Erdem & Erdem Law Office > Istanbul, Turkey > Firm Profile

Erdem & Erdem Law Office > Firm Profile

The firm: Erdem&Erdem is an international law firm dedicated to providing practical business solutions to a diverse range of clients particularly in cross-border business transactions, M&As, corporate restructuring and governance, international contracts, corporate finance, project finance, energy/renewable energy, privatizations and PPPs, private equity investments, capital markets, competition and antitrust, litigation (execution and bankruptcy) and international arbitration.

Erdem&Erdem has a team of 50 fee-earners with specializations in line with the firm’s growing reputation and diversified practice areas.

Areas of practice
International transactions, M&As and private equity: The firm advises public and private companies, private equity firms, financial sponsors, investment banks, governmental entities in a variety of complex, cross-border and strategic transactions including structuring and organizing fund sponsors and investment funds, executing acquisitions, financing and exit transactions.

Competition and antitrust: The firm has a strong record of successful representation of the largest regulated and networked companies in Turkey, Europe, Asia, and the CIS and advisory in competition regulations.

Banking and finance: The firm advises corporate borrowers, private equity funds, financial advisers, commercial banks, investment banks in construction and acquisition finance and refinance, project finance, banking and capital market transactions, including issuances of high-yield debt security, secured and unsecured debt offerings and private placements.

Privatization: The firm represents foreign and local clients in privatization projects in Turkey, Western Europe and Southeast Asia. Its clients encompass refinery, port, airport, energy, healthcare, real estate, consumer goods, natural resources, and infrastructure and construction industries, also banks and financial institutions.

International contracts, agency and distributorship: The firm has decades of diverse experience in the field of international contracts. Team members are known for their in-depth know-how and extensive experience in drafting and negotiating all types of commercial contracts, such as agency, franchise, supply and distribution and commission arrangements, foreign representative and consultancy agreements.

Energy and renewables: The energy sector experience includes natural gas, coal and oil-fired power plants, co-generation facilities, agricultural and municipal solid waste projects, hydroelectric projects, and wind, solar and other renewable energy facilities.

Real estate and construction: The firm represents investors, developers, owners, lenders, prime contractors, REITs, PPPs, subcontractors, architects, port management authorities, airlines and energy utility companies involved in the construction and development of manufacturing, distribution and operational facilities in real estate finance, joint venture, leasing, acquisition and disposition of real estate assets.

Capital markets and corporate governance: the firm provides innovative solutions to a wide variety of capital raisings and compliance and governance issues the clients face in Turkey and abroad.

International arbitration: The firm’s arbitration practice is among its most prominent field of work. The team handles commercial and treaty dispute cases under the rules of every major arbitration system and in a wide variety of industries, including energy, mining, manufacturing, transportation, telecommunications, construction, finance, manufacturing and sports arising in Western Europe, Asia, Africa, Middle East and the CIS.

Litigation and bankruptcy: The hallmark of the litigation team is the experience of the lawyers who have been involved in litigation in almost every major practice, including M&As and post-closing disputes, insurance, transportation, breach of contract, partnership and joint venture disputes, real estate contracts, unfair competition, franchise and distributor disputes, government contracts, shareholders disputes.

Maritime law: The firm regularly represents clients in trials and appeals of admiralty and maritime matters. Their team handles and provides efficient resolution to maritime insurance and liability claims and other transportation matters in international or coastal trade. Erdem&Erdem has been involved in both prosecuting and defending transportation claims involving marine carriers.

Aviation: The firm regularly counsels airlines, airport authorities and other aviation industry clients in civil aviation regulation and enforcement, aircraft finance, engine and aircraft leasing, competition law and antitrust, mergers and alliances, aircraft acquisition and disposition, airport terminal construction and expansion projects, as well as aviation company reorganization, and restructuring issues.

Hospitality and leisure: The team is often engaged by foreign and local clients to provide support in all aspects of the development, acquisition, sale, financing, franchising, leasing and operation of hospitality and leisure assets that include hotels, resorts, theme parks, entertainment and sport complexes and convention centers that are abroad and in Turkey.

Intellectual property: The firm advises clients in telecommunications, Internet, advertising, and media who develop and license intellectual property, enter into transactions involving intellectual property, acquire portfolios of intellectual property, and make strategic decisions that are based on such considerations.

Tax law: Taking into account the fact that every commercial transaction comes with tax implications, we provide our clients with tax advisory and tax litigation services.

Press Releases

Erdem & Erdem Represented Acıbadem Healthcare Group in the Acquisition of Private Orthopedia Hospital

17th August 2022 Acıbadem Healthcare Group, one of the academic health institutions that is referenced in the world which created a model for Turkey serving in 5 countries, namely Turkey, Macedonia, Bulgaria, Serbia and the Netherlands, acquired Private Orthopedia Hospital, which is one of the first private orthopedic hospitals that was established 14 years ago in Adana by orthopedic physicians. The share purchase agreement was signed on Tuesday, August 9, 2022.

Didem Adlığ joined Erdem & Erdem as Managing Associate

14th March 2022 We are proud to announce that Didem Adlığ joined Erdem & Erdem as Managing Associate.

Erdem & Erdem Represented Yıldırım Holding in the Soda Ash Factory to be Established in Kazakhstan

11th November 2021 The ground breaking ceremony for the Qazaq Soda factory, which is to be built by Qazaq Soda LLP, a subsidiary of the Yıldırım Group of Companies represented by Erdem & Erdem, was recently maid. Kazakhstan's first soda ash factory, which will be constructed with a $400 million investment, will meet the country's domestic needs by producing 400 thousand tons of soda ash and other important raw materials annually, and will employ 1500 people during the construction phase and appx. 300 people once it is brought into service.

Erdem & Erdem Represented Akinon on $20 Million Investment

8th September 2021 Akinon, which is supporting the omni-channel operations and digital transformation processes of Turkey's and the world's leading retail brands with its cloud-based solutions, attracted $20 million investment in the investment tour led by Actera Group and Revo Capital. Erdem & Erdem is proud to support Akinon in the series B investment round and to represent the company in all legal processes of this transaction.

Canan Doksat has been promoted as Managing Associate at Erdem & Erdem

14th July 2021 We are very proud of announcing that Canan Doksat has been promoted as Managing Associate, as of July 1, 2021.

Alper Uzun has been promoted as Partner of Erdem & Erdem

14th July 2021 We are very proud of announcing that Alper Uzun has been promoted as Partner, as of July 1, 2021.

Anadolu Cam, Denizli Cam, Paşabahçe, Soda Sanayii and Trakya Cam were Merged Under Şişecam

22nd October 2020 Five companies of the Şişecam Group, four of which are publicly held, namely Anadolu Cam, Denizli Cam, Paşabahçe, Soda Sanayii and Trakya Cam have merged under Şişecam and the transaction was completed as of September 30, 2020.  Erdem & Erdem is proud to represent Şişecam in this merger transaction which is the biggest merger in Turkish capital markets.

Legal Developments

Value Added Tax Aspect of Disguised Profit Distribution Through Transfer Pricing

24th November 2021 Disguised profit distribution through transfer pricing is one of the tax security methods regulated under Article 13 of Corporate Tax Law No. 5520 (“CTL”). Pursuant to this article, if corporations purchase or sell goods or services with related parties at prices determined contrary to the arm’s length principle, the profit is deemed to have been distributed implicitly through transfer pricing in whole or in part. In the event that the disguised profit distribution is determined through transfer pricing, many consequences such as refusal of deduction, correction, and dividend assessment occur for taxpayers.

Turkish Mortgage Covered Bonds

24th November 2021

Introduction

Mortgage covered bonds are one of today’s most common structured finance products. Although they have a prominent presence in the marketplace today, these bonds have historical roots in the Pfandbrief of 18^th century Prussia. In the aftermath of the Seven Years War, King Frederick the Great implemented new a mortgage finance mechanism and provided for the issuance of mortgage covered bonds in their simplest form to improve liquidity of the assets of the Prussia’s landed gentry, as their financial position had heavily deteriorated due to the wars.^[1] Almost two hundred and fifty years from the first issuance of the Pfandbrief, mortgage covered bonds enable creditors to obtain funds from the secondary mortgage markets at low costs. In addition, through securitization, a creditor’s long-term illiquid mortgage loans can turn into liquid capital market instruments. These instruments remain on the balance-sheet of the issuer and provide an investor-friendly mechanism, as factors such as default and prepayment risks are not transferred to the investor. This article focuses on the issuance of mortgage cover bonds (“MCB”) under the framework of the Turkish capital markets, the nature of cover assets and responsibilities of the cover pool monitor, and the conditions required by the Capital Markets Board ("CMB”) for their issuance.

The Practice of Green Bonds in the World and Turkey

24th November 2021 “Green Bonds” are, in brief, fixed income securities issued for borrowing from the markets in accordance with the conditions in the prospectuses accepted by the issuers, designed specifically for use in preventing climate change or for other environmental projects. In addition to promoting sustainability, these bonds provide certain tax advantages.

The Legal Nature of Representations and Warranties in Share Purchase Agreements

24th November 2021

Introduction

In a share purchase transaction of stock corporations, the assets, management or actives and passives of the company are not directly transferred, instead, the partnership rights over the company is transferred. The legal nature of the share purchase transaction is not transfer of an asset, it is a transfer of a right.

Receivable Rights in the Context of Capital Contribution

24th November 2021

Introduction

Arguably, one of the most important principles of joint stock companies is the principle of capital maintenance. This principle is one of the founding principles of Turkish Commercial Code No. 6102 (“TCC”), as well as being one of the principles adopted in the Civil law countries along with the legal capital system.^[1] The two main pillars of this principle are that company obtains the capital fully and the paid-in capital is not unlawfully returned to the shareholders.^[2]

Interim Injunctions Under Competition Law: The Turkish Competition Board’s Retailers, WhatsApp and Trendyol Decisions

24th November 2021

Introduction

Pursuant to Article 9/4 of the Law on Protection of Competition (“Law No. 4054”), “where serious and irreparable injuries are likely to occur before the final decision, the Board may take interim measures in order to maintain the situation before the infringement, without exceeding the scope of the final decision.” Accordingly, the Turkish Competition Board (“Board”) has the power to apply an interim injunction to investigated undertakings, where it deems, irreparable injury is likely to occur. Considering the fact that investigations last around two years, the relevant provision is clearly a much-needed tool that the Board may use to prevent any probable harms arising from serious competition law concerns. The Board’s recent decisions highlighted below exhibit when and how Board uses the interim injunction tool.

