Category: Turkiye

The Personal Data Protection Authority [“Authority”] has published a public announcement on September 28, 2021, with respect to the collection and processing of PCR test results and information regarding vaccination status being shared with third parties to mitigate potential health risks during pandemic.

First, it should be mentioned that personal data regarding vaccination status and PCR test results qualify as ‘sensitive information’ pursuant to Article 6 of the Turkish Personal Data Protection Law No. 6698 [“Law No. 6698”], and one can process such data only upon obtaining explicit consent of the data subject. It was therefore, controversial as to whether explicit consent must be obtained from the data subjects while requesting information on PCR test results and vaccination status by employers, or by companies organizing public activities, such as concerts, theatres, cinemas, etc.

In its announcement, the Authority provided its response regarding these issues and indicated that collection, processing and recording health data relating to PCR test results and vaccination status do not constitute a violation under the relevant provisions of the Law No. 6698. By referring to the exception set out in Article 28/1 (ç), the Authority further stated that collection and processing of health data during the fight against Covid-19 should be considered inevitably required to maintain public health, public security and public order.

In this respect, according to the Authority’s announcement, it is permissible to request from persons participating in public activities to share information regarding their vaccination status and/or negative PCR test results. Similarly, workplaces/employers can collect, process and record health data of their unvaccinated employees who must take PCR tests once a week, without seeking their explicit consent. Nevertheless, activities that fall outside of the specified scope will still be subject to terms and conditions for processing health data as per the Law No. 6698. 

By Zahide Altunbas Sancak, Partner, and Sevinc Jafarova, Associate, Guleryuz & Partners

Pelister Atayilmaz Enkur has advised the individual shareholders of Epsilon Composite Technologies and Defense Industry on the sale of a 51% stake in the company to Akkok Holding, ARD Holding, and NDC Holding. Herguner Bilgen Ozeke reportedly advised the buyers on the deal.

Financial details were not disclosed. 

Epsilon Composite is a composite aero-structures manufacturing company based in Ankara, Turkey. The company is a supplier to the aviation and aerospace industry, including Airbus, KAI, Patria, and Bell Helicopter.

Akkok Holding conducts operations in the fields of chemicals, energy, and real estate, with 19 commercial and industrial enterprises.

According to PAE, “following the completion of the transaction, Epsilon Composite became the joint venture company owned by the sellers and purchasers with a shareholding ratio of 51:49. The sellers will continue to hold 49% of Epsilon Composite’s share capital via another Ankara-based entity, [Epsilon Aviation], and the parties will have joint control in the management of the company. Epsilon Composite’s main shareholder, Mr. Baris Nalcaci will continue to stay in Epsilon Composite’s board of directors as an executive board member.”

PAE’s team included Partner Gokhan Enkur, Senior Associate Senem Sarac, Associate Mehmet Ali Sertac Kocahal, Junior Associate Behiye Gokceli, and Intern Ahmet Yasar.

BTS & Partners has advised 500 Startups in its investment in Agave Games.

500 Startups is an early-stage venture fund and seed accelerator founded in 2010 by Dave McClure and Christine Tsai. 

Agave Games, which was founded by Alper Oner and Oguzhan Merdivenli, defines itself as a “hyper-casual game publisher.”

BTS & Partners’ team included Partner Okan Arican and Senior Associate Riza Yucel.

BTS & Partners did not reply to our inquiry on the matter.

Paksoy has advised the EBRD on the acquisition of 5.92% of the shares in Biotrend Cevre ve Enerji Yatirimlari from Doganlar Yatirim Holding for USD 20 million. Akol advised Doganlar on the deal.

Biotrend is a waste-to-energy firm that has been listed on Borsa Istanbul since April of 2021.

Paksoy’s team included Partners Elvan Aziz, Omer Collak, and Sera Somay, Counsel Okkes Sahan, Senior Associate Soner Dagli, and Associate Simge Sengun.

Akol’s team included Partner Omer Gokhan Ozmen, Counsel Handan Bacioglu, and Senior Associates Murat Ayyildiz and Keskin Serbetcioglu.

BTS & Partners has advised QNB Finansbank’s venture capital operation Qnbeyond Ventures on its investment in digital marketing management platform Magnetiq.

According to the firm, Magnetiq is a digital marketing management platform that focuses on the digital marketing needs of SMEs. It plans to use the investment to expand overseas and enhance its digital capabilities.

