Esin Litigation Quarterly | Issue 4 | March 2024

Welcome to the Winter 2024 issue of Esin Litigation Quarterly. As we welcome the new year, and bid a farewell to 2023, the litigation world continues to buzz with novel developments. In this issue, we review the landmark rulings rendered by the Constitutional Court in detail while having a look at the Court of Cassation and the European Court of Human Rights’ insights into the last year’s cases. Also, we cover developments in litigation across the globe.

1. Significant court decisions in the last trimester concerning litigation

1.1. The Constitutional Court annuls the provision extending the scope of exceptions to the principle that court proceedings be open to the public.[1]

With its decision numbered 2020/73, and dated October 26, 2023, the Constitutional Court of Türkiye (“Constitutional Court”) decided to revoke a recent amendment of Article 28 of the Code on Civil Procedures (“CCP”) extending the scope of exceptions to the principle that court proceedings be open to the public on the ground that the amendment introduces a specific limitation on the right to a fair trial that has not been envisaged in the Turkish Constitution (“Constitution”). The amendment of Article 28 of CCP provided that the court may, ex-officio or upon request of the person concerned, decide to conduct hearings closed to the public only in cases where public morality or public security, or the superior interests, worth of protection, of the persons related to the proceedings renders it strictly necessary.

In its decision, the Constitutional Court stated that the principle that court proceedings be open to the public (“Principle”) is conceived as a fundamental element of the right to a fair trial under Article 36 of the Constitution. This Principle aims to ensure the transparency of judicial processes, and prevent arbitrariness in the judiciary by enabling the public to review judicial proceedings. It also serves as an instrument to secure the public’s trust in the notion of justice.

The Constitutional Court stated that since the provision subject to its review constitutes a further restriction on the principle, it must be compliant with regulation on the limitation of fundamental rights under Article 13 of the Constitution. Therefore, the provision must be clear, accessible, and foreseeable, as per Article 2 of the Constitution.

The Constitutional Court determined that the provision limits the scope of the Principle by stating that in case that the relevant parties’ interests are endangered, the court proceedings can be conducted closed to the public. The Constitutional Court indicated that the statement of “relevant parties” means any third party whose interests may be harmed as a result of any information or document to be disclosed during court proceedings. With this amendment, the right to request that the court proceedings be conducted closed to the public is not only granted to the parties to the lawsuit, but also extended to any third party who may be affected by the lawsuit.

On the other hand, the Constitutional Court found that the amendment refers to “a superior interest worth of protection”, which furnishes sufficient certainty and foreseeability. Therefore, the Constitutional Court determined that the amendment does not violate the Constitution in this respect.

However, establishing that fundamental rights and freedoms can only be restricted by the relevant clauses of the Constitution, the Constitutional Court emphasized that if the Constitution itself sets specific reasons for the restriction of a constitutional right, no further limitation can be imposed on that right anymore. Furthermore, the Constitutional Court stated that the duties attributed to the State by the Constitution can also not be used as reasons to implement a new restriction on a constitutional right that is subject to specific restrictions.

In light of the above, the Constitutional Court annulled the amendment by indicating that Article 141 of the Constitution already provides for exceptions for when the court proceedings can be closed to the public, and it is not possible to introduce any further restriction.

1.2. The Constitutional Court ruled that the requirement for application to mediation prior to initiation of lawsuits before the consumer courts is constitutional.[2]

In its decision numbered 2020/73 and dated October 26, 2023, the Constitutional Court rejected the request for the annulment of Article 73/A that requires the launch of mediation proceedings before the filing of lawsuits at the consumer courts on the grounds that the provision satisfies all conditions for the limitation of a constitutional right.

In their application for the abstract norm review, the applicants argued that the said provision places an unproportional limitation on the consumers’ right to access to the court by forcing them to settle with the counter-party under unequal conditions, it lengthens the judicial process for the consumers, and it provides for a settlement process where parties are not equal. Therefore, the provision is claimed to be in violation of constitutional principles of equality, protection of consumers, and the constitutional rights articulated above.