Constitutional Court Decided That Lack of Jurisdiction Decision Rendered due to Arbitration Agreement Does Not Violate the Right to Property

23rd November 2021

Introduction

It is well known that the existence of a valid arbitration agreement in dispute resolution eliminates the jurisdiction of the courts. If, despite the existence of a valid arbitration agreement, one of the parties takes the dispute to court and the opponent party raises objection to the jurisdiction, the court must decide that it lacks jurisdiction.

The Prohibition of Inconsistent Behavior

26th October 2021

Introduction

The principle of the prohibition of inconsistent behavior (venire contra factum proprium), which first appeared in Roman law and evolved over the centuries, has now found its place in the “rule of honesty,” which is a fundamental concept of modern legal systems. The rule of honesty, which can be defined as the behavior expected from a person as an honorable and honest person,^[1] is the ethical basis that forms the framework of the exercise of rights in our legal system. This rule, which finds its expression in the Swiss and Turkish Civil Codes as a general rule with a wide implementation area, is included in the French, German and Italian Civil Codes only in terms of the interpretation of contracts and the performance of debts.^[2] On the other hand, the principle, which is called the prohibition of abuse of right in civil law, has found a wide implementation area in common law --especially American law -- under the name of "estoppel".^[3]

The Council of State’s Decision on Notice Payments Under a Mutual Rescission Agreement

26th October 2021

Introduction

The decision of the Council of State Board of Tax Law Chambers, dated 27.01.2021 and numbered 2020/17 E. 2021/2 K. (“Decision”) given upon the request to resolve the conflict between different Regional Administrative Courts was published in the Official Gazette dated 09.09.2021 and numbered 31593. In this article, the legal context of the Decision, the court’s reasoning, and its assessments will be analyzed.

Recent Rulings of the Turkish Tax Administration Regarding the Stamp Tax

26th October 2021

Introduction

The stamp tax, introduced based on the principle of taxation of papers that constitute the ground of legal transactions, has existed in our country's tax system since the 1800s. In the preamble of the current Stamp Tax Law (“STL”) No.488, accepted on 01/07/1964, it is stated that the previous stamp tax law could not satisfy the social and economic functions of a tax and that it presents difficulties in terms of tax technique and practice.

Komstroy Decision: End of an Era for Intra – EU ECT Arbitration or Not?

26th October 2021

Introduction

The Court of Justice of the European Union (“CJEU”) in the Republic of Moldova v. Komstroy LLC (“Komstroy”) rendered a contentious decision which is likely to create controversies on intra-EU arbitrations governed under the Energy Charter Treaty (“ECT”).^[1]

EFET General Agreement Concerning the Delivery and Acceptance of Electricity

26th October 2021

Introduction

The European Federation of Energy Traders (“EFET”) is an Amsterdam-based organization established in 1999 for promoting competition, transparency and open-access in the energy sector.^[1]  In addition to its activities concerning energy regulation and fostering competition in the energy sector, EFET has published standard agreements for wholesale electricity and gas trading. EFET’s General Agreement Concerning the Delivery and Acceptance of Electricity (“General Agreement”)^[2] is widely used in the European Union for electricity trading.^[3] Its use for electricity trading in the Turkish power sector has also increased over the last few years together with the increase in the number of companies having electricity supply licenses in Turkey.

Coca Cola’s Commitments in the Recent Competition Investigation

26th October 2021

Introduction

A commitment procedure has only recently been introduced to Turkish competition law practice. The procedure was instituted on 16.06.2020 with the amendment to Law No.4054 on the Protection of Competition, and has been utilized for over a year now. In this brief time frame, although the recent Coca Cola Satış ve Dağıtım A.Ş. (“CCSD”) commitment case was not the first of its kind, it was one of the most discussed among competition law practitioners due to the extensive commitments.The Turkish Competition Authority (“TCA”) investigated CCSD, the distributor of Coca Cola products in Turkey, pursuant to Turkish Competition Board’s (“Board”) decision of 02.04.2020. This decision was based on the claim that CCSD has abused its dominance in the Turkish cola market. The investigation especially concerned the allegations that CCSD complicated the activities of its competitors and prevented entry to the market through restrictions on access to merchandising refrigerators, utilization of exclusivity clauses in their agreements, loyalty discounts, and similar practices that led to exclusivity.During the investigation process, CCSD made an application in accordance with Communiqué No. 2021/2 on the Anti-Competitive Agreement, Concerted Actions and Decisions, and Communiqué on Commitments to be Submitted in Preliminary Investigations and Investigations on Abuse of Dominant Position published in the Official Gazette dated 16.03.2021.The Board announced on 06.09.2021 that they had accepted the commitment package submitted by CCSD on 02.09.2021 within the scope of the negotiations held during the commitment process. Later on, TCA provided further details on the nature and contents of the relevant commitments. Based on these details, the Board decided to end the investigation without any determination of infringement or sanctions.The commitments submitted by CCSD and accepted by the Board, as well as the Board’s assessments regarding the commitments, will be examined below.

The Commitment Package Accepted by the Board

The summary of the commitment package submitted by CCSD as disclosed by TCA is as follows:

1. Three separate contracts instead of a single contract: With sales points such as grocery stores or markets, instead of the general comprehensive contracts which are created by CCSD to include their entire product portfolio; separate contracts will be signed for each of (1) “Cola Drinks,” (2) “Other Carbonated Products,” and (3) “Non-Carbonated Products.” The other carbonated products category will consist of “flavored soda” and “plain soda” sub-categories, while the non-carbonated products category will consist of the sub-categories of “water and mineral water,” “fruit juice and iced tea,” “energy drinks” and “sports drinks.” Product transitivity between these contracts and sub-categories will be terminated. For example, previously, each product from any category purchased by a sales point that made an agreement with CCSD based on a total sales amount of 100 units could be deducted from that total sales amount of 100 units specified in the contract. With the acceptance of the relevant commitment clause, the sales amount of each category will be determined separately, so the purchase of products from the cola category will not cause any change in the water and mineral water category quota of the sales point.
2. Discounts, promotions and discounts will only be valid for the same type of beverages: Discounts-rebates-promotions defined by the CCSD for the sales points will be determined separately for “Cola Drinks,” “Other Carbonated Products,” and “Non-Carbonated Products” contracts, and separately for the flavored soda, plain soda, water-mineral water, fruit juice-ice tea, energy drinks, and sports drinks sub-categories. In other words, when a sales point purchases a product in the cola category from CCSD, the free product to be gifted by CCSD for this purchase cannot be from a different category, but can only be from the cola category. For example, flavored soda products cannot be given to the sales point as a promotion for purchase of cola products.
3. There will be no exclusivity in non-carbonated products: CCSD’s single brand agreements in non-carbonated products will be terminated except in some exceptional cases. Therefore, CCSD will not be able to conclude an exclusive dealership agreement with the sales points (in other words, an agreement that would result in the availability of only CCSD products at the sales points) in terms of non-carbonated products.
4. Contract periods will not exceed 2 years: Except for some exceptional cases, CCSD’s term contracts will be limited to two years, and if the term of a quantity-based contract exceeds two years, the sales point will be granted the right to terminate the contract without any penalty.
5. Products of CCSD’s competitors that do not have merchandising refrigerators will be put in CCSD’s refrigerators: The scope of the 20% refrigerator access rule applied until today pursuant to the decision of the Competition Board of 10.09.2007 will be expanded. Accordingly, in sales points in the traditional channel and in the on-site consumption channel which are below 100 m², 25% of CCSD’s refrigerators will be accessible to competitors’ products. In this framework, regardless of whether another competitor (other than CCSD) has a refrigerator in the sales point, 25% of other products of competitors without a refrigerator will be allowed to take place in CCSD refrigerators.
6. Obligation to inform: CCSD will inform consumers and sales points within the scope of the accepted commitment clause (5) above regarding the refrigerator access rule. CCSD will also inform the sales points that currently have ongoing contracts within the scope of the accepted commitment clauses (1), (2) and (3) above.
7. New implementation regarding purchase conditions: The phrase “(…) by way of purchasing regularly and continuously” in the contracts of CCSD will be preserved only in contracts containing cash investment (cash support given to the sales point), and will be removed from contracts in terms of provisions containing discounts-rebates-promotions other than cash investments. In addition, in terms of contracts that contain cash investments and include this phrase, the non-compliance of the sales point with the aforementioned phrase will not create any penal consequences for the sales point.
8. Amendments and arrangements regarding the contracts that are currently in-force will be completed within 1 year from the notification of the reasoned decision, and compliance efforts in terms of other commitment clauses will be completed by 31 December 2021.
9. In case of any subject not covered by the text of commitment submitted by CCSD, the text of the reasoned decision of the Competition Board dated 10.09.2007 will be taken as the basis.

The Board’s Evaluations on the Commitments

Upon examining the commitment package submitted by CCSD, the Board concluded that as a result of the commitment package:

• With the amendment to the merchandising refrigerator access rule, CCSD’s competitors will have increased opportunity to have products available at the sales points,
• Consumers will be provided with the opportunity to access more product options at the sales points,
• Competitive concerns arising from the strength of CCSD’s product portfolio will be eliminated by separating the carbonated and non-carbonated products from cola products by also introducing sub-categories,
• Competitive parameters in the relevant markets will become comparable in terms of competitors and sales points,
• Awareness regarding the commitments to be implemented will increase via the notifications to be made by CCSD,
• The shortening of contract periods (with some exceptions), will make the market more competitive,
• With some exceptions, ending exclusivity in non-carbonated drinks will increase the level of competition in the relevant market.

