Esin Litigation Quarterly I Issue 3 I Autumn 2023

Welcome to the Fall 2023 issue of Esin Litigation Quarterly. As we say goodbye to the hot summer, the exciting developments in litigation continue to evolve. In this issue, we look at the growing importance of mediation in dispute resolution and analyze the Constitutional Court’s landmark rulings potentially impacting the framework of the legal disputes.

I. Significant court decisions concerning litigation

1.1 Court of Cassation’s General Assembly on the Unification of Judgment ruled that the application to legal remedy based on the incorrect time limit indicated in the court judgements is valid.¹

In line with the above mentioned decision of the Constitutional Court of Türkiye (“Constitutional Court”), the Court of Cassation of Türkiye (“Court of Cassation”)’s General Assembly on the Unification of Judgment, in its decision numbered 2021/5 E., 2023/2 K., ruled that applications for legal remedies, based on incorrectly indicated time limits in court decisions, should be examined. The Court of Cassation’s decision centers around discrepancies among some chambers of the Court of Cassation, including the General Assembly of Civil Chambers, as to whether such applications should be examined.

First, the Court of Cassation established that the right to seek a legal remedy is an essential component of the freedom to claim rights and access to the courts, as guaranteed by the Constitution of the Republic of Türkiye (“Constitution”). In line with these principles, it decided to examine the case . The Court of Cassation emphasized that the Rechtsstaat’s (i.e., rule of law) fundamental duty is to provide individuals with remedies for the violation of their rights, as set out in Article 40 of the Constitution. Furthermore, the Court of Cassation asserted that the right to access to the court is a fundamental element of the freedom to claim rights, and without it, other guarantees of a fair trial become ineffective.

The Court of Cassation also stressed the state’s responsibility not only to protect its citizens legally, but also to establish effective mechanisms for exercising these rights. It cited findings by the European Court of Human Rights that access to the court is an integral part of the rule of law, and individuals must have practical and effective means to access to the courts.

Additionally, the Court of Cassation highlighted the state’s obligation to inform individuals about legal remedies and their application periods, in accordance with Article 40 of the Constitution. It concluded that accurately indicating legal remedies and their application periods is a constitutional requirement.

While acknowledging the definitive nature of application periods for legal remedies, the Court of Cassation pointed out that strict compliance with these periods, even when the courts are at fault for inaccurately indicating them, can violate the right to access to the courts. Therefore, the Court of Cassation decided that applications made in accordance with the deadlines inaccurately indicated by the courts should be considered timely, within the context of the right to a fair trial and access to the court.

In summary, the Court of Cassation’s General Assembly on the Unification of Judgments decided to standardize the jurisprudence by allowing the examination of applications based on erroneously indicated legal remedy periods in court judgments. This decision is binding on other courts and legal authorities.

1.2 The Constitutional Court ruled that the rejection of the “restatement of the claim” (ıslah) request on the grounds of failure to comply with the legal time limit, despite being made within the period specified by the court is a violation of the right of access to the court.²

The Constitutional Court, in its decision numbered E. 2019/13123, held that the Court of Cassation’s decision, which rejected an appeal by deciding that the request for restatement of the claim was not made within the legal time limits although it was made within the time limit set by the court, violated the right to access to the court and the right to a fair trial, which are guaranteed in Article 36 of the Constitution.

The case originated from an employee who initiated a lawsuit regarding labor receivables following the termination of his/her employment contract. The initial court ruling granted the applicant an extension until the next hearing for the restatement of their claim, based on an expert report obtained during the proceedings. However, the Court of Cassation later overturned this decision on the grounds that the restatement of the claim was not made within the legal time limit.

The applicant argued that they had relied on the first instance court’s interim decision and asserted that they had submitted their petition and paid the necessary fees within the time limit specified by the first instance court. Nevertheless, the Court of Cassation made its decision by considering the time limits set forth in Article 180 and Article 181 of the Code of Civil Procedure numbered 6100 (“Code of Civil Procedure”) instead of the time limit set out in the interim decision. The applicant claimed that this rejection of the restatement request, based on the timing, infringed their right to access to the court.

