Category: Turkiye

International Court of Arbitration of the International Chamber of Commerce (‘’the ICC’’) set forwards its approach for the Alternative Dispute Resolution with new updated arbitration rules. The 2021 Rules were launched on 1st of December 2020, and will become effective and apply to cases that is filled from 1st of January 2021. Cases submitted to the ICC and registered before 1st of January 2021 will be ruled by 2017 ICC Rules, unless the parties stated otherwise. The new alterations intended to make a further efficiency, flexibility and transparency into the arbitral practices whilst anticipating the demands of both the arbitration community and arbitral tribunals.

I. Amendments and Features of the 2021 ICC Rules

Effective Case Management


Article 22(2) of 2017 ICC Rules stated that; “in order to ensure effective case management, the arbitral tribunal, after the consultation of parties, may adapt procedural measures as it considers appropriate, provided that they are not contrary to any agreement of the parties.” Regarding the 2021 Rules, the replacement of “may” with “shall”, grants a complete duty on arbitrator to ensure an effective case administration.

New Scope for Consolidation

In line with the Article 10(b) of the 2017 ICC Arbitration Rule, the ICC may consent 2 or more arbitrational consolidations that are pending under the ICC Rules where “all the claims are made under the same arbitration agreement”. In this context, such phrasing unconfirmed the question as whether “the same arbitration agreement” comprised same arbitration agreements covered in different contract. The 2021 ICC rules clarifies that the ICC may present consolidation in where “all of the claims in the arbitrations are made under the same arbitration agreement or agreements”. Further, revision of Article 10(c) allows the ICC to order consolidation where a different arbitration agreement or agreements may be involved, specified that those agreements are compatible, in-which the arbitrational disputes rise in connection with the same legal relationship.

Consequently, new 2021 ICC Arbitration Rules embraces wider liberal account to consolidation, with compatibility of the related arbitration agreements becoming more essential.

Joinder of Additional Parties after the Arbitral Tribunals


Inclusion of additional parties permitted only in line with the consents of parties in the contract and before the construction of the arbitral tribunal6 through the 2017 Rules. Yet, the revised Article 7(5) permits an arbitral tribunal, when established and upon requests of parties, to join an additional party even when in the lack of complete consent. Besides, additional party is subject to accept the constitution of the arbitral tribunal and agree to the Terms of the Reference. Whilst deciding the joinder application, the arbitral tribunal is subject to determine all relevant circumstances such as the arbitral tribunals’ eligibility to have jurisdiction over the relevant party, the timing of the application, likely conflict of interest, and lastly, the effect of the joinder on arbitral actions.

Increased Expedited Procedure Rules


The monetary limit provided in the Expedited Procedure Rules have been changed by the 2021 Arbitration Rules and raised the opt-out threshold from 2 million to 3 million for arbitration agreements which are concluded on or after 1st of January 2021.

II. Compliance with Due Process Principles

Additional Awards


Under the 2017 Rules, decisions already made may be subject to correction or interpretation by the arbitral tribunals under the ICC’s direction. Currently, the 2021 Arbitration Rules entrains a new rule for additional awards. Under Article 36 (3); within 30 days of receipt of the award, a party may apply the arbitral tribunal to issue an additional award to rule upon claims raised that been omitted during the proceedings.

III. Constitution of the Arbitral Tribunal

The new rules build on Article (12)8, which allows the ICC Court to nominate all three members of the arbitral tribunal is one of the major and controversial amendments constructed in the 2021 Arbitration Rules. Under the Article 12(9); “notwithstanding any agreement by the parties on the method of constitution of the arbitral tribunal, in exceptional circumstances the Court may appoint each member of the arbitral tribunal to avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award.” The revision as described by the ICC is inspired by the Dutco decision of the French Court de Cassation and aiming to ensure compliance with public policy and preserve the enforceability of awards in exceptional circumstances. Although such provision object to fairness and equality, limitation on the right of the parties to nominate their own arbitrator will certainly have controversial aspect on the key rights in international arbitration. Regardless of the agreements by the parties on the method of constitution of arbitral tribunals, grating discretionary power to ICC Court is, at first glance, an instance of infringing freedom.

IV. Measures on Prevention of Conflict of Interest

Third Party Funding


In line with the overriding needs on the transparency of international arbitrations, the 2021 Arbitration Rules presents a new provision in regard to the third-party funding disclosures. New Article 11(7) highlights that; “in order to assist prospective arbitrators and arbitrators in complying with their duties under Articles 11(2) and 11(3), each party must promptly inform the Secretariat, the arbitral tribunal and the other parties, of the existence and identity of any non-party which has entered into an arrangement for the funding of claims or defences and under which it has an economic interest in the outcome of the arbitration.” In this respect, intention to increase transparency is evident for arbitrators to disclose their relationship with the funders to avoid any possible conflict of interest.

Party Representation


The new 2021 Arbitration Rules presents new provisions that purposes to strike a balance between fair treatment and arbitrators’ independency. Under the Article 17; parties are mandates to inform any changes in their representation to the ICC Secretariat, the arbitral tribunal and other parties. In return, the Article 17(2) gives a right to arbitral tribunal to decline the proposed amendment or limit the participation of new party representative from the proceedings. Overall, measure of new provision, gradually, aims to prevent the conflict of interest amongst the new party representative and arbitrators.

