Does the CISG or Turkish law apply to your international commercial contract? Learn how foreign buyers and sellers can determine governing law, exclude the CISG, resolve contract disputes and protect cross-border transactions involving Turkey.

A foreign company signs a contract with a Turkish supplier. The agreement states that “Turkish law applies.” The goods are delivered late or arrive defective, and a dispute begins.

Which rules govern the dispute?

Many businesses immediately assume that the answer is the Turkish Code of Obligations or Turkish Commercial Code.

That assumption can be wrong.

For qualifying international contracts for the sale of goods, the United Nations Convention on Contracts for the International Sale of Goods (CISG) may apply directly. Turkey acceded to the CISG on July 7, 2010, and the Convention entered into force for Turkey on August 1, 2011. (UNCITRAL)

This means an international sales contract involving a Turkish company can be governed primarily by the CISG even though the agreement contains a Turkish governing-law clause.

At the same time, the CISG does not regulate every issue arising from an international commercial relationship. Questions outside its scope may still be governed by Turkish domestic law or another applicable national law.

For foreign buyers, exporters, manufacturers and suppliers, the correct question is therefore not simply:

“Does Turkish law apply?”

It is:

“Does the CISG apply first, and which remaining issues are governed by Turkish law?”

CISG and Turkish Law Are Not Necessarily Alternatives

One of the biggest misconceptions is that businesses must choose between the CISG and Turkish law.

That is not always how the system works.

The CISG is an international convention forming part of the legal framework applicable to qualifying international sales involving Turkey.

Where its requirements are satisfied, the CISG can govern matters within its scope.

Turkish domestic law may then govern issues that the CISG does not regulate.

In practical terms, an international sales dispute can therefore involve both the CISG and Turkish law.

When Does the CISG Apply?

The CISG primarily applies to international contracts for the sale of goods.

Article 1 focuses on parties whose places of business are in different states. The Convention can apply where both relevant states are contracting states and, in certain circumstances, where private international law leads to the law of a contracting state. UNCITRAL’s official guidance confirms these principal routes to application. (UNCITRAL)

The nationality of the parties is generally not decisive.

For example, the fact that a company’s shareholder is British, American, German or Turkish does not itself determine CISG applicability.

The parties’ relevant places of business are much more important.

Example: Turkish Seller and Foreign Buyer

Suppose a Turkish manufacturer sells EUR 2 million of industrial equipment to a company whose relevant place of business is in another CISG contracting state.

The contract concerns an international sale of goods.

Unless the parties validly excluded the Convention or another relevant exception applies, the CISG may govern central sales issues.

These can include:

contract formation,

seller’s delivery obligations,

conformity of goods,

buyer’s payment obligations,

remedies for breach,

damages,

contract avoidance,

and interest entitlement.

Domestic Turkish contract law should therefore not automatically be treated as the starting point for every issue.

Does a “Turkish Law Applies” Clause Exclude the CISG?

Generally, not by itself.

This is one of the most important points for international businesses.

UNCITRAL’s guidance explains that, according to almost unanimous case law and scholarly opinion, choosing the law of a contracting state does not itself constitute an opt-out from the CISG. If the chosen law is that of a contracting state and the relevant rules give effect to that choice, the CISG can remain applicable. (UNCITRAL)

Therefore, a clause stating:

“This Agreement shall be governed by the laws of Turkey.”

should not automatically be read as:

“The CISG is excluded.”

Turkey is a CISG contracting state.

If the parties genuinely want domestic Turkish sales law to govern instead of the CISG, clearer drafting is advisable.

How Can the Parties Exclude the CISG?

Article 6 recognizes substantial party autonomy.

The parties may exclude the Convention or, subject to its limitations, derogate from or vary the effect of its provisions. (UNCITRAL)

A commercial agreement can therefore state expressly:

“The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.”

This substantially reduces uncertainty about the parties’ intention.

Simply choosing Turkish law without mentioning the CISG is much less clear.

Can the Parties Expressly Choose the CISG?

Yes, parties can structure their agreement around the CISG where appropriate.

International businesses sometimes deliberately prefer the Convention because it provides a neutral and internationally recognized framework rather than giving one party the perceived advantage of its domestic contract law.

