Portfolio Compensation

The portfolio compensation is compensation paid for the agency no longer benefiting from this portfolio as a result of the transfer of the customer base created by the agency to the client or the supplier due to the termination of the contract. Portfolio compensation is regulated in TCC art. 122 in detail. This compensation, which is essentially foreseen for agencies, is also applied in the termination of continuous contractual relations that give distributorship and other similar monopoly rights unless it contradicts with equity.

In practice, there are some cumulative conditions stipulated for portfolio compensation. These conditions are listed as the agreement should be terminated, the client should gain significant benefits even after the termination of the contractual relationship due to the new customers found by the agency, the agency should incur losses in terms of charges, and when the circumstances of the situation have taken into consideration, the payment of this compensation should be equitable. In order for the agency to be entitled to portfolio compensation, the contract must be terminated by the agent for just cause or terminated by the client without just cause. However, if both parties have an effective fault, it is important to determine who violated the agency agreement for the first time. In addition, the burden of proving that the client gains significant benefits from the new customers found by the agency after the termination of the contract is on the agent for the portfolio compensation.

In terms of the agency's loss of charges, the money earned by the agent in the last year is taken into account in determining the loss of charges. If the contract was not terminated, the period to be taken as a basis while estimating the charge that would be obtained should be equal to the period in which it is assumed that the client will continue to provide benefits after the termination of the contract.

In the calculation of portfolio compensation, the provision art. 112/2 of TCC is taken into account. Accordingly, the compensation cannot exceed the average of the annual commission or other payments received by the agency as a result of the last five years of activity. If the contractual relationship between the parties has continued for a shorter period of time, the average period during the continuation of the activity is taken as the basis.

Another important issue in terms of portfolio compensation is; that the said request cannot be waived beforehand, its provisions meaning waiver are void. The calculation method of TCC 122.2, which is based on the income of the agency as a result of the last five years of activity, is intended to protect the agency, and the parties can only agree on a calculation method that will give a higher result.

Finally, the claim for portfolio compensation must be asserted within a one-year period of the final term from the expiry of the contract. Pursuant to the Turkish Code of Obligations art. 147/b.5, the receivables arising from the agency agreement are subject to a five-year statute of limitations. Provided that the right to demand portfolio compensation is asserted within one year, a lawsuit may be filed with a demand for portfolio compensation within five years. The five-year statute of limitations will begin with the expiration of the agency agreement.

As mentioned above, as long as the portfolio compensation does not violate equity, it also finds application in distributorship agreements and other similar agreements. However, in terms of these contracts, the existence of conditions such as "granting a monopoly right", and "integrating the distributor with the organization of the provider", which are not sought in the agency, should also be considered in terms of entitlement to equalization compensation.