Accordingly, indicating that the commitment package is proportional, is suitable for eliminating competitive concerns, and can be implemented within a short time and effectively, the Board decided to conclude the investigation by accepting the relevant commitment package and deeming the commitments binding.

Conclusion

The most significant of the commitments in the package is arguably the separation of the single contract for all products into three separate contracts for cola drinks, other carbonated products, and non-carbonated products. Coca Cola’s dominance is evident in the market for cola drinks, but not so clear in other carbonated drinks and even less so in non-carbonated drinks. As a result of this commitment, CCSD will not be able to tie/bundle all of its products in a single contract, and thus, will not be able to leverage its high market power and bargaining ability in cola products to gain advantage in the other two. In addition, the 5% increase in CCSD’s obligation to allow its competitors’ products in its merchandising refrigerators will also affect the availability of competitors’ products, likely resulting in a marginal market share loss. These commitments will likely hurt Coca Cola’s business in markets other than cola products, where it is the strongest.Once the reasoned decision of the Board is published by TCA in the upcoming months, more details of CCSD’s practices, their effects, the scope of the commitments, and the Board’s determinations on how the commitments will address competitive concerns will become available.At any rate, this is one of the most interesting and elaborative commitment cases in Turkish competition law practice yet, and it will be utilized as a milestone precedent for the cases to come.

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 (Authored by Can Yıldız and first published by Erdem & Erdem on October 2021)

UNCITRAL Expedited Arbitration Rules

21st September 2021

Introduction

At its fifty-first session in 2018, the United Nations Commission on International Trade Law (“UNCITRAL”) agreed that Working Group II should be mandated to take up issues relating to expedited arbitration.^[1] As seen in many arbitral institutions, expedited arbitration rules set out simplified procedures which are aimed at reducing the time of proceedings as well as costs. The work aimed “at improving the efficiency of the arbitral proceedings and expedited arbitration was described as a streamlined and simplified procedure with a shortened time frame, which made it possible to reach a final resolution of the dispute in a cost- and time-effective manner.”^[2] The work also aimed to increase the efficiency of the proceedings while ensuring due process and fair treatment of the parties.

The Start of the Legal Period for Electronic Notifications in the Light of Judicial Decisions

21st September 2021 Electronic notification to certain persons, including attorneys registered with the Bar Association, has become obligatory in accordance with the Article 7/a of the Notification Law numbered 7201 (“NL”). The procedures and principles regarding electronic notification are outlined in the Electronic Notification Regulation (“Regulation”) in the Official Gazette dated 6 December 2018 and numbered 30617.

Tax Consequences of Failure to Fulfill Capital Commitment Payable

21st September 2021 Trading companies are established with the capital that the founding shareholders have committed to put into the company; this capital is essential for the establishment of trading companies. It is the most important financial duty of the shareholders to provide the capital they have committed to bring to the company in full and on time.  In this context, the legislature has strictly regulated this capital commitment, since companies cannot be established without capital and the continuation of a company's activities is not possible without sufficient capital.

Null and Void Resolutions of the General Assembly in Joint Stock Companies

21st September 2021

Introduction

In general, cases of invalidity of general assembly resolutions fall into the categories of non-existence, nullity and annullability. The scope of this Newsletter is limited to null and void resolutions of general assemblies established under Article 447 and related provisions of Turkish Commercial Code No. 6102^[1]  (“TCC”).

General Assembly Summons Lawsuits

21st September 2021

Introduction

Pursuant to Turkish commercial law legislation, the ordinary general assembly in joint stock companies shall be held within three months following the end of each fiscal year.^[1] According to Turkish Commercial Code numbered 6102 (“TCC”), the authority (Article 410 of the TCC) and duty (Article 375 of the TCC) to convene the general assembly essentially belong to the board of directors. Such that, even if the term of the board of directors has expired, the general assembly can be summoned to a meeting.^[2]

Settlement Regulation Enters into Force

23rd August 2021

Introduction

The first steps towards introducing settlement as a practice in Turkish competition law were taken in June 2020 in line with the amendments to Law No. 4054 on the Protection of Competition (“Law No. 4054”).^[1] This brings Turkish competition law into line with that of the European Union and many other countries.^[2] The details of the procedures and the principles regarding how settlements will be applied were introduced in a new regulation approximately one year after the law was amended. This regulation, entitled the Regulation on the Settlement Procedure Applicable for Investigations on Anticompetitive Agreements, Concerted Practices, Decisions and Abuse of Dominant Position (“Regulation”), entered into force upon being published in the Official Gazette dated 15.07.2021 and numbered 31542. It is expected that this Regulation will establish the culture of settlement in Turkish competition law. In this article, the issues covered by the Regulation are briefly discussed.

Institutionalization in Family Businesses and Family Constitution

23rd August 2021

Introduction

It is a well-known fact that the majority of companies operating in Turkey and around the world are family businesses, and few of these companies are able to transfer their assets to future generations. In order for a family business to successfully manage this, it is necessary and substantial to establish a solid corporate structure and to prevent conflicts which may arise between family members or at least to resolve them in a way that does not adversely affect the operation of the company. One of the most important steps that can be taken towards this goal is the preparation of a family constitution. In this Newsletter, the scope, content and binding nature of the family constitution are examined.

Dispute Resolution in the Digital Age

23rd August 2021

Introduction

Arbitration has benifited from a great increase in the use of technology which has directly effected the conduct of proceedings. More particularly, with digitalization, the way that we conduct arbitration proceedings has been changed to reflect the current needs of parties, with an aim of increasing time and cost efficiency. In line with these needs, and as a measure against the COVID-19 pandemic, virtual hearings have become common.

Articles of Association in Family Businesses

23rd August 2021

Introduction

Family companies, basically, are commercial companies in which the company shares or the authority to manage the company belong to various members of a family. The main criteria that may be used to identify family companies are one or more of the following elements: either the majority of the shareholders are family members, family members dominate the management or the family has a strategic effect on the company management, or the continuity of family relations in the company. For this reason, family relationships and commercial ties between individuals add an intricate dynamic to the shareholding relationship.

A New Player in Liability Law: Artificial Intelligence

23rd August 2021

Introduction

The use of ​​artificial intelligence is increasing day by day and this technology is starting to play an active role in our lives. In addition to the use of artificial intelligence in common products such as smartphones, 3-D printers or drones, there are advanced technology breakthroughs that demand our attention. Unmanned aerial vehicles, self-driving cars, or robots performing surgery, are examples which reveal what this technology is capable to do. Although the technological developments from the Industrial Revolution to the age of Industry 4.0 are quite exciting, the damages that artificial intelligence can cause and who will be affected are still unclear. This newsletter article examines the current developments in Turkish and foreign law regarding liability for damages caused by artificial intelligence.

Definition and Legal Status of Artificial Intelligence

There are many different definitions of artificial intelligence. Known for its active work in the field of artificial intelligence, the EU Commission defines artificial intelligence as “systems that have a certain autonomy and exhibit intelligent behavior by analyzing and acting on their environment to achieve certain goals.”^[1] John McCarthy, who is known as the founder of artificial intelligence, defines artificial intelligence as "the science and engineering of making intelligent machines."^[2] There is no unified regulation on the definition of artificial intelligence yet. However, it is useful to touch on the concepts of "machine learning" and "deep learning" to better understand what artificial intelligence means. Machine learning, a term often used as synonymous with artificial intelligence, is actually a field of artificial intelligence that uses algorithms to learn from data. These algorithms build a model based on the inputs and use the resulting insights to make decisions or make predictions. Deep learning, on the other hand, is a much more recent concept and is defined as "continuous learning". It exemplifies the methods used by the human brain to solve complex problems.”^[3]While it is quite difficult to define artificial intelligence, there is also no consensus on its legal status. Indeed, there is no specific legislation or definition regarding artificial intelligence in Turkish law yet. For this reason, it should be evaluated whether artificial intelligence falls within the scope of the definitions already in the legislation. Although there are various opinions which define artificial intelligence as a person or a slave, there are important criticisms in the doctrine against these opinions, and there are ethical considerations as well.^[4] Since goods must have a tangible existence in accordance with Turkish law, it is also not widely accepted that artificial intelligence technology falls under the definition of goods.On the other hand, there are opinions which classify artificial intelligence as a product or service.^[5] The definition to be made here varies according to the nature of artificial intelligence and the services it offers, since the development level and capacity of each artificial intelligence is different. While it is possible to consider artificial intelligences with more advanced and complex actions as services, those with simpler and plainer features can be described as "products". On the other hand, there are opinions that artificial intelligence can be considered as a commodity within the scope of the Consumer Protection Law No. 6502 (“CPLN”).^[6] Pursuant to Article 3/h of the CPLN (Definitions) goods are defined as movable property, immovable property for residence or holiday purposes, and software, audio, video and similar intangible goods prepared for use in electronic environment, which are subject to trade.Among the foreign opinions on artificial intelligence, the Civil Law Rules on Robotics published by the European Parliament Legal Affairs Committee in 2017 draws attention. According to this report, due to the unique nature of artificial intelligence, it is recommended to create a new legal status and create an "electronic personality”.^[7] Thus, it is understood that the European Parliament is closer to the definition of "person" rather than the definitions of products, goods or services, and wants to create a sui generis personality.