The BTS & Partners team included Partner Okan Arican and Associates Zeynep Dilruba Guldogan and Orhan Deniz Toprak.

BTS & Partners has advised Turkish private equity firm Turkven on merging IT companies Clonera and Pukta.

The merged companies will operate under a new name: Eclit. The new company is a managed IT services partner for the enterprise and SME segments in Turkey, providing managed IT out-tasking and cloud services.

The BTS & Partners team included Partners Selin Beceni, Tugrul Sevim, and Okan Arican, Senior Associate Erdem Aslan, and Associates Mine Hazal Senol, Orhan Deniz Toprak, and Irmak Ulusinan.

Following the death of a person, the fate of the wealth they created throughout their life, and how to ensure the continuity of this value is a common concern shared by many people. In Turkish law, these matters are regulated in the “Inheritance Law” book, which is the third book of the Turkish Civil Code No. 4721. In the first of our series of articles, in which we will examine the law of inheritance through various topics of interest, we will discuss the concept of inheritance and heirdom. In following articles, we will touch on the frequently asked questions regarding the law of inheritance.

I. What is the Right of Inheritance and the Title of Heirdom, and When do They Arise?

The right of inheritance is an “expected” right in terms of heirs. In other words, the rights of statutory or testamentary heirs regarding the inheritance share arise only with the death of the legator and depend on whether the heir is alive at the date of death of the legator. Accordingly, the legator continues to be the owner of the goods and rights that will be included in the estate as long as they are alive. At this stage, the right of inheritance has not yet arisen for the heirs. In this respect, a real or legal person with the expectation of inheritance  does not have the right to make any claim for the inheritance before the opening of the succession [in other words, the death of the legator].

Moreover, the acquisition of the right of inheritance also depends on possession of the title of heirdom, except for specific cases. Heirdom may be lost in cases of successional indignity, disinheritance, or renunciation of inheritance. These cases will be discussed in the following articles of the series.

II. Who is a Statutory Heir?

Statutory heirdom is a status that is not dependent on the will of the legator and arises directly from the law upon the death of the legator. Statutory heirs are blood relatives of the legator, adopted children and the surviving spouse.

III. Who is a Testamentary Heir?

Testamentary heirdom arises when the legator leaves some or all assets to a certain person of their own free will. The testamentary heir has the title of heirdom just like a statutory heir.

IV. Who is a Beneficiary of the Will?

A beneficiary of the will is a person whom the legator wishes to make an unrequited gain from his estate. The beneficiary of the will does not have heirdom, but only a relative right of claim and does not have a direct right on the asset.

V. What Are the Differences Between Statutory Heirs, Testamentary Heirs, and Beneficiaries?

There are two distinct types of heirdom in Turkish law, which are statutory and testamentary heirdom. With the death of the legator, all heirs, regardless of the distinction, become successors of the legator. However, there are some differences between statutory and testamentary heirs. For example, descendants of a statutory heir replace them in accordance with the principle of succession in cases where the statutory heir cannot attain the capacity of heirdom. Despite the same principle applies to the descendants of a testamentary heir, it is possible to stipulate the opposite in the testamentary contract. Another difference is that only statutory heirs can request adjustment. Yet, in cases where statutory heirs request adjustment, testamentary heirs can also benefit from it.

The beneficiary of the will, who is not an heir, acquires the right on the will only when this property is duly transferred to him by the debtor of the will [i.e., heirs, executor of the will or beneficiary of the will in the sub-testament]. We will discuss the concept of sub-testament in length in our upcoming articles.

VI. Can an Heir Be Appointed for Only a Certain Part of the Estate?

There is no legal obstacle for the appointment of an heir for all or a certain part of the estate. If an heir is appointed for only a certain percentage of the estate, the rest of the estate is left to the statutory heirs.

VII. Can a Person Who Has Not Yet Been Born, such as a Future Grandchild, Become an Heir?

Yes, it is possible according to Turkish law. According to the Turkish Civil Code, individuals have the capacity to have rights from the moment they are conceived on condition that they born alive. Thus, a fetus may possess heirdom as long as it is born alive.

The legator can also make a testamentary disposition in favour of an individual who has not yet conceived [e.g., future grandchild]. Therefore, a fetus can both have the title of statutory heir and benefit from testamentary dispositions.

VIII. Is It Possible to Appoint a Legal Entity as an Heir?

Yes, legal entities can also be appointed as heirs. However, legal entities [apart from the treasury] can only have testamentary heirdom.

