Introduction

In disputes between company shareholders, the determination of competent jurisdiction remains a contentious area in both legal scholarship and practice, particularly in relation to the scope and boundaries of the exclusive jurisdiction rule enshrined in Article 14 of the Code of Civil Procedure No. 6100 (“CCP”)[i]. In receivable claims arising from contracts concluded between parties who are in a shareholder relationship, it becomes decisive whether the dispute ought to be characterised as falling within the ambit of the partnership relationship or within the framework of a contractual obligation; accordingly, whether the exclusive jurisdiction rule prescribed under Article 14 is applicable must be established. This question becomes even more complex where an international jurisdiction agreement or an arbitration agreement is in place.

In this article, within the framework of the ruling of the Court of Cassation General Assembly of Civil Chambers (“General Assembly”) numbered E. 2024/176 and K. 2025/618, dated 8 October 2025[ii] (“the Ruling”), the conditions for the application of the exclusive jurisdiction rule pursuant to Article 14 of the CCP to penalty clause claims founded upon contractual obligations arising from a share purchase agreement, as well as the standing of this rule vis-à-vis international jurisdiction agreements, are analysed. The Ruling is noteworthy in terms of the criteria it establishes as to whether shareholder status alone gives rise to exclusive jurisdiction and how the jurisdictional regime should be determined having regard to the nature of the claim.

Facts of the Case and the Decisions of the First Instance Court, the Regional Court of Appeal, and the Court of Cassation

In the present matter, the claimants relied upon the penalty clause provisions contained in a standalone share purchase agreement dated 13 May 2015 and in a further share purchase agreement of the same date, and contended that the defendant had failed to pay the share purchase price and had not performed its contractual obligations concerning the development and financing of the company. In this context, they sought a judgment for the annulment of the objection to the enforcement proceedings instituted for the recovery of the penalty clause receivable and for the continuation of those proceedings.

The defendant, for its part, maintained that although the enforcement proceedings had been founded upon a single contract, the action for annulment of objection relied on two separate contracts and on different penalty clause provisions contained therein. The defendant further contended that the contracts incorporated a foreign court jurisdiction clause and an arbitration clause, and that accordingly the Turkish courts lacked jurisdiction; it also raised substantive law defences and applied for dismissal of the action.

The court of first instance stated that the defendant had raised an arbitration objection as a preliminary objection; however, since the exact date of service of the statement of claim on the defendant could not be ascertained, it was not possible to establish whether the objection had been submitted within the prescribed time limit, and accordingly the arbitration objection was not examined on the merits. The court underlined that the initiation of enforcement proceedings before a competent enforcement office constitutes a procedural prerequisite for an action for annulment of objection. It further held that the parties held merchant status pursuant to the share purchase agreement dated 13 May 2015 and that the agreement contained a valid jurisdiction clause designating the London courts as the competent forum for disputes. On this basis, it concluded that the enforcement proceedings ought to have been initiated at the place designated pursuant to that jurisdiction clause. Accordingly, the court found that no valid enforcement proceedings had been initiated before a competent enforcement office and dismissed the action on procedural grounds owing to the absence of a procedural prerequisite.

Upon appeal against the first instance determination, the Regional Court of Appeal held that the dispute arose from share transfer agreements between company shareholders and that, pursuant to Article 14 of the CCP, the courts and enforcement offices in Ankara, where the company's registered seat is located, have exclusive jurisdiction. It further underscored that, pursuant to Article 17 of the CCP, the parties may not conclude a jurisdiction agreement in matters subject to exclusive jurisdiction, and accordingly found reliance on the jurisdiction clause contained in the contract to be without merit. Nevertheless, on the ground that no duly initiated enforcement proceedings existed before a competent enforcement office in Ankara, it set aside the first instance determination and dismissed the action.

Upon further appeal against the Regional Court of Appeal's determination, the competent Chamber of the Court of Cassation held that the contract contained a clause providing for the resolution of disputes by way of arbitration. It further stated that the exclusive jurisdiction rule enshrined in Article 14 of the CCP applies solely to actions between parties who have an existing partnership or membership relationship, and that, in the present matter, the defendant had not yet acquired shareholder status. Accordingly, it concluded that exclusive jurisdiction could not be invoked and that it was erroneous to render a judgment without first examining the defendant's arbitration objection. On those grounds, it reversed the judgment.