Liability for Damages Caused by Artificial Intelligence

Contractual relations and torts, which form the fundamental basis of legal responsibility, are evaluated in the doctrine in terms of the damages potentially caused by artificial intelligence. Firstly, considering contractual liability, the responsibility arising from the contract between the buyer and the seller of the artificial intelligence shall be examined. In contractual liability, there are various advantages, such as providing ease of proof to the injured party and the statute of limitation is 10 years. However, in accordance with the principle of privity of contract, it will not be possible for third parties other than the buyer to make a claim against the seller. As a matter of fact, the defects that occur in artificial intelligence will most likely be caused by the manufacturer's fault rather than the seller; however, it will not be possible to sue the manufacturer due to the principle of privity.^[8]As another source of responsibility, tortious liability and strict liability are frequently evaluated in the doctrine. Pursuant to Article 49 of the Turkish Code of Obligations No. 6098 (“TCO”), a person who causes harm to another by a wrongful and unlawful act is obliged to compensate for this damage. Compensation may be claimed under the provisions of the tortious liability, in the event that one of the persons who had no previous relationship with the tort causes harm to the other.^[9] For this reason, if a person who is harmed due to artificial intelligence does not become a party to any contractual relationship and the conditions required by law are fulfilled, compensation can be claimed according to this general provision.^[10]Strict liability cases are a type of liability regulated exceptionally in our legislation. In this type of liability, a person is held liable only for the damages caused by his own actions, or by some related facts, without any showing of fault.^[11] Categories of strict liability under Turkish law include equity liability, the duty of care, and liability for dangerous activities. Among these, there are several opinions which argue that artificial intelligence should be accepted as a personality in order to apply the equity liability.^[12] Liability for dangerous activities is regulated under Article 71 of the TCO (Liability for dangerous activities and equalization). Accordingly, if a loss arises from the activity of a business that poses a significant danger, the owner of the business and the operator, if any, are jointly responsible for this loss. In the event that artificial intelligence is used in an enterprise where the danger is envisaged in this article, it is possible to bring an action for danger liability.Finally, the topic of producer responsibility should be addressed. Today, it is generally accepted that the manufacturer may be held responsible for damages caused by artificial intelligence. Since manufacturers have the technical knowledge and expertise required for the production of artificial intelligence, it is considered quite reasonable to hold them responsible^[13]. As stated above, while it is not possible for the buyer to sue the manufacturer due to the privity of the contract, the manufacturer's responsibility provides a legal basis for that. In this regard, the responsibility of the manufacturer is clearly regulated in accordance with the Product Safety and Technical Regulations Law No. 7223. Accordingly, the responsibility of the manufacturer comes to the fore in cases where a product put on the market is faulty and this causes damages. However, some authors are of the opinion that the causal link may pose a problem since causality must be proved by the injured party^[14]. Given the complexity and technical side of artificial intelligence, buyers are likely to have difficulty proving this causation.

Developments in Foreign Legislation

It is well known that the EU Commission is closely following the artificial intelligence issue and is working to create a uniform regulation in this field. In this context, in the White Paper^[15] published in 2020, the artificial intelligence ecosystem was closely examined and opinions were expressed about the legislation to be created and what the responsibility regime should look like. It is noteworthy that if a very strict liability regime regarding artificial intelligence liability is developed, the development of this technology may be hindered. In this context, the EU Commission prepared the first draft legislation on artificial intelligence in 2021.^[16] In the aforementioned draft, a “risk-based” approach has been adopted and levels such as unacceptable risk, high risk, low risk and minimum risk have been determined according to the risk level of artificial intelligence activities. The proposal is expected to enter into force in 2023. Thus, an important step will be taken towards a uniform legislation specific to artificial intelligence.

Conclusion

Artificial intelligence, the use of which is rapidly increasing along with its capabilities, is generally considered too complicated to be defined with current legal concepts. As there is no uniform legislation on this subject in our country and in the world yet, attempts are being made to solve the problems related to artificial intelligence with existing concepts and responsibility regimes. There are various debates about how artificial intelligence should be regulated through legislation. A general caveat, however, is that the development of this technology could be hampered if overly burdensome liability regimes are introduced. It is eagerly awaited that the uniform regulations on how to define artificial intelligence. And how it will be subject to rules, will be clarified in the near future.

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(Authored by Yagmur Zeytinkaya and first published by Erdem & Erdem on August 2021) [1] https://digital-strategy.ec.europa.eu/en/library/communication-artificial-intelligence-europe (Access date: 17.07.2021)[2]  http://jmc.stanford.edu/artificial-intelligence/what-is-ai/ (Access date: 09.08.2021)[3]  Büyüközkan Feyzioğlu, Gülçin: Gelişen Teknolojiler ve Hukuk II: Yapay Zeka, 2021, s. 6-7[4]  Bak, Başak; Medeni Hukuk Açısından Yapay Zekanın Hukuki Statüsü ve Yapay Zeka Kullanımından Doğan Hukuki Sorumluluk, 2018, s. 9[5]  Sarı, Onur: Yapay Zekanın Sebep Olduğu Zararlardan Doğan Sorumluluk, TBB Barosu 2020 Sayı: 147, 2019, s. 259[6]  Sarı, s. 262[7]  European Parliament resolution of 16 February 2017 with recommendations to the Commission on Civil Law Rules on Robotics (2015/2103(INaL)) https://www.europarl.europa.eu/doceo/document/TA-8-2017-0051_EN.html#title1 (Access date: 18.07.2021)[8]  Sarı, s. 265[9]  Tandoğan, Haluk: Türk Mesuliyet Hukuku, 2010, s. 6[10]  Sarı, s. 265[11]  Tandoğan, s. 8[12]  Sarı, s. 268[13] Sarı, s. 275[14] Kapancı, s. 177[15]https://ec.europa.eu/info/sites/default/files/commission-white-paper-artificial-intelligence-feb2020_en.pdf  (Access date: 20.07.2021)

Revaluation of Immovables within the scope of Law No. 7326

27th July 2021 Law No. 7326 on the Restructuring of Certain Receivables and Amendments to Certain Laws ("Law No. 7326") entered into force by being published in the Official Gazette dated 9 June 2021. In Law No. 7326, provisions regarding (i) the restructuring of finalized tax receivables, (ii) tax receivables that are not finalized or are in litigation, (iii) tax assessments in litigation before first degree courts or whose deadline for filing a lawsuit had not expired, and (iv) tax base increase mechanism are included.

The Carrier’s Right of Retention on Goods

27th July 2021

Introduction

Arising from the contract of carriage, the legislator has prescribed a right of retention on cargo by the carrier in order to secure the carrier’s receivables. Although the carrier's right of retention is subject to separate regulations within the scope of Turkish Commercial Code numbered 6102 (“TCC”) in terms of land transport and sea transport, the carrier has a right of retention on the goods in terms of both land transport and sea transport. In this article, the sea carrier’s right of retention on sea cargo transport is examined.

Scope of the right of retention and exercise of the same against shipper and consignee

The carrier has the right of retention on the cargo in accordance with Articles 950-953 of Turkish of Civil Law (“TCL”) numbered 4721. Pursuant to Article 950 of the TCL, the creditor may impound the movable or negotiable instruments belonging to the debtor that he had possessed with the debtor’s consent for the carrier’s receivables arising from the contract of carriage at sea until the debt has been paid, if the debt is due, and the goods are related to the debt due to their nature. The legislator refers to the general provisions of the TCL regarding the right of retention under Article 1201 of the TCC, and has drawn up separate and independent regulations regarding the carrier’s right of retention, considering the parties of the carriage relationship and the diverging aspects of the contract of carriage.The carrier may exercise the right of retention against the shipper, which is a party to the freight contract, for all receivables arising from the freight contract. The scope of the receivables includes freight charges, distance freight, dead freight, demurrage fees, receivables arising from the container’s waiting period, expenses incurred for the execution of the instruction and compensation receivables arising from the breach of the freight contract.^[1] As a rule, the right of retention only guarantees claims that arise on the goods from the journey on which the right of retention has been used.As per Article 1200 of the TCC, the shipper is the debtor of the receivables arising from the freight contract until the delivery of the goods is requested by the consignee. The consignee, who is in the position of a third party, is included in the relationship arising from the freight contract when he requests delivery of the goods. In this respect, in order to use the right of retention against the consignee who is in the position of a third party, the consignee must demand the delivery of the goods.The carrier’s receivable must be due in order for the right of retention to arise. In terms of non-due receivables, the carrier has no right of retention on the goods. Article 952 of the TCL sets forth an exception to this principle for cases where the debtor is in a state of insolvency. If the debtor is incapacitated, the carrier may use the right of lien on the cargo, even if the debtor's receivable is not yet due.

Exercise of the Retention Right

It is accepted by the scholars that the right of retention should be exercised in a proportional manner. This general acceptance is also stipulated in the TCC in terms of the carrier's right to retention. Pursuant to Article 1201(3) of the TCC, the right of retention can only be exercised on the goods in the amount that was secured. However, in order for this right to be exercised in a proportional manner, the goods must be divisible.In terms of exercising of the retention right, the carrier may refrain from delivering the goods to the consignee. When the delivery of the goods is requested, the carrier shall notify the carrier that he has exercised this right against the person who has requested the delivery.The right of retention on the goods cannot be claimed independently from the secured receivable. In the liquidation process of this right, the method of “liquidation by keeping the book” is performed. In this respect, the carrier may request the assistance of the enforcement office for the protection of the right of retention. Afterwards, the executive directorate makes a ledger of the goods that have the right to retention on them and gives the carrier a period of fifteen days to initiate execution proceedings for the foreclosure of the pledge. The carrier must initiate the execution proceedings for the foreclosure of the retention right within the granted fifteen days.

Conclusion

The right of retention that is envisaged to provide a guarantee to the creditor if the debtor cannot fulfill his debt is separately regulated in the TCC in terms of receivables arising from maritime transport. Against whom this right is directed depends on whether the consignee demands the delivery of the goods or not. In order to exercise the right of retention, the debt must be due. In terms of the execution of this right, special regulations are included in the law, and the carrier has the opportunity to claim his receivables as a result of the liquidation of the goods through enforcement proceedings.(Authored by Duygu Oner and first published by Erdem & Erdem on July 2021)

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[1] Ülgener, Fehmi: Çarter Sözleşmeleri I, Genel Hükümler ve Sefer Çarteri Sözleşmesi, 2. Bası, İstanbul 2017, p. 405.

