CHAPTER FOUR

Private Law

1) INTRODUCTION

n contrast to the field of public law, where the State is always in a superior po-
I sition in its relations with individuals, private law is concerned with relations
and conflicts among individuals as private persons. In the field of private law,
therefore, all persons (natural or legal) are considered equal entities.

Private law assumes that its subjects are equal before the law despite the
obvious inequalities in reality. In the field of private law, all persons are, as a
rule, considered as equal without regard to their being rich or poor, educated or
illiterate, male or female, native or foreign. The principle of “equality in acquir-
ing private rights” applies to all persons.

In the field of public law, public authorities may impose legal obligations
upon persons regardless of whether they agree or not. Legal obligations can thus
be unilaterally imposed by the public authorities.

In the field of private law, however, the basis of every legal obligation is,
in principle, a voluntary agreement between the parties. Legal obligations in this
field can usually be created by bilateral acts, such as the making of a contract.
This means that in the field of private law nobody is, as a rule, entitled to issue
orders which are binding on others, unless such proposals are accepted by all
parties from the beginning.

Even the State itself is not always in a superior position in its relations with
private persons when such relations fall within the scope of private law. It is gen-
erally agreed that governmental transactions of a commercial nature, such as the
sale or leasing of real property, are governed by private law, unless an act of ex-
106 part two: branches of taw

propriation is involved, which would make it a public law matter.

Where a contractual relationship exists between the State and a private

person, the State has no sovereignty over the other party. In fact, both the State
and the private party are in equal positions. For example, where a private indi-
vidual rents a building owned by the State, the legal positions of the State and the
tenant (kiract) are no different from those of two private persons bound by a
similar contract. In fact, the relationship is simply one of landlord-tenant, with
the State having no more rights than an ordinary, private landlord. For instance,
the State cannot directly punish or evict a tenant who fails to comply with his
contractual obligations. In such a ‘case, the State would have to bring an action
before the competent court and try to obtain a judgment against the tenant like
any other ordinary landlord.

In the field of private law, it is not the fact of guilt or innocence that is at is-
sue, but the nature and degree of personal lia bility arising from a certain act. For ex-
ample, in a medical malpractice case, the first issue is whether the treating physician
failed to exercise the required level of care in relation to the patient. If the physician
is found at fault, he will be legally liable.t The next matter for private law is to as-
sess the level of compensation due to the injured party.

2) BRANCHES OF PRIVATE LAW

Private law may be divided into three main branches: civil law (medeni hukuk);
commercial law? (ticaret hukuku); and private international law (devletler ézel
hukuku). There are, however, other categories of law that fall within the area of
private law, such as the laws regarding copyright, patents, intellectual property,
information technology (computer) law and the protection of industrial rights.

A) Civil Law
Civil law? covers such a vast area of relations that to define its limits is not easy:
legal rules related to personality, marriage, family relations, property rights, suc-
cession and obligations are all parts of civil law.

Civil law is connected with the economic sphere of social life; with rela-

tions involving property and obligations on the one hand, and the legal status of
persons on the other.

1 For “criminal law” see, p. 92.

Sometimes called “Law Merchant”.

3 The term civil law (medeni bukuk) is derived from the Roman law term of ius civile which
was the law
applicable to Roman citizens, i.e. to the people of the City of Rome (civitas).
In the Turkish word “medeni hukuk” the first word “medeni” is derived from the Arabic word
“me-
dine”, which was the equivalent of “city”. It should not be confused with “medeni” in the sense
of
“civilized”.

chapter four: private taw 107

A brief look at the systematic arrangement of the Civil Code, which is the

fundamental source’ of Turkish and Swiss civil law, gives an idea about the mat-
i rs and governs.

_ Fe first Civil Code of Turkey, along with the Code of Obligations, was
adopted from Switzerland in 1926. Although in later years a number of more or
less extensive changes were introduced, the main characteristics of the Swiss
Code were preserved. In 2002 an entirely new version of the Civil Code was en-
acted. However, this Code also clearly reflects the principles of the Swiss Code.

The Turkish Civil Code consists of a Preliminary Chapter and four Books:

Book I - Law of Persons (Articles 8-117)

Book II - Family Law (Articles 118-494)

Book III - Law of Succession (Inheritence) (Articles 495-682)

Book IV - Law of Property (Articles 683-1027)

B) The Preliminary Chapter of the Civil Code _

A brief study of the preliminary chapter of the Turkish Civil Code will give some
idea about the basic concepts of private law. Its provisions are intended to be the
general rules applicable to all legal relations. These include the following principles:

~ The order of the application of legal rules (written provisions, custom-

ary law, judge-made law - Article 1); . 7

— discretion and creative (law-making) functions of judges in the adminis-

tration of justice (Articles 1 and 4);

—the role of good faith (bona fides) in legal relations (Articles 2 and 3)
and

— basic rules as to the burden of proof (Article 6) are among the principles
laid down in the preliminary chapter.
These may be called the foundations of private law. .

In Switzerland and Turkey, the rules regulating obligations between pri-

vate persons are codified in a separate code: the Code of Obligations (Borclar
Kanunu). However, this Code is regarded as an integral part of the Civil Code.
For this reason, in legal studies the law of obligations is viewed.as a sub-branch

of civil law.

