Jurisdiction Settled: Commercial Courts to Hear Non-Compete Disputes – Court of Cassation Unifies Divergent Case Law in Türkiye

A long-standing jurisdictional tug-of-war has finally been resolved. The Grand General Assembly of the Unification of Judgments of the Court of Cassation (the “Assembly”) resolved the differences in judicial opinions regarding the determination of the competent court in lawsuits arising from breaches of non-compete clauses. The conflict reflected varying interpretations of the provisions in the Turkish Code of Obligations (“TCO”), the Labour Courts Act (“LCA”), and the Turkish Commercial Code (“TCC”). In practice, the central question was whether disputes concerning non-compete clauses should be heard before the commercial courts of first instance or the labour courts.

Competing Statutory Claims

At the heart of the dispute lay three statutes pulling in different directions: Articles 444 to 447 of the TCO regulate the employee’s obligation not to compete with the employer and the consequences of breaching this obligation. Article 5 of the LCA stipulates that labour courts are competent to hear all disputes arising from the employment relationship between the employee and the employer. Conversely, Article 4/1-c of the TCC provides that disputes arising from Articles 444 and 447 of the TCO are considered absolute commercial cases and must be heard before the commercial courts of first instance.

How the Assembly Resolved the Conflict

Crucially, the Assembly focused on the legal source and timing of the obligation. The Court of Cassation emphasized that disputes concerning non-compete clauses arise from a non-compete agreement, which the employee and employer separately and expressly conclude in writing and which, while rooted in the employment relationship, operates as a standalone agreement and produces its legal effects only after the employment relationship ends. Because the agreement is independent of the employment contract and the employee’s duty of loyalty, the Assembly characterized it as commercial in nature. The decisive factor was that the LCA contains no explicit provision specifically bringing disputes arising from Articles 444 to 447 of the TCO within the labour courts’ jurisdiction; instead, it refers generally to disputes arising from service contracts. The relevant provision of the TCC therefore remains in force and does not conflict with the LCA.

The practical implications are significant and immediate. In conclusion, the Assembly has ruled that the competent court in lawsuits arising from breaches of non-compete clauses shall be the commercial courts of first instance. This decision has established a definitive unity of jurisprudence, providing clear guidance that similar disputes shall be heard before the commercial courts of first instance in practice.

Not all members of the Assembly agreed. The decision was reached by a qualified majority exceeding two-thirds, with a substantial dissenting opinion. The dissenting judges argued that non-compete agreements are inseparable from the employment relationship, that the LCA is a later and more specific statute that should override the TCC, and that resolution of non-compete disputes often requires evaluating the validity and termination of the underlying employment contract—matters within labour court expertise.

To assess how this landmark ruling affects your existing non-compete arrangements, litigation and dispute resolution strategies, and related contractual arrangements in Türkiye, reach out to your CMS partner or a local CMS expert: Dr. Döne Yalçın and Erdinç Dalar