The Constitutional Court stated that setting the launching of a mediation proceeding as a pre-requisite for the filing of a lawsuit restricts consumers’ right to access to the court as regulated under Article 36 of the Constitution. However, the Constitutional Court determined that the provision also clearly establishes the scope of and exceptions to the instances where application for mediation proceedings is required. Moreover, the Constitutional Court emphasized that the function of the provision is in compliance with the objectives of the mediation institution.

Furthermore, the Constitutional Court stated that the requirement to apply to mediation proceedings before filing a lawsuit with the consumer courts enable parties to settle their dispute in an expedited manner. The Constitutional Court also indicated that the provision is important in that it allows the parties to resolve their conflict through peaceful means, and thus, helps the preservation of public order.

The Constitutional Court found that the limitation on the right to access to the court introduced by the said provision is appropriate to achieve the objectives of enabling consumer disputes to be resolved in a faster and simpler way, and reducing the courts’ workload. Moreover, the provision provides parties with a platform for settling their dispute under the guidance of a professional, independent and impartial mediator under equal circumstances. Therefore, the said provision is necessary to attain the above-stated objectives.

Considering that the mediation proceedings will not last more than four weeks, and prescriptive periods and statute of limitations do not run, the Constitutional Court found that the requirement for the initiation of a mediation proceeding before filing a lawsuit at consumer courts neither unnecessarily prolongs the judicial process nor causes any loss of rights to consumers. Also, the Constitutional Court argued that the provision introduces several protective regulations in favor of consumers including the non-liability of consumers for court fees for not attending the mediation process. Finally, the provision provides a flexibility to some extent by enumerating exceptional situations under which there will be no requirement to launch mediation proceedings.

 In light of above reasoning, the Constitutional Court concluded that the provision bringing the requirement to apply to a mediator prior to filing a lawsuit at consumer courts preserves the balance between people and public interest, while the limitation on the right to access to the court does not place an unproportional burden on the people, and is in line with the proportionality condition sought under Article 13 of the Constitution. Therefore, the Constitutional Court ruled that the provision is constitutional, and rejected the application.

1.3. The Constitutional Court has annulled Article 326/2 of the Code on Civil Procedures for compensation claims due to confiscation without expropriation (kamulaştırmasız el atma).[3]

The Article 326/2 of CCP regulated the distribution of court fees in cases where the court partially accepts the lawsuit. With its decision numbered 2023/101 E., 2023/207 K. and dated November 30, 2023, the Constitutional Court has annulled this Article for lawsuits related to compensation claims due to confiscation without expropriation. The Constitutional Court stated that the annulment is based on the violation of the guarantee to pay the real value of the expropriated good as established under Article 46.

In its application for the concrete norm review, the Küçükçekmece 5th Civil Court stated that in case the court partially accepts the compensation claims due to confiscation without expropriation, the plaintiff will be held partially liable for the court fees. The Court argued that this partial liability contradicts with the right to property, the State’s duty to protect people’s right to property, and the rule of law. The applicant court also referred to the Constitutional Court’s decisions in the individual applications which conclude that imposing a part of the court fees on the plaintiffs in compensation claims related to confiscation without expropriation violates the plaintiffs’ constitutional rights.

The Constitutional Court found that the partial imposition of court fees on the plaintiff in the above-stated cases means that the plaintiff will not be able to obtain the whole value awarded by the court as compensation. The Constitutional Court determined that this constitutes a restriction on the right to property.

According to the Constitutional Court, the said provision must not be in conflict with the wording of the Constitution, including foremost the additional guarantees envisaged in different clauses of the Constitution. Article 46/1 of the Constitution provides that the State or other public legal persons may expropriate private properties on the condition that the State (or others) pays the full real value of the relevant property. Therefore, the Constitutional Court argued that the State may only claim ownership over private properties implementing the procedure set in Article 46, and paying the real value of the properties.