4 Alongside the Civil Code and the Code of Obligations, which are the primary sources of civil
awe
much legislation has been cnacted to supplement and facilitate the application of the
provisions o
these codes: the Regulation on the Land Register (Tapu Sicili Nizamnamesi), the Civil Status
Services
Act (Nifus Hizmetleri Kanunu), the Land Registration Act (Lapelama Kanumt), Laws relating to
te
Registration of Ilegitimate Children in the Civil Status Register (Evlilik Dig: Birlesmelerden
Dogan

escili Hakkinda Kanunlar).

5 tne saa of the Turkish Code of Obligations; Article 5 of the Turkish Civil Code; Article 7 of

the Swiss Civil Code.

108 part two: branches of law

The new version of the Turkish Code of Obligations was adapted in Jan-
uary 2011. While reflecting the main principles of the former code the new ver-
sion introduced new concepts such as consumer protection, electronic signature
etc.

The Code of Obligations consists of two main parts. The first part lays
down the general principles, while the second part provides for special provi-
sions applicable to various types of contracts such as the sale of goods (satim),
gifts (bagis), loans (Gdiing), agency (vekdlet), rent (kira) etc..

In addition to these classifications, civil law (including the law of obliga-

tions) is further divided into five sub-branches:

a) Law of Persons

The law of personality concerns the legal existence of a person and is one of
the most important concepts of private law. Every person can be the subject of
rights under law, and everyone is entitled to the rights recognized by law under
modern legal systems without distinction of any kind regarding such factors as
race or social origin, In the words of the Universal Declaration of Human Rights,
“Everyone has the right to recognition everywhere as a person before the law” (Ar-
ticle 6). The formulation in the Turkish Civil Code reads as follows: “Every person
can be the subject of rights; within the limits imposed by law, they have an equal
capacity to possess rights and duties” (Article 8).

While persons can be the subject of rights under the Civil Code, animals
and things can only be objects over which rights are exercised.

It should be noted, however, that the amended Section 90 (90a) of the

German Civil Code (BGB),under the title of “Animals” provides that:

Animals are not things. They are protected by special statutes. They are
governed by the provisions that apply to things, with the necessary modifica-
tions, except insofar as otherwise provided.®

Legal personality begins at birth and ends at death. However, even before
birth a human being is not without legal recognition. Between conception and
birth the child is deemed to have legal capacity, conditional on his being born
alive (Turkish Civil Code, Article 28/1).

Persons are the subjects of private law. The law confers rights and impos-
es certain duties on them. The law of persons provides the rules regulating the re-

6 The New Zealand Parliament went one step further by passing a bill under which a river has
been re-
cognized as a living entity with its own rights, The river (The Whanganui) was granted “the
right to Tep-
resent itself through human (real person) representatives”. lt is said that the river in question
“is abso-
lntely important to the people living on the river (the Maori community).There are two
representatives
of the river,one appointed by the Maori community, and the other by the Government.

chapter four: private law L09

lationships of persons in matters such as the creation and termination of person-

ality, the legal capacity of the person, the protection of dignity and honour of the
person, etc..

The term “person” is not limited to human beings, though. It also refers
to legal persons (juristic persons; corporate bodies). These are entities created
by the function of law, and not biology. For example, a corporation, a founda-
tion, or a professional association are all legal or juristic persons and thus sub-
jects of private law entitled to enjoy legal rights, but also possessing duties as
well. A foundation is a special type of legal personality whereby a fund (prop-
erty) is set apart to be used for a specific purpose. Foundations enjoy rights
similar to other legal persons’ rights within the limits of their purpose. Legal
persons are thus among the matters regulated by the law of persons, providing
the rules for their formation, legal capacity, administration and the scope of
their activities.

It should be noted, however, that the legal capacity of legal persons differs
in certain respects from that of real persons (human beings). Although they can
acquire rights, own property, incur contractual liability, and sue (or be sued), it
is obvious that they cannot create family relations. Legal (juristic) persons are le-
gally capable of having rights and incurring obligations except for those rights
and obligations that are inseparably bound up with human nature, such as sex,
age or family relationship (Turkish Civil Code, Article 46, Swiss Civil Code, Ar-
ticle 53). On the other hand, such basic human rights as the right to physical se-
curity cannot be claimed by legal persons.’

Capacity is an important aspect of the Law of Persons. Only a person who

has legal capacity may enjoy certain rights under the law. This means that the
law will recognize the acts of the person as having legal effect. The most common
example is in the area of contracts. A person who does not have capacity is not
entitled under the law to enter into contractual relations. If he attempts to do so,
the result will be either that the contract is void or voidable, depending on the
type of incapacity involved.

While all persons are equal in terms of the rights they possess, in order to
have the capacity to act a person should be capable of making fair judgements.
For example, they should have reached the age of majority and be in control of
their mental faculties.

7 — Individual members of a legal person (members of an association or political party, or

partners or man-
agers of a business association or company) may claim to be victims of human rights
violations such

as arbitrary detention.
110 part two: branches of law

b) Family Law

“The Family is the natural and fundamental group unit of society and is
etitled to protection by society and the State”.8

Family law regulates the relationships among persons, such as engage-

ment, marriage, divorce, paternity, parent-child relations, child custody and sup-
port or domestic relations in general. Matters such as adoption (evlat edinme)
and guardianship (vesayet) are also regulated by family law.