V. Innovative ICC Rules

Arbitration of Treaty-based Disputes

About 20 percent of cases registered by the Court involved a state or state entity, with a 67 percent upsurge over the past 5 years. In an attempt to adapt to the particularities of this growing portfolio, the provisions of the Rules on investor-state dispute resolution (‘ISDS‘) have been strengthened with a few tweaks.

The 2021 Arbitration rules provides two new rules on the treaty disputes under the Article13(6) and Article26(9) c. Resembling to ICSID Convention Article 39, Article13(6) asserts that none of arbitrator can have the same nationality as a party, unless the parties agree otherwise. Thereby, introducing a new neutrality feature or requirement in treaty-based disputes. Moreover, Article26(9)c implicitly specifies that Emergency Arbitration Provision are not offered when “the arbitration agreement upon which the application is based arises from a treaty.” And such provision is in compliance with the UNCITRAL Arbitrational Rules and ISCID which do not provide the emergency arbitration provision. In sum, given provisions on treaty-based disputes are indication of the Court’s eagerness to attract parties’ attentions on the consideration of the 2021 Arbitration Rules.

Settlement of Disputes

The significant techniques recommended by the 2021 Arbitration Rules on the settlement of disputes stresses is that the importance of “encouraging the parties to consider settlements of all part of the dispute”, rather than narrowly informing parties about this option.

VI. Digitalisation of Arbitration

Virtual Hearings

With the encroachment of COVID-19, it has become evident that to carry on with the proceedings, all parties to the arbitration should be eager to conduct some adjustments to the conventional ways. On 9 April 2020, the ICC announced its, the most significant guidelines on virtual hearings, Guidance Note on Possible Measures Aimed at Mitigating the Mitigating the Effects of the COVID-19. In the light of the ICC Guidelines, the 2021 Arbitration Rules introduced virtual hearing into its arbitral tribunal proceedings.

Electronic Submissions

The 2021 Arbitration Rules depart from the conventional way of submitting document in terms of pleadings and communications and allow practitioners to electronic fillings from the beginning of the Covid-19. As Article 3(1) states that; “all pleadings and other written communications submitted by any party, as well as all documents annexed thereto, shall be supplied in a number of copies sufficient to provide one copy for each party, plus one for each arbitrator, and one for the Secretariat. A copy of any notification or communication from the arbitral tribunal to the parties shall be sent to the Secretariat.” However, with the new amendments, the requirement of hard copy documents is optional both to the parties and the arbitral tribunals. Further, in the light of the amendments completed on Article 4 and Article 5; it is left to parties to determine whether they opt delivery against receipt, registered post or courier and subsequently submission of hard copies to relevant parties, the arbitrator and finally, the Secretariat. Obviously, whilst such amendments are environmentally friendly, the cost-effectiveness of this approach is self-evident.  

VII. Conclusion

The new 2021 ICC arbitration rules present significant features to further modernise and encourage efficiency, flexibility and transparency, predominantly demonstrated by the new provisions on complex arbitration such as joinder and consolidation, party representation and disclosure of third-party funding. Taking into account, the changes in international arbitration and encroachment of Covid-19 to law’s paradigm, alterations on the arbitration rules appears to be vital. Though, the provision on the nomination of all three members of arbitral tribunal and arbitral tribunal’s right to exclude counsel is likely to encounter some concerns. Ultimately, although given amendments objects to rise efficiency, flexibility and transparency, the Court and arbitrators should put the latest hard work whilst invoking such provision for any degree of dispute resolution. For more detailed information, you can contact us via the following information.

By Ali Guden, Founding Partner, Guden 

2020 was a busy year for the legislator in relation to the Turkish Capital Markets. An amendment made in the Turkish Capital Markets Law (CML) at the beginning of 2020 introduced several elements, including a Security Agent, into Turkish law. And then the pandemic hit, making the trust factor in regard to assets even more crucial than it was before. In times of uncertainty, the Security Agent may be invited to play a greater role.

Under the amended CML, companies are provided the opportunity to issue secured bonds. By this tool, companies are able to provide the comfort that investors may seek in these challenging times. Accordingly, issuers can use a certain category of their assets for leveraging, and may reach financing at lower costs than unsecured debt instruments.

Following the amendment of the CML, secondary legislation was expected. In October 2020, the Capital Markets Board issued a draft communique on the terms and conditions applicable to the issuance of secured debt instruments, as well as the rules applicable to the Security Agent.

As per the draft communique, assets which may constitute “security” for debt instruments are rather broadly defined, and may include: Turkish Treasury bonds and notes, immovable assets, precious metals, participations in investment funds, shares traded on the Star market of the Istanbul Stock Exchange, and machinery and equipment. Such assets must be located in Turkey. Periodical revenues from these assets (such as rent, interest, dividend, and so on) are normally added to the corresponding security. However, it is possible to decide otherwise, so that the issuer may still collect the periodical revenues, while using the asset itself to generate financing. 

The secured debt instruments can be issued at once, or in several tranches within a certain ceiling corresponding to the secured amount. Prior to the initiation of the offering of the secured debt instruments, a security management agreement is required to be executed between the issuer and the Security Agent. The assets constituting securities of the debt instruments to be issued are to be transferred to the Security Agent at least one day prior to the start of the subscription into the secured bonds, either by way of transfer of ownership or as an in rem  right.