Decision on Resistance

In its resistance ruling, the Regional Court of Appeal stated that the finding in the reversal determination of the competent Chamber of the Court of Cassation—that the defendant did not yet hold shareholder status as of the contract date—did not accord with the case file. It held that, on the basis of the share transfer agreement and the general assembly attendance list, it was established that the parties were shareholders as of the contract date. Accordingly, it concluded that the reversal had been founded upon a material error and resolved not to comply with it. It was further stated that the share transfer agreement by which the parties were jointly bound did not contain an arbitration clause and that, with respect to the other agreement containing an arbitration clause, the arbitration objection constituted a preliminary objection and could no longer be examined as it had not been raised at the appeal stage. On those grounds, it adhered to its prior reasoning and rendered a resistance ruling.

Assessment of the General Assembly

Upon the appeal lodged by the parties' counsel against the resistance ruling delivered by the Regional Court of Appeal, the matter was referred to the Court of Cassation General Assembly of Civil Chambers. It first clarified that the dispute concerned an action for annulment of objection and that, for this reason, the court's examination must be confined to the contract relied upon in the enforcement request; provisions contained in other contracts that were not invoked as the basis of the enforcement proceedings cannot be taken into consideration in resolving the dispute[iii].

The General Assembly further clarified that the rules governing the competence of enforcement offices and those governing the international jurisdiction of courts must be treated as distinct. It stated that compulsory enforcement constitutes an exercise of state sovereignty and that, accordingly, Article 47 of the Code of Private International Law and International Civil Procedure No. 5718 (“PILC”) cannot be applied directly to the competence of enforcement offices. Therefore, even where the parties have designated a foreign court as competent, the creditor may still initiate enforcement proceedings before enforcement offices in Türkiye; this circumstance alone does not render the proceedings invalid. However, once the dispute proceeds to the litigation stage and a jurisdictional objection is duly raised, the court will evaluate the international jurisdiction agreement solely in terms of its own jurisdiction. In this respect, the General Assembly held that the court of first instance's approach—treating the enforcement proceedings as invalid on the ground that a foreign enforcement authority was competent—was not legally tenable.

Another pivotal distinction underscored in the Ruling is the difference between exclusive jurisdiction rules pursuant to domestic law and the concept of exclusive international jurisdiction in international procedural law. It was further stated that the instances of exclusive jurisdiction governed by the CCP do not automatically give rise to exclusive international jurisdiction. Exclusive international jurisdiction pertains to limited subject matters that directly implicate state sovereignty and where the recognition of a foreign court judgment would be objectionable on grounds of public policy. Not every exclusive jurisdiction rule may be characterised as one of exclusive international jurisdiction. Within this framework, it was accepted that the mere existence of an exclusive jurisdiction rule pursuant to domestic law does not, of itself, invalidate an international jurisdiction agreement concluded by the parties pursuant to Article 47 of the Code of PILC. Accordingly, the Ruling found that the Regional Court of Appeal's approach—setting aside the international jurisdiction agreement on the basis of the exclusive jurisdiction rule in Article 14 of the CCP—lacked legal foundation.

A further decisive finding in the Ruling is the determination that the competent Chamber of the Court of Cassation's conclusion that the defendant did not yet hold shareholder status was not borne out by the case file. It was established that, as of the contract date, the parties were shareholders in the same company. At the same time, the General Assembly underlined that the dispute was not of a nature that would give rise to an amendment to the company's articles of association or to the trade registry records, and that the claimants sought solely the recovery of a penalty clause receivable founded upon contract. It therefore concluded that penalty clause claims between shareholders cannot be regarded as a category of disputes falling within the state's sphere of exclusive international jurisdiction. According to the General Assembly, there is no impediment to the application of an international jurisdiction agreement in a receivable claim of this nature. Accordingly, the approach of setting aside the jurisdiction agreement on the basis of exclusive jurisdiction pursuant to domestic law and dismissing the action by relying on the competence of the enforcement office was not considered legally tenable.

In conclusion, the General Assembly held that the outcome ought to be determined by assessing the international jurisdiction agreement contained in the contract underlying the enforcement proceedings and the defendant's jurisdictional objection founded upon that agreement within the framework of preliminary objections. It therefore reversed the resistance ruling delivered by the Regional Court of Appeal on different grounds.