Following the example of the Universal Declaration of Human Rights (Ar-

ticle 16), Article 41 of the Turkish Constitution stipulates that “the family is the
fundamental unit of Turkish society”,? reflecting the importance of family law.

c) Law of Succession (Inheritence)

Even after the person dies, the law continues to regulate his/her relation-
ships with the mortal, material world. If the deceased is lucky enough to have ac-
cumulated property, such as a home, real estate, cars, jewellery, an art collection,
etc., his/her death creates a problem, at least for societies recognizing individual
ownership of property. The law of succession is the body of rules applied to de-
termine who will inherit the property of the deceased and how the estate will be
divided if there is more than one heir.

The totality of the property belonging to a person is called their estate (ter-
eke). Under Turkish law, upon the death of a person, his/her entire estate passes
to the heirs (mirascilar). The only question is how this is effected - by operation
of law or by the testamentary will of the deceased?

The term inheritance cover both the property received from a family
member (usually an ancestor) under the laws of intestacy or by a will (testa-
ment). Therefore, the law recognizes two types of heirs: the statutory heir and
the appointed heir.

Statutory heirs and their respective inheritance rights are expressly provid-
ed for by the Civil Code, i.e. by statute. Accordingly, the heirs who are first in
line are deemed to be the descendants of the deceased person. If the deceased per-
son left no descendants, the Civil Code provides that the parents, as second-in-
line heirs, will inherit the estate. Furthermore, the Code recognizes full equality
between male and female statutory heirs. The inheritance rights of descendants

will devolve onto their own descendants if any of the former is no longer alive
when the inheritance takes cffect.

8 Universal Declaration of Human Rights, Article 16/3; International Covenant on Civil and
Political
Rights, Article 23/1.
9 “Aile Tiirl toplumunun temelidir”. Sce also Article 16(3), Universal Declaration of Human
Rights.

chapter four: private law 111

Appointed heirs (legatecs) are those heirs expressly and specifically desig-
nated by the deceased in a will (testament). The Civil Code recognizes that all
persons having the requisite capacity, exercising sound judgment and who have
completed their fifteenth? year have testamentary capacity. The person can dis-
pose of his/her estate at death. by a will prepared during his/her lifetime. The tes-
tator can choose the heirs and the method of distribution of the estate. Unless the
dity of the testament is contested the last wills of testator are respected. .
In some jurisdictions, testamentary capacity is absolute. For example, in

the United States there are very few limitations on how much of the estate can be
distributed by a will, and how this can be done. For example, it is not uncom-
mon for people to leave their estate to a favourite pet.

Turkish law imposes certain restrictions on freedom of testamentary dis-

position. The rights of statutory heirs are protected by law through reserved
(compulsory) portions. For example, according to the Code, descendants are en-
titled to half of the deceased’s estate and cannot be disinherited of this share by
any act of the deceased. This is known as the reserved portion. Consequently, the
testamentary freedom of the deceased is limited by law to only half of his or her
estate (Article 506). .

Another important concept of the law of succession is the inheritance

agreement (contract). This is a contract whereby a person promises to leave up-
on his/her death, the entire estate, or a specific part of it (for example a house),
to the other party. Such a contract may be concluded, for instance, between a
person and his long-time servant. Turkish law recognizes such agreements,
which can therefore be enforced if not otherwise invalid.

vali

d) Law of Property

Universal Declaration of Human Rights declared that: “Everyone has the

right to own property alone as well as in association with others” (Article 17).

European Convention on Human Rights stated that: “Every natural or le-

gal person is entitled to peaceful enjoyment of his possessions”. 7

Property rights constitute one of the central institutions of civil law. The
acquisition and loss of property rights, the content and the limits of rights over
movable and immovable (land, buildings) things, the registration and transfer of
property and mortgages (rehin, ipotek), etc., are among the various relations reg-

ulated by property law. .

10 Normally the majority age is 18. ds for de.

11 The law specifics certain cases (such as the intentionally murdering of the testator) as
grounds for de
privation of hereditory rights. rights

42 For details sce Article 1 of the Protocol no. 1 to the European Convention on Human
Rights.
112 part two: branches of law

Following the example of Swiss Civil Code (Article 641) Article 683 of the
Turkish Civil Code regulates the nature of ownership as follows:

“The owner of property has the right, within the limits of the law, to enjoy
and dispose of it at will.

He/she has the right to demand it back from anyone who wrongfully possess-
es it through legal action (rei vindicatio) and to take measures to prevent any un-
lawful interference with the use and enjoyment of the property.”

It should be mentioned, however, that some of the problems related to

property rights are not governed by the law of property. For instance, where the
State and other public corporate bodies (such as municipalities) expropriate im-
movable property, the law of expropriation (istimlak kanunu) becomes applicable.

e) Law of Obligations

In the field of law the term “obligation” refers to anything that a person
is legally bound to do or forbear from doing. This duty may be imposed by one
or another of various branches of law? Generally speaking there are two kinds
of obligations: :

(i) Obligations of statutory nature; i.¢., the obligations imposed by laws

(statutes) such as paying taxes, the obligation of parents to care for their children
or forbearing unreasonable or unlawful use of property to the annoyance of
neighbours.

(ii) Obligations arising out of an independent volition such as a debt based

on a contractual reletionship e.g. purchaser’s obligation to pay the price; seller’s
obligation to deliver the goods as agreed.