The assets transferred to the Security Agent shall be kept separately from the assets of the Security Agent and cannot be subject to any foreclosure for any debts of the Security Agent, including public debts. Furthermore, the draft communique also addresses potential conflict of interests between the issuer and the Security Agent and restricts/forbids certain areas of inter-action which could otherwise potentially create conflicts.

One of the most attractive feature of such secured debt instruments from the perspective of the investors involves the relatively quicker remedies available in cases of default: the Security Agent is authorized to convert any security asset under its management into cash by any means, including direct sale to a third party or through auction. By doing so, the Security Agent is not required to notify the defaulting party of such default, provide a cure period, or obtain any permission or approval from court or from any administrative authority. In addition, the draft communique sets out clear deadlines in terms of the period of time within which such liquidation activities shall be initiated following default.

In order to ensure the protection of investor trust, breaches by the Security Agent of its legal obligations trigger relatively heavy consequences: if assets constituting security are used in ways violating the security management agreement, the Security Agent may be sentenced to 5 to 7 years of prison.

The secured debt instruments are expected to make a very positive contribution to the domestic debt market as they are very likely to facilitate financing by providing sufficient comfort to investors and by reducing costs for issuers, since such instruments will reduce potential default risk exposures.

By Levent Celepci, Managing Partner, Celepci Law in cooperation with Schoenherr

This Article was originally published in Issue 7.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Akol Law has advised Global Ports Holding on the sale of 99.9% of its stake in Port Akdeniz to QTerminals. Kolcuoglu Demirkan Kocakli, reportedly working with Clyde & Co as the coordinator on the deal, advised QTerminals.

According to Akol Law, “the enterprise value was USD 140 million and the closing equity value is USD 115 million.” 

Port Akdeniz is a cargo export port located in Antalya, Turkey. The port handles cargo containers and general and bulk cargo for Asian and Middle Eastern markets. 

QTerminals is a provider of container, general cargo, RORO, livestock, and offshore supply services. The company operates the Hamad Port in Qatar.

Global Ports Holding operates 21 cruise ports in 13 countries in the Caribbean, Mediterranean, and Asia-Pacific regions. The company was established in 2004 and is headquartered in London. 

Akol Law’s team consisted of Partners Meltem Akol and Tugce Tatari, Senior Associate Selin Tomay, and Associate Cansu Teksen. 

The KDK team included Partners Umut Kolcuoglu and Serhan Kocakli, Managing Associate Melis Oget Koc, and Associate Ipek Yuksel.

Fatih Isik, former Senior Associate at Erdem & Erdem, has launched a new firm in Istanbul under the name Isik & Partners.

According to Isik, his newly founded firm will focus on arbitration, litigation, and legal consultancy.

“I was convinced that I am mostly a disputes lawyer, I could be successful at arbitration and litigation, and I could launch my own firm,” Isik commented. “This would not be possible without the Erdem & Erdem Law Firm, where I worked for many years. I am so grateful to all my colleagues and friends that I worked with.”

Akol has advised Human Care HC AB, a portfolio company of Applied Value Group, on its acquisition of 100% in Kenmak Hastane Malzemeleri ve Elektrostatik Boya San Tic from its founder Kenan Kilic, who was advised by solo practitioner Caglayan Kokkilinc.

Human Care produces and provides mobility solutions for people with special needs.

Kenmak Hastane Malzemeleri ve Elektrostatik Boya San. Tic. A.S. produces hospital equipment, beds, and other supplies for, according to Akol, “most of local hospitals in Turkey as well as more than 70 countries in Middle East, North America, Europe, Middle East, and Africa, with production facilities in Izmir.”

AppliedValue, based in Andover, USA with subsidiaries in Sweden, China, Finland, and Denmark, combines management consulting, private, and public investments, and social responsibility, and has Soderfors Steel, Rullprofil I Orebro AB, LagerKomponenter AB, Kaunis Iron, Division 5, Bake My Day AB, FriendsofAdam Glutenfree Bakery, Oh My Good AB, PNP AB, CosmosID, rivermeadow, Sourcing Value, IVDesk, NEXT Biometrics, mobilityView, Starzplay, Applied Investments, Fortner, and Sparx in its portfolio. 

Akol’s team included Partners Meltem Akol and Tugce Tatari, Senior Associate Selin Tomay, and Associate Yagmur Aker. 

The Turkish Competition Authority (“Authority”) has recently published its Draft Communiqué on Commitments Offered During Preliminary Investigations and Investigations on Restrictive Agreements, Concerted Practices, Decisions and Abuse of Dominance (“Draft Communiqué”) which has introduced a new commitment mechanism to Turkish competition law enforcement. This mechanism makes it possible for the undertakings and trade associations to offer commitments during an ongoing preliminary investigation or a full-fledged investigation process, in order to eliminate potential competition concerns under Articles 4 and 6 of the Law No. 4054 on the Protection of Competition (“Law No. 4054”) that prohibit restrictive agreements and abuse of dominance.

The primary legal basis of the commitment mechanism is Article 43 of the Law No. 4054, which was among the very significant changes introduced by the Law No. 7246 Amending the Law on the Protection of Competition (“Law No. 7246”) that entered into force on 24.06.2020. Aside from the commitment mechanism, these changes brought by the Law No. 7246 included (i) the amendments made to the exemption mechanism related to the self-assessment procedure, (ii) the introduction of the significant impediment of effective competition test during concentration analysis, (iii) extending the Turkish Competition Board’s (“Board”) authority to order structural remedies for anti-competitive conduct, (iv) expansion of the Authority’s on-site investigation powers, and (v) the introduction of the de minimis principle as well as the settlement mechanism to Turkish Competition Law enforcement.

