Foreign Court Jurisdiction Clause: Turkish Court of Cassation 2025

When millions of dollars paid by a foreign investor into a hotel project in Türkiye are not repaid, is the claim pursued before a Turkish enforcement office, or sued on before the courts of the foreign state named in the contract? If the parties wrote "disputes shall be referred to the Courts of England" into the contract and the defendant relied on that clause in time, can a Turkish court still go into the merits? After proceedings lasting more than ten years, the 11th Civil Chamber of the Court of Cassation answered this question through the rules on international jurisdiction.

In its decision of 04.12.2025, Docket No. (E.) 2025/2318, Decision No. (K.) 2025/7273, the 11th Civil Chamber of the Court of Cassation reversed in favour of the defendant the Regional Court of Appeal judgment, which had rejected on the merits the appeal against a first-instance judgment annulling the debtor's objection for a principal claim of USD 3,000,000.00. According to the Chamber, the clause in the contract giving jurisdiction to the English courts is valid; because the defendant raised the jurisdiction objection in time, the case should have been dismissed on procedural grounds for lack of international jurisdiction. The decision was unanimous.

🏨 USD 3 Million Sent to a Hotel Project

The parties signed a "Credit and Reciprocal Performance Agreement" (Kredi ve Karşılıklı Edim Sözleşmesi) on 09.06.2011 and a supplementary agreement on 30.09.2011. The contract defined the claimant as the "investor-lender" and the defendant company as the "borrower". According to the claimant, the purpose of the contract was to develop a five-star hotel project by rebuilding five properties said to belong to the defendant.

Initially, USD 2,000,000.00 was to be transferred to obtain architectural and construction permits; the supplementary agreement raised this figure to USD 3,000,000.00. The claimant stated that it transferred USD 867,750.00 on 10.06.2011, USD 1,132,250.00 on 17.06.2011 and USD 1,000,000.00 on 30.09.2011, a total of USD 3,000,000.00. Under the contract, the loan term was nine months from signature.

In summary, the claimant's allegations were as follows:

• The stage of establishing the two project companies envisaged in the contract was never reached, and the conditions in Article 1.11 of the contract were not fulfilled within 90 days.
• It emerged that the properties declared to belong to the defendant did not in fact belong to it and that a mortgage existed in favour of a third party.
• On 21.11.2011 the defendant registered two companies, issued an additional 20% share in one of them and transferred it to a company that is not a party to the case, and these transactions were concealed from the claimant.
• Although the nine-month period had expired, the loan was not repaid, and the enforcement proceedings that were started met with an objection.

The defendant, for its part, argued that Articles 6.1 and 6.3 of the contract provided for English law and the jurisdiction of the English courts, that the claimant had not performed its obligation to transfer USD 10,000,000.00 to the project company within six months, and that filing the action five years later was incompatible with good faith.

🇬🇧 The English Courts Clause in the Contract

Paragraph 3 of Article 6 of the contract, titled "Governing Law and Arbitration", read: "If the parties cannot reach agreement on any dispute or difference, these disputes shall be referred to the Courts of England." Although the word "arbitration" appears in the heading, the provision points to the English state courts, not to an arbitral institution. In its statement of defence, the defendant's counsel relied on this provision to raise an objection on international jurisdiction.

The validity of such clauses is regulated in Article 47 of the Act on Private International Law and International Civil Procedure No. 5718 (MÖHUK). According to the text of the article:

⏳ From Lack of Jurisdiction to the Merits: Ten Years of Proceedings

The course of the case shows clearly how decisive the jurisdiction question was:

In the examination of the merits, the first-instance court applied English law, which had been chosen in the contract, and Turkish law on procedural matters. The defendant's petition of 25.12.2019 claimed that the money had been paid in December 2014 to an intermediary based in Moscow; this was treated as a connected composite admission, and the burden of proving the payment was placed on the defendant. The claimant took the oath proposed by the defendant, and the claim was accepted. The interest claim was rejected because no notice of default had been served before the enforcement proceedings. A similar discussion on oath and proof can be found in our article on foreign investors and oath as evidence.

⚖️ The Court of Cassation's Reasoning

The Chamber first identified paragraph 6/3 of the contract and the defendant's objection in its statement of defence, and then quoted Article 47 of MÖHUK. An important part of the reasoning deals with how a jurisdiction objection is to be assessed in disputes with a foreign element. The findings taken from earlier decisions of the Chamber and of the General Assembly of Civil Chambers are as follows:

As the basis for this view, the Chamber cited its own decisions of 14.01.2020 (2018/3110 E., 2020/372 K.), 18.03.2025 (2025/1000 E., 2025/1927 K.) and 15.05.2025 (2024/5157 E., 2025/3433 K.), and the decision of the General Assembly of Civil Chambers of 27.09.2023 (2022/11-772 E., 2023/865 K.). It concluded that the jurisdiction clause was valid in this case and that the defendant's objection should be accepted and the case dismissed on procedural grounds.

🔒 Why the "Final Decision" Argument Was Not Enough

The Regional Court of Appeal did not examine the jurisdiction objection that the defendant repeated at the appeal stage, on the ground that its own decision of 28.09.2018 setting the earlier ruling aside was final. This approach rests on Article 362/1-c of the Code of Civil Procedure (HMK). Under the current text of that provision, decisions on the subject-matter and territorial jurisdiction of first-instance courts within the same judicial district, and decisions determining the competent court, cannot be appealed on points of law.

The Court of Cassation, however, stressed that this rule is a matter of domestic law. The decision states that the finality rule for jurisdiction and subject-matter disputes between courts in the same judicial district does not prevent the application of the MÖHUK provisions in disputes with a foreign element. In other words, the question of which Turkish court has jurisdiction was not treated as being of the same nature as the question of whether Turkish courts can hear the dispute at all. For this reason, the question of international jurisdiction was subjected to Court of Cassation review together with the judgment on the merits.

🧭 What It Means for Investment Contracts

With the reversal, the judgment on the USD 3,000,000.00 claim fell away, and the case was sent to the first-instance court under Article 373/1 of the Code of Civil Procedure (HMK). In view of the ground for reversal, the Court of Cassation saw no need to examine all of the claimant's appeal grounds and the defendant's remaining ones. As a result, the Court of Cassation made no assessment of matters such as the existence of the claim, the outcome of the oath evidence, interest and enforcement denial compensation. The hearing attorney's fee of TL 40,000.00 was collected from the claimant and awarded to the defendant.

The decision shows concretely the consequences of jurisdiction clauses in cross-border investment and financing relationships:

• A written clause naming a foreign state court can prevent a Turkish court from going into the merits when the defendant objects in time.
• The appearance of the word "arbitration" in the heading of the clause did not prevent the provision from being treated as a jurisdiction agreement pointing to a state court.
• According to the approach cited by the Chamber, whether the foreign court is separately specified with certainty in a jurisdiction objection falls outside the Turkish judge's remit.
• Years of proceedings and an accepted claim can be reversed because of this single procedural finding.

For a different decision on investment disputes with a foreign element, see our article on partnership or receivable for an investor abroadTR; for an example of the effect of an arbitration clause, see our article on the arbitration clause in bankruptcy enforcementTR.

❓ Frequently Asked Questions

For detailed information and legal support, you can contact Savun Law & Consultancy. Contact details are on the contact page, and similar decisions are in the Precedent DecisionsTR archive.