Category: Turkiye

Akin Gump has advised Kuveyt Turk Katilim Bankasi on its USD 350 million issuance of fixed-rate resettable sustainability Tier 2 certificates due 2031.

Kuveyt Turk Katilim Bankasi is a Turkish participation bank majority-owned by Kuwait Finance House.

According to Akin Gump, these trust certificates are the world’s first regulatory capital Tier 2 environmental, social, governance, and Islamic compliant trust certificates. “An amount equal to the net proceeds will be applied to finance and/or refinance eligible green and/or social projects in accordance with Kuveyt Turk’s Sustainable Finance Framework. The certificates were issued on September 16, 2021, through KT21 T2 Company Limited, a Cayman Islands incorporated special purpose vehicle. The joint bookrunners were Bank ABC, Citi, Dubai Islamic Bank, Emirates NBD Capital, KFH Capital, and HSBC.” The trust certificates are listed on Euronext Dublin.

According to the firm, “the issuance was oversubscribed 12 times with an order book of USD 4 billion. The issuance also achieved the tightest pricing for any Tier 2 Issuance out of Turkey since 2017 at 6.125%, reflecting strong fundamentals and positive market sentiments.”

Akin Gump’s team included Partner Rizwan Kanji, Counsel Hamed Afzal, and Associate Sahar Abas.

Editor’s note: After this article was published, Clifford Chance announced that it worked with its Turkish associated firm Ciftci Attorney Partnership to advise the joint lead managers. Their team was led by Global Head of Islamic Finance Qudeer Latif and Head of Finance Sait Eryilmaz and included Istanbul-based Associates Basar Kirka, Ali Can Altiparmak, and Zana Oztarhan.

Turunc has advised Bogazici Ventures on leading a TRY 7.8 million investment round into Acrome coding platform Riders. Ak Portfoy participated in the round. Erturan Sit Kosgeroglu reportedly advised Acrome and Riders on the deal.

Acrome is a provider of hands-on robotic experiments and education with hardware, software, and integrated courseware for academia.

Turunc’s team included Managing Partner Kerem Turunc and Lawyers Yasemin Kerestecioglu, Beste Yildizili Ergul, Selay Berfin Turgut, and Canberk Taze.

In its decision dated June 8, 2021, and numbered 2018/5832, the Turkish Constitutional Court [the “Court”] ruled that the dismissal of the case in terms of non-jurisdiction nearly after seven years on the ground of the arbitration clause does not violate the right to property.

The judgement emphasized that the applicant could have foreseen the decision of non-jurisdiction from the beginning, and that adverse outcome were not within the scope of positive obligations of the state.

Course of Events

The applicant insurance company had insured the iron commodity exported abroad under the insurance policy signed with the shipper, and the iron commodity in question was damaged due to corrosion by getting wet with salty sea.

The agreement between the shipper and the freighter contains an arbitration clause. Despite this clause, the applicant initiated enforcement proceedings in Turkey against the shipper, and the shipper objected to proceedings. In the action for annulment of the objection filed by the applicant, it was decided to cancel the objection and accept the case even though the shipper raised objections based on the arbitration clause. Upon the appeal, the Court of Cassation reversed the decision by pointing out that the case should be dismissed due to the arbitration clause.

Thereupon, the applicant alleges that its right to property was violated on the grounds that (i) the decision of non-jurisdiction was rendered approximately seven years after the damage occurred in 2010 and thus, its claim for damages was barred by statue of limitations under English law, and (ii) there was no possibility of compensation for its loss since it had not recourse to arbitration on time.

Court’s Assessment

The Court emphasized that the applicant had two alternatives to collect its receivables: the first is to bring the dispute to arbitration in accordance with the arbitration clause set out in the agreement, and the other is to attempt to collect its receivables before Turkish courts despite the arbitration clause. In other words, according to the Court the applicant was in a position to foresee that Turkish courts may render a decision of non-jurisdiction based on a possible objection of arbitration by the counterparty.