In its decision, the Constitutional Court underlined that the applicant had indeed acted within the time limit determined in the first instance court’s interim decision. It emphasized the Court of Cassation’s obligation to provide accurate information to the parties involved in procedural matters, noting that this principle was also recognized in the jurisprudence of the Court of Cassation’s Grand Civil Assembly.

Consequently, in line with the most recent unification of judgments decision by the Court of Cassation’s Grand General Assembly, issued on 14 September 2023, the Constitutional Court concluded that the applicant’s right to access to the court, within the framework of the right to a fair trial guaranteed under Article 36 of the Constitution, had been violated. The case was referred back to the first instance court for retrial.

1.3 The Constitutional Court annulled “the deferment of the announcement of the verdict” (hükmün açıklanmasının geri bırakılması).³

The Constitutional Court with its decision numbered 2022/120 E., has decided to annul paragraphs 5-14 of Article 231 of the Code of Criminal Procedure (“CCP”) regulating the deferment of the announcement of the verdict. The Decision was published in the Official Gazette of Türkiye (“Official Gazette”) dated 1 August 2023 and will enter into force on 1 August 2024.

Deferment of the verdict announcement is the postponement of the defendant’s conviction in a criminal case before the defendant is considered a convicted person under certain conditions, such as when the sentence has not reached a certain severity and the crime has been committed for the first time. As a result, it is clear that the defendant committed the crime, yet the conviction has no legal consequence.

Firstly, the Constitutional Court found that the acceptance of only the objection as a legal remedy against the deferment of the announcement of the verdict decision pursuant to Article 231/12 of the CCP, and the fact that the defendant is deemed to have waived the right to appeal by accepting the deferment of the announcement of the verdict decision, impose an excessive burden on the defendant and forces the defendant to waive in advance. Therefore, the will to waive constitutes a violation of the right to a fair trial regulated in Article 36 of the Constitution.

The Constitutional Court also found that there was a lack of assurance in terms of the consent of the victim when deferment of the announcement of the verdict decision was made. The Constitutional Court found that asking the defendant for consent to a deferment before the verdict is rendered could be considered an admission that the defendant had committed the crime, which is contrary to the right to a fair trial, given that the verdict is exempt from appeal.

In addition, the Constitutional Court considered that the institution of deferment of the announcement of the verdict decision is also unconstitutional in terms of confiscation proceedings, as there is no clear legal provision on the stage at which confiscation proceedings will be executed in the event of a deferment of the announcement of the verdict decision, and it cannot be evaluated whether the restriction on the right to property through confiscation is arbitrary and unlawful in the event of a deferment of the announcement of the verdict. The Constitutional Court found that this uncertainty does not constitute a sufficient guarantee to protect the right to property and is disproportionate. For these reasons, it constitutes a violation of Article 13 of the Constitution.

Furthermore, the Constitutional Court stated that since the defendant did not receive an enforceable penalty as a result of the deferment of the announcement of the verdict, the fact that the consent of the victim was not sought, the lack of a possibility of moral compensation for the victim and the fact that the verdict did not provide an adequate and effective remedy for the victim, the verdict, therefore, constituted a violation of the right to protect the material and moral existence of the person, regulated in Article 17 of the Constitution.

Finally, the Constitutional Court made a further evaluation in cases where the perpetrator is a public official and in such cases, the institution of the deferment of the announcement of the verdict is incompatible with constitutional principles. The Constitutional Court stated that if public officials commit crimes that can be considered within the scope of Article 17 of the Constitution, it must be shown that these extremely serious acts will not be tolerated. The Constitutional Court found that the lack of a legal regulation stating that the institution of deferment of the announcement of the verdict would not apply to public officials, and the failure of the practice to solve this problem, is incompatible with the procedural obligation of the state to “punish the defendants in proportion to their acts” and “provide an appropriate remedy for the victims.”

For the reasons explained above, the Constitutional Court decided to repeal the first sentence of Article 231/5 of the Criminal Procedure Code, which regulates the deferment of the announcement of the verdict and other provisions that are no longer applicable.

1.4 The Constitutional Court rules that court decisions that do not discuss fundamental arguments violate the right to a reasoned decision.⁴

The Constitutional Court, in its decision numbered E. 2020/20054, held that the fact that the applicants’ main claims in the case were not discussed either before the court of first instance or during the appeal review violated the right to a reasoned decision as a whole.

