istanbul 17th Commercial Court specialize in Maritime disputes, in cases where there are concerns about time constraints (since courts have additional stages such as appellate proceedings), and when the choice of foreign law as the applicable law will be preferred (as the application of foreign law may pose difficulties for the courts) opting for arbitration would be more advantageous.

[1] https://diabgm.adalet.gov.tr/Home/SayfaDetay/yabancilarin-teminat-yatirma-yukumlulugu05032021034324

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