Renegotiation Duty or Obligation in Turkish Law?

After the establishment of a contract or during its formation, parties may encounter performance obstacles. Various legal systems have arranged different sanctions against such obstacles. One method to resolve these negative situations without resorting to legal means is for the parties to renegotiate and reach a common ground. The concept of adapting the contract while staying within its bounds reflects the principle of covenant loyalty. According to Baysal, "Renegotiation, which is a reflection of the autonomy of the will, is also a requirement of the honesty rule” [1]. Additionally, parties often include renegotiation clauses in contracts to delineate risk areas. “These provisions, which impose a renegotiation obligation on the parties in the face of changing circumstances, are called renegotiation clauses” [2].

The distinction between renegotiation as a duty or an obligation gained prominence due to the collapse of the transaction basis in the Turkish Code of Obligations, effective since 2012 [3]. It is crucial to determine whether renegotiation is a duty or not for the adaptation of contracts as regulated in Article 138 of the Turkish Code of Obligations. If considered a duty, renegotiation is seen as one of the collateral obligations arising from the duty relationship. Although a lawsuit may not be filed directly for the performance of collateral obligations, a violation of these obligations means the debtor falls under the debt of compensation for damages. If renegotiation is deemed an assignment, the debtor cannot be forced to perform, nor will they fall under the duty of compensation. As a result of a breach of duty, the loss of rights related to the adaptation of the contract will become prominent [4].

In International Law, such as PECL (Principles of European Contract Law Article 6:111) and German Law, renegotiation is considered a duty [5]. Yavuz, who views renegotiation as an obligation, argues that encouraging settlement in cases where parties can freely dispose, in accordance with Code of Civil Procedure Article 137, incentivizes renegotiation. Thus, if the legislator has arranged for renegotiation in this article, it should apply to the collapse of the transaction basis [6]. According to Baysal, considering renegotiation as an obligation has the disadvantage of prolonging negotiations, further damaging the already shaken contractual relationship. It is also unclear how a judge will assess the damage and defect, elements of compensation, if renegotiation yields a negative outcome [7].

In legal doctrine, Baysal argues that renegotiation should be characterized as an assignment, which aligns better with the purpose of renegotiation, thus avoiding the responsibility of compensation [8]. He contends that recognizing renegotiation as an assignment would mean the party wishing to exercise the right to adapt the contract would lose this right in case of assignment violation, thereby encouraging renegotiation [9].

Conversely, Ince opposes Yavuz's view, arguing based on Article 137 of the Code of Civil Procedure that renegotiation cannot be considered a duty. This article pertains to the judge inviting the parties to compromise after applying to the court, not to a renegotiation obligation [10].

Furthermore, if there is a gap in risk distribution due to changes, parties can come together and discuss it voluntarily, but this does not constitute a renegotiation obligation or duty. According to Topuz, it is the court’s duty to eliminate the risk imbalance caused by changing situations. Topuz describes renegotiation as a right that generates innovation, stating that due to the numerus clausus principle, there can be no mention of a right not recognized by law [11].

In conclusion, when considering Article 138 of the Turkish Code of Obligations, there is no legal provision in Turkish law categorizing renegotiation as either a duty or an obligation. The regulation in the Code of Civil Procedure is viewed as an invitation to arbitration and cannot be adapted to renegotiation. Voluntary negotiation by the parties to adapt the contract to changing conditions is a positive mechanism, enhancing speed and respecting the parties' autonomy. Resolving whether renegotiation is an obligation or a duty in Turkish Law requires a specific legal arrangement.

[1] Baysal, B., Yeniden Müzakere Ödevi., Prof. Dr. Hasan Erman’a Armağan, Der Yayınları, İstanbul, 2015, p.188.

[2] Baysal, B., “Sözleşmenin Uyarlanması”, On İki Levha Yayıncılık, 2. Baskı, İstanbul, 2017, p.275.

[3] İnce, N., “Yeniden Müzakere Etme Borcu mu Külfeti mi?”, Banka ve Ticaret Hukuku Dergisi, 33(1), 2017, pp.179-208

[4] Baysal, 2015, p.195.

[5] Principles of  European Contract Law Article 6:111 https://www.internationalcontracts.net/international-law-documents/Principles-of-European-Contract-Law.pdf (Last accessed: 20.07.2024)

[6] Yavuz, N., “6098 sayılı Türk Borçlar Kanunu’nun Getirdiği Değişiklikler ve Yenilikler, 2. Basım, Ankara, 2012, p.244

[7] Baysal, 2015, p.195.

[8] Baysal, 2015, pp.185-198

[9] Baysal, 2015, p.196.

[10] İnce, 2017, pp.179-208.

[11] Topuz, S., “Türk – İsviçre ve Alman Borçlar Hukukunda Denge Bozulması ve İfa Güçlüğü Durumlarında Sözleşmeye Müdahale”, Yetkin Yayınları, 1. Baskı, Ankara, 2009, p.335.