Newsletter-21

50 NEWSLETTER 2016 Non-Compete Clauses in Share Transfer Agreements Review of the Court of Cassation’s Decision* Att. Ozgur Kocabasoglu Introduction The 11th Civil Chamber of the Court of Cassation approved the decision of the court of first instance by the majority of votes with its decision dated 11.06.2015 1 . The court of first instance stated in its decision regarding a non-competition clause for a 15 year period provided in a joint stock company’s share transfer agreement that “ the penalty clause is null and void as it restricts the economic freedom of the parties and is incompatible with the principle of good faith and morality. ” We will assess the relevant decision along with the rationale behind the decision and the dissenting votes. Summary of the Case The claimants, N. and Ç.G., acquired a certain amount of shares of the company from the persons who were non-parties to the law- suit, and acquired the remaining amount of shares from the defendant S.K.K. The transferors accepted and undertook through the transfer agreement that they shall not conduct any storekeeping activities with- in the limits of the province of Antalya, and they shall pay a penalty for non-conformance. Nevertheless, the employer of the defendant, S.K.K., procured another defendant, A.Ç., to establish a company that is active in storekeeping; thus, it continued to conduct storekeeping activities in Antalya. The claimant requested the prevention of unfair competition as the defendants prevent the company from operating in the field of storekeeping by submitting better offers to the ships to which the company submits offers and, thus, they damage the com- * Article of February 2016 1 Yargıtay 11. HD, E. 2014/11565, K. 2015/8187, T. 11.6.2015 (www.kazanci. com).