The Constitutional Court pointed out that confiscation without expropriation is an unlawful act as it does not comply with the expropriation procedure contained in the Constitution. The Constitutional Court further stated that even if a court partially accepts the plaintiff’s claim in a confiscation without expropriation lawsuit, the plaintiff (i.e the owner of the expropriated immovable) still must enjoy the additional securities included in Article 46, and must be paid the real value of its property. Therefore, the Constitutional Court concluded that if the plaintiff is held liable for court fees, and thus, an additional financial burden is imposed upon it, it would not be compensated with the real value of its property. In light of this, the Constitutional Court annulled Article 326/2 of CCP for compensation claims due to confiscation without expropriation.

1.4. The Constitutional Court annuls the provision establishing the minimum monetary limits for appeal before administrative courts.[4]

With its decision numbered 2023/81 and dated October 26, 2023, the Constitutional Court revoked Article 45/1.2 and Additional Article 1 of the Code on Administrative Procedures (“CAP”) addressing the minimum monetary limits required to appeal decisions of administrative and tax courts on the grounds that these provisions did not contain sufficient clarity as to the date by which monetary limits for appeal will be considered. The decision was published in the Official Gazette on December 21, 2023.

The provisions subject to annulment regulate the monetary limit for filing an appeal against the decisions of administrative and tax courts. Accordingly; such provision stated that “the decisions of the administrative and tax courts on tax cases, full remedy actions and nullity actions against administrative acts, the subject matter of which does not exceed five thousand Turkish Liras, shall be final and no appeal may be filed against them.

Istanbul 13th Administrative Court and 2nd Tax Chamber of Samsun Regional Administrative Court filed their objection to the Constitutional Court stating that the said provisions establish monetary limits for appeal, that these limits are updated per the revaluation rates on an annual basis, that this change in monetary limits may cause a loss of right to appeal as the monetary limits for appeal may be different on the dates of filing of the lawsuit and the decision. The objection also claims that the said provisions do not provide any clarity as to whether the date of lawsuit or the issuing of decision is to be taken as a basis to determine the monetary limits for appeal. For all these reasons, the above provisions are argued to violate the constitutional requirements for laws to be clear and foreseeable, and thus, needs to be annulled.

The Constitutional Court found that the right to request a review of any decision by a court of higher degree is considered under Article 36 of the Constitution. The said provisions introduce a limitation on the constitutional right to appeal a court decision. According to Article 13 of the Constitution, any limitation on fundamental rights and freedoms needs to be instituted through a law that is clear, accessible and foreseeable. The Constitutional Court also referred to its very recent ruling annulling a similar provision on the minimum monetary limits for appeal to the Council of State, and emphasized that it found this provision unconstitutional.

The Constitutional Court stated that the provisions contained in CAP subject to its review do not regulate which date will be taken into account while determining the monetary limits for appeal. Furthermore, any other provision under Turkish law does not provide any explanation as to this issue. Since the monetary limits for appeal are updated on a yearly basis, the said provisions cannot be uttered to be clear, and certain. Furthermore, the said provisions are incompatible with the right of access to the court and the right to request a review of the judgment. Therefore, the Constitutional Court concluded that Article 45/1.2 and Additional Article 1 of CAP are unconstitutional, and annulled them.

Despite the objection request enumerating the violation of equality principle among its reasons for annulment, the Constitutional Court decided that it is unnecessary to make further examination on the above provisions since they are already addressed within the scope of Articles 13 and 36 of the Constitution. The Decision will enter into force nine months after the date that the Decision is published in the Official Gazette (21 December 2023), in other words, on 21 September 2024.

1.5. The Constitutional Court annuls the provision on the inflation adjustment on the ground that such regulation means retroactive application of laws.[5]

In its decision numbered 2023/105 E., 2023/208 K. and dated November 30, 2023, the Constitutional Court revoked the provision precluding an inflation adjustment for the year 2021 (“Decision”). The Decision has been published on the Official Gazette numbered 32431 and dated January 16, 2024. Since the Decision does not specify an effective date for the annulment to take effect, it is presumed to be effective by the date of its publication on the Official Gazette as per Article 153 of the Constitution.