In 2016, the applicants participated in a construction tender organized by the General Directorate of Highways, and the tender was awarded to the applicants. The applicants applied to the Ministry of Economy for a “Tax, Duty and Fee Exemption Certificate,” but their request was rejected on the grounds that the tender was not an international tender.

Subsequently, they filed a lawsuit before the administrative court for the annulment of the aforementioned action. The administrative court dismissed the case on the grounds that a tender in which foreigners did not bid was not an international tender. Thereafter, the applicants were charged stamp duty on the declaration issued pursuant to the tender.

The applicants, who had paid the taxes with reservation, brought an action before the tax court for a refund of the taxes they had paid, arguing that the tender had been open to foreigners and that the fact that no foreigners had actually participated in the tender did not render it non-international. The tax court accepted the applicants’ case, stating that the tender was open to foreign participants. However, on appeal, the regional administrative court overturned this judgment and ruled no foreign participants had actually participated in the tender. Upon appeal, the Council of State of Türkiye (“Council of State”) rejected the appeal and upheld the judgment.

The applicants claimed that their right to a fair trial had been violated, arguing that the phrase “and also bid by foreign companies” in Additional Article 2 of Law No. 488, which defines an international tender, was added to the law later and that the Constitutional Court had annulled this provision. The Constitutional Court examined the application in the context of the right to a reasoned decision.

The Constitutional Court firstly reiterated that the wording in its previous decision led to unpredictability and uncertainty. In this sense, the Constitutional Court found that the judgments of the court of first instance and the Council of State did not respond to the claims that would affect the dispute. Therefore, the Constitutional Court decided that the applicants’ right to a reasoned decision was violated on the grounds that the reasoning of the court judgments was not sufficient.

1.5 The 12th Civil Chamber of the Court of Cassation has announced a significant shift in its jurisprudence concerning the “objection to repetitive proceedings” (mükerrerlik iddiası) in enforcement proceedings.⁵

In its decision with reference numbers E. 2022/9785 and K. 2023/4352, the 12th Civil Chamber of the Court of Cassation announced a significant shift in its legal stance concerning the concept of a “objection to repetitive proceedings” in enforcement proceedings. Previously, when a debtor raised an objection about multiple enforcement actions for the same debt, the 12th Civil Chamber consistently considered this as an objection to the debt itself, to be submitted to the enforcement office (not to the enforcement court) under Article 62 of the Code of Enforcement and Bankruptcy numbered 2004 (“Code of Enforcement and Bankruptcy”).

However, in light of the procedural requirements outlined in the Code of Civil Procedure and the decision numbered E. 2021/2 of unification of judgments by the Grand General Assembly of the Court of Cassation, the Court of Cassation now asserts that, regardless of whether or not an enforcement proceeding is based on a judgment, the absence of a repetitive enforcement proceeding must be considered as a prerequisite for any enforcement procedure. Consequently, it is now apparent that this application should be filed as a complaint before the enforcement court and that there is no time limit for filing such a complaint.

1.6 The Constitutional Court annulled the provision on the Procedure for Collection of Public Receivables regarding non-gratuitous dispositions made between blood relatives.⁶

The Constitutional Court annulled subparagraph (1) of the first paragraph of Article 28 of Law No. 6183 on the Procedure for Collection of Public Receivables on the grounds that it is unconstitutional, in its decision numbered 2022/143 E. and published in the Official Gazette on 15 September 2023. The relevant subparagraph of the annulled Article 28 provided that non-gratuitous dispositions made between blood relatives up to the third degree (including this degree) would be considered donations. The annulment will enter into force nine months after its publication on 15 June 2023.

In its concrete norm control application, the court of first instance, in summary, argued that the rule is contrary to Article 13, Article 35 and Article 36 of the Constitution by stating that the balance between public interest and personal benefit is disrupted in a disproportionate manner without allowing for an examination as to whether the disposition made due to Article 28 was intended to prevent the collection of public receivables.

Within the context of the requirement that the limitation of rights must be based on law, the Constitutional Court stated that Article 28 clearly and unambiguously determines with whom and to what degree the non-gratuitous dispositions of the public debtor’s blood relatives and in-laws must be deemed as donations, leaving no room for any doubt. Therefore, the Constitutional Court stated that the rule is specific, accessible and foreseeable, and that there is nothing contrary to the constitutional principle that fundamental rights and freedoms should be restricted by law.

