The Constitutional Court’s New Decision May Signal a Turning Point for Foreign Currency-Denominated Contracts

The Constitutional Court of Türkiye (“Court”) has annulled Article 1 of Law No. 1567 on the Protection of the Value of the Turkish Currency (“Law”). The Court’s decision was published in the Official Gazette No. 33048 dated 15 October 2025. Article 1 had granted the President the authority to issue regulations concerning foreign exchange transactions, trade in precious metals and stones, and import/export activities.

The Court ruled that this provision violated the principle of non-delegation of legislative power set out in Article 7 of the Constitution. The key reasoning can be summarized as follows:

• The Law conferred on the President broad powers to regulate a wide range of economic activities, including foreign exchange, banknotes, and securities trading, without setting clear legislative boundaries or guiding principles.
• Granting such extensive regulatory authority to the executive branch, particularly over areas that significantly affect economic activity, without defining fundamental principles in the law, is inconsistent with the constitutional principle that legislative power cannot be delegated.

To prevent a legal vacuum that could harm the public interest, the Court ruled that the annulment decision will take effect nine months after its publication, i.e., on 15 July 2026.

This decision effectively removes the legal basis for the Decree No. 32 on the Protection of the Value of the Turkish Currency and other secondary regulations issued pursuant to Article 1.

The Court decisions do not apply retroactively, but it is expected that the Turkish Grand National Assembly will adopt new legislation before the annulment becomes effective to maintain the validity of existing regulations. Otherwise, a wide range of regulations related to the foreign exchange regime – including, most notably, the Communiqué No. 2008-32/34, which restricts the use of foreign currency in certain contracts – may face the risk of losing their legal basis.