The respondent board member started working at the claimant company in 2009, was elected as a board member in 2014 and resigned in 2016. The claimant company initiated debt collection proceedings against the respondent board member for a contractual penalty of USD 25,000.00 alleging that the respondent violated the duty of confidentiality by sharing commercial secrets and confidential customer information with a competitor and unauthorized individuals during the term of his contract. Upon board member's objection to the debt collection proceedings, the company filed a lawsuit for the annulment of the objection. A criminal complaint was also filed against the board member by the claimant, followed by a criminal case for the disclosure of confidential commercial information or documents. In this regard, a decision was made to defer the announcement of the verdict (hükmün açıklanmasının geri bırakılması).

The Court of First Instance Ordered the Board Member to Pay the Contractual Penalty of USD 25,000.00 But It Dismissed Denial Compensation

The Court of First Instance, in consideration with the decision of the criminal court, ruled in the annulment of objection case that the provision/clause titled “confidentiality agreement” of the contract was violated and ordered the respondent board member to pay the penalty of USD 25,000.00. However, it rejected the claimant’s denial compensation (icra-inkâr tazminatı) request due to the absence of conditions. The claimant appealed for a full acceptance of the case whereas the respondent appealed for the case to be dismissed.

The Regional Court of Appeal Has Overturned the Decision of the Court of First Instance on the Grounds that the Unilateral Penalty Clause Imposed Against the Board Member Is Invalid

The Regional Court of Appeal has qualified the contract between the parties as an employment contract and the respondent board member as an employee [1]. It has ruled that the unilateral inclusion of a penalty clause against the employee in the employment contract renders it invalid. Based on this, it overturned the Court of First Instance’s decision and ruled for the dismissal of the case. The claimant company appealed to the Turkish Supreme Court.

The Turkish Supreme Court Ruled That the Contractual Penalty Should be Paid at a Reduced Rate and Overturned the Decision of the Regional Court of Appeal

The Turkish Supreme Court, in consideration with the criminal case, determined that it was established, based on the entirety of the case, that the respondent violated the duty of confidentiality during the continuation of the contract. Therefore, it ordered the payment of the contractual penalty, yet at a reduced rate due to its exorbitant amount. Consequently, the case was referred to the Regional Court of Appeal [2].