The Constitutional Court pointed out that Article 28 aims to prevent the debtor’s evasion of assets from the public, the failure to collect the receivable, to protect the public receivable, which is the most important financing of public expenditures, and thus the public interest. It aims to do this by providing the creditor with ease of proof due to the difficulty of revealing the real will of the parties to the disposition, which is often not reflected to the outside world.

On the other hand, the Constitutional Court stated that the presumption of collusion for the debtor’s dispositions with their blood relatives, including third-degree relatives, spouse and in-laws, including seconddegree relatives, does not allow the parties to make claims and defenses and to submit evidence, information and documents to counter-prove the issues. The Constitutional Court held that the protection of public receivables may also be possible with a rebuttable presumption.

It further noted that such a preference would have a milder impact on both the right to property and the freedom to seek justice, and that the rule in force was not necessary to achieve the legitimate aim of the rule, which is to ensure the protection of the public receivable.

Prior to the annulment of the provision, these transactions made by the debtor to the aforementioned relatives, even if they were gratuitous, were considered as “donation” and were deemed null and void.

1.7 The Constitutional Court found the “completion of the judgment” (hükmün tamamlanması) constitutional.⁷

In its decision numbered 2023/106, the Constitutional Court rejected the application for the annulment of the completion of the judgement procedure in Article 305/A/1 of the Code of Civil Procedure. Pursuant to the first instance court’s application stating that the completion of the judgment is contrary to Article 2 and Article 141 of the Constitution, the Constitutional Court ruled that it does not contradict the Constitution.

Through completion of the judgment, either party may, within one month from the notification of the final judgment, request an additional judgment on the issues that have not been fully or partially decided although they were raised in the proceedings or should have been decided ex officio by the judge.

The Constitutional Court has emphasized the importance of the principle of certainty and the principle of res judicata, which are among the fundamental principles of the rule of law. The Constitutional Court has also emphasized that, in a rule of law, the rules regarding the procedural concepts that legislators may introduce in the exercise of their discretionary power must prevent any uncertainty in the judicial system and provide enough safeguards to ensure the security of the law and to observe the principle of res judicata.

According to the Constitutional Court, the complementary judgment that would be issued under the completion of the judgment procedure would not lead to any legal ambiguity. For this practice to lead to legal ambiguity, the additional judgments that must be rendered to complete the judgment must systematically produce contradictory judgments, and the judicial system must not have efficient mechanisms to affect or end these contradictions.

The Constitutional Court held in its decision that the legal remedies provided by law against the initial judgment and the complementary judgment have the power to put an end to the inconsistencies between these judgments.

It is concluded that the mechanisms stipulated in the law provide sufficient safeguards against contradictory judgments and that the problems arising in this context can be solved through judicial practices. Thus, it cannot be said that the rule that allows the court to issue complementary judgments to make up for the deficiency in the final judgment in matters that have not been officially or partially decided on will cause practices contrary to the principles of legal certainty and security and the principle of res judicata.

II. Statistics and other news concerning litigation

2.1 Statistics

In the previous issue of Esin Litigation Quarterly,⁸ we had shared the prison statistics for 2022 and observed how crowded the prisons were that year. According to the statistics, a 14.6% rise from 2021 brought the total number of inmates to 341,294. In addition, at 25% of all crimes committed in 2022, robbery was the most frequent offense, followed by violation of residence immunity with 8.6%. This time, the Ministry of Justice released statistics on mediation in Türkiye by year, including information on how many cases were successfully resolved through mediation. The statistics show that mediation has a relatively high success rate, particularly in voluntary mediation, which is a voluntary method of alternative dispute resolution. Let’s take a closer look at these figures.

(a) Number of files resulting in voluntary mediation

Over time, the number of cases resulting in the use of voluntary mediation increased significantly. We believe that this increase is due to the fact that if the parties reach an agreement at the end of the mediation process, the protocol executed in the end have the force of a judgment and can therefore be enforced through enforcement proceedings based on judgement.

