The Law No. 805 On the Compulsory Use of the Turkish Language in Economic Enterprises (“Law No. 805“) came into effect on 1926 and had been one of the most debated regulations in terms of its procedural power.
The Law sets forth that the Turkish companies and enterprises are under the obligation to use the Turkish language in all transactions, agreements, correspondences, accounts and books. The application of the law does not cover the contracts that are to be performed outside of Turkey.
The procedural power of the Law as mentioned is that the Turkish Court of Cassation ruled in some occasions, the arbitration clauses that were regulated in languages other than Turkish should be deemed invalid. For a long time discussions on the topic resulted in the good-faith principle to weigh over the Law No. 805 as it would be absurd for a Turkish party to enter into a contract that is not fully understood.
Subsequent to various negative awards in 2020, the Court of Cassation ruled in October 2020 that the execution of an agreement subject to arbitration in a foreign language would not constitute a violation of the Law No. 805 as there was a foreign element as per Article 2 of the Law numbered 4686 on the Turkish International Arbitration Law.
However, as to the unpublished recent awards, we observe that the risk still stands.
Our opinion in the matter would be to stay on the safer side and have a dual column / dual language contract -if not possible- have a dual column arbitration clause that has a Turkish version as well.