The subject-matter of the law of obligations is the formation, validity and

enforceability of obligations through legal proceedings." A legally enforceable ob-
ligation derives from a bilateral relationship as a result of which one of the parties
may request the other party to act in a certain manner. In such cases the party who
is asked to act is legally obliged to comply with the request.

As indicated above, the essential elements of a legally enforceable relation-

ship are the parties, e.g. the creditor (alacakh) and the debtor (bor¢lu), and the pres-

13 Article 35 of the Constitution provides: “Everyone has the right to own and inherit property.
These
tights may be limited by law only in view of public interest.

The exercise of the right tv own property shall not be in contravention of the public interest.”

14 As indicated above in 1926, along with the Swiss Civil Code, Swiss Code of Obligations
was adopted
by Turkey. In January 2011, the Parliament (TBMM) passed the new version of the Turkish
Code of
Obligations to replace the Code of 1926. Although several innovations were introduced in the
new
Code of Obligations the essential features of the old Code have remained unchanged.

chapter four: private lav 113,

tation (edim) which is the action or service that forms the subject-matter of the ob-
ligation; and the performance of which the creditor may demand from the debtor.

In the field of Law of Obligations, obligations are divided into three cate-
gories according to their origin: .

(i) Obligations of contractual origin: A contract is an agreement that is en-

forceable at law (binding) and creates rights and duties between the parties. In its
simplest form, the formation of a contract begins with the putting forward a pro-
posal; for example, A proposes to sell his computer for TL. 2.000 (offer) and B
agrees to buy it. A is under the obligation to transfer the ownership of the comput-
er and in return B must pay TL. 2.000. This voluntary agreement between them
will be enforced by a court of law should either one fail to fulfil his/her duty.

An acceptence which deviates from the offer is considered to be a new of-

fer on a rejection of the original offer. For example, if B says he would buy the
computer not for 2.000 but for TL. 1.500.

The elements necessary to create a valid contract are:

— Mutual consent of the parties (offer and acceptance);

The consent must be free of any defects such as “error”, “fraud”, “wilful
deception” or “threat (duress)”.45 A person acting under material error at the
conclusion of a contract is not bound by it. If a party has been induced to enter
into a contract by the willful deception of the other party, the contract shall not
bind the deceived party.

— Legal capacity;

— Legal subject matter;

— Formalities in some cases.

A contract creates the right to claim the prestation such as a payment of

money, rendering of a service etc.

Under English Law “a promise to pay money, or to perform a service, or

confer any benefit (...) has no binding force if the promisor gets no
“consideration”.1® The “consideration” does not need to be fully adequate but
must be of some value in the eyes of the law, and must be legal.

Apart from other requirements (such as written form) “a promise is not

generally enforceable in the United States unless it is supported by consider-
ation. Consideration is something (e.g., a return promise or an act) for which
the promisor has bargained and received in exchange for the promise.”*”

114 part two: branches of law

Black’s Law Dictionary defines “consideration” as “something of value

(such as an act, a forbearance, or a return promise) received by a promisor from
a promisee.”

Oxford Dictionary of Law defines “consideration” as “an act, forbear-

ance, or promise by one party to a contract that constitutes the price for which
he buys the promise of the other."® Consideration is essential to the validity of
any contract other than one made by deed. Without consideration an aggree-
ment not made by deed is not binding.

It should be mentioned that the concept of “consideration” as such is un-

known to Turkish law. However, it is required that every contract should have a
legal ground (bukuksal neden, sebep). For example, in a contract of sale the buy-
er’s obligation is to pay the agreed price and the seller’s obligation is to transfer
the title to the goods sold. These obligations constitute the legal ground for the
contract in question.

In the formation of a contract, the agreement between the parties may be

either express or inaplied. Furthermore, a contract does not need to be in writing
in order for it to be binding. Contracts are valid without any special form unless
the law provides otherwise. For example, a contract for guarantee is a formal
contract whose validity under the Code of Obligations depends upon it being ef-
fected in “written form”. It should be mentioned, however, that formal contracts
constitute only a small minority among the nearly-infinite types of contract.

In order to have a valid contract, each party to it must have the legal ca-
pacity to consent, and the consent given must be genuine. In other words, the
consent must not be obtained by error, fraud or duress (wilful deception).

On the other hand, a contract is void by which a party acquires clearly

disproportionate pecuniary advantages by exploiting the predicament, extreme-
ly difficult situation or inexperience etc. of the other party.

The legality of the subject-matter of the contract is another essential ele-

ment of any valid contract. The object of the contract must not be one that the
law prohibits. Generally speaking, any agreement whose purpose or content is
contrary to public policy (ordre public) or peremptory norms is void. For exam-
ple, contracts concerning the black market or smuggling are void because they
are against the law.

(ii) Obligations in tort (baksiz fiil): A tort, unlike a contractual relation-

ship, is not based on a voluntary agreement between the parties. Instead, it de-
rives from an obligation imposed by law for persons to act in a prudent manner
and not cause injury to the personal or property rights of another. For example,

18 Dunlop v. Selfridge (1915) AC 847 (HL).

chapter four: private law 115

Bisa reckless driver who drives off the road and into A’s garden, damaging the
gate. B will be liable to A for the damage caused because of his reckless (tortious)
act and will have to pay for the repair of the gate. The obligation to not drive
recklessly is imposed by law and not by any mutual agreement between A and B.