IX. Is It Possible to Make a Testamentary Contribution to a Certain Community That Does Not Have the Status of a Legal Entity?

Yes, it is possible to contribute to a certain community that does not have the status of a legal entity [for example, X university students] through a testamentary disposition. Nevertheless, such a community can not attain heirdom, but can only be a beneficiary of the will.

X. Can Foundations and Associations be Heirs?

Foundations and associations are deemed as private law legal entities under Turkish law. Therefore, foundations and associations, like all legal entities, can have the title of testamentary heir.

XI. Can Foundations be Established by a Will?

The legator can also establish a new foundation through a testamentary disposition instead of appointing an existing foundation as an heir or leaving a certain property to it.

In this case, the foundation becomes a legal entity not with the death of the legator, but with the fulfilment of the legal requirements [which is, the registration of the foundation] afterwards. In this case, the official deed in foundations established before death is replaced by the will or testamentary contract.

By M. Tarik Gueryuz, Partner, and Aziz Can Cengiz, Junior Attorney, Guleryuz & Partners

Former Inal Unver Attorney Partnership Partner Ekin Inal has joined the International Finance Corporation as a Legal Counsel in Turkey.

Early in her career, Inal was an Associate with Herguner Bilgen Ozeke. After working for a year in Dubai with Chadbourne & Parke as a Visiting Attorney, she joined the Bilgic Attorney Partnership team (at the time, affiliated to Chadbourne & Parke) in Istanbul in 2011. She became a Partner at the firm in 2016, a year before Norton Rose Fulbright and Chadbourne & Parke merged globally (as reported by CEE Legal Matters on February 21, 2017). She remained with the team through the subsequent rebranding of the Turkish affiliate of Norton Rose, first to Inal Kama Avukatlik Ortakligi (as reported on January 8, 2019) and then to Inal Unver Attorney Partnership (as reported on October 21, 2020).

Recently, Norton Rose Fulbright announced it is forming a new alliance with Turkish firm Pekin Bayar Mizrahi (as reported by CEE Legal Matters on September 10, 2021).

Former ARC Avukatlik Burosu Managing Partner Cemal Araalan has joined Bezen & Partners as a Partner and Head of Litigation.

Before joining Bezen & Partners, Araalan led ARC for a year and was a Senior Manager with PwC Turkey for five months. Between 2017 and 2020, he was Head of Dispute Resolution at Postacioglu, and Head of Litigation and the IT Law practice at GSI Goksu Safi Isik, between 2014 and 2016. Even earlier he spent four years with BASEAK and a year at Japan Tobacco International.

Araalan focuses on corporate and dispute resolution matters and has experience in the technology sector.

“I am thrilled to be the Head of Litigation, heavily involved in complicated disputes,” Araalan said of his new appointment, “and also consulting clients regarding IT law matters such as data protection, blockchain, and e-commerce. I believe a fresh start as a Partner is a major step in my career. Together with Bezen & Partners’ expertise in different fields of law, we will announce our achievements for many well-known projects in the future.”

 

Employees may have access to important and confidential information related to the employer, including the company’s operations, clientele and trade secrets. Use of such information without employer’s knowledge may harm the legitimate interests of the employer. In this respect, an employee should not compete with his/her employer according to the duty of fidelity during the term of the employment agreement. As this is a statutory duty imposed on the employee, there is no need for such non-compete obligation to be explicitly set out in the employment agreement.

On the other hand, parties are allowed to extend the competition prohibition for a certain period after the termination of the employment agreement. However, not all non-compete clauses are enforceable under Turkish law. Accordingly, certain conditions must be for a non-compete clause to be enforceable under Turkish law. As such, those clauses must be reasonable in terms of both protection of commercial life and trade secrets of the employer as well as professional and economic freedom of the employee. In this respect, a non-compete clause which constitutes an exception to constitutionally protected freedom of work and the equally protected right to free development of economic or professional activity of the employee is only deemed valid if stipulated within the legal boundaries.  

In this Article, validity of non-compete clauses after the expiry or termination of the employment agreement [post-employment] will be discussed.

I. Conditions for an Enforceable Non-Compete Agreement

Non-compete obligation of the employees can be regulated either in an employment agreement [non-compete clause] or alternatively by a separate agreement [non-compete agreement]. As non-compete obligations limit the freedom to work of employees, the law imposes several requirements for the validity of those clauses/agreements. Accordingly, the Turkish Code of Obligations No. 6098 [“TCO“] regulates the below conditions for a non-compete clause/agreement to be enforceable under Turkish law.

