Category: Turkiye

In accordance with Turkish Law, employee’s employment security rights are secured with reemployment lawsuit. At cases where labor contract of employee terminated unlawfully, employee can request his/her reemployment (compensation in case of not being accepted to job) and fee for the period he/she was not able to work due to unlawful termination. But even though court rules for reemployment, employee must act in accordance with time periods and conditions regulated at law. Otherwise, employee might not benefit from the earned rights even though the verdict of court regarding reemployment lawsuit is in favor of the employee. In this context, regulation regarding employee to make an application to the employer within 10 days after service of finalized court verdict of verdict to him/her; directly effects employee’s rights and it has been seen that this regulation is interpreted differently by different chambers of Supreme Courts.

Legal Regulations Regarding This Matter, are Regulated at Article 21/6 of Labor Law Numbered

At article 21/6 of Labor Law; it has been regulated that “For re-engagement in work, the employee must make an application to the employer within ten working days of the date on which the finalized court verdict was serviced to him. If the employee does not apply within the said period of time, termination shall be deemed valid, in which case the employer shall be held liable only for the legal consequences of that termination.”

Since this 10-day period is lapse of time, if the employee does not make the application within this period, termination shall be considered as a valid termination and the employer only be held responsible from legal consequences of it. At this case, employee cannot claim any fees for the period he/she did not work and compensation for not being accepted back to work, but employee can still claim severance and notice pay.

“Finalized Court Verdict” Started at Article 21/6 Will be Defined in Accordance With Relevant Legal Regulations. 

In accordance with provisional article 3 of Code of Civil Procedure numbered 6100; since 427. and 454. articles of Code numbered 1086 with the amendments dated 26.09.2014 made with law numbered 5236 shall be applicable to the finalization of court decisions prior to the July 20th 2016 which is the date of Regional Court of Justices’ entry into force; even though Regional Court of Justice and Code of Civil Procedure numbered 6100 entered into force, a decision ruled before July 20th 2016 will finalize after revision of decision if appeal and revision of decision is applicable to the decision in the first place.

For decisions subject to Code of Civil Procedure numbered 6100; these decisions will finalize after they go through appeal and appellate procedures. 

In addition to this; for lawsuits regarding collection of labor claims filed at the time when Code numbered 1086 was in force, revision of decision by Supreme Court is not possible.

With the amendment published on Official Gazette on October 25 2017 amending Article 11 of Code on Labor Courts numbered 7036 and last paragraph of Article 20 of Labor Code numbered 4857; it is regulated that for decision given by the Court, if an appeal application made, Regional Court of Justice will render it’s decision urgently and as final. again in accordance with the article 38/a of Code numbered 7036, it is regulated that this amendment will enter into force in January 1st 2018. Finally, in accordance with provisional article 1 of the Code numbered 7036, it is regulated that decisions rendered by courts of first instance before this Code numbered 7036 enter into force, will be subject to the laws in force at the time of decision.

Within the light of this amendment; for decisions regarding reemployment rendered before January 1st 2018, parties can firstly apply to regional courts of justice and then can appeal before Supreme Courts for the decisions of Regional Court of Justice. But; for decisions rendered after January 1st 2018, parties can only apply to Regional Court of Justice so it will not be possible for them to appeal the decision before Supreme Courts.

Different Chambers of Supreme Court Have Different Legal Opinions on Starting Date of 10-day Reemployment REEMPLOYMENT APPLICATION PERIOD

9th Civil Chamber of Supreme Court who is competent for reemployment lawsuits have the opinion that court decision with finalization statement should be serviced to claimant employee in order that time of lapse regarding 10-day application period can start (9th Civil Chamber of Supreme Court, 09.11.2015, 2014/18378E., 2015/31595K.)

But on contrary; Supreme Court Assembly of Civil Chambers, 7th and 22th Civil Chambers of Supreme Court which are competent for handling labor suits; ruled that finalization statement serves as a statement only therefore it does not have any legal effect on finalization of the decision; finalization shall occur as a result of decision of approval and there is no obligation regarding service of finalization statement (22th Civil Chamber of Supreme Court, 01.11.2012, 2012/19092E., 2012/24055K.)(7th Civil Chamber of Supreme Court, 24.06.2013, 204/17333E., 2015/12949K.)(Supreme Court Assembly of Civil Chambers, 01.10.2014, 2013/22-1158E., 2014/743K.)

But in the recent decisions of 22th Civil Chamber of Supreme Court, it can be seen that Chamber adopted view of 9th Civil Chamber of Supreme Court and abandon their view regarding “there is no obligation regarding service of finalization statement” (22th Civil Chamber of Supreme Court 28.02.2017, 2017/5592E., 2017/4066K.)

Conclusion

In the light of above leading cases; opinions of 9th Civil Chamber differs from opinions of 7th Civil Chamber and Assembly of Civil Chambers regarding our matter. 9th Civil Chamber of Supreme Court accepts that court decision with finalization statement should be serviced to claimant employee in order that time of lapse regarding 10-day application period can start in accordance with Article 21/6 of Labor Law with taking “interpretation in favor of employee” and protection of employee” principles into account. On contrary (even though changed stance in the recent period) 22th Civil Chamber of Supreme Court and Supreme Court Assembly of Civil Chambers accepts that servicing decision of approval or the final decision of Regional Court of Justices to the employee shall finalize the decision and there is no need for servicing finalization statement.