(iii) Obligations arising from unjust enrichment (haksiz iktisap - sebepsiz

zenginlesme): A person who is deemed by law to have been unjustly enriched at
the expense of another is required to make restitution to the other.For example,
A pays B TL 10.000 in settlement of a debt. If he subsequently forgets about the
payment and makes a second payment for the same debt, B is unjustly enriched.
A may demand that B return the second payment.

C) Commercial Law (Ticaret Hukuku)

a) Introduction
The peculiarities of commercial life render some rules of civil law (includ-

ing Law of Obligations) insufficient for the regulation of commercial transac-

tions, creating a need for special rules. For example, the rules of the Civil Code
applicable to associations (dernekler) in general do not apply to various types of
business associations (sirketler) because, in contrast to associations, which are
created for humanitarian, cultural or charitable purposes business associations
are formed for profit making.

Commercial law is the body of rules applicable to commercial relations

and organizations. Until 2012, the fundamental source of Turkish commercial
Jaw was the Commercial Code, which came into force in 1956. In January 2011
a new Commercial Code which was intended to replace the Code of 1956 passed
by the Parliament. However, a transition period of six months is envisaged; the
Code did not go into effect until 1 July 2012.

While preserving the main features of the old one the new Code intro-
duced a number of entirely new concepts such as “single member partnership
with limited liability” and “single sharebolder joint stock company” and the
possibility of materializing board of directors and board of executives meetings
in electronic environment; i.¢., without members actually being present in the
same venue. The new Code also brought about new provisions regulating book
keeping requirements for the commercial enterprises. Another interesting feature
of the new Code relates to the field of auditing and accounting. The Turkish Ac-
counting Standards Board (TMSK, “Tiirkiye Mubasebe Standartlari Kurulu”) is
recognized as the sole authority which has the power to provide for the standard

forms and contents of accounting practices.

116 part two: branches of law

The new Code is consisted of an “Introductory Chapter” (articles 1-10)

providing for the general principles and six “Books” and an additional chapter
of “Last Provisions (articles 1521-1535 ). The titles of the Books are as follows;

Book One “Commercial Enterprise” (Ticari Isletme) (articles 11-123);

Book Two “Corporate Law” (Commercial Partnerships) (Ticarez

Sirketleri) (articles 124-644);

Book Three “Negotiable Instruments” (Ktymetli Evrak) (aticles 645-849)

Book Four “Transport Business” (Tagema Isleri) (articles 85 0-930)

Book Five “Maritime Law” (Deniz Ticareti) (articles 931-1400);

Book Six “Insurance Law” (Sigorta Hukuku) (articles 1401-1520).

The very existence of a Commercial Code alongside the Civil Code and
the Code of Obligations raises the importance threshold question of which of
these Codes will be applicable to a certain transaction or act ? Article 1 of the
Commercial Code provides that the Commercial Code is an integral part of the
Civil Code. Therefore, in the field of Commercial Law relevant provisions of the
‘Civil Code and Code of Obligations’? will be applicable as lex generalis, when
needed. However, commercial provisions include not only the articles of Com-
mercial Code but provisions of other laws such as Law on Cheques,” Law reg-
ulating the interest rates?’ and Law Preventing unfair competition.22 _

On the other hand, article 1 of the Commercial Code provides that in the
instances where there is no written Provision of “commercial” nature applicable to
the case at hand, the court should decide in accordance with commercial custom.
Therefore, general provisions (lex generalis) i.e. Civil Code and Code of Obliga-
tions will apply only when there is neither a commercial provision of law nor cus-
tomary rule applicable to the case. Thus,superiority of customary rules of commer-
cial practice over the written rules of lex seneralis is clearly acknowledged.

The distinction between “commercial” and “non-commercial transactions

and acts is of vital importance for finding the applicable provisions of written law
or customary rules. The concepts of “commercial enterprise” (ticari isletme) and
“commercial affairs” (ticari isler) play a very important part in this regard. All of
the transactions and acts pertaining to a commercial enterprises are “commercial
affairs”.

chapter four: private law 1177

profits exceeding the limits of a small scale trader (shopkeeper; esnaj). The border-
line of sizes between “commercial enterprise” and “small scale trade” will be de-
fined by a governmental decree (art.11/2). a

Under Turkish law there are two types of merchants: individual (real per-
son) merchants and legal person merchants (business associations).

An individual merchant is a real (natural) person who actively operates a

commercial enterprise wholly or partly under his own name. According to this
definition, the president of a corporation is not considered a merchant because he
does not operate the corporation under his own name. Conversely, a person who
does not actually operate a commercial enterprise may be regarded asa merchant
if he publicly announces by circulars or newspapers, radio, tv advertisements etc.
that he has founded and opened a commercial enterprise. Without exception, all
business associations are considered merchants. Furthermore, organizations and
institutions founded by public bodies such as the State, province or municipality
are also regarded as merchants if they are commercially operated or function

within the boundaries of private law.

b) Commercial Partnerships .

