Legal Partnership Solutions for Companies Doing Business Between Turkey and the Middle East

According to TurkStat data, Turkey’s exports to the Gulf states have reached approximately USD 126.7 billion over the past five years, with exports to the United Arab Emirates nearly tripling over the same period. This growth creates a two-way legal need. Middle Eastern companies operating in Turkey must comply with Turkish law, while Turkish companies doing business in the Middle East are subject to each country’s own commercial and contract regulations. The right approach is to build this process, from company formation to contracts, from debt collection to dispute resolution, from a single coordination point right from the start of commercial activity.

The Legal Framework for Middle Eastern Companies Operating in Turkey

When a company headquartered in Qatar, Kuwait, Dubai, Abu Dhabi, or Saudi Arabia opens a branch in Turkey or forms a company with a local partner, the first question that arises is whether the partnership structure has been set up correctly. The choice between the limited liability company and joint stock company models under the Turkish Commercial Code directly affects the allocation of authority among partners and how any future disputes will be resolved. For example, when a Dubai-based construction materials supplier sets up a local company in Istanbul and grants management authority to the Turkish partner without clearly defining the limits in the signature circular, this can turn into a serious dispute over access to the company’s bank accounts two years later.

The second pillar of this framework is ensuring that commercial contracts comply with Turkish law. Parties coming from the Middle East often want to carry over the contract templates they are used to in their own region directly into transactions in Turkey, but when provisions on security, default, and termination are not rebuilt within the framework of the Turkish Code of Obligations, the contract can lose its enforceability. Tax liability, accounting arrangements, and work permit procedures for companies with foreign partners also need to be planned at the same time as company formation; gaps that surface later can halt operations for months. These checkpoints, which fall under corporate and commercial law, can largely be mitigated by clearly setting out the limits of managers’ and representatives’ authority from the outset.

Debt collection and payment security, together with anticipating potential disputes between partners, complete this framework. In a company with foreign partners, if it is not defined from the outset in the articles of association which partner has signing authority for which decisions and what path will be followed in the event of a dispute, a simple disagreement can effectively lock the company up.

The Shifting Legal Landscape for Turkish Companies Doing Business in the Middle East

On the other side of the coin are Turkish companies expanding into Iraq, Libya, Egypt, Lebanon, or the Gulf states. The main challenge here is that company law, commercial legislation, labor and tax regulations, and collection procedures operate in fundamentally different ways in each country. In one country, a branch may be opened without a local partner requirement, while another may require local capital or a license; the exact scope and duration of these differences in each country can only be confirmed by a qualified local law firm in that country.

Suppose a Turkish white goods manufacturer wants to set up a distribution network in Kuwait and intends to sign a distribution agreement with a local representative. Whether the contract’s exclusivity, termination notice period, and compensation provisions are governed by local law or by Turkish law directly determines how a future termination dispute could play out, potentially to the manufacturer’s detriment. A similar risk applies to construction, logistics, export, and supply contracts; particularly for companies participating in public tenders or working with a local partner, the question of local courts versus arbitration needs to be settled before the contract is signed.

Debt collection is perhaps the most neglected issue in this area. When payment cannot be obtained from a buyer abroad, the question of which country’s enforcement laws will apply and how long litigation will practically take in that country is usually raised only after a dispute arises, not when the contract is signed. Answering this question during the drafting stage of commercial contracts substantially shortens the collection process.

How a Local Counsel Partnership Model Works

Both scenarios described above raise the same question: if a company operates in Turkey and in several different Middle Eastern countries at once, does it have to find a separate lawyer in each country? In practice, this creates wasted time and coordination problems. Under the partnership model (coordination with local counsel) common in international trade, the company’s legal advisor in Turkey works together with a local law firm in the relevant country; the company communicates in Turkish with a single point of contact, while document flow, legal assessment, and process tracking are organized from Turkey.

In practice, this model works as follows: a Turkish company wishing to sign a supply contract in Baghdad sends the draft contract to its legal advisor in Turkey; the draft is forwarded to a local law firm familiar with Iraqi law, a compliance check under local law is carried out, and the resulting assessment is translated into Turkish and presented to the company. The company gets local legal expertise combined with Turkish-language coordination, without having to find a lawyer who knows Iraqi law on its own.

This structure is particularly valuable before a contract is signed, because correcting a provision that violates local law after signature is far more costly than making a small revision beforehand.

Contract Security for Port, Free Zone, and Logistics Companies

A significant share of trade between Turkey and the Middle East does not take the form of direct sale and purchase, but runs through re-export, warehousing, and distribution. When a logistics company based in Mersin, Iskenderun, or Istanbul warehouses goods arriving from Europe and then re-exports them to Egypt or Libya, each of the following becomes a separate risk point: transport and delivery terms, payment and security structure, customs documentation, and warehousing and bonded warehouse agreements.

The most critical clause in these kinds of contracts is often the one that gets overlooked: the choice of competent court and governing law. Under Article 24 of Turkey’s Act on International Private and Procedural Law (MOHUK), parties to a contract with a foreign element may expressly choose the governing law; if no choice is made, the law of the country most closely connected to the contract applies. Similarly, if the parties have a written arbitration clause, arbitration can proceed under the International Arbitration Act, and thanks to the 1958 New York Convention, to which Turkey is a party, a foreign arbitral award can be recognized in Turkey. Making these choices before the contract is signed prevents jurisdictional disputes that can drag on for months once a dispute arises.

For example, if a bonded warehouse operator cannot collect payment for goods it has stored, and the contract has pre-specified the competent court and governing law, litigation can begin within days; if this clause is missing, the parties first have to argue over which country’s courts have jurisdiction, delaying collection for months.

Single-Point Legal Coordination: What Should Be Done

The common thread running through all of the above is this: the right legal structure must be put in place from the very start, not after commercial activity has already begun. For a Middle Eastern company operating in Turkey, the priority is to clearly set out the partnership structure and the limits of authority; for a Turkish company doing business in the Middle East, the priority is to have each country’s own regulations confirmed by a local lawyer practicing in that country.

A practical sequence can be set up as follows: first, clarify the company structure and partnership relationship; then choose the governing law and competent court or arbitration for contracts; next, check administrative processes such as tax and work permits; and finally, set up the collection and dispute resolution mechanism in advance. When this sequence is reversed, that is, when the legal framework is only sought out after a problem has already arisen, the solution becomes both longer and more costly.

• The partnership structure and the authority of managers and representatives should be put in writing from the outset when the company is formed.
• The governing law and the choice of competent court or arbitration in contracts should be determined before signature.
• The local regulations of each Middle Eastern country should be confirmed with a local lawyer who practices that country’s law.
• Debt collection and payment security should be addressed as a separate clause in logistics and warehousing agreements.