Non-compete agreements must be in writing to be valid and enforceable [TCO art.444/1].

Non-compete obligation cannot be imposed unilaterally. It must be agreed upon by and between the employer and the employee in writing [whether within the employment agreement or via a separate agreement]. Thus, only referring to an internal regulation or a similar document will not be sufficient for validity of a non-compete clause.

It should be noted that the writing requirement constitutes a crucial criterion for the validity of a non-compete clause post-termination. Accordingly, even though Turkish law does not require employment agreements to be in written form, non-compete agreements must be in writing.

Non-compete agreement cannot be signed with all employees.

Non-compete clause is deemed enforceable if it protects legitimate interests of the employer in preventing the competitive activities of the employee. On the other hand, the employee should be in a position to harm the legitimate interests of the employer by accessing the relevant information regarding employer’s business. Such information may be related to production secrets that cannot easily be reached by third parties, or professional activities that should be kept confidential for the business of the employer, or the clientele.

Use of confidential information must have the potential of a significant loss for the employee.

Disclosure and use of the relevant information to the benefit of the employee or another company must have the potential of negatively affecting the employer’s business. Whether this loss would occur in the ordinary course of business and its severity are vital points in evaluating validity of the clause. As a result, adverse consequences such as loss of profit and customers, regression in competitive capacity in the market, and/or reduction of work capacity should arise in case of a breach.

Non-compete agreement should not unreasonably jeopardise financial future of the employee [TCO art.445/1].

Non-compete clauses should be reasonably limited with regard to place, scope and duration of the prohibition.

1. Geographical scope of the restricted area should not be extended beyond the territory where the employer is carrying out its business activities. This area may be a city, region, or any place where the use of confidential information could lead to damages to the employer’s interests. Yet, it is a matter of debate whether the radius of the geographical area can be determined as the entire territory of Turkey. While the Court of Cassation issued several judgements ruling unenforceability of non-compete clauses covering the whole country, such clauses may be deemed valid provided that the employee had received an adequate consideration.
2. It is also crucial to limit the duration of the non-compete obligation. While the legitimate professional interests of the employer on the protection of the trade secrets can lose its importance in the long run, the excessive duration of the prohibition might limit the employee’s economic freedom. As a matter of fact, the TCO states that the duration of the non-compete obligation should not exceed 2 [two] years, unless there are special circumstances [TCO art.445/2].
3. The scope of the prohibited professional activity of the employee must be reasonable in terms of the position and work description of the employee. That being said, the Court of Cassation rendered non-compete clauses which relate to the entirety of the employee’s activities to be invalid. Accordingly, a non-compete clause should only be adopted with regards to the employer’s actual position within the company.

II. Burden of Proof and Discretionary Power of Judge

Employer will have the burden of proof regarding the validity of the non-compete clause/agreement. If the relevant clause is held to be invalid, the remaining provisions of the employment agreement will remain in full force and valid.

In addition, courts are entitled to restrict the non-compete obligation if it exceeds the legally set limitations in terms of geographical place, scope and duration of the prohibition. For instance, they can shorten the duration or narrow the radius of restricted area [TCO art.445/2].

Nevertheless, it should be emphasized that there are various decisions of the Court of Cassation in which non-compete clauses/agreement that do not meet the requirements explained above were ruled invalid by the court.

III. Breach of Non-Compete Agreement

In case of breach of the non-compete obligation, the employer may claim all damages suffered by it [TCO art. 446/1]. Unless the employee’s action is proven not to be based on fault, s/he will be held liable for the breach. As such, if the employment agreement provides for the payment of a penalty in case of a breach, the employer is entitled to receive the penalty amount along with the damages exceeding the penalty [TCO art. 446/2].

IV. Termination of Non-compete Agreement

Undoubtedly, the non-compete obligation will be automatically terminated upon the expiration of the agreed duration. On the other hand, if the employee’s use of the relevant information would no longer harm the employer’s interests [e.g., in case the information became publicly known], the non-compete obligation may be deemed to be terminated before the expiration of the term.

Employer and employee may also execute a release agreement any time for the purposes of termination. Further, should the employer terminate the employment agreement without a justifiable cause, or should the employee terminate the employment agreement due to a reason attributable to the employer, non-compete clause would also be terminated [TCO art. 447/2].

By M. Tarik Guleryuz, Partner, and Zahide Altunbas Sancak, Partner, Guleryuz & Partners