Newsletter-21

52 NEWSLETTER 2016 the obligation of non-compete with the enterprise that it transferred, even if such non-compete clause is not expressly provided in the agreement. The judge concluded that the parties agreed that the good- will of the company is of substantial importance and, therefore, the non-compete period of 12 years provided within the limits of freedom of contract is reasonable, and it does not illegally infringe upon the economic freedom of the defendants. The second dissenting opinion also determined that the non- compete clause is set forth for 12 years. Subsequently, the judge underlined that the non-compete clause has arisen from necessity, in practice, and that it is foreseen under the provisions regarding the employment contract of the Turkish Code of Obligations (“TCO”), as well as the provisions regarding the commercial agency under Article 123 of the Turkish Commercial Code (“TCC”); the judge noted that the non-compete clauses are also permitted within the scope of a trans- fer of the commercial enterprise, although there no explicit provisions set forth by the TCO. The judge also noted that the non-competition clauses are often subject to certain restrictions in terms of location, term and subject matter, and that any contract violating the general principles of ethics are null and void pursuant to Articles 26 and 27 of the TCO. After this general introduction, the judge applied these rules to the case at hand, and stated that the non-competition clause pro- vided by the share transfer agreement is in conformity with Articles 26 and 27 in terms of location and subject matter limitations, and that the term of 12 years is reasonable for these contracts. It is noted that non- competition clauses in such contracts shall not be evaluated pursuant to the restrictions provided for the employment contracts and license agreements, because the consideration paid for the transfer of shares was principally paid for the goodwill and customer portfolio of the company. The judge further underlined that the storekeeping company subjected to the share transfer does not have any production facility, and the goodwill of the company is its substantial asset; even if the 12 year term is not considered reasonable, nullity of the non-compete clause and total freedom of the transferor is not in conformity with the principle of interpretation in favor of the parties ( favor negotii/ favor contractus) in terms of contractual economy and the parties’ interests. Therefore, the judge concluded that the non-compete clause