The main purpose of the commitment mechanism is to reduce the possible anti-competitive effects of a competition law violation and, at the same time, save time and costs for both the Authority and the investigated parties during the examination processes required for the determination of a violation, as it has been in the cases for Havaalanları Yer Hizmetleri A.Ş. (“Havaş”) and Türkiye Sigorta, Reasürans ve Emeklilik Şirketleri Birliği (Turkish Insurance, Reinsurance and Pension Companies Association, “TSB”) and OSEM Sertifikasyon A.Ş. (“OSEM”), so far. Moreover, it is beneficial for the undertakings as they may be able to avoid paying significant amounts of administrative fines and the negative publicity, in case of a violation.

In order to further illustrate the application of this mechanism set forth under Article 43 of the Law No. 4054, the Authority opened the Draft Communiqué to public comment until December 28, 2020.

I. An overview of the provisions in the Draft Communiqué

Set forth below is a summary of the key provisions of the Draft Communiqué along with certain comparisons with the commitment mechanism in the EU regime, as applicable:

Submission of the commitments to the Board

According to Article 5 of the Draft Communiqué, the commitment requests shall be submitted to the Board within three months, starting from the date the parties have received the investigation notice. The commitment process shall be deemed initiated with the undertakings’ written request to submit commitments to the Board. In the Arslan decision, the Board has confirmed that the commitments offered after the termination of the investigation period shall be rejected, and that the investigation period ended once the third written defenses were submitted to the Authority’s records, according to the process under Law No. 4054.

Under the EU regime, while a definitive date for the submission of the commitments to the European Commission (the “Commission”) has not been defined, the undertakings are encouraged to communicate their interest in offering commitments at the earliest stage possible.

Beginning of the discussions with the Authority

According to Article 6 of the Draft Communiqué, after the submission of the commitment request the Board initiates deliberations with the parties, as soon as possible. The deliberations can be conducted via written correspondence or verbally. Furthermore, it is possible for the Board to postpone the deliberations with the parties in case it is found that further examination is necessary in order to determine the competition law violation. 

In terms of the parties’ right to access the investigation file, as per Article 6(3), the Board may prevent the parties from having access to the documents and information which serve as a basis for the competition law concern, if the parties have been notified of the investigation. However, this paragraph may lead to some difficulties in practice, especially as it may be restricting the parties’ right to be informed of the basis of the allegations against themselves, since the investigation notice is not always sufficient to explain in detail every single aspect of an investigation.

Nature of the commitments

According to Article 9 of the Draft Communiqué, both structural and behavioral commitments are acceptable, which is similar to the EU regime. 

The commitments shall be proportional to the severity of the competition law violations, and serve as a remedy to efficiently eliminate these violations within a short time period. According to Article 9(3), in order to ensure their efficiency, the commitments which do not require monitoring are preferable. In parallel, under the EU regime, it is mentioned that the commitments shall be self-executing and that if needed, a trustee can be appointed to assist the Commission to monitor the execution of the commitments.

It is also noteworthy that the Draft Communiqué sets forth that the parties under investigation cannot offer commitments with regard to the complainant’s or third party’s actions. However, pursuant to Article 8(3) of the Draft Communiqué, in cases where the implementation of the commitment requires an agreement with the complainant or a third party, documents indicating that an agreement has been reached to with the complainant or the third party are also submitted to the Board, alongside with the commitments.

Evaluation of the commitments

The Board primarily takes into consideration whether the commitments offered by the parties are capable of eliminating the competition law violation. If the Board decides that the commitments are suitable and effective, it renders them binding for the parties. Consequently, the investigation on the parties will be terminated; or in case the investigation is yet to be launched, the Board will forgo initiating a full-fledged investigation, as it is possible to submit the commitments during the preliminary investigation process under Article 5 of the Draft Communiqué. 

If the Board deems that the proposed commitments are not fit to eliminate the violation under scrutiny, it can either invite the parties to amend the commitments, for only once, or terminate the commitment process.

Opinions of the complainant and third parties

While evaluating the commitments, the Board may decide to consult the complainant and third parties on the proposed commitments, and take their opinions into consideration, as well. In this respect, the Board may decide to (i) affirm the commitments and make them binding, or (ii) ask the parties to amend the commitment, just the once, or (iii) to terminate the commitment process, following its evaluation based on the opinions received from the complainant or a third party.  There is reason to believe that it is crucial for the Board to explain the evaluation criteria in its reasoned decision on the commitments, in order to prevent future queries concerning legal certainty.

 Termination of the commitment process 

The commitment process comes to an end if the parties do not submit their commitments in the timeline determined by the Board, or if the parties decide to retract their commitments. The parties cannot offer new commitments once the commitment process has been terminated.

The Board’s decision rendering the commitments binding for the parties

Article 14 of the Draft Communiqué sets forth that the Board’s decision rendering the commitments binding for the parties, shall not include any reference as to whether the agreement, decision, or the practice in question, does or does not constitute any violation of competition law. In this respect, the Board’s decision on the proposed commitments shall not include any finding with regard to the violation.