Competition Law Concerns Regarding Human Resources Practices

27th July 2021

Introduction

Pursuant to Article 2 of the Law on Protection of Competition (“Law No. 4054”), “all agreements, decisions and practices that prevent, distort or restrict competition between any undertakings operating in, or affecting markets for, goods and services within the borders of the Republic of Turkey; abuse of dominance by dominant undertakings in the market; any kind of legal transactions and behaviors that are in the nature of mergers and acquisitions, and which may significantly decrease competition; and transactions concerning the measures, observations, regulations and supervisions aimed at the protection of competition,” are within the scope of Law No. 4054. Under the succeeding provision, which is Article 3, terms and concepts are defined for the purposes of the implementation of Law No. 4054, and the grounds for this article clearly stipulate that while intellectual or physical activities, or activities, which concern both, and are undertaken for a price or benefit, are defined as service. In its largest sense, the definition also includes banking, insurance, money, credit, capital, knowledge and the other elements. Having said that, the same grounds for the same Article also stipulate that “The labor market, where the principle of collective bargaining is accepted, is not included in this definition.” However, the principle of collective bargaining is interpreted as referring to unionization. To that end, in light of past and recent decisions of the Competition Board (“Board”), it is clear that the Competition Authority (“Authority”) considers labor markets within the scope of Law No. 4054.

Regulation Models for Third Party Funding in Investment Arbitration – Part I

27th July 2021

Introduction

The United Nations Commission on International Trade Law (“UNCITRAL”) Secretariat published the Draft Provisions on Third-Party Funding (“TPF”) in Investor State Dispute Settlement (“ISDS”).^[1]The Draft Provisions give an insight of host states’ long-lasting concerns on the influence of the TPF^[2] in treaty-based arbitrations.^[3] It is argued by some states that TPF is used as an abusive tool for easier access to arbitration, especially for frivolous claims filed with political purposes. By the Draft Provisions, it is aimed to fill the regulation gap, and raise transparency in practice as a part of the UNCITRAL Working Group III’s ISDS Reform proposals dating back to August 2019.^[4]Once finalized, these provisions may be implemented through inclusion into investment treaties at bilateral or multilateral levels.^[5] Their modified versions may be incorporated into arbitration rules and domestic legislation.

Definitions

Draft Provision 1 provides definitions of key terminology, such as TPF, funder and funded party.^[6] The definitions are drafted in a broad manner. TPF includes indirect funding, where a funding agreement is concluded by an affiliate or a representative of a disputing party. It also covers both financial and non-financial support, commercial financing and, as well, forms of non-profit funding.

Scope

The UNCITRAL aims to block potential claims to be raised by funders due to loss or damage they suffer while funding an investment dispute against a host state. In this manner, Draft Provision 8 draws the scope of covered “investor” and “investment,” and clearly excludes TPF from this scope. Accordingly, neither shall TPF be construed as an “investment,” nor may the funder be an “investor” as per the applicable treaty.

Regulation Models

Draft Provisions 2 to 5 set forth regulation models aiming to raise integrity and avoid abuse in the ISDS proceedings.

• • Prohibition Models: Draft Provision 2 offers four options to implement a prohibition against TPF. Options vary from a general prohibition to a denial of benefits clause. Should any of these options be included into investment treaties, claims filed through a funder may be rejected, and tribunals may declare jurisdiction to hear the claim.

The prohibition models fail to respect claimants’ right to access justice, and disregard the financial burden many claimants face in treaty-based arbitrations. Instead, the prohibition models appear to excessively back host states’ concerns over frivolous claims filed in bad faith and/or for political purposes.

• • Restriction Models: Draft Provisions 3 to 5 allow only certain types of TPF. According to the “Access to Justice Model,” TPF is permitted where the claimant is not in a financial position to file a claim without a funder. This prevents funding obtained only for business purposes, where claimants can actually manage risks, and afford the costs of the proceedings without financial support from a funder.

“Sustainable Development Model” permits TPF only if claimants’ investments comply with sustainable development provisions of the host state. The UNCITRAL argues that this model could motivate states to prioritize investments contributing to fight against climate change and protection of environment.“Restriction List Model” illustrates prohibited funding types that are speculative, requiring excessive return, and which exceed a reasonable number of cases funded against the same respondent state regarding the same measure.Given their subjective nature, these models are likely to cause further complications in treaty arbitrations should they be incorporated into treaties. The “Access to Justice Model” is not, especially, convincing since it fails to explain why claimants should be under the burden of using solely their own sources while filing a claim.

Sanctions

Draft Provision 6 sets forth legal consequences, should there be a TPF falling within the Prohibited or Restricted Models, which nevertheless finances an investment claim. Possible sanctions vary, such as, lack of jurisdiction for the tribunal, inadmissibility of claim, termination of the TPF agreement, return of the funding received, suspension of proceedings, and consequential costs awards. The UNCITRAL takes one step further by underlining the likelihood of annulment of an award in such cases.

Disclosure Regime

A major part of the UNCITRAL’s work covers a detailed disclosure regime in the TPF. As per Draft Provision 7, the claimants are expected to disclose the identity of the funder with its beneficial owner and decision-maker in addition to the funding agreement. The tribunal has the discretion to determine the extent of disclosure. Accordingly, further details might also be required to be disclosed such as, the funders’ expected return, level of influence on the claim, and other cases they fund against the same state.The disclosure regime serves the purpose of bringing more transparency to the ISDS proceedings, which has been a common concern for arbitration institutions such as the ICSID and ICC. This provision may be developed further to combine with disclosure requirements of the tribunal members in line with draft Code of Conduct for Adjudicators in International Investment Disputes.^[7]

Costs

The UNCITRAL provides alternative provisions for cost-related matters, as well. Draft Provision 9 offers two options for ordering security for costs. Option A regulating a mandatory regime requires ordering security for costs should there be a claim funded by TPF. This option appears to be designed to reassure recovery of respondent states’ costs in an investment dispute brought by a claimant in financial difficulties.As per Option B, the tribunal has the discretion to order security for costs from the funded party. This option seems to be more adequate, since the mere existence of TPF would not necessarily justify an order for security of costs.^[8] It also better aligns with the fact that each dispute has its own financial realities, subjects and grounds that require a case by case analysis.Draft Provision 10 provides two alternatives on allocation of costs related to TPF (including a return to be paid to the funder) in an investment dispute. Option A excludes TPF costs from the costs of the proceedings. As per Option B, TPF costs shall be borne by the funded party. Both provisions underline the tribunal’s discretion to determine differently on cost allocation.

Considerations on Code of Conduct for TPF

Lastly, the UNCITRAL considers various initiatives to develop a Code of Conduct for TPF. These initiatives are likely to focus on disclosure; transparency in business conduct; limitation on return to be paid to the funder; control of the funder in the proceedings; number of claims to be funded against the same state; and due diligence against frivolous claims.

Conclusion

The Draft Provisions on TPF in the ISDS reflect concerns on the funding industry’s impact in the ISDS practice.The Prohibition and Restriction Models in addition to Sanctions provide a strict framework limiting funding options, which fail to answer the needs of arbitration practice, typically requiring a high amount of financial source while filing a claim. The Draft Provisions on Disclosure and Cost Allocation are important steps on the way to transparency and efficiency.TPF is argued by some to be used as an abusive tool for easier access to investment arbitration, especially for frivolous claims filed with political purposes. However, this negative bias is not necessarily true. Funders’ prior due diligence on the merits and success chance of the claim prove the other way around, since financing claims having no legal basis and borne to be dismissed before an arbitral tribunal would not be sound and sustainable for the funding business.Regulatory work on TPF is likely to continue further, in line with the ISDS reform. Arbitration institutions have followed the same path since the ICC 2021 Arbitration Rules^[9], and the ICSID’s fifth working paper on its Draft Rules^[10] were also drafted in a way to answer long-lasting calls of states for further transparency and regulation in the funding industry, which will be covered in depth in Part II of this article.(Authored by Tilbe Birengel and first published by Erdem & Erdem on July 2021)

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[1] For access to the Draft Provisions: Third-party funding | United Nations Commission on International Trade Law.[2] For further details on TPF see Leyla Orak Çelikboya, Third Party Funders in Arbitration, September 2015, for access: Third Party Funders in Arbitration - Erdem & Erdem (erdem-erdem.av.tr).[3] Jack Ballantyne, UNCITRAL publishes proposals to reform funding of ISDS, GAR, for access: Global Arbitration Review - UNCITRAL publishes proposals to reform funding of ISDS.[4] UNCITRAL Report of Working Group III (ISDS Reform), 38^th Session, Vienna, 14–18 October 2019, para. 94, for access: A/CN.9/1004 - E - A/CN.9/1004 -Desktop (undocs.org).[5] The Draft Provisions will be open for comments until 30 July 2021.[6] TPF is defined as “‘Third-party funder’ is any natural or legal person who is not a party to the proceeding but enters into an agreement to provide, or otherwise provides funding for the proceeding.”[7] For access: Code of Conduct for Adjudicators in International Investment Disputes | ICSID (worldbank.org).[8] UNCITRAL Report of Working Group III (ISDS Reform), 38^th Session, Vienna, 14–18 October 2019, para. 94, for access: A/CN.9/1004 - E - A/CN.9/1004 -Desktop (undocs.org).[9] The ICC 2021 Arbitration Rules Art. 11/7 is as follows:In order to assist prospective arbitrators and arbitrators in complying with their duties under Articles 11(2) and 11(3), each party must promptly inform the Secretariat, the arbitral tribunal and the other parties, of the existence and identity of any non-party which has entered into an arrangement for the funding of claims or defences and under which it has an economic interest in the outcome of the arbitration.For access: 2021 Arbitration Rules - ICC - International Chamber of Commerce (iccwbo.org).[10] ICSID’s fifth working paper on its Draft Rules, for access: ICSID Releases Fifth Working Paper on Rule Amendments | ICSID (worldbank.org).