The Constitutional Court has addressed the compatibility of the said provision with the constitutional rights after an objection filed by a first instance court which had been dealing with a taxpayer’s request for the refund of the overpaid taxes. The Constitutional Court stated that the inflation adjustment is instituted to eliminate the artificial increase realized in the tax bases due to inflation, and the negative impact associated therewith, and to ascertain the real taxable amount. Article 298 of Tax Procedural Law No. 213 (“TPL”) regulates how to apply the inflation adjustment to the non-monetary assets indicated in financial statements. Article 298 requires the satisfaction of two cumulative conditions for the inflation adjustment to be applied. These conditions are (i) an increase by more than 100% in the Domestic Producer Price Index (D-IPP) over the last three accounting periods including the current period, and (ii) an increase by more than 10% in D-IPP over the current accounting period. However, the Article 33/1 of the TPL, which was added afterwards and was effective as of 20 January 2022, provides that the financial statements will not be subject to inflation adjustment in the 2021 and 2022 accounting periods, including the provisional tax periods, and the provisional tax periods of the 2023 accounting period, regardless of whether the conditions for inflation adjustment are met.

After examining the relevant data, the Constitutional Court concluded that both of the above-stated conditions for inflation adjustment have been realized. Furthermore, the Constitutional Court found that by the time the provision preventing the application of inflation adjustment entered into force, the accounting period for both corporate income tax and income tax had ended. In other words, the Constitutional Court stated that the entry into force of the said provision meant retroactive application of laws as it constituted a change into the inflation adjustment regulations that had an effect on the determination of tax bases after the cause of taxation occurred. Therefore, the Constitutional Court pointed out, the provision regarding the inflation adjustment application brought about an unconstitutional restriction on the right to property as it was in breach of both the legality of laws and legality of taxes.

2.Statistics and other news concerning litigation

a. The Civil and Criminal Chambers of the Court of Cassation decided on 264,254 cases in total last year.[6]

The Great Assembly of the Court of Cassation’s decision numbered 2024/1 and dated January 18, 2024 has been issued in the Official Gazette on January 23, 2024. The decision provides statistics as to how many cases the chambers of the Court of Cassation resolved last year, and how many of them are still pending.

The decision states that all civil and criminal chambers of the Court of Cassation combined addressed 264,254 cases last year. The criminal chambers of the Court of Cassation dealt with 146,655 applications while civil chambers ruled upon 115,489 cases.

Resolved cases by civil and criminal chambers of the court of cassation in 2023

The 4th Criminal Chamber of the Court of Cassation takes first place among criminal chambers concluding 26,608 cases while the 9th Civil Chamber stands out from the other civil chambers resolving 20,631 applications.

Per the decision, the Civil General Assembly of the Court of Cassation rendered a total of 1401 decisions last year in comparison to 709 rulings issued by the Criminal General Assembly of the Court of Cassation.

There are 341,415 pending cases before the criminal chambers of Court of Cassation. On the other hand, the number of unresolved cases before civil chambers of Court of Cassation stands at 66,999.

Pending cases before civil and criminal chambers of the court of cassation

Civil Chambers – 16%

Criminal Chambers – 84%

b. The case-distribution per subject matter among the chambers of the Court of Cassation has been announced.[7]

The abovementioned decision of the Great Assembly of the Court of Cassation also sheds light on the distribution of cases according to their subject matter among the chambers of the Court of Cassation. The decision states that there are four fundamental fields of expertise under which all civil chambers of Court of Cassation are subsumed. These fields are named as: “civil law”, “real-estate law”, “law of obligations and commercial law”, and “employment and social security law”. Accordingly, the distribution of cases to the chambers of the Court of Cassation is made based on these fields of expertise. Each civil chamber is principally assigned to cases concerning one field of expertise only. On the other hand, the decision establishes that under exceptional circumstances, a civil chamber may be tasked with two fields of expertise.