Commercial partnerships (business associations, companies) play a vital

role in economic relations. Individuals come together to create partnerships of
various types which are governed by The Commercial Code with the exception
of “ordinary partnership” (adi sirket?3). However, the newly introduced concepts
of “one man company”, “single member partnership with limited liability” or
“single shareholder joint stock company” represent new developments in the
field of commercial law. It should be noted that while consisting of a single
shareholder (partner) these partnerships (companies) may have such organs as
Board of Directors, specia] committees, auditing units, advisory bodies, oS Part-
nerships are governed by specific legal rules which regulate their formation, op-
eration and dissolution, The Turkish Commercial Code provides for two distinct
categories of commercial! partnerships: partnerships where the salient feature is
the capital invested (corporations; sermaye sirketleri); and the partnerships
where the personal identities of the partners rather than the capital are important
(sabts sirketleri).

148 part two: branches of law

Joint stock companies (anonim sirketler), partnerships with limited liabil-

ity (limited sirketler) and limited (commandité) partnerships whose capital is di-
vided into shares (sermayesi paylara boliinmiis komandit sirketler) are regarded
as corporations.

General partnerships (kollektif sirketler) and limited (commandité) part-

nerships (komandite sirketler) are partnerships where the prestige and personal
identities of the partners rather than the capital are important.

The following paragraphs may give a brief picture of the types of partner-
ships provided for by the Turkish Commercial Code:

(i) General Partnership (Kollektif Sirket)

General partnership is a commercial association in which all partners usu-

ally participate in running the business and share equally in its profits and losses
(Turkish Commercial Code, articles 211-303). In this type of partnership, the
partners must have full confidence in one another. Unless otherwise provided for
in the partnership agreement, each partner is entitled to act alone for the partner-
ship. Each partner is individually and personally liable for the debts of the part-
nership. Any agreement contrary to this rule can have no legal validity against
third parties. This means that each one of the partners will be responsible for any
act of the other partners, whether or not he knew about it, so long as it was do-
ne in the interest of the partnership.

Personal liability means that not only will the assets (property) of the part-
nership be applied to pay off the debt, but the personal property of the partners,
including their personal assets (home, car, etc.) can also be used to pay the debt.

(ii) Limited (Commandité) Partnership (Komandit Sirket)

In this type of partnership there are two categories of partners (Articles 304
to 328 of the Turkish Commercial Code). The liability of one group of partners,
called the commanditaires (general partners, komanditer ortaklar), is absolute, i.e.
they are liable for all the debts and obligations of the firm. Only real persons can be
general partners. The second category is composed of the “partners en commandi-
té” (komandite ortaklar) who, at the time of the formation of the partnership, con-
tribute a certain amount of capital and are not liable for the obligations and debts
of the firm beyond that amount. This is a way to attract the partnership of some-
one who may not otherwise agree to assume the risk of a general partnership.

A special kind of “limited” (commandité) partnership is the one whose

capital is diveded into shares (sermayesi paylara béliinmiis komandit sirket)
(Turkish Commercial Code articles 564-572). This partnership is, in many re-
spects, akin to the joint stock company.

chapter four: private law 119

(iii) Joint Stock Company (Anonim Sirket)

This partnership creates an entirely separate legal entity or corporate legal

personality which is able to conduct business in its own name independently of the
individuals who created it (Turkish Commercial Code articles 329 to 572). Be-
cause of this legal separation, the individual partners do not have any personal li-
ability for the corporation’s debts and obligations. In corporations it is the capital
and not the partners (shareholders) that is the dominant factor.
There is no minimum number of partners for forming a joint stock com-
pany; even one single real or legal person may form such company. The mini-
mum capital invested in a corporation is specified by law.?4 Legal persons may
join the corporations as incorporators. Two or more corporations may merge
and create a new body, called a “holding company”. Such companies usually su-
pervise the management of the corporations which formed the “holding”.

Ownership in a corporation is distributed by legal instruments called

shares. A share represents the monetary value of the ownership that the corpora-
tion (or the market if a publicly traded corporation) assigns to each share. The
person who holds the share — the shareholder — is an owner of the corporation.
The shareholders cannot, without their consent, be deprived of those vested
rights which they have acquired by virtue of their position as shareholders.

An important characteristic of a corporate entity is that the shareholders

have no personal liability for the acts of the corporation.

(iv) Partnerships with Limited Liability (Limited Sirket)

Limited liability partnerships are very similar to corporations (Articles 573

to 644). They may be formed by an individual (real or legal person) or by a group
of real or legal persons. The liability of limited partnerships is also limited by the
amount of its capital. The formation of a limited partnership also requires similar
formalities as the ones required for the creation of a corporation. However, the
number of partners may not exceed 50, and there is personal liability for tax debts
of the company and the debt of the other partners.

(v) Co-operative Partnerships

The aim of this type of partnership is to secure by mutual assistance and

support the common economic advantage and interests of the partners. It should
be noted, however, that by a law passed in 1969 co-operative partnerships are
no longer governed by the Commercial Code but by a new law (Kooperatifler
Kanunu),
120 part twa: branches of law

c) Negotiable Instruments

Another important subject of commercial law is valuable documents

which are called negotiable instruments (krymetli evrak). These are extensively
used in commercial transactions and circulated somewhat like money. For exam-
ple, corporate share certificates, bills of lading and cheques are examples of ne-
gotiable instruments. They are documents representing money which can be free-
ly traded and exchanged like money.