In this respect, the Court highlighted that the applicant’s right to property was not violated given that while the applicant was able to argue that its receivables were barred by statute of limitations  applying to arbitration after the court’s decision of non-jurisdiction, and that it could not sufficiently demonstrate that the collection of the receivables became impossible as a result of non-jurisdiction decision adopted after a long time; and stated this situation does not fall within the scope of positive obligations of the state.

The principles emphasized by the Court of Cassation are of vital importance in agreements including arbitration clauses. As a matter of fact, in disputes arising from contracts with an arbitration clause, if legal remedies are resorted before Turkish courts, the claim may be barred by statute of limitations according to the law of the country to which it is subject –as in the present case–, or other procedural problems may arise until the court rejects the case in terms of jurisdiction. According to the Court, the state does not have any positive obligations or responsibilities in such cases.

By M. Tarik Guleryuz, Partner, and Baris Ulker, Senior Associate, Guleryuz & Partners

Turkish litigation-focused law firm Bozkurt Bozkurt has opened an office in New York. The new office will be headed by the firm’s US resident Partner Gokhan Bozkurt. The firm’s Istanbul office will continue to be managed by Partner Mustafa Bozkurt.

According to the firm, “the New York office will serve as a gateway to Bozkurt Bozkurt for US clients and law firms throughout the United States, providing access to [the firm’s] distinguished Turkish law expertise in Turkey. Our New York office will assist US clients, including financial institutions, insurance companies, investors, private equity and venture capital funds, and companies across every industry with their Turkish law-related disputes and internal investigations in Turkey.”

Prior to this appointment, Gokhan Bozkurt has spent almost six years as a Partner with Bozkurt Bozkurt in Istanbul, and another six with Paksoy. He started his career with the Usta Law Office in 2001 and was a Litigation Associate with consumer goods company Hayat Holding, between 2002 and 2009.

Turunc has advised Bogazici Ventures on its TRY 4 million investment in the online therapy platform Hiwell. Tevetoglu advised Hiwell on the deal.

Turunc’s team included Managing Partner Kerem Turunc and Associates Yasemin Kerestecioglu and Beste Yildizili Ergul.

Tevetoglu’s team was led by Co-Founder Zeynep Aga Tevetoglu.

Moral & Partners has advised Turkish private equity fund Taxim Capital on its investment in Moltek A.S. through Luxembourg subsidiary LuxTheranostics. Acar & Ergonen advised Moltek’s shareholders.

Financial details were not disclosed.

Moltek is a Turkish radiopharmaceuticals producer established in 2007. It specializes in nuclear medicine and its products are used in oncology, neurology, and cardiology.

The Moral & Partners team was led by Partners Resat Moral and Serkan Pamukkale and included Senior Associates Karaca Kacar, Serra Haviyo, and Duygu Bozkurt and Associate Dilara Kaymaz.

The Acar & Ergonen team included Partners Duygu Acar Yucesoy and Asli Tezcan and Associates Beyza Akinci and Pinar Akkaya.

Former Turkish Competition Authority Chief Legal Counsel Harun Gunduz has moved into private practice by joining ELIG Gurkaynak Attorneys-at-Law.

Gunduz has been with the competition authority (Rekabet Kurumu) since 2005 when he joined it as a Junior Competition Specialist. In 2009 he was promoted to Senior Competition Specialist and was made Chief Competition Specialist in 2018. He was subsequently promoted to Head of Strategy Development, Regulation and Budget Department in 2018 and has been serving as the Chief Legal Counsel since February 2020.

“ELIG Gurkaynak is growing stronger and stronger at the competition law front, with the addition of a carefully-picked roster of experienced, wise, and energetic senior figures of Turkish competition law,” commented ELIG Founding Partner Gonenc Gurkaynak. “With his knowledge and experience, he will no doubt be instrumental in ELIG Gurkaynak’s journey of providing top-quality assistance to clients in the competition law field, while also helping us develop our extremely talented and enthusiastic junior competition law specialist lawyers toward their true potential.”

Originally reported by CEE In-House Matters.