(b) Number of files resulting in mandatory mediation

Beginning with labor law disputes in 2018, the number of mandatory mediation files has increased over time with the addition of consumer and commercial disputes. It will be interesting to see how the mandatory mediation in lease related disputes will affect these numbers as of 1 September 2023.

(c) Success rates in mediation files in 2022

In 2022, the rate of agreement in concluded voluntary mediation files was 98.85%, while this rate was 43.64% in mandatory mediation.

(d) Ratio of mandatory mediation cases resulting in agreement

Since their entry into force, labor law disputes have led the way in cause of action mediation with a 58% success rate, followed by consumer and commercial disputes with 52%.

2.2 Other news concerning litigation

(a) The Central Bank of the Republic of Türkiye published the Communiqué on the Determination of the Interest Rates to be applied in Rediscount and Advance Transactions in the Official Gazette dated 1 November 2023 and numbered 32356.⁹

The Central Bank of the Republic of Türkiye (“Central Bank”) increased the discount and advance interest rates by 500 basis points with the communiqué published in the Official Gazette dated 1 November 2023 and numbered 32356. Accordingly, the discount rate to be applied in rediscount transactions against promissory notes with a maximum of three months to maturity was determined as 35.75% per annum, and the interest rate to be applied in advance transactions was determined as 36.75% per annum. Previously, these rates were 30.75% per annum for rediscount transactions and 31.75% per annum for advance transactions according to the communiqué published on 28 September 2023.¹⁰

The following table shows the changes in the interest rates applicable to discount and advance transactions since the beginning of 2023:¹¹

(b) Major amendments to the Mediation Law entered into effect¹²

As of 1 September 2023, certain provisions of Law No. 7445, which introduced significant amendments to the Mediation Law, has officially come into effect. These amendments, discussed in detail in our spring issue of Esin Litigation Quarterly,¹³ bring about substantial changes in the field of dispute resolution in Türkiye.

Under the newly introduced Article 18/B of the Mediation Law, parties are now required to initiate mandatory mediation proceedings before initiating a lawsuit in lease related disputes. These disputes include issues arising from rental relationships, the division of movable and immovable property, joint ownership disputes, as well as disputes arising from Condominium Law No. 634 and neighboring rights, as regulated under Turkish Civil Code No. 4721.

It will be interesting to monitor the extent to which this amendment reduces the burden on the courts, which have recently been faced with a significant influx of rental disputes.

Our previous issue provided a detailed analysis of these legal amendments, shedding light on their implications and significance in the context of dispute resolution. As these changes come into force, they underscore the growing importance of mediation as a crucial preliminary step in resolving civil disputes efficiently and effectively.

(c) Corporate titans in Asia promote mediation for cross-border disputes¹⁴

In a resounding show of support for mediation, 38 multinational corporations (“MNCs”) from various sectors across Asia have promoted mediation as the preferred method for resolving cross-border disputes. This groundswell of corporate endorsement signifies a remarkable shift toward the adoption of mediation as the go-to solution for efficient and cost-effective dispute resolution.

These MNCs, from different sectors including finance, technology, manufacturing and more, collectively represent countries such as China, Germany, India, Japan and the US, underlining the global relevance of mediation. Additionally, four influential business associations have pledged their commitment to encouraging their members to consider mediation in commercial disputes.

The pivotal event took place on 30 August 2023 at the Shangri-La Singapore. Representatives from these corporations and associations voiced their support for mediation and its many benefits.

Mike Yeh from Microsoft highlighted the mediation’s cost-effectiveness and confidentiality, which makes it a business-friendly option for dispute resolution. He also emphasized its eco-friendliness, with online hearings reducing the carbon footprint.

Loretta Yuen, representing OCBC, acknowledged the mediation’s effectiveness in resolving cross-border disputes, saving time and money while sparing parties from the emotional toll of legal battles.

Chuan Wee Meng, CEO of the Singapore International Mediation Centre, emphasized the swift resolution of most mediations, with over 90% concluding within a day. The mediation’s flexibility also allows it to complement litigation or arbitration.

In a world where cross-border business is the norm, this overwhelming support for mediation by corporate giants and influential associations signals a transformative shift toward efficient, eco-friendly and collaborative dispute resolution. Mediation is undeniably on the rise as the preferred choice for resolving cross-border disputes in Asia and beyond.