D) Private International Law

The international community is made up of many states, each with its own legal
system and laws regulating such aspects of daily life as family relations, business
relations, and property rights. These laws can vary significantly from one state to
another. With the increased mobility of people across international borders and
the predominance of international trade, often involving companies or individu-
als based in more than one state, it is inevitable that the different legal systems will
come into conflict. Private international law is that branch of law which specifi-
cally deals with the conflict of laws problem amongst states. The aim of private
international law is not to resolve the substantive problem but to provide a frame-
work of legal rules to determine which state’s law applies to a legal dispute.

The issues concetning private international law are divided in to the fol-
lowing three categories.”

a) Conflict of Laws

The problem of determining which state’s law will apply to a legal dispute
involves two steps. First, the determination of which state’s court will have juris-
diction to decide the case; second, which state’s substantive law will be applied
to the legal problem before the court.

The jurisdictional issue, ie. the problem of “which court can hear the
case”, must logically be determined before identifying the substantive law to be
applied. For example, if a dispute arises from a breach of a contract made by two
Turkish nationals in Germany for the sale of real property located in Istanbul,
the first issue to be resolved is whether a German court or a Turkish court has
jurisdiction to hear the case.

The first court seised must make this determination by applying its own
national conflict of law rules.26 In the above example, if the German court is

chapter four: private law 1241

seised, the judge will apply German conflict of law rules to determine whether
his/her court has jurisdiction.

Only the court having proper jurisdiction can then go onto the second
step and determine which country’s substantive law is to apply. Turkish law,
German law or some other law? This is called the “conflict of legislative author-
ity” problem.

To take another example, if a dispute arising from a contract concluded

in Italy between a Turkish firm and a French firm for the delivery of goods in
Spain were brought before the Istanbul Commercial Court, the first question the
court should ask is whether it has jurisdiction, i.e. the legal power to hear the
case.

In every country the authority and legal power of national courts are de-
termined by the national law of that country. In other words, no national law
may authorize another country’s courts to adjudicate or prevent them from hear-
ing a case.

Therefore, the Istanbul court will decide only if it has jurisdiction or

not. If it decides that it has jurisdiction (for example, because the defendant is
domiciled in Istanbul), the next issue will be the determination of the law to
be applied to the merits of the case. In this example, it is a reasonable assump-
tion that at least three different systems of law may have relevance:

a) Italian law (lex loci contractus: law of the place where the contract was
entered into);

b) Turkish law (lex fori: law of the place where the case is being heard);

c) Spanish law (lex loci solutionis: law of the place where the contract is
to be performed).

It is also possible that the parties, by a written agreement designated the

applicable law.

It is the task of private international law (conflict of laws) rules to choose

the applicable law in concrete cases. National courts are governed by their own
conflict of laws rules in determining the applicable law in cases brought before
them. It should be noted that the conflict of law rules of a country may indicate
that in a particular case the applicable law is another country’s law. There are
several instances where the Turkish Code of Private International Law envisages
the application of foreign law.?” For example, under Turkish law capacity to
marry is governed by the national law of the spouses (Turkish Code of Private
International Law, Article 12(1)). Therefore, when a German woman and a
422 part two: branches of law

French man marry in Turkey, the bride’s capacity will be governed by German
law and the bridegroom’s capacity will be governed by French law.

The Turkish Code of Private International Law also provides that in case
of the inheritance by an alien (foreigner), the process will be governed by the na-
tional law of the deceased. However, immovable property located in Turkey is
always subject to Turkish law (Article 19).

b) Law of Nationality

Closely related to the area of conflict of laws is the law of nationality. In

private international law, the resolution of a legal dispute often will require that
the nationality of the interested parties be first determined. The determination of
a person’s nationality may be problematic at times, as, for example, where a per-
son possesses more than one nationality (double or multiple nationality), or
where they have none, 7.e. are stateless.

In certain cases marriage may confer nationality either automatically or

through certain procedures.

On the other hand transfer of territory between states, annexation or

partition may affect nationality status of the people living in those territories.

The fundamental principles of Turkish citizenship law are set forth in Ar-
ticle 66 of the Constitution and the details are provided in the Law of Turkish
Citizenship (Law nr. 5901 dated 29 May 2009).28 The Constitution defines be-
ing “Turkish” as follows:

“Everyone bound to the Turkish State through the bond of citizenship is a

Turk.”

The European Convention on Nationality states that nationality” is the

legal affiliation of an individual to the population of a sovereign state. It does not
indicate the ethnic origin of a person (Article 1).

Citizenship can be acquired either by blood relations (jus sanguinis), that is

through parentage, or by being born in a certain country (jus soli), or by being con-
ferred with citizenship upon a formal application (naturalization). The laws and
practices of individual countries differ: Citizenship in the USA is based on jus soli.
Anyone born on US soil automatically acquires citizenship. Germany, on the other
hand, does not automatically grant citizenship to every child born within the nation-
al territory. Israel grants citizenship to those who are Jewish.
chapter four: private law 123

The Turkish law of citizenship adheres primarily to the principle of jus

sanguinis, 1.2. the citizenship of children follows that of their parents, irrespective
of their place of birth. The child of a Turkish father or a Turkish mother isa
Turk. If a child born in Turkey of foreign parents cannot acquire the nationality
of any other state, it will be granted Turkish citizenship, in order to avoid state-
lessness.

