TÜRKIYE Law and Practice Contributed by: Faruk Aktay, Ayşe Müge Aktay and İrina Gül Coşkun, Aktay Law Firm
2.3 Third-Party Funding for Plaintiff and Defendant As Turkish law does not restrict third-party funding, it is theoretically available to both plaintiffs and defend- ants. In practice, funding is more commonly extended to plaintiffs, though defendants may also obtain fund- ing for defence costs or to pursue counterclaims with financial recovery potential. 2.4 Minimum and Maximum Amounts of Third-Party Funding There are no statutory minimum or maximum amounts for third-party funding in Türkiye. Funding levels are determined contractually and depend on the eco- nomic value and merits of the case, as well as the funder’s assessment of recoverability and overall risk. In practice, funders set their own upper and lower thresholds, but these limits stem from commercial judgement rather than legal requirements, and may be freely agreed between the parties under the principle of freedom of contract. 2.5 Types of Costs Considered Under Third- Party Funding Third-party funders may cover a range of litigation expenses, including attorney’s fees; court application and hearing fees; expert witness and evidence-gather- ing costs; as well as necessary travel, communication, research, and analytical expenses. Funding decisions typically depend on the funder’s assessment of the merits and recoverability of the claim, rather than any statutory cost categories, and the scope of covered costs is defined contractually between the parties. 2.6 Contingency Fees Contingency fees are permitted in Türkiye within the limits set by the Attorneyship Law. Under Article 164, lawyers may agree on a success-based fee in addi- tion to the base fee; however, quota litis arrangements – where the lawyer receives a share of the asset or right obtained through the litigation – are expressly prohibited, and no transfer of the litigated property to the lawyer is allowed. In practice, success fees must remain proportionate and not undermine the prohibi- tion on quota litis, and they typically do not exceed approximately 25% of the monetary outcome.
Rights of audience are limited to attorneys registered with a Turkish bar association; trainee lawyers and for- eign lawyers do not have independent standing before the courts. Foreign lawyers may participate only in co-operation with a Turkish attorney and solely in an advisory capacity. Article 44 of the Attorneyship Law permits foreign attorney partnerships to operate under specific regu- latory and foreign-capital conditions; however, such partnerships do not confer courtroom audience rights on foreign partners. Parties are free to engage foreign counsel in arbitration or matters governed by foreign law, and temporary authorisation may be granted where provided by international treaties or special arrangements. There is no specific legislation in Türkiye regulating or prohibiting third-party litigation funding. In domes- tic court proceedings, funding arrangements are not expressly addressed in the procedural codes; how- ever, they must comply with the general principles of attorney independence and the prohibition on quota litis agreements under the Attorneyship Law. Third-party funding is permitted in practice in interna- tional arbitration. The Turkish International Arbitration Law, which is aligned with international standards, contains no restrictions on external funders, and tri- bunals seated in Türkiye generally follow global norms regarding disclosure and conflicts. The New York Convention also facilitates the enforcement of arbi- tral awards, indirectly supporting funded arbitration. 2.2 Third-Party Funding: Lawsuits As Turkish law does not expressly regulate third-party funding, there is no statutory limitation on the types of lawsuits that may, in principle, be funded. In practice, third-party funding is most commonly used in high- value commercial disputes, international arbitration, compensation claims, and certain intellectual property matters, where the economic structure of the case makes external funding viable. 2. Litigation Funding 2.1 Third-Party Litigation Funding
1149 CHAMBERS.COM
Powered by FlippingBook