The contract should still specify how matters outside the Convention’s scope will be handled.

For example, the agreement might select the CISG for covered sales matters while identifying a national law for issues not governed by the Convention.

CISG Applies Only to Sales of Goods

This limitation is extremely important.

The CISG does not govern every international commercial contract involving a Turkish company.

It is principally concerned with international sales of goods.

Therefore, the following agreements should not automatically be analyzed as CISG contracts:

share purchase agreements,

shareholder agreements,

company acquisition agreements,

pure consultancy contracts,

distribution relationships as a whole,

agency agreements,

loan agreements,

licensing agreements,

construction agreements,

and many service contracts.

The legal characterization of the transaction must be determined first.

Mixed Goods and Services Contracts

Modern commercial contracts often contain both goods and services.

Suppose a foreign company purchases an industrial production line from a Turkish supplier.

The supplier will manufacture the equipment, transport it, install it, commission it and train the purchaser’s employees.

Does the CISG apply?

Article 3 contains rules relevant to mixed transactions.

Where the preponderant part of the supplier’s obligations consists of labor or other services, the Convention may not apply to the transaction in the ordinary manner.

The economic substance of the agreement therefore matters.

Manufacturing Contracts

The fact that goods have not yet been manufactured does not automatically prevent CISG application.

Article 3 generally treats contracts for goods to be manufactured or produced as sales unless the party ordering the goods undertakes to supply a substantial part of the materials necessary for manufacture or production.

This can be highly relevant to customized machinery, industrial equipment, textiles, automotive components and manufacturing arrangements involving Turkish suppliers.

What Does the CISG Govern?

The Convention governs important aspects of international sales relationships.

These include contract formation and the rights and obligations of sellers and buyers arising from the sales contract.

In practical disputes, this means the CISG may determine whether goods conform to the contract, whether notice of defects was timely, whether delivery obligations were breached, whether payment can be demanded, whether damages are recoverable and whether the contract can be avoided.

These rules can produce different results from applying domestic Turkish contract law without reference to the Convention.

What Does the CISG Not Govern?

Article 4 establishes important limits.

The Convention is principally concerned with formation of the sales contract and the rights and obligations of buyer and seller arising from it.

Except where expressly provided otherwise, it is not concerned with issues such as the validity of the contract or contractual provisions, or the effect the contract may have on ownership of the goods.

Those issues may therefore require resort to the applicable domestic law.

This is one reason why the question is often CISG plus Turkish law, rather than CISG versus Turkish law.

Contract Validity

Suppose a party argues that a contract or clause is invalid because of fraud, illegality, incapacity or another validity issue.

The CISG generally does not provide a comprehensive regime governing contractual validity.

The applicable domestic law identified through relevant private international law rules may therefore become important.

Where Turkish law governs the relevant issue, the Turkish Code of Obligations and other applicable Turkish legislation may need to be examined.

Ownership of Goods

The CISG regulates important seller obligations but does not comprehensively determine the proprietary effect of the sales contract.

Questions such as when legal ownership passes can therefore require analysis under the applicable domestic property-law framework.

This distinction can become extremely important in insolvency, retention-of-title and competing-creditor disputes.

Limitation Periods

Another common misconception is that the CISG provides a complete limitation-period regime for every international sales claim.

It does not.

Limitation questions may require separate analysis under the applicable national law and other potentially relevant international instruments.

A business should therefore never calculate its deadline simply by reading the CISG provisions dealing with defect notification.

The Article 39 notice period and a statute of limitations are not the same thing.

Defective Goods: CISG Rules Can Be Crucial

For buyers, Articles 35, 38 and 39 are particularly important.

Article 35 concerns conformity of the goods.

Article 38 generally requires examination of the goods within as short a period as practicable in the circumstances.

Article 39 generally requires the buyer to notify the seller of the nature of the non-conformity within a reasonable time after discovering it or when it ought to have discovered it.

A buyer that ignores these CISG requirements and relies only on its understanding of domestic law may jeopardize an otherwise strong defect claim.

