Turkey: Even e-law is law

[img_assist|nid=7638|title=|desc=|link=none|align=left|width=66|height=100]The issue of applicable law in electronic commerce is still a controversial issue in many aspects. This article aims to highlight some of the most important aspects of this issue and provide solutions according to Turkish Law, such as when and according to which criteria electronic transactions are considered commercial, whether the parties are entitled to choose the law applicable to their online disputes, which law shall apply to their contract in case they fail to choose a law, which law applies to torts committed on internet and on which grounds arbitral awards are enforced in Turkey. The author concludes that Turkey is a country where the principle of party autonomy is fully enjoyed and Turkish Law leaves no room to legal gaps on the determination of the law applicable to electronic transactions.

Electronic commerce provides wide commercial opportunities as it abates the physical boundaries between countries. Besides, the fact that the boundaries tend to disappear may create problems regarding the application of laws. The matter of which law shall apply to electronic commercial transactions among nationals of different states is still a controversial issue. The problems of conflict of laws on the applicable law to electronic sale transactions in which buyer and seller are from different countries shall also be resolved.

Which issues are considered as commercial in Turkish Law?

As to our rules of law, there are two kinds of commercial activities according to the Turkish Commercial Code [TCC].

The first kind is composed of the activities regulated by the Commercial Code, and the second kind is composed of other transactions, activities and businesses.

The matters regulated in the Commercial Code are, by their nature, related to commercial enterprises. However, there are also some other issues which are considered to be commercial as they are regulated by the Commercial Code, although they are not commercial in nature. For instance, relevant articles of the Commercial Code apply to the transportation of goods or passengers with bills of exchange or to the mutual accounts among non merchants. Torts related to commercial enterprises are considered commercial matters. Articles 177, 256, 321, 489 and 542 of the Commercial Code on the responsibility of the company from the torts of the partners or organs of the company can be mentioned as examples of torts.

Are the parties entitled to choose the law applicable to their contract?

Parties are entitled to choose the law applicable to their contract according to the Article 24 of the Law No. 5718 on Private International and Procedural Law [PIPL] if they are parties to a commercial contract of international nature, where nationals of more than one state are involved. The law chosen by the parties as the applicable law to their contract may be Turkish Law or a foreign law.

Which law will apply if the parties fail to determine the applicable law?

In case the parties have not explicitly chosen the applicable law to their contracts, courts will apply the law of the place of performance of the contract in disputes. In contracts that impose obligations to both parties, there may be more than one place of performance of the contract. In such cases, the law of the place of specific performance will apply. For instance, in sales contracts, the performance of payment of the price is not the specific performance of the contract. The seller's performance constitutes the specific performance of the contract. In this case, the law of the place of the seller will apply to the dispute. When determination of the place of specific performance is not as easy as it is in sales contracts, the law of the place with closest or strongest connection with the contractual relationship will apply.

Which law applies in torts committed on the Internet?

In obligations which arise from torts, the law of the place of the tort will apply according to article 34 of law No. 5718. To the question whether the place of the tort is the place of the tortuous act or the place where damages occurred, articles 34 says the applicable law is law of "the place where damages occurred." In cases in which the place of the tortuous act and the place where damages occurred are in different countries, the law of the place where damages occurred will apply.

On which grounds are arbitral awards recognized and enforced in Turkey?

Since national courts do not usually solve controversies in short time, referring commercial disputes to arbitration is a well established practice in most countries. Parties may resort to arbitration either by an arbitration clause included in the contract before the dispute arises, or by arbitration agreement agreed upon after the dispute arose, providing that the dispute will be settled by arbitrators.

Articles 50 to 60 of Turkish Law No. 5718 regulate the procedure to recognize (execute) foreign arbitral awards.

Turkey recognizes the condition of "reciprocity" for foreign arbitration awards. Yet, determining to which country belongs an arbitration institution functioning at an international level is very burdensome and even, sometimes, impossible. Besides this, to require satisfaction of the condition of reciprocity for recognition of an award, which is based on the will of the parties, is not consistent with the nature of arbitration.

However, Turkey is signatory to the New York Convention on the recognition of arbitral awards on commercial disputes. This agreement was ratified by Law No. 3731 (dated 8.5.1991). According to this Convention, awards made in signatory countries will be recognized according to the New York Convention, but not through articles 60-63 of the PIPL. Conflict of laws arising from electronic commerce shall be solved as any other problem arising from traditional commerce; the commercial nature of the business does not change because it is made on the electronic environment. The provisions of the New York Convention do not require any other condition for the recognition of awards from signatory countries.