Monitoring and the execution of the commitments

According to Article 15 of the Draft Communiqué, the parties` compliance with respect to commitments can be subsequently monitored by means of the parties’ regular submission of reports to the Board, the appointment of a third party to serve as a trustee, or through cooperation with professional associations or relevant public institutions. The Board also reserves its right to monitor the commitments ex officio. When the parties have fully complied with and fulfilled their commitments, they will inform the Board, which will render a decision to this effect. 

II. An analysis of the points that are not fully clarified in the Draft Communiqué

Despite the fact that the Draft Communiqué elucidates the main issues with regard to the implementation of the commitment mechanism, there are still certain points of concern worth mentioning which remain to be clarified through the future decisions of the Board.

 Scope of the commitment mechanism

According to Article 43(3) of the Law No. 4054, commitments are not acceptable for evident and severe infringements such as price fixing, territory and customer allocation, or supply restriction among competitors. Article 2 of the Draft Communiqué confirms this by reiterating that hardcore restrictions do not fall within the scope of the commitment mechanism.

On the other hand, under the EU regime, commitments can be submitted for all violations other than cartels, as there is no commitment that could possibly solve the competition problem in case the very nature of the infringement calls for a fine.

The Board’s definition of hardcore restrictions is not limited to the ones explicitly referred to in the relevant articles. For instance, in some decisions of the Board, the exchange of sensitive information has been deemed to be “cartel,” while in others, it has been defined among the “other violations” that have been prohibited by Article 4 and Article 6 of the Law No. 4054 and which do not fall within the scope of cartels.In addition, it is not clear whether the practices regarding resale price maintenance can benefit from the commitment mechanism.

In this respect, which violations are considered to be hardcore restrictions are not yet fully defined and may vary through the Board’s decisions over time.

 The nature of the reasoned decision rejecting the commitments offered by the parties

As mentioned in Article 43 of the Law No. 4054, if the Board decides that the proposed commitments can resolve the relevant competition problems, it may render them binding for the relevant undertakings or associations of undertakings and decide to forgo an investigation, or to terminate an ongoing one. However, according to Article 10 of the Draft Communiqué, the Board may also reject the commitments offered by the parties and terminate the commitment process.

The Draft Communiqué also does not refer to the nature of the Board’s decision rejecting the commitments offered by the undertakings. While it seems possible for the parties to file a lawsuit against the rejection decision of the Board, as mentioned in the Arslan decision below, it would be ideal if the Draft Communiqué included a specific provision with regard to the nature of the decision to clarify this point (i.e., whether such rejection of commitments would qualify as a final decision issued by the Board) and whether the parties would be able to apply for its judicial review.

In the Arslan decision, the Board evaluated the request of Arslan Nakliyat San. ve Tic. A.Ş. (“Arslan”) to terminate the investigation initiated against it, based on the commitments proposed by Arslan to the Board pursuant to Article 43(3) of the Law No. 4054. The Board rejected the commitments proposed by Arslan for failing to meet the timing prerequisite, as they had submitted their commitments after the investigation phase was completed. Moreover, the case team’s opinion with regard to the nature of the alleged violation indicates that the commitments submitted by Arslan would not fall within the scope of the commitment mechanism, as the violations subject to the investigation constituted hard-core infringements such as price fixing and customer allocation between competitors.   

The Board indicated in the Arslan decision that it is possible for the parties to file a lawsuit against the Board’s decision before the administrative court, within 60 days starting from the date the reasoned decision was served on the parties. 

Sanctions in case of non-compliance with the commitments

According to Article 14(2)(h) of the Draft Communiqué, the sanction to be applied to the parties in case of non-compliance with the offered commitments, will also be set out within the Board’s decision that renders the commitments binding for the parties.

In case of non-compliance with the offered commitments, according to Article 43(4) of the Law No. 4054, the primary sanction to be applied by the Board is to re-launch an investigation concerning the undertaking which has violated the offered commitment.  However, the Draft Communiqué does not contain a specific provision with regard to other possible sanctions, such as the imposition of an administrative fine to the parties in case of non-compliance, and seems to have left it to the Board’s discretion.

Under the EU regime, it has been regulated that if an undertaking concerned does not comply with its commitments, the Commission can impose a fine of up to 10 per cent of the undertaking’s annual turnover without having to prove any violation of the competition rules. The Commission can also impose periodic penalty payments of up to 5 per cent of the average daily turnover until the undertaking complies with its commitments. In parallel, the Commission may decide to re-open the investigation that was closed pursuant to the commitment decision, with a view to adopting a prohibition decision on the matter.[9]

Article 17 of the Law No. 4054 sets forth that in case of non-compliance with the commitments, the Board shall, for each day, impose on undertakings and associations of undertakings an administrative fine corresponding to 0.05% of their annual gross revenues (generated in the financial year preceding the decision). However, the Draft Communiqué does not clarify whether the administrative monetary fines regulated under the relevant provisions of the Law No. 4054 are applicable without the need for proving any violation of the competition rules, as is the case with the EU regime. To that end, there is room to argue that the Draft Communiqué should contain a more enlightening provision with regard to the sanctions and proving mechanism of any violation of the competition rules, in case of non-compliance with the commitments.

Commitments beyond the necessary extent

What the Board’s approach would be, if a commitment beyond the necessary extent were to be offered by an investigated undertaking, is a noteworthy issue that has not been fully clarified within the scope of the Draft Communiqué.