Two-Year Outer Notice Rule

Article 39 also generally prevents the buyer from relying on a lack of conformity if notice is not given within two years from the date the goods were actually handed over, unless this is inconsistent with a contractual guarantee period.

This is another reason international buyers should identify CISG applicability immediately after a defect emerges.

Waiting to determine governing law until litigation begins can be a serious mistake.

Fundamental Breach

The CISG uses the concept of fundamental breach.

Under Article 25, a breach is fundamental where it results in detriment substantially depriving the injured party of what it was entitled to expect under the contract, subject to the Convention’s foreseeability qualification.

This concept becomes particularly important for contract avoidance.

Not every breach permits the buyer or seller to terminate the entire transaction.

Avoidance Under the CISG

The CISG uses the concept of avoidance rather than treating every breach as grounds for cancellation.

The buyer’s avoidance rights are principally addressed in Article 49.

The seller’s corresponding rights are principally addressed in Article 64.

Whether avoidance is available depends on the nature of the breach and other requirements of the Convention.

A foreign buyer should therefore avoid sending an immediate “contract cancelled” notice without first determining whether the legal requirements for avoidance are satisfied.

Damages Under the CISG

Article 74 establishes a major damages rule.

Recoverable damages can include loss suffered as a consequence of the breach, including lost profits, subject to the Convention’s foreseeability limitation.

This can be highly important in commercial disputes involving production losses, replacement purchases, customer claims and interrupted operations.

However, the injured party must prove the loss and its relationship to the breach.

Mitigation

Article 77 imposes a duty to take reasonable measures to mitigate loss.

Suppose a Turkish supplier fails to deliver raw materials.

The foreign buyer knows that equivalent materials can be purchased elsewhere but takes no action for several months while its losses grow dramatically.

The seller may argue that part of the claimed loss could reasonably have been avoided.

Evidence of mitigation efforts should therefore be preserved.

Interest

Article 78 provides an entitlement to interest where the price or another sum is in arrears.

However, the CISG does not itself provide one universally applicable interest rate.

Determining the rate can therefore require resort to the applicable law or other relevant legal principles.

For unpaid invoice disputes involving Turkish companies, this issue should be analyzed separately.

Turkish Code of Obligations

Where the CISG does not apply or an issue falls outside its scope, the Turkish Code of Obligations can become central if Turkish law governs the relationship.

This can include general contractual principles, validity questions, interpretation of obligations outside the CISG’s scope and other matters governed by domestic law.

International businesses should therefore avoid treating the CISG as a complete replacement for all Turkish contract law.

Turkish Commercial Code

The Turkish Commercial Code may also become relevant.

Commercial transactions can raise questions concerning merchant status, commercial practices, invoices, company representation, commercial interest and other matters outside or alongside the CISG framework.

The correct legal framework can therefore involve several layers rather than one statute.

Turkish Private International Law

Where a dispute has foreign elements, determining applicable domestic law may require Turkey’s private international law rules.

These rules become particularly important where:

the CISG does not apply,

the contract concerns services rather than goods,

the parties did not select governing law,

or an issue falls outside the Convention’s scope.

The court or tribunal must then determine which national law governs the relevant issue.

Governing Law and Jurisdiction Are Different Questions

This distinction is essential.

A contract might state:

“This Agreement shall be governed by Turkish law.”

That tells the parties something about substantive governing law.

It does not necessarily establish which court will hear the dispute.

Likewise, a contract might provide for arbitration while selecting Turkish law.

The result can therefore be:

CISG as part of the applicable sales law + Turkish law for supplementary matters + arbitration as the dispute forum.

These concepts should not be confused.

Turkish Courts or Arbitration?

International commercial agreements frequently contain arbitration clauses.

If the parties have agreed to arbitrate, substantive disputes may need to be submitted to the designated tribunal.

The tribunal can apply the CISG where the Convention governs the sales relationship.

Alternatively, Turkish courts may apply the CISG when they have jurisdiction over a qualifying international sales dispute.

Choosing arbitration does not itself exclude the CISG.

Choice of Foreign Law

Suppose a Turkish exporter and foreign purchaser select the law of another country.

The effect depends partly on whether that country is a CISG contracting state and whether the Convention has been excluded.