(d) Landmark decision by the DIFC Court of Appeal in the United Arab Emirates¹⁵

In a significant ruling on 6 September 2023, the Dubai International Financial Centre (“DIFC”) Court of Appeal overturned a worldwide freezing order (“WFO”) issued by the court of first instance. The decision was based on the DIFC Courts’ inability to award the WFO against parties with no connection to DIFC due to lack of jurisdiction.

This decision limits the use of interim measures in the DIFC to promote international court proceedings that do not fit within the designated jurisdictional gateways stated in Article 5A of the Dubai court Authority Law 12/2004 (“JAL”). As a result, interim remedies may be unavailable in the DIFC Courts if the potential judgment debtor does not have any connection to the DIFC.

A member of a wealthy Kuwaiti family filed a series of court lawsuits against their brother and other family members, claiming fraud in connection with co-owned Cayman Islands properties. Respondents filed legal claims in Kuwaiti state courts as well as criminal charges in France. While the local courts originally dismissed the Kuwaiti actions, the respondents seek a WFO from the DIFC Courts to avoid asset dissipation during the continuing international civil court procedures.

The central issue was whether the DIFC Courts had jurisdiction to grant the WFO when none of the parties fell under the DIFC Courts’ jurisdictional criteria under the JAL.

The respondents cited JAL Article 5A(1)(e), which grants jurisdiction based on DIFC statutes and regulations. However, the DIFC Court of Appeal ruled that this clause could only establish jurisdiction if particular laws or regulations clearly conferred such authority, and that the respondents’ reliance on Rule 25.24 of the DIFC Courts provided a procedural rather than a jurisdictional power.

The court’s ruling did not change the foundation that was established in DNB Bank v. Gulf Eyadah Corporation that the DIFC Courts possess jurisdiction to execute international judgments even if the debtor has no assets in the DIFC.

Furthermore, the DIFC Court of Appeal reaffirmed the requirements for obtaining a freezing order in the DIFC Courts, including establishing a “good arguable case”, the presence of recoverable assets, and the danger of unjustified asset disposal. It also explored discretionary criteria and the burden of evidence in jurisdictional challenges.

The DIFC Court of Appeal’s significant decision reshapes the landscape of interim remedies available in the DIFC and highlights the significance of jurisdictional certainty in cross-border litigation procedures.

(e) European Court of Human Rights hears climate change case against 33 states.¹⁶

In a significant session at the Grand Chamber of the European Court of Human Rights in Strasbourg, a pivotal hearing took place, involving six young applicants and representatives from 31 governments. The central issue was the most extensive climate change case to date brought before the court. The six applicants from Portugal argued that the countries were failing to meet their obligations under Article 2 and Article 8 of the European Convention on Human Rights and raised concerns under Article 3 and Article 14. On the opposing side, the UK and Belgium challenged the court’s jurisdiction over climate change matters. The case, titled Duarte Agostinho and others v. Portugal and 32 others, seeks to hold 33 states accountable for their inaction on climate change. However, the states argue that the issue is too complex and global for the European Court of Human Rights to address, and that expecting the applicants to litigate in 33 states is impractical and renders their rights meaningless. This case is one of three vital hearings convened by the grand chamber this year, involving numerous European nations and Türkiye. The outcome carries the potential to set a precedent on human rights and environmental concerns.

Conclusion

In our latest issue, we explored the growing significance of mediation in resolving disputes, dissected the Constitutional Court’s landmark decisions and provided the latest updates from the realm of litigation. As the world of litigation remains in perpetual motion, we anticipate captivating developments in the coming months. Stay tuned for our next issue as we continue to keep you informed of innovations, trends and critical shifts in this ever-evolving field.

The original version of this article can be accessed via this link.

1 You may access the decision here.

2 You may access the decision here.

3 You may access the decision here.

4 You may access the decision here.

5 You may access the decision here.

6 You may access the decision here.

7 You may access the decision here.

8 You may view the previous issue of Esin Litigation Quarterly here.

9 You may access the Communiqué here.

10 You may access the previous Communiqué here.

11 You may find more details here.

12 You may access Law No. 7445 here.

13 You may view the spring issue of Esin Litigation Quarterly here.

14 You may find more details here.

15 You can find more details here.

16 You can find more details here.