Newsletter-21

51 COMMERCIAL LAW pany; the claimant also demanded from the defendant, S.K.K, to pay the penalty in the amount of TRY 160.000. The defendant, A.Ç., argued that he is not a party to the share transfer agreement, and he has no commercial partnership with the other defendant. On the other hand, the defendant, S.K.K., requested the dismissal of the lawsuit by also alleging that he has no commer- cial relation with the other defendant. Following the dismissal of the lawsuit by the court of first instance, the claimants appealed the deci- sion, and the 11th Civil Chamber of the Court Cassation quashed the decision as the defendants undertook the protocol regarding the share transfer not to compete with the company during the company’s license term; therefore, the Court ruled that the term of the license should be determined and the court of first instance should assess whether the non-compete clause for such period infringes the economic freedom and freedom of labor of the defendants. Following the quashing of the decision, the court of first instance followed the ruling of the Court of Cassation, and concluded that the 15 year term is unreasonable, and is contrary to the economic freedom of the defendants, as well as the principle of good faith and ethics, and ruled that the penalty clause is null and void for this reason, and that the operations do not constitute an act of unfair competition. In relation to the defendant, A.Ç., the court ruled that the defendant is not a party to the protocol. Thus, the court dismissed the requests of the claimants, and the Court of Cassa- tion approved the relevant decision with the majority of votes. Dissenting Opinions There are two dissenting opinions to the abovementioned deci- sion. The first one states that the term of non-competition is, in fact, 12 years considering the date of conclusion of the share transfer protocol; therefore, the assessment of 15 years is inadequate, although the term of the license is 15 years. Subsequent to this determination, the judge states that the non-competition clause and penalty clause provided in the share transfer agreement may be evaluated similarly with the rules provided for the non-competition clauses in the case of transfer of the commercial enterprise. With the transfer of the commercial enterprise, the goodwill of the enterprise is also transferred to the transferee, and in accordance with the principle of good faith, the transferor shall have