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In this article, we take a look at some of the Turkish Court of Appeals decisions concerning international arbitration from 2019 onwards, with a view to identifying whether Turkey is shifting towards a more pro-arbitration approach.

Turkey is hardly known as a particularly pro-arbitration jurisdiction. Although there are a number of pitfalls in the legislation, this is not quite the reason – the International Arbitration Act numbered 4686 is, after all, based on the UNCITRAL Model Law. Turkey has been a party to the New York Convention since 1991, and as the lex specialis, the Convention prevails over the International Private and Civil Procedure Law numbered 5718 (IPPL). The IPPL, which applies to enforcement of awards falling outside the scope of the Convention, was amended to accommodate the needs of a more arbitration-friendly environment.

Turkey has been historically highly dependent on oil and natural gas imports, due to low local production levels. The recent discovery of a natural gas reserve in the Black Sea as well as extensive exploration activities in the Mediterranean Sea have increased foreign and Turkish investors’ interest in exploration and production activities. The recent conflict between Ukraine and Russia and Turkey’s dependency on Russian natural gas also stressed the importance for Turkey for diversifying its natural gas sources. In that context, this article aims to give an overview of the fiscal regime and the main incentives for investors under the Turkish Petroleum Law as well as the tax legislation, with a specific focus on incentives regarding exploration activities.

Exploration and production activities (E&P) related to petroleum and natural gas in Turkey are governed by Turkish Petroleum Law no. 6491 (TPL) based on the ‘tax and royalty’ regime.