
The Court of Cassation Unification Board Ruled that Commercial Courts Have Jurisdiction over Lawsuits Arising from Breach of Non-Compete Agreements
Introduction
In its decision dated June 13, 2025, numbered 2023/1 E. and 2025/3 K. (the “Decision”), the Court of Cassation Unification Board (the “Unification Board”) ruled that commercial courts have jurisdiction over disputes arising from breaches of non-compete obligations under articles 444–447 of the Turkish Code of Obligations No. 6098 (“TCO”). You may access the full text of the Decision here.
Case Law Divergence Leading to Decision
Under an employment contract, an employee undertakes, as part of the duty of loyalty, not to compete with the employer during the term of the contract. However, once the employment relationship ends, there is no statutory provision prohibiting the employee from competing with the former employer. Nevertheless, the parties may agree that the non-compete obligation will continue after the termination of the contract.
In the event of a dispute arising from a breach of such a non-compete undertaking, the case law was inconsistent as to whether jurisdiction lay with labor courts or commercial courts. In fact, there was a divergence of opinion among the Court of Cassation’s General Assembly on Civil Chambers, the 9th Civil Chamber, and the 11th Civil Chamber regarding the competent court [1]. Unification Board’s Decision resolved the conflicting case law and ensured consistency in practice.
Unification Board Emphasized that Non-Compete Agreements Are Independent Agreements Related Commercial Life and Qualify as Commercial Disputes. It Therefore Ruled that Commercial Courts Are Competent
Unification Board emphasized that a non-compete agreement constitutes an independent agreement, distinct from an employment agreement and the duty of loyalty; that the matters covered by the non-compete obligation concern commercial life rather than labor law; and that disputes relating to non-compete agreements are classified as commercial cases under the Turkish Commercial Code No. 6102 (“TCC”). In this context, the Decision states:
- The duty of loyalty is an ancillary obligation arising from the employment agreement and this duty terminates upon the end of the employment relationship between the parties
- Although the non-compete obligation is closely connected to employment agreement, its validity conditions concern commercial law rather than labor law
- Disputes relating to non-compete obligations fall within the scope of commercial cases as set out in article 4/1-c of TCC and cannot be regarded as an exceptional provision as per article 5/1 of TCC
In light of these findings, Unification Board stated that the commercial courts have jurisdiction over lawsuits arising from breaches of non-compete obligations.
Analysis
In recent years, employee mobility has been steadily increasing. This trend raises the risk of employers’ trade secrets being disclosed to third parties, making the protection of such information more critical than ever. Disputes over the competent court in cases arising from breaches of non-compete agreements frequently led to jurisdictional dismissals, prolonging proceedings and creating uncertainty among the courts. Against this backdrop, Unification Board’s Decision is of particular importance, as it eliminates the divergence of case law and establishes consistency in practice with respect to jurisdiction.
Bibliography
- [1] Although the Court of Cassation’s General Assembly on Civil Chambers has issued decisions in both directions, in recent years it has tended to recognize the jurisdiction of commercial courts. Meanwhile, the 9th Civil Chamber has regarded labor courts as competent, whereas the 11th Civil Chamber has considered commercial courts to have jurisdiction
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