Article 9(2) of the Draft Communiqué sets forth that the commitment shall be proportional to the severity of the competition law violation, suitable to resolve these problems within a short period of time, and effectively applicable. Therefore, in case that the undertaking offers a commitment which is not proportional and in fact more burdensome to the undertaking than necessary to resolve the competition law problem, it is not clearly indicated whether the Board will notify the undertaking of this finding, and recommend an amendment so that the undertaking can revise its commitments as applicable within the scope of Article 10(3) of the Draft Communiqué. As this may cause certain difficulties in implementation of the commitment mechanism, it would be more prudent to include a specific arrangement into the Draft Communiqué, to avoid any ambiguities going forward.

III. Initial implementations of the commitment mechanism

The Board’s recent decisions, which serve as the initial examples of the commitment mechanism’s application in Turkish competition law enforcement, can be summarized as follows:

Havaş decision

According to the Board’s announcement dated 06.11.2020, Havaş is the first example of the application of the commitment mechanism in Turkish competition law enforcement.

In the Havaş decision, the Board decided to launch a full-fledged investigation on 24.07.2020 against Havaş and MNG Havayolları ve Taşımacılık A.Ş., S Sistem Lojistik Hizmetler A.Ş. and Türk Hava Yolları A.O. operating in the field of bonded temporary storage or warehouse services at airports in order to determine whether these companies had violated Article 6 of the Law No.4054. During the investigation process, on 07.10.2020, Havaş proposed commitments to the Board. In this respect, deliberations with the Authority started right after the submission of this commitment. Regarding the timings, within 6 days after the commitment proposal, Havaş and the Authority convened for a meeting on 13.10.2020, where the Authority shared further information regarding the competition concerns within the scope of the investigation. Accordingly, Havaş submitted its final commitment package to the Authority on 19.10.2020.  

The commitment proposed by Havaş indicates that the commitments would be effective for a specific period of time. As per the commitments submitted, Havaş will terminate its practice of charging transfer fees when a customer wishes to switch warehouses, which restricts the transfer of imported products to competitor and alternative warehouses. Havaş stated that the proposed commitment does not require monitoring.

According to the case team’s opinion, the commitment proposed by Havaş is proportional with the competition concerns at hand, suitable to resolve competition concerns, able to be executed in a short period of time and efficiently applicable. However, the case team suggested that the commitment period is not sufficient to eliminate the competition concerns permanently, and that the period set forth for the application of this commitment should be amended as indefinite. The case team pointed out that it would be possible for Havaş to apply to the Board to retract its commitment, in case any essential change occurs in the market in the future.

However, in its evaluation, the Board decided that the commitment, as submitted by Havaş, is suitable to resolve the competition concerns. In this respect, the commitment process initiated upon the request of Havaş has been concluded within approximately one month and thus, the investigation has been terminated for this entity. Nevertheless, the investigation remains pending for the other three undertakings.

TSB/OSEM decision

According to the Board’s announcements dated 11.01.2021 and 12.01.2021, the commitment mechanism has been applied within the scope of the investigation conducted against TSB and OSEM. The Board’s decision with regard to TSB/OSEM is of importance as aside from constituting the second example of the application of the commitment mechanism, it is also the first decision that structural and behavioral commitments have been jointly accepted by the Board.

The commitments included, among others, the submission of a copy of the transfer agreement to the Board, termination of the data processing services protocol executed between OSEM and Sigorta Bilgi ve Gözetim Merkezi (Insurance Information and Monitoring Center), and submission of an undertaking that the board of directors of OSEM would not use the information which becomes available to them due to their board memberships in OSEM, for their own or third parties’ benefit.

As the Board accepted the commitments offered by TSB and OSEM, the investigation has been closed. It is noteworthy that the Board has evaluated and decided on the commitments in a short period of time, in 15 days after the final submission of the commitments.

IV. Conclusion

It is certain that the commitment mechanism will bring many advantages for both the Authority and the investigated parties, in terms of time and cost efficiency and minimizing the impacts of anti-competitive practices. Moreover, the implementation of the Draft Communiqué will play an important role in avoiding certain question marks during the whole process of offering and fulfilling commitments. However, there are still aspects of this new institution have not been clarified by the Draft Communiqué and while Havaş and TSB/OSEM decisions shed light on the application of the commitment mechanism, it is certain that the Board’s approach in its future precedents will further shape the merits.

(First published by Mondaq on January 26, 2021)

By Gonenc Gurkaynak, Partner, Eda Duru, Counsel, Betul Bas Comlekci, Associate, Esma Aktas, Associate, and Asli Su Coruk, Associate, ELIG Gürkaynak Attorneys-at-Law

On January 1, 2021, Basgul Attorneys at Law opened its doors for business in Ankara and Istanbul. 

According to Founding Partner Erdem Basgul, who focuses his practice on energy and infrastructure, the firm is a consequence of “a growing appetite for quality corporate legal services in the Ankara legal market. This market is mainly composed of construction and energy sectors,” he says, “and these are the sectors that I have been mostly concentrating on for the last six years.” In addition, Basgul says, he hopes to focus on the start-up and football club markets, “and say that we are the agile, astute, and versatile lawyers that are craving to deliver the quality legal services that you need.”

Co-Founding Partner Meric Bahcivanci heads the Litigation, Employment, and Insolvency practices of Basgul Attorneys at Law, with an additional focus on real estate and construction disputes as well as debt collection and insolvency proceedings.

Both Basgul and Bahcivanci obtained their law degrees from the Ankara University School of Law. 

