Overview
Türkiye is one of the largest and most dynamic economies in the region, strategically positioned between Europe, Asia and the Middle East. Its legal system is based on civil law and has undergone extensive reform in recent decades to align with international standards, particularly in the areas of commercial law, arbitration and foreign investment.
Since 1992, the country’s membership in the New York Convention and the ICSID Convention has underpinned investor confidence by ensuring access to arbitration and the enforceability of arbitral awards. At the same time, domestic courts remain active in commercial disputes, creating a dual landscape where both litigation and arbitration are important tools for businesses operating in Türkiye.
Dispute Resolution
Commercial disputes in Türkiye are primarily resolved through the civil courts, including specialist commercial courts in Istanbul, Ankara and Izmir. These courts handle corporate governance, shareholder disputes, insolvency, and contract enforcement. While concerns about delay persist, judicial reforms and the introduction of digital case management systems are gradually improving efficiency.
International arbitration is well established as an alternative to litigation. The country is a party of the Ney York Convention, the ICSID Convention, and more than 100 bilateral investment treaties, making arbitration a key part of its dispute resolution framework. The Istanbul Arbitration Centre (ISTAC) has, since its establishment in 2015, become a credible regional institution, offering modern rules and flexible proceedings for disputes in infrastructure and construction.
Türkiye’s construction sector is one of the most active in the region, and many disputes arising from large infrastructure projects are referred to arbitration. The construction and infrastructure sector has long been central to Türkiye’s economic growth. Turkish contractions are among the most active globally, with major projects spanning transport, energy, and urban development. Domestically, large-scale public-private partnership (PPPs) and government-backed infrastructure investments have generated significant commercial activity and disputes.
Construction disputes in Türkiye frequently involve delays, variations and cost overruns, as well as challenges around financing and government guarantees. Given the high value of these projects, parties often turn to arbitration rather than domestic courts. The Istanbul Arbitration Centre (ISTAC) has established itself as a forum for such disputes, applying rules aligned with international standards. At the same time, international parties often prefer neutral arbitration seats such as Geneva, Vienna, or Paris, typically under ICC or VIAC Rules, to ensure neutrality and international enforceability.
Türkiye has been a frequent respondent in high-value investor-state disputes. For instance, in PSEG Global v. Turkey (ICSID Case No. ARB/02/5), claims of approximately USD 200 million arose from an energy project, while in Libananco v. Turkey (ICSID Case No. ARB/06/8), claims exceeded USD 10 billion. These cases highlight both Türkiye’s exposure to treaty arbitration and the importance of structuring investments to secure treaty protection.
Enforcement
Türkiye’s accession to the New York Convention has made the enforcement of arbitral awards more predictable. Turkish courts now regularly recognise and enforce awards from institutions such as ICC, ICSID, and ISTAC, limiting challenges to the narrow grounds available under the Convention. Foreign court judgements may also be enforced, but only on the basis of reciprocity. Public policy remains a potential obstacle, particularly in sensitive sectors such as energy or natural resources, where the courts apply closer scrutiny. For this reason, arbitration remains the preferred method of dispute resolution for high-value, cross-border contracts.
Recent practice shows a judiciary that is increasingly aligned with international standards, providing greater confidence that successful outcomes can be carried through to recovery.
Sanctions and Compliance
Türkiye does not operate an autonomous sanctions regime but implements UN Security Council sanctions and enforces domestic Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) rules through regulations such as Banking Regulation and Supervision Agency (BRSA), the Financial Investigation Board (MASAK) and the Ministry of Treasury and Finance.
The real challenges for businesses are the risk of secondary sanctions, particularly from the US Office of Foreign Assets Control (OFAC). Because of Türkiye’s close trade with Russia, Iran, and other high-risk jurisdictions, companies may face Western enforcement even where no breach of Turkish law occurs. Exposure can extend to restrictions on dollar transactions or exclusion from global markets.
Turkish banks and corporates are under increasing pressure to adopt compliance programmes that meet international standards. Ad hoc checks are no longer sufficient, firms are expected to maintain structured AML and sanctions frameworks, including screening, enhanced due diligence, and contractual safeguards. This shift has made sanctions and financial crime compliance a central consideration for any international business active in Türkiye.