Protection and Registration of Designs

27th July 2021 Within the scope of Industrial Property Law No. 6769 (“IPC”), the visual features of a product, in other words, its design, may be protected. Today, as designs also have marketing, advertising and competition elements, their registration has gained more importance. Design right gives the owner the right to prevent the unauthorized and unfair use of the design by third parties.

The Unification of Judgments Decision of the Court of Cassation on Notification Law

15th June 2021

Introduction

The Decision of the Court of Cassation Great General Assembly on the Unification of Judgments (“Assembly”) dated 20.11.2020 and numbered 2019/2 E., 2020/3 K. (“Decision”) was published in the Official Gazette dated 20.04.2021 and numbered 31460 and resolved the differences in opinion and application among the Court of Cassation General Assembly of the Civil Chamber, 2nd Civil Chamber, 4th Civil Chamber and 12th Civil Chamber. This article discusses the Decision, the terms used throughout the Decision, and the dissenting opinions.

Singapore Convention and Enforcement of Settlement Agreements in Turkey

15th June 2021

Introduction

The United Nations Convention on International Settlement Agreements Resulting from Mediation (“Singapore Convention”) was adopted by the United Nations General Assembly on 20 December 2018. It was signed by Turkey on August 7, 2019, when it was opened for signature. Finally, the Presidential Decision dated 21 April 2021 and numbered 3866 on the ratification of the Singapore Convention entered into force after being published in the Official Gazette dated 22 April 2021 and numbered 31462.

Shareholders’ Agreements in Family Businesses

15th June 2021

Introduction

Family businesses, in the simplest definition, are companies in which the company shares, or the authority to manage the company, belongs to various members of a family. The most significant issues that must be addressed in these companies are institutionalization, and the prevention or minimization of the effects of disagreements between family members on company activities. In ensuring the institutionalization of the company, it is not always sufficient for family members to be aware of their duties and responsibilities in the company and to comply with them in good faith, and legal instruments that have a binding effect and sanctioning power over the relevant family members become necessary in most cases. In this regard, one of these instruments is the shareholders’ agreements.

Recent Regulations Regarding Electricity Storage Activity

15th June 2021

Introduction

Technology has evolved to the point, today, where we use the energy we obtain from different sources most commonly in the form of electrical energy. Electricity is an ideal form of energy through which to perform our daily tasks due to its ease of transfer and conversion to different energy forms.

Liability in Primary Employer and Sub-Employer Relationship

15th June 2021

Introduction

Under labor and social security law, it is essential for the employer to carry out business with its employees. However, in the legislation, the sub-employer concept has been regulated by providing the opportunity to gain support from another employer and its employees in some parts of the work, wherein the employer and, therefore, its employees are insufficient. Pursuant to Article 2 of Labor Code numbered 4857 (“Labor Code”), an employer may assign its auxiliary works related to the production of goods or services carried out in the workplace, or a part of the main work that requires expertise due to technological reasons and the operation, to another employer who takes the job and assigns its employees solely for this work. As is understood from this regulation, the establishment of the primary employer and sub-employer relationship is subject to certain rules.In addition, some regulations have been stipulated in the legislation in terms of the results of this relationship and the liabilities imposed on the parties. Accordingly, due to the possibility that sub-employers who have more limited financial opportunities and smaller capital than the primary employer, cannot meet their debts to their employees and the Social Security Institution ("SSI"), the primary employers with a stronger financial structure and capital have been held jointly liable together with the sub-employer for these debts. In this article, the cases of joint liability regulated under the legislation, and the recourse relationship of the parties, will be evaluated.

Legal Grounds and the Scope of Joint Liability

Pursuant to Turkish Code of Obligations numbered 6098 (“TCO”), joint liability means that each of more than one debtor is responsible for the entire debt to the creditor. Below, the legal regulations under which the primary employer and the sub-employer are legally jointly liable and the scope of these regulations will be examined.

Labor Law

The responsibility of an employer to its employees arises from the employment contract between them or the mandatory provisions of the law-governed by this employment contract. Therefore, the primary employer has various responsibilities and obligations to its employees, both contractually and legally, due to the employment contract between them. There is no contractual relationship between the primary employer and the employees of the sub-employer. Nevertheless, pursuant to Article 2/7 of the Labor Code, the primary employer, together with the sub-employer, are liable for the obligations arising from the Labor Code, the employment contract, or the collective labor agreement to which the sub-employer is a party, to the employees of the sub-employer. With this regulation, the legislator has stipulated joint liability arising from the law to protect the sub-employer's employees as the employees of the primary employer. As a result of this obligation, the sub-employer’s employee may apply to both the sub-employer and the primary employer separately or together for the performance of his/her receivables.Pursuant to the Supreme Court, with respect to the scope of the joint liability in terms of individual labor law, notice, severance, bad faith, and reinstatement compensations, and all labor receivables, such as wages, overtime work, week holidays, general holidays, annual leave, bonus, premium, meals and road allowances are included.^[1] On the other hand, there are different opinions in the doctrine regarding the calculation of the primary employer's obligation arising from the receivables which are dependent as to the period of service, such as severance pay and annual leave. In terms of collective labor law, the responsibility of the primary employer comes into question for the rights arising from the collective labor agreement to which the sub-employer is subject.In accordance with the established doctrine and the Supreme Court opinions, within the framework of the job security granted to the employees with Article 18 of the Labor Code, the primary employer is not jointly liable for the invalidity of termination nor reinstatement of the employee; however, it is accepted that the joint liability exists in terms of non-reinstatement and idle time compensations arising from the sub-employer’s non-reinstatement of the employee to the work after a court decision.It should be emphasized that this joint liability is limited to the time that the employee works at the primary employer's workplace.^[2]

Occupational Health and Safety Law

Pursuant to Article 4 of Occupational Health and Safety Code numbered 6331 (“OHSC”), which is based on the obligation to take care of the employees, which is one of the fundamental obligations of the employer, the employer is obliged to take necessary measures to ensure and protect the health and safety of the employees employed in the workplace. In addition, as per Article 22 of the OHSC, an obligation to establish an occupational health and safety committee is regulated for the primary employer and sub-employer relations that last more than six months. Since the basis of these regulations is the employer’s obligation to taking care of its employees, it is considered that the material and moral compensation claims arising from a work accident suffered, or occupational disease acquired, by the sub-employer’s employees that occurs in or from the workplace, are within the scope of the joint liability of the primary employer.

Social Security Law

Joint liability for the primary employer and the sub-employer is also foreseen under Social Insurance and General Health Insurance Code numbered 5510 ("SIGHIC"), which regulates the social security legislation. According to Article 12/6 of the SIGHIC, even if the insured are employed through a third party and have made a contract with them, the primary employer is responsible, together with the sub-employer, for the obligations this law imposes on the employer. In accordance with the precedents of the Council of State and the Supreme Court, the primary employer is jointly liable with the sub-employer for the obligations imposed by the SIGHIC on the employers, such as the obligation to submit the statement of employment and the leave of the insured, the obligation to notify the workplace, the obligation to report workplace accidents, the obligation to give the monthly premium and the service documents, the obligation to pay the insurance premiums, etc. On the other hand, there are differing practices between the opinions of the SSI, the Supreme Court, and the Council of State, in terms of whether or not this joint liability exists for administrative fines. In one of its decisions, the Supreme Court is of the opinion that administrative fines are the result and sanction of the failure to comply with the duties imposed on the employer, the main employer shall also be responsible for the consequences of the subcontractor's failure to comply with its duties, and the primary employer will be liable for the administrative fines imposed on the sub-employer in accordance with this joint liability.^[3] On the other hand, in a recent decision, the Council of State has decided that since there is no explicit provision in the law stating that the principal employer will be liable for administrative fines in the case of failure to fulfill the specified obligations, and the responsibility of the primary employer solely exists financially and legally; therefore, the party who acts contrary to the relevant obligations should be held subject to the penalties. Accordingly, the Council of State considered that the primary employer shall not be held responsible for the administrative fines imposed by the SSI against the sub-employer, as per the rule of the personality of the penalties.^[4]

Right of Recourse

Under Article 167, which is one of the general provisions of the TCO regulating joint liability, unless otherwise agreed to, or understood from, the nature of the legal relationship between the debtors, each of the debtors is responsible for the performance that shall be made to the creditor with equal shares between/amongst each other. Therefore, as per the internal relationship between the primary employer and the sub-employer, the rule is that both employers are responsible equally to the employee of the sub-employer. On the other hand, this equal liability existing in the internal relationship can be eliminated by the sub-employer agreement concluded between the parties. According to precedents of the Supreme Court, it is stated that in a recourse case between the primary employer and the sub-employer, the liability should be resolved according to the provisions of the sub-employer contract.^[5] Accordingly, the primary employer may demand the entire amount from the sub-employer, which is paid to the sub-employer’s employee, if it is stipulated in the contract.

Conclusion

In the legislation, various results are foreseen in terms of the primary employer and sub-employer relationship. One of these consequences is the joint liability of the primary employer to the creditors of the sub-employer for some debts. The joint liability of the primary employer takes place not only in labor law, but also in occupational health and safety law and social security law. Accordingly, the primary employer is jointly liable with the sub-employer in terms of liabilities arising from the law and the contract to the employees of the sub-employer. In addition, it is accepted that this joint liability exists in terms of the compensation to be claimed as a result of a work accident or occupational disease in the workplace. Unlike the labor law and occupational health and safety law, the scope of the joint liability of the primary employer in social security law is controversial in case law and doctrine views.Legal joint liability stipulates that both employers are equally responsible to the employee and SSI. On the other hand, in the internal relationship between the primary employer and the sub-employer, this responsibility can be eliminated, or the liability ratios can be changed, if the parties agree. It should be noted that this agreement in internal relations cannot be claimed against third parties.

