Turkey–Hong Kong Investment Protection Agreement: Legal Insight for Investors

The Agreement between the Republic of Türkiye and the Hong Kong Special Administrative Region of the People’s Republic of China for the Reciprocal Promotion and Protection of Investments has officially entered into force following its approval by Law No. 7570, published in the Official Gazette dated 27 December 2025 (No. 33120).

Signed on 1 June 2023 in Ankara and 31 October 2023 in Hong Kong, the Agreement now forms part of Türkiye’s domestic legal order and establishes a binding international investment protection regime between the two jurisdictions.

From a legal and commercial perspective, the Agreement is designed to enhance predictability, stability, and enforceability for cross-border investments.

Scope of Protection

The Agreement applies to all investments, whether made before or after its entry into force, provided they are established in accordance with the host state’s laws. Investments are defined broadly and include movable and immovable property, shares, contractual claims with financial value, intellectual property rights, and business concessions.

Both natural persons and enterprises qualifying as investors under Turkish or Hong Kong law are covered.

Core Standards of Treatment

Under the Agreement, each Contracting Party undertakes to ensure:

• Fair and equitable treatment, including protection against denial of justice and violations of due process
• Full protection and security, limited to the customary international law minimum standard
• Protection against unreasonable or discriminatory measures affecting the management, use, or disposal of investments

Importantly, the Agreement clarifies that these standards do not create obligations beyond customary international law, reducing interpretative uncertainty often seen in older investment treaties.

Expropriation and Compensation

The Agreement provides detailed safeguards against direct and indirect expropriation. Any expropriation must:

• Serve a public purpose
• Be carried out on a non-discriminatory basis
• Comply with due process of law
• Be accompanied by prompt, adequate, and effective compensation

Compensation must reflect the real value of the investment immediately before expropriation, include interest, and be freely transferable in a freely usable currency.

Transfer of Investments and Returns

Investors are guaranteed the free and unrestricted transfer of:

• Capital contributions
• Profits, dividends, and other returns
• Proceeds from sale or liquidation
• Payments related to compensation or dispute settlement

Limited exceptions are permitted, such as in cases of insolvency, criminal enforcement, or serious balance-of-payments difficulties, provided measures are applied in good faith and on a non-discriminatory basis.

Investor–State Dispute Settlement

One of the most significant features of the Agreement is the Investor–State Dispute Settlement (ISDS) mechanism.

After an initial consultation period, investors may submit disputes to:

• UNCITRAL Arbitration Rules, or
• Another agreed arbitral institution or set of rules

Both Türkiye and Hong Kong have given advance consent to arbitration, and arbitral awards are enforceable under the New York Convention. This provides investors with an enforceable remedy outside domestic courts.

Why This Agreement Matters

For investors operating between Türkiye and Hong Kong—particularly in finance, trade, technology, manufacturing, and cross-border services—the Agreement significantly strengthens legal certainty by:

• Reducing sovereign risk
• Ensuring enforceable investor protections
• Aligning with modern international investment treaty standards

It also reflects a more balanced approach, preserving each state’s right to regulate in areas such as public order, health, environment, and financial stability.

Full Text of the Agreement (PDF)

The official and complete text of the Agreement is published on TurkishTradeLawyers.com verbatim and without modification, in line with its approval and international authenticity.

Access the full Agreement (PDF)