“I have known Erdem for more than a decade from the Ankara Law School where we studied together,” commented Bahcivanci. “Since then, he has worked at firms like SNR Denton, White & Case, and Cakmak, and focused on the transactional front. And I have been a hardcore litigator dealing with complex disputes and debt enforcement proceedings. We get extremely excited when we contemplate the things we can achieve as we now finally combined these two different but intrinsic realms.”

BTS & Partners has advised Two.Zero Ventures on its investment in BluTV, a Turkish TV digital entertainment platform operating in the Middle East, North Africa, Central Europe, and Asia.

According to the Two.Zero website, “as Turkey’s first sports venture capital, twozero provides venture investing to technology-driven and disruptive startups in sports, media, and entertainment.”

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

It is quite rare for the Turkish courts specialized in matters of intellectual property rights (“IP Courts”) and the Turkish Patent and Trademark Office (“TPTO”) to acknowledge the concept of bad faith in trademark registrations. In this sense, the recent Target Ventures decision of the General Court of the European Union (“EGC”) regarding bad faith in trademark registration applications is worth discussing, as this crucial decision sheds light on how bad faith should be assessed and may, therefore, also constitute a basis for Turkish IP practice in the future.

The Concept of Bad Faith in the Turkish Civil Code and IP Law

Turkish legislation avoids giving a specific definition for “bad faith” on purpose, in order not to limit the scope of the concept. This is also due to the fact that the concept of bad faith cannot be easily delineated or formulated with precise elements, as it is a pure reflection of human intention and creativity in greed. Therefore, the boundaries of its implementation are somewhat fluid as the common practice of the courts is to describe bad faith simply as “actions that are not compliant with the good faith principle.” That said, Article 3 of the Turkish Civil Code (“TCC”) does indicate that good faith can be deemed as the “exercise of due care that can be expected from a person in a given situation,” while Article 2 of TCC provides that each person is obliged to act honestly (i.e., in good faith) while exercising their rights. In the particular context of trademark registrations however, the adopted approach is based on Tekinalp`s description of acts in bad faith: “applying for a trademark registration not for the genuine use of the applicant, but as a back–up, for the purposes of trading on the trademark itself, or extortion.”

In accordance with the above-mentioned principles, the relevant Turkish legislation, Industrial Property Code (“IPC”), obliges the trademark applicants to avoid acting in bad faith and acknowledges it as a valid ground of rejection and also annulment, under Articles 6 (9) and 25 (6), respectively. 

• Bad faith practice of the IP courts

Due to the lack of a clear statutory definition as per the above, it is the decisions of the IP Courts and TPTO that provide some guidance in terms of what can be deemed as bad faith practices. That said, the relevant precedents show that acknowledgement of bad faith in trademark registration has been confined to a relatively limited sphere.

The IP Courts are willing to adopt a rigorous approach when it comes to trademarks that have speculative and/or obstructive purposes. Those trademarks that are registered not for routine commercial use but for trading on the trademark itself and/or for blocking others to enter into a given market, have been dealt with in a number of benchmark cases. In these cases, the courts found that one has a duty to exercise due care in finding out whether a trademark is already owned and used by a third party; even if that third party’s trademark was not registered and used in Turkey. This imposition of the obligation to investigate is similar to the Target Ventures where the court decision refers to the obligation of the trademark applicants to investigate whether the trademark in question is already in use outside a given geographical area. Although there are other decisions with similar findings, we still cannot speak of a settled practice that definitively accepts such approach, as there are decisions that suggest otherwise, as well. 

Despite the precedents above, the courts present a rather restrictive approach to the issue of bad faith in trademark registration while bad faith can manifest itself in various forms wherein not always the speculative and/or obstructive purpose is transparent. As a result of this, instead of applying a more rigorous examination to the bad faith allegations, the courts focus on other grounds in the assessment of the trademark infringement. In certain cases, despite clear indications of bad faith in the particular trademark registration, the courts and TPTO have preferred to rely on “confusion of trademarks” as a ground, rather than assessing the bad-faith-registration angle.

All in all, adding to the vague standards adopted in assessment of bad-faith-registration, the restrictive approach adopted by the IP Courts is dismissive of the realities of daily commercial life.

• TPTO`s assessment of bad-faith in trademark registration

 The approach adopted by TPTO in this regard is similar to the IP Courts, in that they employ a rather narrow scope in evaluating a trademark registration, when an opposition is submitted. 

TPTO seeks solid and definitive evidence, such as those put forward in previous court precedents, to accept the existence of “bad faith.” However, concrete evidence of bad-faith is rarely present, as it is quite uncommon to have substantive evidence of an abstract element, i.e., the intention, in trademark cases. In the absence of such evidence, TPTO tends to steer clear of a finding of bad-faith-registration.

For instance, TPTO refrained from assessing the bad faith allegations in the opposition made against the trademark “GSUITE,” which is almost identical to the earlier trademark of “G SUITE,” with a slight difference of a space between “G” and “SUITE” phrases, and similarly in the opposition made against the “STREET VIEW GUIDE,” which is almost identical to the earlier trademark of “STREET VIEW” with the mere addition of the word, “guide.” In another opposition case against the trademark registration application for “YOUTUBER,” TPTO did not accept the bad faith claims where the applicant has filed for other trademark applications for the phrase “youtube”, which is a well-known trademark. These show that TPTO has a very narrow interpretation of bad faith and acknowledges it under only specific circumstances, although it refrains from providing the relevant basis or the detailed framework in its decisions.