---

(Authored by Idil Uz and first published by Erdem & Erdem on May 2021)[1] Decision numbered 2008/23429 E., 2008/20721 K. and dated 21.07.2008 of 9th Civil Chamber of the Supreme Court.[2] Justification of Labor Code numbered 4857 dated 07.03.2003.[3] Decision numbered 1991/10-277 E, 1991/359 K and dated 12.06.1991 of the General Assembly of the Supreme Court.[4] Decision numbered 2015/10087 E., 2018/7937 K. and dated 28.11.2018 of the 15th Civil Chamber of the Council of State.[5] Decision numbered 2012/8729 E., 2012/15064 K. and dated 11.06.2012 of the 13th Civil Chamber of the Supreme Court; Decision numbered 2004/11-254 E., 2004/295 K and dated 12.05.2004 of the General Assembly of the Supreme Court.

Limitation on Financing Expense Deduction through the Updated Draft Communique

25th May 2021

With the Article added to Corporate Tax Law No. 5520 (“CTL”) through Law No. 6322 promulgated in the Official Gazette dated 15.06.2012, the limitation on financing expense deduction was re-introduced into our legislation. According to the regulation whose first effective date was 01.01.2013, for the taxpayers whose foreign liabilities exceed their equity capital, except for credit institutions, financial institutions, financial leasing, factoring and financing companies, a portion of the financial expenses (exclusively for the exceeding part and excluding those added to the cost of the investment) to be determined by the President (the Council of Ministers on that date), not more than 10% has been considered as the payment not deducted as expense in the determination of the tax base. The President has been authorized to differentiate the rate by sector; whereas, the Ministry of Treasury and Finance has been authorized to designate the procedures and principles of the limitation.

Road to Energy Efficiency in Public Buildings: Communique on the Implementation of EPC’s

25th May 2021

In our country, significant steps have been taken recently to increase energy efficiency, to reduce energy costs, and to protect the environment. One of these steps is to increase energy efficiency by saving energy used in public buildings. Various regulations have come into force regarding public administrations, as well as other public institutions and organizations (“Administration”) to form energy performance contracts (“EPC”) with contractor companies in order to reduce their energy consumption or energy costs.

Assignment of the Author’s Economic Rights

25th May 2021 The author is the person creating the work and automatically becomes the owner of the economic rights on the work by the creation thereof. If the author does not have the resources to solely exercise the economic rights on the work, s/he may apply two different methods to benefit from the economic rights as regulated under Intellectual and Artistic Works Act numbered 5846 (“IAWC”). These methods assign the economic rights and assign the authority to exercise the economic rights; in other words, granting licenses for economic rights.

What Does Remote Working Regulation Regulate?

25th May 2021

The concept of remote working was included in the scope of Turkish Labor Law No. 4857 ("Labor Law") through the amendment[1] of Article 14 of the Labor Law in 2016. However, no secondary legislation that regulates the details of remote working was published following the amendment.

Minimum Labour Conditions of FIFA for Female Players Regarding Pregnancy and Maternity

25th May 2021

On 4 December 2020, the FIFA Council approved the amendments to the Regulations on the Status and Transfer of Players (“RSTP”) endorsed by the FIFA Football Stakeholders Committee in November, 2020. One of the most essential additions to the RSTP is the provision regarding pregnancy and maternity for female professional players. This article focuses on the minimum labour standards for female professional players introduced in the amendments to the RSTP, which were also notified to all member associations through circular numbered 1743.[1]The amendments came into force on 1 January 2021.

European Union Payment Services Directive and Its Effects on the Turkish Payment Systems Legislation

25th May 2021

With the initial regulation of the European Union called Payment Services Directive numbered 2007/64/EC (“PSD1”), which entered into force on 01.11.2009, an efficient, fast, secure and competitive payment market was intended, and the application of unified rules throughout this large market across Europe was ensured. FinTech companies, which are payment system providers within that scope, appeared in the finance scene as new actors, together with the banks.

Basic Principles Regarding Public Offering

25th May 2021

Public offerings attracted a great deal of attention from companies and investors in the first quarter of 2021. Beyond any doubt, one of the biggest benefits of public offerings is that it provides liquidity to the company (according to the method to be followed) and is a source of unsecured and non-recourse financing. Aside from this, public offerings of shares ensures the institutionalization of the company offered and, thus, the company becomes independent from a specific individual. The recognition and credibility of the company increases. Considering the benefits of a public offering, it seems that this momentum will continue to increase in the upcoming period. Many products, such as company shares, debt instruments, and warrants may be subject to a public offering. This article refers to the public offering of company shares.[2] Below, the main legislation that the companies will be subject to in initial public offerings in Turkey's capital markets, and the conditions deemed necessary by the Capital Markets Board ("CMB") and the basic principles regarding a public offering process, will be focused on.

The Change in WhatsApp Privacy Policy and Its Effect on Personal Data Protection Law

19th March 2021

On January 4, 2021, the most preferred online messaging application worldwide, WhatsApp, announced that it will change its privacy policy.

Withholding Tax Issue in Digital Advertising Services

19th March 2021

For startup companies, adjusting technology to needs, or creating new needs, with the products and services they offer, and gearing up in our country day by day, one of the key elements is undoubtedly digital advertising activities. With the impact of the Covid-19 epidemic, being visible in digital environments has become the golden rule of being able to operate. The 64% increase in electronic commerce volume[1] may indeed be considered as an indicator of this rule.

A New Tax Controversy: Valuable House Tax

19th March 2021

In accordance with the Valuable House Tax (“VHT”) that is regulated through Law Numbered 7194 on the Digital Service Tax and the Amendment of Certain Laws and Law Decree Numbered 375 (“Law No. 7194”), and which is quite new and controversial to Turkey, households in Turkey whose tax value is more than TRY 5,000,000 are also subject to the VHT in addition to real estate tax.

Energy Performance Contracts as a Project Financing Method

19th March 2021

The objectives of the Energy Efficiency Law[1] ("Law"), which was adopted in 2007, are listed as the efficient use of energy, prevention of waste, lowering the burden of energy costs on the economy, and increasing efficiency in order to protect the environment. In this regard, Article 3(1)(k) of the Law, defines energy efficiency as the reduction of energy consumption, without any decrease to the living standard and service quality in buildings, and without a decrease in production quality or quantity in industry.

Breach of Concordat by the Debtor

19th March 2021

A concordat is a reconstruction agreement that is regulated under Articles 285-309 of the Execution and Bankruptcy Law (“EBL”), and aims to protect both the debtors in poor financial standing, as well as their creditors. Concordats had been applied in our country for a considerable time in the past; however, their popularity ceased after suspension of bankruptcy provisions came into effect.

Halliburton Decision on Apparent Bias: Violation without Consequences

19th March 2021

The English Court of Appeal once reasoned, “Impartiality is the watchword of all tribunals, including arbitrators.”[i] This is indeed true. Arbitrators’ independence and impartiality, both in connection with the parties and the dispute itself,[ii] are fundamental to the arbitral process.

Parent-Subsidiary Liability Within the Scope of Foreign Corrupt Practices Act

19th March 2021 Traditionally, with an aim to prevent corrupt practices internationally, pursuant to the Foreign Corrupt Practices Act (“FCPA”), offering anything of value to foreign public officials while performing their duties in order to gain commercial advantages are prohibited.

Actual Carrier in Carriage of Goods by Sea

19th March 2021

Performance of the carriage of goods by someone other than the person who undertakes the carriage, both for inland and intentional carriage, is a common circumstance. This unique type of carriage by the sea resulted with the emergence of the concept of “actual carrier” due to its genuine nature and needs evolving over time. This Article reviews the term “actual carrier,” and the liability regime within the scope of sea carriage.

The Practice of Unforeseen Circumstance in EPC Contracts

19th March 2021

In EPC Contracts, especially for the international ones, there is a long period between the finalization of the tender or the execution of contract and delivery of the work. It is a quite common situation, in practice, with EPC Contracts that various events arise that were not present and/or unforeseeable when the bid was made or even when the contract was executed, which changes the circumstances unforeseeably.

Administrative Supervision of Advertisements in Light of Advertisement Board Decisions

19th March 2021 Advertising, which has existed since the beginning of trade between people, is a marketing element that we encounter today on television, internet, radio, all kinds of social media tools, on the street; in other words, in all areas of life.

Portfolio Management Companies 101

19th March 2021 The portfolio management companies (“PMC”) that are defined under Article 55 (Portfolio Management Companies) of Capital Market Law numbered 6362 (“CML”) are joint stock companies whose main activity is the establishment and management of investment funds.

Mert Karamustafaoglu has been promoted as Partner and Competition & Compliance Leader

6th March 2019

We are very proud of announcing that Mert Karamustafaoglu has been promoted as Partner and Competition & Compliance Leader, as of January 1, 2019.

Nezihe Boran Demir has been promoted as Managing Associate

6th March 2019

We are very proud of announcing that Nezihe Boran Demir has been promoted as Managing Associate, as of January 1, 2019.

Transfer of Türk Telekom Shares owned by OTAS is completed

6th March 2019

Within the scope of the restructuring of the loans obtained by Ojer Telekomünikasyon A.Ş. (OTAŞ) in 2013 and 2014, the transfer of the shares owned by OTAŞ, representing 55% of Türk Telekomünikasyon A.Ş.’s (Türk Telekom) issued share capital by a special purpose vehicle  incorporated directly or indirectly by the creditors was completed on 21^st of December, 2018.

Opinion of the Court of Cassation on the Contention of Expert Opinion and Expert Report

7th January 2019

The notion of Expert Opinion, which entered into our law through the Code of Civil Procedure ("CCP"), has been a frequently resorted to method of helping to resolve disputes by the parties in our judicial system over the course of time...

Arrest of Ships under Turkish Law

7th January 2019

The general principles on maritime enforcement are set out in Turkish Commercial Code ("TCC") numbered 6102. On the other hand, Turkey has ratified the International Convention on Maritime Liens and Mortgages, signed in Geneva on 6 May 1993 and the International Convention on the Arrest of Ships, signed in Geneva on 12 March 1999 and both conventions have been come into force on 25 March 2017. The provisions of these two conventions have already been taken into consideration by the drafting committee of the code, and the relevant provisions have been incorporated into the TCC in preparing the same. This newsletter reviews the principles and provisions stipulated in the TCC for the arrest of ships.  