As known, several months ago, Whatsapp Inc. had informed its users about the update on the terms of use and privacy policy and announced that “the users must consent to their WhatsApp data being shared with Facebook companies in order to continue using WhatsApp, otherwise as of February 8, 2021 they will not be able to use WhatsApp”. This update stirred a huge debate among users, and millions stopped using the app. That being said, on January 12, 2021, the Personal Data Protection Authority [“Authority”] initiated an ex officio investigation as to whether WhatsApp infringed Article 15 of Turkish Personal Data Protection Law No. 6698 [“Law No.6698”]. 

The Authority recently completed its examination on the Terms of Service of WhatsApp and imposed 1,950,000 TRY [one million nine hundred and fifty thousand Turkish Liras] fine on the company for failing to sufficiently protect user data, with its decision dated 03.09.2021 and numbered 2021/891. This is the highest penalty ruled by the Authority so far.

In its decision, the Authority also discussed the following and decided that the company is processing users’ personal data in violation of the Law No. 6698:

• The WhatsApp Terms of Service do not provide users with an optional right for the processing and transferring their personal data abroad. Accordingly, the “free will” element of the explicit consent has been infringed since explicit consents were not obtained
• The terms regarding the data transfer have been set non-negotiable. Thus, users are forced to provide consent to the contract as a whole.
• Since WhatsApp servers are not located in Turkey, the consent for all kinds of personal data transactions must be obtained explicitly from the users in the

Additionally, the Authority ordered WhatsApp to bring its Terms of Service and Privacy Policy in line with the Law No. 6698 within 3 [three] months and inform data subjects in this respect.

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

Norton Rose Fulbright has announced it is forming a new alliance with Turkish firm Pekin Bayar Mizrahi. The international firm’s former affiliated law firm in Turkey will continue to be part of its enlarged team.

In 2019, CEE Legal Matters reported that Norton Rose Fulbright had ended its affiliation with attorney Haluk Bilgic in Turkey and renamed its affiliate office in Istanbul, from the Bilgic Avukatlik Ortakligi (Bilgic Attorney Partnership) to Inal Kama Avukatlik Ortakligi, reflecting its new management by Partners Ekin Inal and Olgu Kama. Since then, Olgu Kama left in 2020 and Utku Unver joined the firm’s associated Turkish law practice, on October 19, 2020, thus rebranding the firm to Inal Unver Attorney Partnership (as reported by CEE Legal Matters on October 21, 2020). Lastly, Inal recently moved to the IFC. According to a Norton Rose spokesperson, “Unver and our other Turkish law qualified lawyers will continue to be part of our enlarged team.”

According to Norton Rose, Pekin Bayar Mizrahi is one of the oldest and largest law firms in Turkey. It was founded in 1946 and is led by Selin Bayar and Ergin Mizrahi.

“This alliance stems from a shared vision. Pekin Bayar Mizrahi’s philosophy of teamwork, integrity, and service mirrors Norton Rose Fulbright’s core business principles of quality, unity, and integrity,” commented Norton Rose Fulbright Global Chief Executive Gerry Pecht. “We believe that our offerings around the world and Pekin Bayar Mizrahi’s experience in Turkey will significantly benefit the clients of both firms.”

“With the formation of this alliance, the lawyers from Norton Rose Fulbright’s Istanbul office will be working closely with Pekin Bayar Mizrahi in an arrangement which will foster seamless integration between the firms,” added Pekin Bayar Mizrahi Managing Partner Selin Bayar. “There is demand for sophisticated cross-border legal services in Turkey, and we have put ourselves in an advantageous position by deepening our relationship with a truly global firm like Norton Rose Fulbright. We have great professional respect for one another, and we look forward to working even more closely together.”

In the ordinary course of commercial life, “bankruptcy” may be inevitable for financially distressed companies. In such case, the question arises with respect to the status of receivables from the bankrupt entity and how they will be collected.

General Information on Bankruptcy

The debt collection methods regulated in the Enforcement and Bankruptcy Law No. 2004 [“EBL”] are divided into two: debt enforcement proceedings and bankruptcy. In the former, while there is a proceeding by a certain creditor to collect the debt from the assets of the debtor [that is sufficient to pay the debt]; the latter is a more general process which addresses “all” assets of the debtor and aims to pay all debts. Furthermore, bankruptcy proceeding can only be filed against entities subject to bankruptcy whereas any individual or legal entity may be subject to debt enforcement proceeding. 