As for the problem of dual-nationality law and practice may vary radical-
ly from one country to other. Some States are categorically opposed to the con-
cept of dual-nationality. For example the Constitution of the Republic of Cuba
(2003) provides that “Dual citizenship is not recognized. Therefore, when a for-
eign citizenship is acquired, the Cuban one will be lost” (Article 32). According
to the Nationality Law of Japan (Law no. 147, amended Article 14): “A Japa-
nese national having a foreign nationality shall choose either of the nationalities
before he or she reaches twenty two years of age if be or she bas acquired both
nationalities on and before the day when he or she reaches twenty years of age
or within two years after the day when he or she acquired the second nationali-
ty if be or she acquired such nationality after the day when he or she reached
twenty years of age.” German Nationality Law has similar provisions.

However, legal systems of some other States have more or less permissive
regulations relating to the problem of dual-nationality. Generally speaking, the
Turkish practice has a permissive attitude towards dual-nationality.®°

The Constitution states that “no Turk shall be deprived of citizenship un-
less he commits an act incompatible with loyalty to the motherland. Recourse to
the courts against the decisions and proceedings related to deprivation of citizen-
ship shall not be denied” (Article 66).

c) Law of Aliens

Law of Aliens regulates the rights accorded by a state to persons not hav-
ing the nationality of that state. For example, in Turkey various legal rules regu-
late the ability of non-Turkish nationals to work, own property, make invest-
ments or engage in other activities. Traditionally, political rights have been de-

nied to aliens. —
It should be noted that there are limits to the restrictions imposed on non-

nationals

“Byeryone has the right to recognition everywhere as a person before the law”
(Universal Declaration of Human Rights, Article 6).
124 part two: branches of law

The Turkish Constitution stipulates that the restrictions imposed on the

fundamental rights of aliens must be in conformity with the standards of inter-
national law (Article 16).

Turkey is a party to Protocol 12 of European Convention for the Protec-

tion of Human Rights and Fundamental Freedoms under which “The enjoyment
of any right set forth by law shall be secured without discrimination on any
ground such as sex, race, colour, language, religion, political or other opinion,
national or social origin, association with a national minority, property, birth or
other status” and no one shall be discriminated against by any public authority
on any one of the grounds as mentioned above.

It should be mentioned that “nationality” (citizenship) is not among the

grounds specified in Protocol 12.

On the other hand, article 16 of the of European Convention for the Pro-
tection of Human Rights and Fundamental Freedoms clearly states that states
parties may impose restrictions on the political activities of aliens.

3) BRANCHES OF LAW WHERE PUBLIC AND

PRIVATE CHARACTERISTICS ARE MIXED

In some branches of law, as a result of certain historical developments, elements

of both private law and public law are present. For example, copyright law, or
intellectual property law is branch where both public and private elements con-
verge. The law of copyright, which concerns the intangible rights of an author,
or the originator of certain artistic creations, is a typical example of an intellec-
tual right.

Copyright protection is an area that requires governmental involvement.

In addition to civil law protection, such as compensation for damages resulting
from a violation of a person’s copyright, criminal penalties may also be imposed.

Newly-emerged areas of law, such as internet law, competition law or

communications law have further increased the number of branches in which
public and private characteristics are mixed.

However, labour law, (or industrial relations law) perhaps is the best ex-
ample of the branches where public and private law elements are intermingled.
Labour Law (sometimes also called “Employment Law”) since the Industrial
Revolution?! in the 18 Century, has emerged and developed into a separate
branch of the law, embodying both public and private elements.
chapter four: private law 125,

Labour Law

The relationship between the employer and employee, in many Cases, is not only
4 matter of private law but, because of the Government’s involvement in the de-
termination of these relationships, also concerns public law. Composition of the
International Labour Organization” (ILO) governing body where representa-
tives of workers and employers participate alongside the government delegates
reflects this fact.

In many cases, the contracts negotiated between employers and employees

are the result of a collective bargaining process, and not made on an individual
basis. The Turkish Constitution declares that the workers and employers have
the right to conclude collective labour agreements in order to regulate reciprocal-
ly their economic and social positions and conditions of work (art 53). Such
agreements are made by worker’s organizations (trade unions) on the one side
and by a single employer or an organization of employers on the other. As to
their content the collective labour agrements mainly regulate questions of salary,
vacation, occupational safety, maternity rights, etc. The bargaining is conducted
with the participation of trade unions (Sendikalar), resulting in a contract that is
mutually accepted by the employers and employees.

This process is governed by the Law on Collective bargaining, Strike and

Lockout.?3

Matters relating the formation, organization, activities etc. of trade

unions (of both workers and employers) are reg lated by the Trade Unions

Law.4

Apart from the laws relating to collective bargaining and organization

and activities of trade unions, the main source of Turkish Labour Law is the La-
bour Act.2> The rights and obligations regarding working conditions and work
environment and related matters are, in principle, subject to the Labour Act
‘However, certain businesses and business relations specified in article 4 are out
of the ambit of the Labour Act. Among these are “sea and transport businesses” ;
“businesses and enterprises carrying out agricultural and forestry works and em-
ploying less than 50 workers”, “domestic services” etc.

Finally, there exist a special set of courts hearing cases relating labour con-
troversies.

32 International Labour Organization which was established after the First World War and had
been con-
fined to a realm of relations between member states. Today it.has become a specialized
agency of the

United Nations where not only the member states but also workers and employers are
represented in

their own right. 7