Which Law Governs an International Contract in Turkey? MÖHUK Article 24, Choice of Law and Closest Connection

1. Article 24 is the general conflict rule for contractual obligations

Article 24 operates as the general rule for international contractual obligations unless MÖHUK or an applicable international treaty provides a more specific regime. Consumer contracts, employment contracts, contracts concerning immovable property, intellectual-property contracts and carriage of goods all have special provisions that can displace the general rule.

The first classification task is therefore to determine whether the dispute truly belongs under Article 24. A commercial distribution agreement may be governed by Article 24, while a consumer sale can fall under Article 26 and a cargo contract under Article 29.

Incorrect classification can produce the wrong applicable law even before the merits are considered.

2. An express choice-of-law clause is the strongest starting point

Article 24 allows the parties to choose the law governing their contractual relationship. A clause such as “This Agreement shall be governed by the laws of the Republic of Türkiye” is considerably clearer than a vague statement that “Turkish rules shall apply where relevant.”

The chosen law should identify a national legal system rather than an undefined commercial custom. International rules such as Incoterms can be incorporated into the contract, but they are not necessarily a substitute for selecting the governing national law.

The clause should also be coordinated with the forum or arbitration clause. Choosing English law and Turkish courts is legally possible in many commercial settings, but it means the Turkish judge may need to establish and apply English substantive law.

3. Turkish conflict law can recognise a clearly demonstrated implied choice

Article 24 does not require every choice to appear in one labelled sentence. A choice that is clearly understood from the contractual provisions or circumstances can also be recognised.

However, implied choice should not be inferred casually. Use of Turkish currency, a Turkish-language contract or a Turkish court clause can be relevant but does not necessarily establish that the parties intended Turkish substantive law to govern every issue.

The overall drafting, prior contracts, incorporated terms and dispute-resolution language should be examined together.

4. A later choice of law can operate retrospectively

Article 24(3) expressly permits the parties to make or change their choice at any time. A choice made after formation operates retrospectively, subject to rights of third persons. It is therefore incomplete to treat a later amendment as affecting future performance only.

Record the date, agreed scope and exact wording of the amendment, and identify any third-party rights that may already have arisen. Check that the document is an actual agreement to change governing law, rather than a draft or settlement proposal. Questions of consent, authority and formal validity still require their own analysis.

5. Article 24 expressly allows a choice for all or part of the contract

Under Article 24(2), the parties may agree that their chosen law applies to the whole contract or only part of it. A clause covering only a defined payment obligation should therefore be distinguished from a clause covering all contractual obligations. Identify the selected part precisely; the remaining issues need a separate applicable-law analysis.

This contractual choice is different from special conflict rules that independently govern a property right, employment issue or intellectual-property contract. A choice for one part does not displace those rules. In drafting, check how remedies, interest, termination and limitation issues interact instead of leaving contradictory provisions in different schedules.

6. Without a valid choice, Article 24 looks for the law most closely connected with the contract

The statute does not automatically select the claimant’s law, defendant’s law or place of signature. It looks for the law of the country most closely connected with the contractual relationship.

To make that concept workable, Article 24 creates a characteristic-performance presumption. The party performing the obligation that gives the contract its essential legal character becomes the principal connecting point.

This presumption is not absolute. A stronger connection to another legal system can displace it.

7. Characteristic performance identifies the party whose obligation defines the contract

In many bilateral contracts one party’s performance is payment of money while the other provides the distinctive service, goods, licence or expertise. The non-monetary performance commonly supplies the characteristic obligation.

For example, in a consultancy contract the consultant’s service is usually characteristic. In a licensing agreement, special Article 28 can instead govern. In an ordinary supply arrangement not governed by a treaty or specific rule, the supplier’s obligation can be central.

The classification must be made from the actual contract rather than the title used by the parties.

8. Business contracts connect characteristic performance to the relevant business establishment

For a contract concluded in commercial or professional activity, Article 24(4) starts with the characteristic performer’s place of business and, if there is none, their domicile. The relevant circumstances are those at formation. Outside that commercial or professional category, the provision uses habitual residence. Domicile, habitual residence and nationality should not be treated as interchangeable connecting factors.

This is important for multinational businesses. The parent company’s headquarters may not be the relevant establishment if the contract was negotiated and performed through a different branch or operational establishment.