According to the Turkish Commercial Code No. 6102 [“TCC”], those who are merchants, those who are deemed to be merchants and are subject to the provisions on merchants, and those who are reported to be subject to bankruptcy according to the laws although they are not a merchant, are subject to bankruptcy. In this respect, legal entities are subject to bankruptcy under Turkish law. There are three different bankruptcy proceedings to follow depending on the case at hand: bankruptcy through debt enforcement, bankruptcy through debt enforcement based on exchange notes and bankruptcy through filing a case. Regardless of the method, the commercial court of first instance is the sole authority to declare bankruptcy. With the adjudication of bankruptcy, the debtor takes the title of “bankrupt”, regardless of where and who is in possession of it, all the seizable assets and rights of the bankrupt constitute the estate. 

Consequences of Bankruptcy for Creditors 

Adjudication of the bankruptcy leads to some major consequences regarding the creditors. Accordingly:

• All the debt collection proceedings filed against the bankrupt shall halt and with the finalization of the decision, all proceedings drop. Although this is the general rule, enforcement proceeding related to foreclosure and the evacuation of the leased continue. It is possible for the lienor to initiate an enforcement proceeding against the estate.
• All civil lawsuits related to the property and rights included in the estate will halt with the bankruptcy decision. However, unlike enforcement proceedings, these cases will not drop. Statute of limitation period shall not apply during this
• All the debts of the bankrupt, including deferred debts, become due. This rule does not apply to the debts secured by If the debt has interest, interest and proceeding costs incurred until the day of the bankruptcy decision are added to the main debt.

Procedure of Collection of Debts in Bankruptcy Process

Creditors are required to register their receivables at the bankruptcy estate within 1 [one] month from the declaration of the bankruptcy decision. The assets shall be converted into cash and creditors who registered their receivables, join the distribution process of the cash in proportion of their receivables. The creditor who did not register receivables within the 1 [one] month period can apply to bankrupt’s assets and register the receivables until the bankruptcy process is finalized. In that case, the creditor who applied late is obliged to bear the expenses incurred due to the late application such as notice expenses. In addition, the late applicants are unable to participate in the temporary distribution process, in which the creditors may retrieve some portion of their receivables in advance in case the liquidation process is prolonged.

Following the registration, receivables are separated in four ranks set forth in the EBL depending on their qualification and a list is made showing the sequence of payments to creditors. It is possible to object to this list through filing a lawsuit or a complaint. The first three of these ranks are privileged receivables and the fourth rank is non-privileged. Receivables in the same rank are shared among the same rank creditors in proportion to their receivables. The creditors in the lower rank could not collect their debts until the creditors in the upper rank are satisfied. The classes specified in the EBL are as follows:

• First Rank: Receivables arising from employment relations, including the notice and severance payments accrued within one year prior to the bankruptcy and the notice and severance payments arising upon the termination of the employment relationship due to
• Second Rank: All receivables of those whose properties are left to the administration of the debtor due to guardianship and
• Third Rank: Receivables stated to be privileged in the relevant laws [g., receivables of the flat owners from the other flat owners who do not pay their share of building expenses, attorney fees etc.]
• Fourth Rank: Remaining non-privileged receivables that are not listed

In practice, even if all the cash amount collected from sale of the assets in bankruptcy is distributed, creditors might not be able to collect their receivables in full. For this reason, an “insolvency certificate” is granted for the unpaid portion to the creditor who cannot get the receivables in full. If the debtor acquires a new property after the liquidation of the asset, a new debt collection proceeding can be initiated based on the insolvency certificate. As regards the receivables that are not registered at the estate, the creditor would still have the right to request them following the bankruptcy process. However, it will not be possible to ask for any interest for these receivables.

This content is solely produced for informative reasons and do not constitute legal opinion or advice under any circumstances. Güleryüz & Partners Attorneys at Law is the sole owner of the intellectual property rights of this content and shall not be reproduced, copied, or used without written consent of Güleryüz & Partners Attorneys at Law.

By M. Tarik Guleryuz, Partner, and Baris Ulker, Senior Associate, Guleryuz & Partners