Decision of the Court of Cassation General Assembly on the Unification of Judgments holding that an

7th January 2019

In civil procedural law, a ban on the expansion and alteration of a claim and defense comes with two exceptions; the other party's consent, and "the amendment". The parties may completely or partially amend their proceedings prior to the end of the investigation phase. Provided that the legal requirements are fulfilled, an amendment may be filed without the consent of the other party or the court, since it is a unilateral and express declaration of will directed at the court 1. For instance, the parties may amend the value of the claim, or claim compensation, instead of payment in kind for defective goods.

Share Pledges in Joint Stock Companies

7th January 2019

Share pledges in joint stock companies are not specially regulated under the Turkish Commercial Code ("TCC"). Therefore, the provisions of the Turkish Civil Code that regulate the general rule regarding pledges, shall apply. Under Turkish Civil Code Article 954, transferable receivables and other rights may be subject to pledge. The pledge established on a share in joint stock companies is a "pledge right established on the right." A pledge is established on shareholding rights. A pledge on receivables and rights is subject to the principles of movable pledges. (Turkish Civil Code Article 954/2).

Updated FIDIC Contracts

3rd January 2019

International Federation of Consulting Engineers that is known by the abbreviation of FIDIC (Fédération Internationale Des Ingénieurs-Counseils) launched updated Red Book (the Conditions of Contract for Works of Civil Engineering Construction), Yellow Book (the Conditions of Contract for Plant and Design-Build)) and Silver Book (the Conditions of Contract for EPC/Turnkey Projects) in the "International Contract Users Conference," organized in London in December of 2017...

Recent Developments in the Right of Access to Files

3rd January 2019

The parties of an investigation that is conducted in accordance with the Act on the Protection of Competition No. 4054 ("Competition Act") may enjoy the right to access the files concerning them that are drawn up by the Competition Authority ("Authority"). The procedures and principles related to use of this right are regulated via Communique on the Rules for Access to Files and the Protection of Trade Secrets No. 2010/3 ("Communiqué"). For the parties, it is very important to exercise their right to access to files properly, since the relevant right has a direct correlation to their right to defense. Therefore, this article focuses on the discussions that may rise during the exercise of the right to access the files in light of the recent Competition Board ("Board") decisions...

The General Data Protection Regulation in Force

3rd January 2019

The General Data Protection Regulation ("GDPR" or "Regulation")1 that was approved by the European Union ("EU") Parliament and entered into force in 2016 has started to be applied as of May 25, 2018. The GDPR lays down rules relating to the protection of natural persons ("data subjects") with regard to the processing of personal data, and rules relating to the free movement of personal data. With this Regulation, it is intended to protect the privacy of the data subjects more strictly, and to reorganize data privacy laws across Europe. Also, it is worth to note that, international companies, as well as Turkish companies, are under the obligation to comply with the GDPR, provided that their activities fall under the scope of the GDPR.

Scope of the GDPR...

General Information on Registration to the Data Controllers Registry and the Decision of the Persona

3rd January 2019

Law on the Personal Data Protection numbered 6698 ("Law") was accepted on 24 March 2016 and entered into force, except for certain articles that are reserved, through publication in the Official Gazette dated 7 April 2016 and numbered 29677...

Amendment of ICSID Rules and Regulations

10th October 2018

At the 2016 Annual Meeting of the Administrative Council, the International Centre for Settlement of Investment Disputes ("ICSID") launched an amendment process on its' rules and regulations ("ICSID Rules and Regulations"). This has been the fourth amendment process since 1984, 2003 and 2006. As per Article 6 of the ICSID Convention, the amendments will only be effective upon the approval of two-thirds of the contracting states2. Hence, ICSID invited contracting states and the public3 to provide their amendment suggestions on topics worthy of consideration, which will be used as background papers throughout the process.

Amendments Introduced through Law No. 7101 on Arbitration Proceedings

10th October 2018

State courts have very important functions concerning arbitration proceedings. These functions may aim to provide assistance to arbitration proceedings, such as collection of evidence through state courts, which would support the functions of the tribunal, or functions aimed at supervision of arbitration proceedings, such as set-aside actions. The legal provisions regulating these functions play an important role in the determination of whether a particular state has an arbitration-friendly legislation.

Trust Liability in terms of Groups of Companies

4th October 2018

Article 209 of Turkish Commercial Code No. 6102 ("TCC") has set forth obligations that are subject to damage caused by the trust and reputation of the parent company, as created with society and the consumer. Accordingly, "in the event that the reputation of the parent company and the group of companies reaches a certain level which provides trust to society or the consumer, the parent company is liable for the trust created by utilization of this reputation".

Possibilities and the Results of Trademark Confusion

4th October 2018

Trademarks are the vehicles that are used to differentiate companies one from the other. They help to capture the consumers' attention. It is essential and necessary to protect trademarks that are created and improved with capital and effort, from unrightful use by third parties, and to prevent the encroachment of trademarks through confusion. One of the most efficient functions of intellectual property law is to encumber imitations, and to halt improper benefit by using the popularity of the trademarks to their consumers. On the other hand, in our daily lives, we often see trademarks that are similar, and may wonder how they co-exist at the same time. In this article, we will shed light on the reasons why similar trademarks can be registered, the criteria that cause trademark confusion, and the remedies to prevent and/or remove these infringements.

Recent Developments on the Enforcement and Bankruptcy Law and Concordat

28th September 2018

Introduction

A significant part of the recent legislative amendments to improve the investment environment are made to Enforcement and Bankruptcy Law (“EBL”) numbered 2004. The amendments made within the scope of Law numbered 7101 on the Amendments in Enforcement and Bankruptcy Law and Certain Laws[i] (“Law numbered 7101”) and the Law numbered 7078 on the Ratification of the Statutory Decree on Certain Regulations within the Scope of State of Emergency with Alterations[ii] (“Law numbered 7078”) shall be addressed.

[i]              Official Gazette (OG), No. 30361, March 15, 2018.

[ii]             OG, No. 30354, March 8, 2018 (bis).

Regulatory Approaches to Crowdfunding in European Union

28th September 2018

Introduction

Crowdfunding has finally entered into Turkish legislation through Omnibus Law no. 7061 dated 5 December 2017, by way of amending certain provisions of Capital Market Law numbered 6362. Although the amendments cover the mainframe of crowdfunding in a very basic form, detailed secondary legislations and policies are needed to implement crowdfunding as a successful system. In anticipation of the secondary legislation it would be beneficial to look at the regulatory approaches to crowdfunding within European Union (EU) Member States and United Kingdom (UK).

Challenging Arbitrators and LCIA Challenge Decisions

28th September 2018

Introduction

It is essential that all arbitrators are and remain, independent and impartial throughout the arbitration. Almost all institutional rules contain a provision requiring arbitrators to be impartial and independent. Examples include Article 14 of the ICC Rules where “lack of impartiality or independence” is a ground for challenging the arbitrators and Article 10 of the LCIA Rules and Article 12 of the UNCITRAL Arbitration Rules where “justifiable doubts as to the arbitrator's impartiality or independence” is foreseen as a valid ground for challenge. Other grounds for challenge include arbitrators acting contrary to the arbitration agreement and the arbitrator’s qualifications.

Management of Information Systems

28th September 2018

Introduction

As stated under Article 128 of Capital Markets Law No. 6362[i] (“Capital Markets Law”), one of the duties of the Capital Markets Board (“CMB”), among others, is to determine the procedures and principles for the supervision and operation of the management of the information systems of capital markets institutions, publicly held companies, stock exchanges and self-regulatory establishments. To this end, based on the provisions of the Capital Markets Law, Communiqué on the Management of the Information Systems (VII-128.9) (“Management Communiqué”), together with the Communiqué on the Independent Auditing of Information Systems (III-62.2) (“Auditing Communiqué,” Management Communiqué, and the Auditing Communiqué, shall collectively be referred to as the “Communiqués”) have been published in the Official Gazette dated 5 January 2018 and numbered 30292. Both the Management Communiqué and the Auditing Communiqué have entered into force with their publication in the Official Gazette. While the procedures and principals applicable to the management of the information systems for the listed establishments therein are determined under the Management Communiqué, independent auditing of information systems is further regulated under the Auditing Communiqué. This article will mainly focus on the scope of the Management Communiqué, innovations introduced thereunder, especially the obligation to keep the systems in the Republic of Turkey and, finally, the sanctions.

[i] Capital Market Law numbered 6362, OG, No. 28513, December 30, 2012.

MiFID II and its Eventual Impacts on Turkey

28th September 2018

The financial crisis of 2007–2008, which is considered by many economists to have been the worst since the Great Depression of the 1930s, has exposed weaknesses in the transparency of the financial markets. In order to restore investor confidence, strengthen transparency, and improve the functioning of the internal market for financial instruments, the European Union (“EU”) has started to draft a new regulatory framework for financial markets following the financial crisis. After seven years in the making, the Markets in Financial Instruments Directive II 2014/65/EU, and Markets in Financial Instruments Regulation 600/2014 (hereinafter together referred to as the “MiFID II”) entered into force on January 3, 2018.

As outlined, above, the new legislation includes both a directive and a regulation. While the regulation has a direct effect within the EU, the directive is to be applied by the member states in national law where there may be national discretion. This article aims to focus on the key aspects of the MiFID II and its eventual impact on third country firms i.e. on Turkey.

Canan Doksat has joined Erdem & Erdem as Tax Counsel

27th September 2018

We are proud to announce that Canan Doksat joined Erdem & Erdem as Tax Counsel. Canan Doksat graduated from Koç University Faculty of Law in 2010. She continues her LL.M at the dissertation stage in Istanbul Bilgi University. She started her working life in 2010 at EY Turkey and worked as Manager in the department of Tax and Law.