If the chosen state is also a contracting state, selecting that country’s law does not necessarily eliminate CISG application. UNCITRAL guidance expressly recognizes this distinction. (UNCITRAL)

Contract drafting should therefore address the Convention explicitly.

Example: Turkish Law Clause Without CISG Exclusion

A Turkish machinery manufacturer sells equipment to a foreign company.

The agreement says:

“This contract is governed by Turkish law.”

It says nothing about the CISG.

A defect dispute arises.

Assuming the CISG’s applicability requirements are otherwise satisfied, the buyer should not automatically frame the case solely under the Turkish Code of Obligations.

The CISG may govern conformity, examination, notification and remedies.

Turkish law may supplement issues outside the Convention’s scope.

Example: Express CISG Exclusion

Now assume the agreement states:

“This Agreement shall be governed by Turkish law. The United Nations Convention on Contracts for the International Sale of Goods shall not apply.”

The analysis changes substantially.

The parties have expressly indicated their intention to exclude the Convention under Article 6.

The relevant Turkish domestic law will therefore assume a much larger role in governing the sales relationship.

Example: No Governing Law Clause

Suppose the contract contains no choice-of-law provision at all.

This does not mean that no law applies.

If both parties have their relevant places of business in CISG contracting states and the transaction falls within the Convention, CISG Article 1(1)(a) can trigger direct application. UNCITRAL explains that in such circumstances the Convention can apply without resorting to private international law. (UNCITRAL)

For issues outside the CISG, the applicable national law must still be determined.

CISG Does Not Apply to Every Distribution Dispute

A distribution agreement can involve recurring sales of goods, but the distribution relationship itself may include broader obligations concerning exclusivity, territory, marketing, minimum purchases and termination.

Individual purchase orders may potentially fall within the CISG while the broader framework agreement raises issues governed by national law.

The contract structure should therefore be separated into its different legal components.

Agency Agreements

A commercial agency agreement is not simply an international sale of goods.

The CISG generally does not govern the agency relationship itself merely because the agent facilitates sales.

Questions concerning commission, termination, exclusivity and authority may instead require domestic contract and commercial law analysis.

Share Purchase Agreements

A Share Purchase Agreement concerns the acquisition of company shares rather than an ordinary sale of goods.

Article 2 expressly excludes sales of stocks, shares and investment securities from the Convention’s scope.

Therefore, an international acquisition of shares in a Turkish company should not automatically be analyzed under the CISG.

Corporate and contract law rules become central instead.

International Service Agreements

Consultancy, management, professional services and many technology-service agreements generally require a different governing-law analysis.

The fact that one party is Turkish and the other foreign does not automatically make the CISG applicable.

The substance of the transaction matters.

Incoterms Do Not Replace the CISG

International contracts frequently use Incoterms such as FOB, CIF, FCA or DDP.

Incoterms and the CISG serve different purposes.

Incoterms can regulate important delivery, cost and risk responsibilities.

The CISG governs broader sales-law issues.

A contract can therefore simultaneously use an Incoterm and be governed by the CISG.

Contract Terms Take Priority in Many Areas

The CISG gives substantial importance to party autonomy.

Businesses can therefore modify many default rules through their agreement.

This makes careful drafting essential.

Delivery dates, inspection procedures, warranty mechanisms, limitation clauses, notice requirements, damages provisions and dispute-resolution clauses should be addressed expressly where commercially important.

Which Law Should Foreign Companies Choose?

There is no universal answer.

The CISG can provide neutrality and internationally familiar sales rules.

Turkish domestic law may be preferable where parties want a framework closely connected with the local legal system or where the transaction extends substantially beyond an international sale of goods.

What matters most is clarity.

The contract should clearly address:

governing law, CISG inclusion or exclusion, dispute forum, arbitration, delivery terms, inspection procedures, defect notices, limitation of liability and damages.

Ambiguity on these issues often becomes expensive after a dispute begins.

Practical Example: EUR 3 Million International Supply Contract

Assume a foreign manufacturer purchases EUR 3 million of industrial components from a Turkish supplier.

The contract states that Turkish law applies but does not mention the CISG.

