With the Presidential Decree No. 85 dated September 12, 2018, it has been decided to keep the value of Turkish currency from losing value, a ban on contracts with foreign currency was imposed by adding to Decree No. 32 on the Protection of the Value of Turkish Currency (“Decree”). According to the Decree, except in exceptional circumstances determined by the Ministry of Treasury and Finance (“Ministry”), public and private law persons resident in Turkey, the parties themselves, including securities and real estate purchases, vehicles and leasing of all kinds of securities and real estate leases, contract prices, interests, damages for delay in performance, penalty clauses etc. arising from the contracts of leasing and employment, service and construction contracts shall not be decided in foreign currency or indexed to foreign currency. According to the Decree to be implemented, the three conditions set out in the provision must be cumulatively satisfied.
With the Decree, if the parties cannot agree on the contract price in Turkish lira it will be calculated in Turkish lira with the rates determined by the Central Bank of the Republic of Turkey as the indicator set on January 2, 2018. In residence and roofed workplace lease agreements signed before September 12, 2018, the rental fees in foreign currency or indexed to foreign currency will be determined as Turkish currency, for two years in the same procedure.
The Announcement of the Ministry dated October 12, 2020 stated that if the parties do not reach a consensus on the rate of increase in Turkish lira, they will be subject to the limitations of Article 344 of the Turkish Code of Obligations Law numbered 6098 titled “Determination Of The Rental Price”. It has been decided that it is not possible to redetermine the prices set for the transition period in foreign currency or indexed to foreign currency after the end of the two-year period.
The full text of the Announcement can be accessed here.
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Damla KIZIL (Apprentice Attorney)
Uçar Law & Consultancy Office