As for the scope of examination of criminal chambers, the decision provides that the case-distribution will be made based on the specific type of crime indicated in judgments issued by lower degree courts, or in indictments prepared by public prosecutors. If a case concerns more than one crime, the severity of sanctions attributed to each crime in the concrete case will be considered. The decision says that the criminal chambers need to compare maximum and minimum limits envisaged for relevant sanctions, and determine which sanction requires more severe punishment for the defendant.

c. The Central Bank of the Republic of Türkiye publishes the Communiqué on Determination of Interest Rates Applicable to Late Payments in Procurement of Goods and Services as per Article 1530/7 of Turkish Code of Commerce.[8]

The Central Bank of Republic of Türkiye (“Central Bank”) has increased from 11,75% to 48% the annual interest rate applied for late payments in the procurement of goods and services as per Article 1530/7 of Turkish Code of Commerce (TCC). The Central Bank has also set the minimum costs for obtaining receivables in the procurement of goods and services at TRY 1,310, a 63,75% increase from the previous TRY 800.

Article 1530 of TCC establishes specific provisions for the contractual relations between commercial enterprises regarding the procurement of goods and services. For instance, Article 1530/2 of TCC states that in case the debtor does not fulfill its obligation to deposit the due payment on time, it shall be presumed to be in default without any further need for notification by the creditor. Also, Article 1530/3 provides the creditor with a right to automatically request an interest for the debtor’s default (late-payment) even in the case of non-existence of such an agreement on the interest for the debtor’s default.

d. The European Court of Human Rights announces that Türkiye has the highest number of cases registered among Council of Europe members.[9]

The European Court of Human Rights (ECtHR) has shared with the public its annual review for the year 2023, and provided a deep insight as to the content and number of pending cases. In 2023, ECtHR issued 1,014 judgments in total, and found in 892 of the judgments that there is at least one violation of the European Convention on Human Rights (“Convention”) while determining no breach in 92 applications. Seventeen cases resulted in friendly settlements/strike-outs while ECtHR handed down other judgments in 15 cases.[10]

According to the review, out of all members of the European Council, Türkiye has the largest number of applications made against it with 23,397 pending cases. The Russian Federation ranks second with 12,453 applications, followed by Ukraine with 8,737 cases. ECtHR has delivered 78 decisions on Türkiye.

ECtHR found that there is at least one infringement of the Convention in 72 cases against Türkiye whilst determining that the country has committed no contravention on the fundamental rights and freedoms in three cases alone. Per the review, ECtHR has not rendered any ruling on the remaining three applications due to either strike-out or friendly settlement.

ECtHR has determined that Türkiye violated the right to a fair trial (Article 6), and the right to liberty and security (Article 5) the most while the country breached the provisions on no punishment without law (Article 7), the prohibition on discrimination, and the right to education (Article Protocol-1/2) only once. ECtHR has also highlighted some of its case-law involving Türkiye to highlight breaches of the Convention. For instance, ECtHR has referred to Yüksel Yalçınkaya v. Türkiye to address the application of right to fairness of proceedings.

e. Litigation landscape unveiled: 80% of London litigators navigate litigation funders amid calls for regulatory action

An eye-opening 80% of London litigators find themselves entangled in cases with litigation funders, as revealed by the London Solicitors Litigation Association’s survey.115President Nicholas Heaton sheds light on the urgent call from 90% of litigators for regulatory measures in the third-party finance sector. Despite a predicted 60% growth in litigation, only half experienced it in the past year. Notably, 94% reported retaining litigation work in London, while 88% advocate for additional regulation in litigation funding. The survey also delves into the rising role of artificial intelligence, with 45% using AI in litigation, showing optimism for its cost-reducing and efficiency-boosting potential.

f. High court judge issues warning: litigants in person given “one last chance” as mistakes push civil action to the brink

In a recent legal development, a High Court judge issued a stern plea to plaintiffs in person, John and Jennifer Greenwood (“Greenwoods”), whose civil action is on the verge of collapse due to a series of errors.12 The judge emphasized that the Greenwoods’ failure to comply with court rules, including providing a required transcript of the judgment for their appeal and a United Kingdom service address, poses a serious risk of automatic dismissal of their claims. The judge urged the self-represented couple (Greenwoods) to seek legal advice, emphasizing that the law is not a game and involves emotional and financial costs.

