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The Case for Force Majeure in Turkey: A Buzz Interview with Ebru Temizer of Gen Temizer Ozer

The Case for Force Majeure in Turkey: A Buzz Interview with Ebru Temizer of Gen Temizer Ozer

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Turkey's high inflation stirs real estate disputes while logistics tenants and labor-intensive sectors are deeply affected, according to Ebru Temizer, Partner of Kinstellar Turkish affiliate Gen Temizer Ozer.

"Currently, high inflation is the hottest topic, affecting everyone’s lives in one way or another," Temizer begins. "It is a major discussion point among lawyers, the business community, and ordinary citizens. Official figures are not fully reflective of the reality, as, in fact, prices have doubled compared to last year."

Consequently, Temizer highlights that inflation has had a major impact on real estate. "Real estate prices and rent have increased a lot, leading to numerous disputes," she notes. "Normally, landlords cannot file a lawsuit to redetermine the price of real estate unless five years have passed since the initial lease agreement, however, in practice, we see frequent lawsuits even when only two years have passed."

Temizer says that clients that rent logistics warehouses are frequently struggling, as the rent is the critical factor in their costs. "Interestingly, courts see the high inflation as an unexpected event and, in some cases, they decide matters in favor of landlords," she adds. "It is very difficult to manage businesses in Turkey, because of these factors."

On top of that, according to Temizer, some sectors – especially labor-intensive ones such as the logistics and industrial sectors – are affected very deeply. "Generally, the prices in such sectors are increased in parallel with the minimum wage increase on an annual basis, and around 60% of contract prices are based on minimum wages in addition to other variables," she says.

"The price indexation formulas under the agreements regulate that the prices shall be increased annually," Temizer points out. However, she says, this year, for the first time in the last decade, the government has increased the minimum wage twice already, in January and July. 

According to Temizer, "since July, there has been a 30% increase in the minimum wage in addition to the 50% increase effected in January, and there have been intense discussions about whether to implement the additional increase in the minimum wage which was effected in July into the contract prices and how."

Finally, she points out that there have been huge heated discussions and negotiations on behalf of service providers about how to renegotiate the prices. "We try to find alternatives and figure out whether the current situation should be structured under force majeure, or what classifies as force majeure at all," Temizer wraps up.