In contracts with a foreign element, in case of a dispute, the determination of which law will be applied is regulated within the scope of the Law on International Private and Procedural Law Numbered 5718.
1) Can foreign law be agreed upon even if there is no foreign element?
This issue is debated in legal doctrine. We will explain our recommendations by referring to a decision of the Court of Cassation General Assembly dated 06.05.1998 and numbered E.12-28, K. 325 on this subject.
"If this agreement, which involves a foreign element in the debt relationship and grants jurisdiction to a foreign state court, does not rely on the principles of 'Public Order' or 'Exclusive' jurisdiction, it is very clear that it will be valid under Turkish law. In more concrete terms, during a lawsuit to be directly filed in a general court, it should be accepted and respected that when a claimant creditor uses his right to file a lawsuit in a general court based on the credit agreement they concluded with the defendant and initiates an execution in the Serik Execution Directorate and the defendant raises an objection to the debt, the court, in accordance with Article 31 of Law No. 2675, should deem the jurisdiction clause legally valid and decide to dismiss the lawsuit due to the jurisdiction objection.
However, this lawsuit is not of the type described and has a completely different legal procedure and nature. The lawsuit is of a legal nature arising from compulsory execution law. In other words, the objection to jurisdiction belongs to the phase of implementing the precautionary seizure decision given by the court of first instance at the Serik Execution Directorate. Therefore, the evaluation of the dispute within the limits of this legal fact requires a legal necessity. There should be no hesitation in the execution of the precautionary seizure decision and its legal consequences in the case of compulsory execution. Compulsory execution is a direct result of the use of the state's sovereignty and sovereignty rights. Therefore, it can be said to be an exercise of sovereignty that symbolizes the power and authority of the state. The Turkish nation exercises its sovereignty through the authorized bodies in accordance with the principles laid down in the Constitution. The exercise of sovereignty cannot be left to any person, group, or class in any way, and no person or entity that does not derive its authority from the Constitution can exercise a state power." (Article 6 of the Constitution)
In legal doctrine, there are different opinions on this matter, and in light of this Court of Cassation decision, the legally safer approach regarding contracts without a foreign element would be to avoid choosing the application of foreign law, that is, to avoid creating a subjective foreign element.
2) Which law applies to contracts with a foreign element?
In accordance with Article 27 of Law Numbered 5718, the parties to an employment contract can choose the law of any country they desire, whether it is related to the contract. If the parties have not made such a choice, the law of the country where the employee normally performs the work will apply.
However, the most important point is that if the legal system chosen by the parties falls below the mandatory provisions of the employee's customary workplace law in terms of minimum protection, then the law of the customary workplace will apply. In this case, a beneficial comparison for the employee must be made between the chosen law and the customary workplace law.
3) What is the “customary workplace”?
The customary workplace should be understood as the place where the work is primarily performed in terms of time and content, and where the employee physically does the work. The method and currency in which the employee's wages are paid are not determinative in establishing the customary workplace. If an employee temporarily performs work in another country, for example, if they are temporarily assigned to work abroad for assembly, this workplace will not be considered the customary workplace. The duration of temporary work should be determined by the judge according to the specific circumstances of each case.
Some workers may perform their work in various countries due to the nature of their work. For example, for a truck driver transporting goods between different countries or a circus performer, the customary workplace may not be a specific country since these workers are constantly traveling. In this case, the employment contract is subject to the law of the country where the employer's main place of business is located.
4) How and when should the choice of law be made in contracts with a foreign element?
In contracts with foreign elements, the freedom of contract is applied; however, when the parties expressly choose a foreign law, they can do so separately in the main contract or in the form of a separate contract or as a provision in the contract. Similar to the general practice, the legislator did not require a special form for the choice of law in Article 24 of the PIL (MÖHUK). Furthermore, in accordance with Article 24, the choice of law can always be made, or the chosen law can be changed by changing to another law. If the choice of law is made after the formation of the contract, it will have retroactive effects provided that the rights of third parties are protected.
However, it should be noted that the Court of Cassation does not accept the choice of law made or the change of the chosen law when the investigation stage is nearing completion, in other words, shortly before the judgment, on the grounds that it will disrupt the wellness of the trial.