The Court of Cassation has Ruled That The Competent Court Fot Cases Brought On The Grounds Of Volation Of The Non-Competition Clause Is The Commercial Court of First Instance 19 September 2025

2. TERMS OF THE NON-COMPETITION AGREEMENT

Articles 445, 446, and 447 of the Turkish Commercial Code also stipulate certain restrictions regarding non-competition agreements to be established between employees and employers. These restrictions and the conditions necessary for establishing a non-competition agreement can be briefly summarized as follows:

• The existence of a valid employment contract between the employee and the employer

• The parties must be competent to enter into a non-compete agreement (having a legal capacity)

• The non-compete agreement must be in writing.

• The employee having the opportunity to learn certain secrets of the employer (knowing customers, learning trade secrets, the possibility of using information constituting trade secrets causing harm to the employer)

• Limitations on the subject matter, location, and duration of non-compete agreements (Non-compete agreements shall be drafted in a manner that does not jeopardize the employee's economic future in a manner contrary to fairness in terms of type, location, and duration, and shall not exceed two years except in special circumstances and conditions).

• In case of a non-competition agreement is entered into in violation of these restrictions and conditions, the agreement shall be invalid. Furthermore, pursuant to Article 445/2 of the Turkish Code of Obligations, the court may limit the scope or duration of an excessive non-competition clause by freely evaluating all circumstances and conditions and taking into account the counterperformance that the employer may have undertaken in a manner consistent with equity.

3. CONSEQUENCES OF VIOLATING THE NON-COMPETITION AGREEMENT AND TERMINATION OF THE NON-COMPETITION AGREEMENT

The sanctions that an employee may face for violating a valid non-compete agreement are regulated under Article 446 of the Turkish Code of Obligations (TCO). If the employee acts in violation of this restriction, they are obligated to compensate the employer for all damages incurred. In addition, as stipulated in Article 447 of the TCO, the non-compete agreement will terminate if it is determined that the employer has no legitimate interest in maintaining the restriction, or if the agreement is terminated by the employer without just cause, or by the employee due to a reason attributable to the employer.

4. THE ISSUE OF WHICH COURT HAS JURISDICTION IN CASE OF BREACH OF NON-COMPETE OBLIGATION

When a dispute arises due to a breach of the non-competition agreement between an employee and an employer, the question of whether the competent court should be the labor courts or the district commercial courts has been the subject of debate both in judicial precedent and in doctrine. These debates have prevented uniformity in practice, and the General Assembly of the Court of Cassation has had differing opinions based on the decisions of the 9th and 11th Civil Chambers of the Court of Cassation.

Indeed, there is a divergence of opinions regarding the competent court, both among the chambers and between the chambers and the Civil General Assembly of the Court of Cassation, with the Assembly having rendered decisions in different directions. With the Court of Cassation’s Unification of Case Law Grand Assembly Decision No. 2023/1 E. 2025/3 K., published in the Official Gazette No. 33015 on 12th September 2025, a consensus was achieved in practice, and it was determined that the competent court is the Commercial Court of First Instance, based on the reasons summarized below.

The reasons for the latest Judgment of the Court of Cassastion are briefly summarized below.

• The non-competition obligation, which is regulated within the scope of the duty of loyalty, is a secondary obligation arising from the employment contract. In general, no separate agreement is required for the duty of loyalty, and specifically for the non-competition obligation within this duty, to become effective; this obligation arises from the employment contract being a continuous and personal contract, meaning that this duty of loyalty continues as long as the employment contract continues. Therefore, when the employment contract between the employee and the employer ends, this obligation also ends. For this reason, since the non-competition obligation does not necessarily continue after the employment contract ends unless otherwise agreed, the competent court in case of a violation of this prohibition will not be the labor court.

• Whether included as a clause in an employment contract or entered into as a separate agreement, a non-compete agreement remains effective and produces its legal effects after the employment contract has ended and the employer-employee relationship has ceased.

• The non-compete clause shall only be valid if it is separately agreed upon in writing; in this respect, it arises from the employee's contractual commitment and does not give rise to an ancillary obligation under the employment contract.

• The non-compete agreement, which expresses the provisions and consequences after the termination of the employment contract, serves the purpose of maintaining the balance between the freedom of work and contract regulated in Article 48 of the Constitution rather than the principle of employee protection that prevails in Labor Law. This protection and evaluation should also be carried out by the commercial court.

• What is meant by “customer base” and “production secrets” as referred to in Article 444/2 of the Turkish Commercial Code is a commercial matter closely linked to market conditions that must be assessed by the commercial court of first instance, and concerns “private commercial life” rather than business life in general.

• Pursuant to Article 4/1-c of the Turkish Commercial Code, disputes relating to non-competition agreements are classified as absolute commercial cases, and absolute commercial cases are cases whose commercial nature is definitively accepted regardless of the nature of the parties.

• Despite the provision in Article 5/1 of the Labor Courts Law that labor courts have jurisdiction over disputes arising from service relationships regulated in the Sixth Section of the Second Part of the Turkish Code of Obligations, the same article does not contain a provision contrary to Article 4/1-c of the Turkish Commercial Code. It cannot be inferred from Article 5/1 of the Labor Courts Law that labor courts have jurisdiction over disputes relating to non-competition clauses regulated in the TCC. Moreover, while there are fifty-five articles in Part Two, Section Six of the Turkish Civil Code (TBK) concerning general service contracts, Article 4/1-c of the Turkish Commercial Code (TTK) specifically highlights the non-competition clause contracts between 444 and 447.

Along with the Court of Cassation’s Decision on the Unification of Case Law, it has been determined that the court of first instance commercial courts will now be the court to settle disputes between employees and employers regarding non-competition clauses. In practice, it is expected that filing lawsuits regarding non-competition clauses between employees and employers in a court other than the court of first instance commercial court will result in the case being dismissed due to lack of jurisdiction.

BIBLIOGRAPHY:
1. TBB Dergisi, Sayı 87, 2010, A. Eda Manav- İŞ HUKUKUNDA REKABET YASAĞI SÖZLEŞMESİNİN GEÇERLİLİK KOŞULLARI
2. Court of Cassation’s Unification of Case Law Grand Assembly Decision No. 2023/1 E. 2025/3 K.
3. Relevant caselaw of Court of Cassastion (Y. 9.HD  2021/11745 E., 2021/16748 K.  Y.9.HD 2021/3076 E., 2021/9789 K., Y. 11.HD 2020/6410 E. 2022/697 Y.11HD   2021/1534 E., 2021/6811 K. YHGK 2013/412 E., 2013/1708 K.  YHGK 2012/854 E., 2013/292 K.)