The foreign buyer later alleges that 30% of the components are defective.

The legal analysis should first determine whether the transaction falls within the CISG.

If it does, the buyer’s rights concerning conformity and notice may principally involve Articles 35, 38 and 39.

The buyer’s damages claim may involve Article 74.

Mitigation may involve Article 77.

Questions outside the Convention’s scope may require supplementary Turkish law.

Finally, the dispute-resolution clause determines whether the dispute belongs before a court or arbitral tribunal.

That is the practical meaning of CISG plus Turkish law, rather than automatically choosing one and ignoring the other.

Immediate Checklist After an International Contract Dispute

The company should first identify the type of contract. Is it actually a sale of goods?

Next, determine the parties’ relevant places of business and whether the CISG’s applicability conditions are satisfied.

Then check whether the agreement expressly excludes or modifies the CISG.

Identify the specific legal issue and determine whether it falls within the Convention’s scope.

For matters outside the CISG, determine the applicable domestic law.

Finally, review the jurisdiction or arbitration clause separately.

This sequence can prevent a company from pursuing an otherwise strong international claim under the wrong legal framework.

Frequently Asked Questions

Does the CISG apply automatically to contracts involving Turkish companies?

It can. Turkey has been a contracting state since August 1, 2011, and qualifying international sales may fall automatically within the Convention. (UNCITRAL)

Does choosing Turkish law exclude the CISG?

Generally, not by itself. UNCITRAL guidance recognizes that choosing the law of a CISG contracting state ordinarily does not itself constitute an opt-out. (UNCITRAL)

How can parties exclude the CISG?

They can expressly state that the CISG does not apply. Article 6 permits parties to exclude the Convention or vary many of its effects. (UNCITRAL)

Does the CISG apply to service contracts?

Generally not to pure service agreements. Mixed contracts require analysis of Article 3 and the predominant obligations.

Does the CISG apply to company share purchases?

No, ordinary sales of stocks, shares and investment securities fall within the exclusions in Article 2.

Which rules govern defective goods?

Where the CISG applies, Articles 35, 38 and 39 are particularly important for conformity, examination and notice.

Can Turkish law still apply when the CISG governs the contract?

Yes. Turkish law can govern issues outside the CISG’s scope or otherwise supplement the applicable framework where appropriate.

Does the CISG determine which court has jurisdiction?

No. Governing substantive law and jurisdiction are separate questions.

Can arbitration apply together with the CISG?

Yes. An arbitral tribunal can apply the CISG as the substantive sales law where appropriate.

What happens if the contract contains no governing-law clause?

The CISG may still apply directly where its requirements are satisfied. For matters outside its scope, private international law rules may determine the applicable domestic law. (UNCITRAL)

Client-Focused Legal Support for CISG and International Contract Disputes

Determining whether CISG or Turkish law applies should be one of the first steps in any international commercial dispute involving Turkey.

For international sales of goods, the CISG may apply automatically. Turkey acceded to the Convention in 2010, and it has been in force for Turkey since August 1, 2011. (UNCITRAL)

A Turkish governing-law clause does not necessarily remove the Convention. UNCITRAL guidance indicates that choosing the law of a contracting state ordinarily does not itself amount to CISG exclusion. Businesses that want the Convention excluded should therefore address that intention clearly in their contracts. (UNCITRAL)

At the same time, the CISG does not regulate every issue in an international commercial relationship. Contract validity, proprietary effects, many limitation questions, corporate matters, service relationships and other issues may require Turkish domestic law or another applicable national law.

A properly structured international contract should therefore clearly coordinate CISG applicability, governing domestic law, Incoterms, payment obligations, inspection and defect procedures, damages, limitation of liability, jurisdiction and arbitration.

Fırat Fesih Kaya Law Office assists foreign companies, international buyers, exporters, manufacturers and suppliers with CISG disputes, international commercial contracts, governing-law disputes, defective goods claims, unpaid international invoices, contract avoidance, international debt recovery, arbitration and cross-border commercial litigation involving Turkey.

Phone: +90 312 434 22 22
Mobile: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No: 221, Yıldırım Tower, Balgat, Çankaya, Ankara, Turkey