The 11th Civil Chamber of the Court of Cassation recently announced its opinion on which court is the competent court in cases arising from the violation of the non-competition clause regulated under Article 444 et seq. of the Turkish Code of Obligations (“TCO”) after the termination of the employment contract. In this article, we will touch upon the past practices regarding the court of jurisdiction, especially after the entry into force of the Labour Courts Law No. 7036 (“LCC”) as of 25.10.2017, and then we will discuss our opinion and the decision of the 11th Civil Chamber of the Court of Cassation.
The disputes regarding the non-competition clause foreseen after the service relationship regulated under Art. 444 et seq. of the TCO have been regulated within the scope of absolute commercial litigation since the former TCC period, and in the decisions of the Court of Cassation rendered during the abrogated Labour Courts Law No. 5521, it is seen that it was decided that the labour courts had jurisdiction until 2012, and the commercial courts had jurisdiction after 2012, and the practice has recently settled that the commercial courts have jurisdiction.
To explain; during the period of the Abrogated Labour Courts Law, it was accepted in the jurisprudence of the Court of Cassation that the lawsuits filed with the allegation of breach of the employee’s loyalty obligation during the term of the employment contract would be heard by the labour court, whereas the commercial court would have jurisdiction over the lawsuits filed with the allegation of breach of the non-competition agreement concluded for the period after the termination of the employment contract.
Firstly, in a decision of the General Assembly of Civil Chambers of the Court of Cassation dated 2008, in which the dispute was evaluated in terms of jurisdiction, it was stated that “the basis of the non-competition subject to the lawsuit arises from the employee’s loyalty obligation arising from the employment contract, and the competent court in disputes arising from the employment contract is the labour court.” (Decision of the General Assembly of Civil Chambers of the Court of Cassation dated 22.09.2008 and numbered 9-517/566, and in the same direction, decision dated 21.09.2011 and numbered 9-508/545).
Subsequently, the General Assembly of Civil Chambers of the Court of Cassation ruled that the commercial courts have jurisdiction and the case law has consistently settled in this direction. “…In the event of a breach of the non-competition clause arising from the employee’s duty of loyalty during the continuation of the employment contract, the court in charge of such cases is the labour court. In case of violation of the non-competition clause after the termination of the employment contract, the lawsuit to be filed based on this is within the scope of Article 348 of the Code of Civil Procedure No. 818 and the lawsuits within this scope are absolute commercial lawsuits regardless of the title of the parties in the face of the explicit provision of Article 4/1-3 of the TCC, and such lawsuits should be examined and decided by the commercial court…” (Court of Cassation dated 29.02.2012 and 2011/11-781 E., 2012/109 K., and the decisions of the Court of Cassation HGK dated 27.02.2013 and numbered E. 2012/9-854, K. 2013/292 in the same direction).
The 9th Civil Chamber of the Court of Cassation also states in the same direction, “It is stated that the cases regarding the disputes that should be evaluated within the scope of Article 348 of the 818 S.K. regulating the violation of the prohibition of competition after the termination of the service contract are absolute commercial cases in accordance with Article 4/1-3 of the Turkish Commercial Code No. 6762, and the place of jurisdiction for absolute commercial cases is clearly stated to be the commercial courts. For the reasons explained, it is erroneous for the court to make a judgement by going into the merits of the case, while it is necessary to make a decision of lack of jurisdiction in the case that falls strictly within the jurisdiction of the commercial courts.” (Court of Cassation 9th HD, E. 2011/8669, K. 2013/12931, T. 30.4.2013. In the same direction; Court of Cassation 9th HD E. 2012/25286, 2014/17992 K., T. 03.06.2014, Court of Cassation 9th HD E. 2012/9107, K. 2013/28992, T. 12.11.2013.)
The 11th Civil Chamber of the Court of Cassation, on the other hand, stated that “In the event of a breach of the non-competition clause arising from the employee’s loyalty obligation during the continuation of the employment contract, the competent court to hear such cases is the labour court. In case of violation of the non-competition clause after the termination of the employment contract, the lawsuit to be filed based on this is within the scope of Article 444 of the TCO No. 6098 in terms of its nature, and the lawsuits within this scope are absolute commercial lawsuits regardless of the title of the parties in the face of the explicit provision of Article 4/1-3 of the TCC, and such lawsuits are examined and decided by the commercial courts.” (Court of Cassation 11 HD dated 17.10.2016, 2016/10595 E., 2016/8147 K. In the same direction, 11th Civil Chamber of the Court of Cassation dated 25.06.2013 T., 2012/18643 E., 2013/13305 K., 11th Civil Chamber of the Court of Cassation dated 25.01.2011 T., 2009/12088 E., 2011/718 K., 11th Civil Chamber of the Court of Cassation dated 10.11.2014 2014/10834 E. 2014/17252 K.)
In the decision of the 22nd Civil Chamber of the Court of Cassation, 2016/27017 E., 2020/665 K., 20.01.2020 T.; “In the concrete case, in accordance with the declaration and undertaking titled confidentiality agreement signed between the parties, the duty to hear the case regarding the compensation receivable requested due to the fact that the plaintiff started working in another workplace in competition with the employer in the same line of business after the termination of the employment relationship belongs to the commercial court.”
As can be seen, during the period of the abolished Labour Courts, the Court of Cassation HCJK and various chambers of the Court of Cassation accepted that the labour courts have jurisdiction in case of violation of the non-competition obligation during the continuation of the service contract, and the commercial courts have jurisdiction in case of violation of the non-competition agreement during the termination of the service relationship.
