At a glance: investment treaty practice in Türkiye

Investment treaty practice

Does the state have a model BIT?

Yes, Türkiye has a model BIT. The first Turkish model BIT was adopted in 2000 and was replaced by the 2009 Turkish Model BIT adopted in May 2009, which appears to have been replaced with the 2016 Turkish Model BIT.

Türkiye’s model BIT provides an overview of the terms, conditions and guidelines on investment promotion, protection and dispute settlement procedures. When concluding any bilateral investment treaties, this model often serves as the starting point for negotiations with potential partner states.

The content of the 2016 Turkish Model BIT is not yet publicly available. Provisions contained in the 2009 Turkish Model BIT provide for broad definitions of investor and investment, promotion and protection of investments, treatment of investments, right to regulate, prohibition of expropriation of investments except for public purposes and in a non-discriminatory manner, in accordance with the general principles of treatment provided and compensation, compensation for losses, repatriation and transfer, subrogation, settlement of disputes between the contracting parties, and the contracting parties and investors of other contracting parties, scope of application and entry into force.

Does the state have a central repository of treaty preparatory materials? Are such materials publicly available?

The main organisations in charge of preserving documents related to treaty preparation are the Directorate of Legal Affairs within the Ministry of Foreign Affairs and the Directorate of Library and Archive Services under the Grand National Assembly of Türkiye, where records of legislative ratification and diplomatic correspondence can be found. The Directorate of Legal Affairs of the Ministry of Foreign Affairs in Türkiye provides access as well. All the laws enacted for the ratification of the international agreements Türkiye is a party to, including the BITs, can be accessed from the Legislation Information System of the Presidency of Türkiye.

The Ministry of Trade has a detailed and informative website that is accessible by the relevant country.

What is the typical scope of coverage of investment treaties?

Turkish investment treaties identify investors and investments within their scope of coverage. According to the 2009 Turkish Model BIT, investors are typically defined as natural persons who are nationals of the contracting state party or as legal entities incorporated under the law in force of the contracting party and with their registered offices and substantial business activities in the territory of that contracting state who have made an investment in the other contracting party.

In the 2009 Turkish Model BIT, investments are defined as every kind of asset, connected with business activities, acquired for the purpose of establishing lasting economic relations in the territory of the contracting state. The 2009 Turkish Model BIT then non-exhaustively lists such assets, which must include both immovable and movable property as well as rights in rem (such as mortgages or pledges); reinvested returns, claims to money or any other rights having a financial value related to an investment; shares, stocks or any other form of participation in companies; industrial and intellectual property rights (patents, trademarks, goodwill, know-how, etc); and business concessions granted under the law or by a contract, particularly those related to the exploration, development or extraction of natural resources.

What substantive protections are typically available?

Türkiye's BITs typically offer standard investment treaty protections to investors. As per article 2 of the 2009 Turkish Model BIT, ‘fair and equitable treatment’ and ‘full protection and security’ in the territory of the contracting state. Article 2 further prohibits arbitrary and discriminatory treatment impairing the management, maintenance, use, enjoyment, extension or disposal of such investments.

Treatment of investments are set out under article 3 of the 2009 Turkish BIT. This article includes national treatment of the investments, most-favoured-nation treatment and non-discrimination.

Article 5 of the 2009 Turkish Model BIT is the provision on the prohibition of direct or indirect expropriation or nationalisation of investments, except for a public purpose, in a non-discriminatory manner, upon payment of prompt, adequate and effective compensation, and in accordance with due process of law and the general principles of treatment provided for in article 3. Article 6 of the 2009 Turkish Model BIT governs the compensation for losses suffered by foreign investors in the territory of the contracting state. Article 7 of the 2009 Turkish Model BIT governs the free transfer of returns, proceeds, compensation, reimbursements, salaries and payments arising from the investments.

Article 9 of the 2009 Turkish Model BIT also provides for subrogation, which sets out that if there is an insurance or guarantee scheme established by law to protect investors and investments, this shall be recognised for the foreign investor and investment.

What are the most commonly used dispute resolution options for investment disputes between foreign investors and your state?

Türkiye’s BITs provide various options for the settlement of disputes, which are typically the competent courts of Türkiye, the International Centre for Settlement of Investment Disputes (ICSID) arbitration or ad hoc arbitration pursuant to the UNCITRAL Rules. The most common choice of foreign investors for the settlement of their investment disputes against Türkiye is the ICSID arbitration.

Does the state have an established practice of requiring confidentiality in investment arbitration?

Türkiye does not have an established practice of requiring confidentiality in investment arbitrations.

Does the state have an investment insurance agency or programme?

Türkiye does not have a state-backed investment insurance institution or programme.

However, as it has been a member state of the Islamic Corporation for Investment and Export Credit Insurance (ICIEC) since 1997, it benefits from the protection and services offered by the Islamic Development Bank Group. ICIEC provides investment insurance and export credit insurance to member countries, protecting them against risks such as political instability, expropriation and non-payment in the territory of other member states. ICIEC collaborates with the Turkish Eximbank in the field of Export Credit Insurance in Türkiye and provides reinsurance services to the Turkish Eximbank within this scope.

Again, being a member of the World Bank’s Multilateral Investment Guarantee Agency (MIGA), Türkiye has access to additional investment insurance and protection mechanisms. Türkiye is one of the countries that benefit significantly from the investment support offered by MIGA. According to 2015 data, 9 per cent of the total US$12.5 billion in loans provided by MIGA was allocated for investments in Türkiye. Through MIGA, Turkish investors can obtain guarantees against risks such as currency inconvertibility, expropriation, breach of contract and political violence, thus increasing the security of their investments abroad.

Similarly, the Overseas Private Investment Corporation of the US government provides US investors with political risk insurance against losses to tangible assets, investment value and earnings resulting from political dangers, which include political violence such as terrorism or coups, expropriation and currency inconvertibility.