The EGC Assessments in Target Ventures

The EGC issued its judgment for Target Ventures on October 28, 2020. In this matter, Target Partners GmbH (who would eventually become the “Intervener” in the EGC case), is a venture capital fund registered in Germany that has owned the domain name ‘targetventures.com’ since 2002 and the domain name ‘targetventures.de’ since 2009. The only purpose of these websites was to redirect the users to the Intervener`s official website ‘www.targetpartners.de’. The applicant to the court, on the other hand, was Target Ventures Group Ltd (the “Applicant”), a venture capital fund located at British Virgin Islands, and claimed to have been operating in Russia since 2012, and in the EU market since 2013.  

On November 2014, the partners of the Applicant and a representative of the Intervener attended the same conference in the investment sector, in London. After the conference, a representative of a start-up looking for investment sent a joint email to all of the email accounts ending in “…@targetpartners.de” and “…@targetventures.ru”, which were the email accounts of the representatives of the Target Partners GmbH and Target Ventures Group, respectively.

Following this, in January 2015, the Target Partners GmbH filed an application to EUIPO to register the word sign TARGET VENTURES for services in Classes 35 and 36. The EUIPO accepted the application and granted the registration on 28 May 2015. Two months later the Target Ventures Group filed an application to EUIPO requesting invalidation of the trademark (having first sent a cease and desist letter and tried an interim injunction in the Berlin regional court), alleging that the case was a bad-faith-registration. This application was first rejected by the Cancellation Division and then by the Board of Appeal of EUIPO, on the grounds that bad faith had not been proven as the Intervener did not know about the services offered by the applicant in the EU area, that the Applicant did not show Intervener’s presumed knowledge of its activities and that the usage of the mark TARGET VENTURES in Europe could not be considered as well-known among the relevant public and competitors when the Intervener applied for the registration of the mark. Moreover, according to the Board of Appeal, during the time of filing the Intervener had legitimate business interest and their intention was to expand their business and to avoid future confusion by its clients. After the decision of the Board of Appeal, the Applicant filed an appeal before the EGC, which issued its judgment on October 28, 2020.

In its analysis under Target Venture, the EGC acknowledged that the factors listed in case law to determine the existence of bad faith were examples only, and therefore the non-existence of a factor should not prevent the court from finding that a particular applicant had acted in bad faith. Furthermore, the court confirmed that an overall assessment must be made and all relevant factual circumstances of the present case must be taken into account, when there is a claim that the registration was made in bad faith.

In light of the above, after examining the circumstances of the case, the court stated that the Intervener had not intended to use its trademark in a way that falls within the function of a trademark, as their intention was to protect and reinforce their first mark. According to the court, this was established by the fact that the domains “www.targetventures.de” and “www.targetventures.com” only redirect to the Intervener’s official website. As a consequence, the EGC concluded that, as the intention of the Intervener at the time of filing the trademark application was for purposes other than those that fall under the functions of a trademark, proving that the applicant had prior knowledge of a third party’s use of the sign would not a necessary condition to find they acted in bad faith.

Furthermore, the Court also pointed out that the Board of Appeal did not take all of the factors of the case into account and found its approach to be very restrictive and insufficient, as their analysis was based only in the businesses in European Union.

Possible Impact of the Target Ventures decision on Turkish IP Law

The EGC decision of Target Ventures can provide guidance for Turkish trademark practitioners in terms of the possible investigation methods of bad faith claims in trademark registrations. Since currently the Turkish IP Court and TPTO assessments of bad faith are very restricted and narrow in their approach, their consideration of the explanations and the methodology of the EGC may also result in promising developments in the Turkish trademark law practice.

Indeed, the EGC found malicious intent on part of the Intervener by putting all of the pieces of events and evidence together, and reaching the conclusion that the Intervener would have been aware of the other party and foresee the potential competition between them, as a potential customer had contacted both simultaneously. All these convinced the Court that the Intervener had filed for this trademark application in order to prevent the other party, who is a competitor of the Intervener, to provide similar services in the relevant activity area.

All in all, as the decisions of courts of the European Union are not binding but merely persuasive precedents or useful guides in Turkish trademark practice due to the similar legislations in trademark law, Target Ventures could inspire the IP Courts and the TPTO to adopt a broader approach and understanding, when it comes to assessing bad faith claims in trademark registrations.

 (First published by Mondaq on January 19, 2021)

By Gonenc Gurkaynak, Partner, Tolga Uluay, Partner and Doruk Altin, Associate ELIG Gürkaynak Attorneys-at-Law

Lawyers from Clifford Chance’s Istanbul office were on a multi-office team advising private equity group CVC Capital Partners on the acquisition by CVC Fund VII of the Turkish, Greek, Croatian, Montenegrin, and UAE businesses of D-Marin from Turkey’s Dogus Group. Sullivan & Cromwell advised the sellers on the deal.

D-Marin runs an international chain of 14 premium yacht marinas across the Eastern Mediterranean and the UAE.

Clifford Chance’s team included Dubai-based Middle-East Regional Managing Partner Mohammed Al-Shukairy, Counsel Daniel Boyle, and Associate Mohamed Tighilt, London-based Partner Andrew Husdan and Associate Tina Xu, and Istanbul-based Partner Itir Ciftci.