Limits of Foreign Language Use in Contracts

According to the main system accepted by the Turkish Code of Obligations, the parties of a contract are free to determine the type of contract, the contents …. etc. The term of freedom of contract, arising from the freedom of will and accepted as the expression of freewill of individuals, reveals one of the main legal principles within the system of obligations law. ([1]) However, the contracts concluded between the parties that is drafted in violation of the mandatory provisions of law, ethics, public order and personal rights causes the contract or some articles of the contract (completely or partially depending on whether the articles in question are essential components) to be null and void. ([2])

The most important limit during drafting and interpreting the contract is the limit that contracts cannot be arranged in violation of the mandatory regulations of the law. Which article of law is mandatory can be determined within the extent and wording of the relevant law and article.

It is seen that some contracts are drafted in a foreign language, especially in English, with the increase of international trade in our country. Some contracts and notifications, such as banking, financial markets, derivative transactions, which we often encounter, appear to have been arranged in foreign languages.

The language of the contracts drawn up to regulate the rights and obligations of the parties is considered to be of no importance at first glance. The belief that the parties who have agreed on the primary and secondary aspects of the contract, also have the freedom to choose the language of the contract appears as a common belief. In fact, “Law on Compulsory Use of Turkish Language in Commercial Enterprises” No. 895 and dated 10.04.1926 provides a mandatory regulation on the language in which contracts and similar legal document shall be drawn up.

Many people are not aware of the provisions and punitive sanctions prescribed by this Law No. 805, even though the mentioned Law has been in force for a very long time.

Considering the decisions of the Court of Appeal regarding the implementation of the Law, it is mandatory for the companies, especially foreign investor companies that operate in Turkey, to be aware of this Law in order to protect their right and interests.

When the provisions of “Law on Compulsory Use of Turkish Language in Commercial Enterprises” dated 10.04.1926 are examined;

1. According to Article 1 of the Law, all kinds of contracts and transactions of Turkish companies ([3]) and enterprises, within Turkey ([4]),
2. According to Article 2 of the Law, for Foreign Companies, all documents and transactions that is signed with Turkish Companies and shall be submitted to public institutions ([5]),

Shall be concluded in the Turkish Language.

In other words, the contracts in which the Turkish language shall be used is enforced under Law dated 1926. In this respect, a contract between two or more Turkish companies (including local companies affiliated with a foreign parent company) shall be drafted and signed in Turkish.

Following Article 4 of the Law states that; “if the contracts are drafted in a language other than Turkish, it is mandatory to have a Turkish text and the Turkish text is valid”. In other saying, if it is preferred that the contract is prepared and put into effect in a foreign language, the Turkish text that will be valid in case of dispute must be accompanied and it should be signed independently. ([6])

Furthermore, according to Article 7 of the Law, “any person that acts in violation with the provisions of this Law shall be imposed with a judicial fine that is not less than for one hundred days”. ([7])

When the decisions of the Court of Appeals on the mentioned law are examined, it can be seen that despite the economic and commercial growth, there are no interpretations made to flex the law and even the judgment was made by interpreting the legislation very narrowly.

As seen in the decision made by the 11th Chamber of Court of Appeals dated 26.03.2012 and numbered E. 2012/3122, K. 2012/407;

Indeed, 11th Chamber of Court of Appeals have rendered judgment in its decision dated 26.03.2012 and numbered E. 2012/3122, K. 2012/407, as follows.

“In scope of the case, it us understood that both parties have drafted the contract in English while it should have been in Turkish according to article 1 of the Law No. 805, in consideration of both parties are companies residing in Turkish Republic, and the location where the contract (s), in which the existence is undisputed, had been concluded in Turkey. Article 4 of the same Law includes a sanction for the breach of the obligation to draft the contract in Turkish, issues on; whether the sanction specified in the law is a material law rule resulting from absolute invalidity by considering the provisions of the law in question by the court, otherwise, whether it is a rule according to the law of evidence, whether the provisions in the contract especially regarding the provisions of arbitration, which are the defendant’s basis, will be taken into consideration in favor of the defendant, whether objecting against arbitration and relying on a contractual clause is “in the favor of a party”, or on the other hand, whether the objection by the plaintiff against the arbitration objection made by the defendant poses a violation in terms of article 2 of the Civil Code on good faith should have been evaluated and discussed, therefore it is was not correct to decide on accepting the defendant’s objections against arbitration by only considering the relevant provisions of the contract dated 22.4.2007 between the parties. By accepting the appeals made by the plaintiff’s attorney in this direction, it is necessary to rule the REVERSAL of the judgment.”

Likewise, the decision of the 11th Chamber of Court of Appeals dated 04.03.2013 and numbered 2012/4008 E. and 2013/3972 K. has also provided a similar outcome.

 “Article 2 of the Law No. 805 on Compulsory Use of Turkish Language in Commercial Enterprises has determined the contracts shall be drawn up in Turkish. It is understood that the contract which contains arbitration clause added to the petition by the plaintiff was drafted in English. In this respect, while the validity of the arbitration clause should have been evaluated by the court and the objection against arbitration should have been settled accordingly, rendering judgment without considering this matter required reversal of the decision.”

To conclude, it is obvious that the Law dated 1926 is a law of reform. The legislator aimed to effectively control the commercial activity by public authorities, and to eliminate the difference in interpretation in possible disputes with the mentioned law. Even though the law is clear and mandatory, it is observed that companies frequently violate this law in practice and draft many contracts and documents in foreign languages.

This Law should be considered separately and in detail for contracts sensitively for the contracts to be made by companies considering that the law is clear and mandatory while including criminal sanctions.

([1]) Dr. Derya Ateş, Article “Sözleşme Özgürlüğü Yönünden Dürüstlük Kuralları”, TBB Magazine,

([2]) Article 27 of the Turkish Code of Obligations No. 6098

([3]) Here, the term company also includes real person traders.

([4]) It is obvious that the contracts concluded abroad by Turkish companies are excluded.

([5]) “Contracts” to be concluded by foreign companies are not included in Article 2 of the Law.

Under the circumstances, some legists interpret that “according to this article, foreign companies can only use the Turkish language in their correspondence with Turkish companies or with the Turkish governmental bodies, therefore the contracts that foreign companies will conclude with Turkish companies should not need to be signed in Turkish”. According to the opinion that we share, even though the word “contract” is not mentioned in the article, the concept of “contracts” is included in the term “transaction” in the article. Therefore the legislation has a “gap in the true sense”. As a matter of fact, according to the below-mentioned decisions of the Court of Appeals, it is stated that the “contracts” should be concluded in Turkish by individuals within the scope of Article 2 of the Law No. 805. Therefore; it is convenient for foreign companies to conclude their contracts with Turkish company bilingually and to choose Turkish version to be the prevailing text, in order not to be damaged due to the conflict of comments. This shall also be applicable for the written communications between foreign companies and Turkish companies.

([6]) On the other hand, it is legally invalid and void to waive prior to any claims to be made based on that the document in question is in violation of the law.

([7]) The mentioned article was changed with the Omnibus Law Numbered 5728 put into effect on 23.02.2008.