The Greenwoods had previously made a GBP 1.4 million statutory demand over a business dispute, which was set aside in September 2021, along with a court order for them to pay GBP 4,680 in costs. Despite this, the Greenwoods later applied to set aside the defendant’s claim, but their understanding of legal terminology raised confusion. A judge had previously ordered them to obtain and file the judgment they sought to appeal and provide a United Kingdom service address, requirements the Greenwoods failed to fulfill.

Residing in France, the Grenwoods rejected the United Kingdom service order, insisting on e-mail communication only, and argued against lodging a transcript, deeming it unnecessary and costly. Their constant reference to a Latin maxim, suggesting civil causes cannot be founded on a plaintiff’s wrongdoing, led the judge to clarify that this phrase does not constitute an unassailable argument for their case. The judge set a deadline of March 1 for the Greenwoods to comply with the transcript and United Kingdom service address requirements, making it the precondition for considering their application for an extension of time. The judge underscored that being a plaintiff in person, living abroad, or facing age and financial challenges does not justify rule breaches.

g. The United Kingdom’s strategic move: embracing global legal cooperation

The United Kingdom ratified the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, which represents a significant move ahead.[13] This move benefits the United Kingdom in a number of ways, subtly addressing important issues:

1. Navigating Post-Brexit Challenges: With post-Brexit complexities in mind, the UK strategically aligns itself with Hague 2019 to ensure a smoother process for recognizing and enforcing judgments with EU member states (excluding Denmark). This move subtly enhances legal certainty for cross-border activities.

2. Harmonizing with Hague 2005: By expanding the reach of the Hague Convention on Choice of Court Agreements, Hague 2019 enhances its predecessor as well. This comprehensive approach to accommodation of different kinds of court agreements is particularly helpful to the financial services sector.

3. Expansive Grounds for Enforcement: Hague 2019’s expansive provisions encompass a variety of claims, offering a robust foundation for enforcement. Excluding specific matters, the convention discreetly improves efficiency and cost-effectiveness in international enforcement proceedings.

4. Global Prospects and Protective Measures: Beyond the EU, Hague 2019’s influence expands globally, with potential signatories like the US, Israel, and Russia. Tactfully addressing concerns, the article mentions safeguards allowing the UK to manage its engagement with states, illustrated by the discreet example of Russia.

The United Kingdom’s prompt endorsement of Hague 2019 showcases a commitment to refining legal predictability in cross-border scenarios. Stakeholders are advised to acquaint themselves with the convention and monitor ongoing developments in its implementation.

h. High court rejects claim served by email: judge calls for review of service rules

In a recent case, a high court’s judge in the United Kingdom dismissed a claim for relief from sanctions after the plaintiff served proceedings via e-mail without permission, contrary to the defendant’s request for postal service.[14] The judge found no exceptional reasons for the incorrect service and questioned the existing rules, expressing disquiet about situations where a defendant can resist a claim due to incorrect issuance. Postulating the need for a review of practice in the law, she highlighted the impact of the COVID-19 pandemic on digitization and suggested a potential reevaluation of e-mail service procedures before the expiration of claim forms. The case involved clinical negligence allegations, and despite the plaintiff’s argument that e-mail service is generally permitted, the judge adhered to existing rules and dismissed the plaintiff’s applications.

Conclusion

In our latest issue, we took a tour through the rulings of the Constitutional Court from the annulment of minimum monetary limits for appeal in administrative cases to the revocation of inflation adjustment. While analyzing yearly statistics of both the Court of Cassation and the European Court of Human Rights, we also extensively looked into the litigation news from around the world. Stay tuned for our next issue as entering into a new year, the world of litigation promises, as always, that the more is ahead.

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 find more details here.

7 You may find more details here.

8 You may access the Communique here.

9 You may access the report here.

10 Please note that two of the judgments rendered concern more than one state, namely Georgia, and Russian Federation.

11 You may access more details here.

12 You may access more details here.

13 You may access more details here.

14 You may access more details here.

15 You can find more details here.