Assessment and Conclusion

The General Assembly of Civil Chambers established that, in an action for annulment of objection, the court's examination is confined to the contract relied upon in the enforcement request and that arbitration or jurisdiction clauses contained in contracts that were not invoked as the basis of the enforcement proceedings must be excluded from consideration. It further concluded that compulsory enforcement is founded upon the state's sovereign authority and that international jurisdiction agreements do not extinguish the competence of enforcement offices. However, once the dispute is referred to a court and an objection concerning international jurisdiction is duly raised, that objection must be examined by the court[iv].

The General Assembly further held that exclusive jurisdiction rules pursuant to domestic law and the concept of exclusive international jurisdiction in international procedural law possess distinct legal characteristics[v]. The Ruling explains that the instances of exclusive jurisdiction provided pursuant to the CCP do not automatically give rise to exclusive international jurisdiction, and that exclusive international jurisdiction pertains only to limited categories of disputes that are directly connected to the exercise of state sovereignty. Within this framework, it was concluded that the mere existence of an exclusive jurisdiction rule pursuant to domestic law does not, of itself, invalidate an international jurisdiction agreement.

The Ruling further establishes that not every dispute between shareholders falls within the ambit of exclusive international jurisdiction. It states that the mere fact that the parties hold shareholder status does not, of itself, give rise to exclusive international jurisdiction. In the present matter, the claim was not directed at procuring an amendment to the company's articles of association or to the trade registry records but related to a penalty clause receivable founded upon contract[vi]. On that basis, the dispute was considered not to fall within a category of exclusive international jurisdiction that would displace an international jurisdiction agreement.

In conclusion, the Ruling determines that an action for annulment of objection must be examined solely within the boundaries of the legal basis of the enforcement proceedings; that international jurisdiction agreements do not affect the competence of enforcement offices; and that the concepts of exclusive jurisdiction pursuant to domestic law and exclusive international jurisdiction must be treated as distinct, this distinction being decisive for the validity of international jurisdiction agreements. It is further accepted that not every dispute between shareholders falls within the ambit of exclusive international jurisdiction and that shareholder status alone does not give rise to exclusive jurisdiction pursuant to domestic law or to exclusive international jurisdiction.

[i] Article 14 of the CCP provides as follows: “(1) In actions arising out of the transactions of a branch office, the court of the place where the branch office is located shall also have jurisdiction. (2) In actions brought by a private legal entity against one of its shareholders or members, or by a shareholder or member, in such capacity, against the private legal entity or against other shareholders or members, provided that the dispute is limited to the shareholder or membership relationship, the court of the place where the private legal entity has its registered seat shall have exclusive jurisdiction.”

[ii] Court of Cassation General Assembly of Civil Chambers, E. 2024/176, K. 2025/618, Date: 08.10.2025 https://www.lexpera.com.tr/ictihat/yargitay/e-2024-176-k-2025-618-t-08-10-2025 ( Access Date: 08.02.2026)

[iii] The Decision explains, with reference to the Court of Cassation General Assembly of Civil Chambers decision numbered E. 2022/1269 and K. 2023/1106 dated 15.11.2023, that an action for annulment of objection derives its legal basis from the Enforcement and Bankruptcy Code No. 2004. It is stated that this type of action, although strictly linked to enforcement proceedings and situated within enforcement law, results in a final judgment by examining the underlying substantive legal relationship. The dependency of the action on the enforcement proceeding applies not only to the amount of the receivable but also to its legal source.

[iv] The Decision emphasizes that the competence of enforcement offices may be reviewed by the court hearing the action for annulment of objection. See also Üstündağ, Saim: İcra Hukukunun Esasları, 8th Edition, İstanbul, 2004, p.81-82.

[v] For detailed information on this issue, see Nomer, Ergin: Milletlerarası Usul Hukuku, 2nd edition, İstanbul, Beta, 2016, p.129.

[vi] With respect to the CCP, according to Postacıoğlu/Altay, both actions brought by a legal entity against its shareholders or members and actions brought by shareholders or members against the legal entity must be filed before the court at the place where the legal entity has its headquarters. Postacıoğlu, İlhan E. / Altay, Sümer: Medenî Usûl Hukuku Dersleri, 8th edition, İstanbul, Vedat Kitapçılık, 2020, p.133.