Corporate group identity does not erase the separate legal party named in the agreement.

9. Multiple establishments require a contract-specific connection

If the characteristic performer has several business establishments, the establishment most closely connected with the particular contract is relevant.

Factors can include which office negotiated the contract, issued invoices, supervised performance, supplied personnel and communicated with the counterparty.

A company should preserve organisational evidence because a later conflict-of-laws dispute can turn on which establishment actually handled the transaction.

10. A more closely connected law can override the characteristic-performance presumption

Article 24 expressly allows the court to apply another law where all circumstances show that the contract is more closely connected to that legal system.

This escape clause prevents mechanical results. A supplier incorporated in one state may perform every material part of a specific project in Türkiye using a Turkish branch, Turkish subcontractors and a Turkish project site.

The court should evaluate the total contractual relationship, not merely count connecting factors.

11. Choice of foreign law does not neutralise every Turkish mandatory rule

Article 6 preserves Turkish rules that apply directly because of their purpose and scope. Article 31 deals separately with directly applicable rules of a third state closely connected with the contract: effect may be given to those rules after considering their purpose, nature, content and consequences. It does not make every mandatory rule of every connected country automatically applicable.

Competition law, foreign-exchange restrictions, customs rules, employment protections, consumer protections, real-estate form requirements and regulatory licensing can therefore remain relevant even where the main contract is governed by foreign law.

A governing-law clause should never be marketed as a way to contract out of Turkish public regulation.

12. Turkish public order can block a foreign-law result in exceptional cases

MÖHUK Article 5 provides a public-order exception where applying a foreign-law provision would be manifestly contrary to Turkish public order.

The exception is narrow. A mere difference between foreign law and Turkish law is not enough.

The court should first determine the foreign rule and its concrete result before deciding whether Turkish public order requires displacement.

13. The material validity of the contract and law choice has its own conflict analysis

MÖHUK Article 32 addresses the existence and material validity of contractual relations. A party cannot simply invoke the chosen law to assume the choice clause itself is unquestionably valid.

Consent, mistake, fraud, duress and authority can raise distinct questions.

Where the person says no contract was ever formed, the court must resolve that threshold issue before enforcing substantive obligations.

14. Contract form is not always governed by the same law as substance

MÖHUK Article 7 contains a general rule concerning form of legal transactions, and special provisions can apply to particular contracts.

For example, real-estate transactions in Türkiye can require mandatory Turkish form rules. A foreign-law clause cannot validate a private document where Turkish land-registration law requires an official act.

Electronic signatures, notarisation and corporate approval should therefore be checked separately.

15. International sales can also be governed by the CISG

Türkiye is a party to the United Nations Convention on Contracts for the International Sale of Goods. Where the CISG applies, it supplies substantive sales rules directly within its scope.

The parties can exclude or modify the CISG under the Convention. A clause selecting Turkish law does not necessarily exclude the CISG because the Convention forms part of Turkish law for covered transactions.

Our international sale payment guide addresses collection issues involving Turkish buyers.

16. Governing law and court jurisdiction are separate questions

A contract can choose Turkish law and foreign arbitration, or foreign law and Turkish courts. The governing-law clause answers what substantive law applies; the forum clause answers who decides the dispute.

MÖHUK Article 47 regulates jurisdiction agreements in disputes with a foreign element, subject to statutory limits.

Drafting both clauses together reduces contradictions.

17. A Turkish judge applies designated foreign law ex officio

MÖHUK Article 2 requires the judge to apply Turkish conflict rules and the foreign law designated by them ex officio. The parties can be asked to assist in establishing foreign law.

Official statutes, authoritative case law, legal opinions and certified translations can be used. If foreign law cannot be determined despite all research, Turkish law applies under Article 2(2).

Parties should therefore prepare foreign-law evidence early rather than assume the judge will obtain every foreign source unaided.

Conclusion

MÖHUK Article 24 gives international contracting parties substantial autonomy, but that autonomy operates within a structured conflict-of-laws system. Clear law choice is preferable. Without it, the characteristic performer and closest connection determine the starting point. Mandatory Turkish rules, public order, special contract provisions and international treaties can still alter the result. A professional contract should therefore coordinate governing law, forum, mandatory regulation and the actual transaction structure.