In this context; with facing these opinion differences between chambers of Supreme Court and the fact that even chambers can change their own opinions time to time, when the matter is approached from employee side, in order to not to face any loss at rights, it will be applicable to make reemployment application to employer within 10 days after service of approval decision or the final decision of Regional Court of Justices without waiting service of finalization statement.

By Omer Ovunc Essiz Attorney Sezer & Utkaner Law Firm

1. Introduction: Despite annulment of Article 14 of the Decree No. 556 by the Turkish Constitutional Court has created a lacuna about the legal ground of the use obligation of trademarks; the proprietor always had the obligation for using its trademark in Turkish and international Trademark Law. In a nutshell a trademark that has not been genuinely used in Turkey for at least continuous 5 years, the trademark can be requested to be cancelled due to non-use of the trademark, unless there is a justification for non-use of the trademark. This article studies the justifications that can be shown for non-use of a trademark in consideration of the current case-law.

2. The Notion of “Use of Trademark” under the Current Legislation and Due Evidence of Use

The main function of a trademark is to address the commercial entity of the products or services bearing the trademark. Therefore, the driving force of having a trademark registered for the proprietor is to use the trademark. Accordingly the proprietors are expected to use their trademark on the goods and services within the scope of the trademark. 

The trademarks that are not subject to “genuine use”¹ in Turkey can be requested to be removed from the trademark registry through a request filed before competent courts. As per Article 9 of the Turkish Industrial Property Code No. 6769 (“IPC”), in short, (i) the trademark should be used; (ii) the use should be genuine; and (iii) the genuine use should be conducted in Turkey. 

The notion of use of trademark refers to commercial use. In other words, the trademark can be considered to be used if the said uses aim to gain a profit and to create or protect a market share out of it.² In parallel to this, performing serious efforts to protect the trademark against trademark infringements has not been considered as “trademark use” by the Court of Appeals (“CoA”), under its decision numbered 2007/4588 E. 2008/13024 K. and dated November 18, 2008.  

The proprietors are given 5 years of grace period from the registration of trademark to the trademark registry as per Article 9 of the IPC, with a view to allow making necessary arrangements for genuine use, for instance R&D or creating supply chain. 

The magnitude of use is also another issue in determination whether the trademark has or has not been used in the context of the obligation for trademark use. In general, use of a trademark should be genuine enough to meet the obligation. Since the concept of “genuine use” has been introduced to the IPC recently in January 2017, there are not much comprehensive precedents in Turkish Trademark Law on what the genuine use is. But it could be said that symbolic use of the trademark is not considered genuine. In fact, symbolic use of the trademark, for instance in the last three months of fifth year of non-use, is considered as an attempt to prevent the risk of facing removal of the trademark. 

Also the magnitude of use should be efficient enough to create or protect the market share. The sufficiency use can differ depending on the goods and services. For instance, the sale of 500 wafers is not deemed sufficient for trademark use, while the sale of 10 luxury private jets is deemed sufficient. 

Similarly, the CoA has made a similar assessment about on the magnitude of use that can be considered as genuine use, and concluded – with its decision numbered 2014/2295 E. 2014/8122 K. and dated April 30, 2014 – that 2 (two) invoices do not suffice submitted to prove the genuine use as it cannot be considered sufficient to create a market share. 

The final main element of use is the “location” of the use, which should be Turkey as per Article 9 of the IPC, but the use does not necessarily have to in the whole country. From this aspect, the use of a trademark outside of Turkey will not be fulfilling the obligation. However, this is assessed with such a strict approach. As long as the goods and services can be provided in Turkey, the CoA accepts that the trademark is being used on Turkey. The SKY decision of CoA – numbered 2009/3437 E. 2011/2191 K. and dated March 03, 2011 – is a case where the world famous SKY is being evaluated in respect of the location that its services are provided. The CoA concludes that, considering the present technology, the television channels do not have to have physical organizations and equipment to provide television broadcast in a place. Accordingly, since the broadcast can be watched by more than 600.000 people on its websites online from Turkey, it is evident that the services rendered within the scope of the SKY trademark exist – and thus the trademark is being used – in Turkey.

In addition, it should also be noted that, according to Article 9/2-(b), there is an exception made for the trademarks that are exclusively used for export business and under the exception, such uses are considered as proper trademark use by the IPC. 

The uses in compliance with the elements explained above are required to be proved before the Court as well. In relation to this, due evidence of trademark use is considered as any material that could attest to the use of the trademark. It should however be kept in mind that the evidence submitted as proof of use must contain the date, trademark, location of use, the goods and services bearing the subject trademark. Thus, brochures, advertisements materials, calendars bearing the trademark with advertisement purposes would be considered as weak evidences, though can be regarded as circumstantial evidence. 

As a recent example on due evidence, the Supermac’s vs. McDonald’s decision³ on the trademark “BIG MAC” should be addressed here as well. The case is a non-use action filed against McDonald’s for its trademark “BIG MAC”, with the claim that the trademark has not been genuinely used for 5 years. McDonald’s has argued that the trademark has been duly used and submitted (i) several affidavits stating the sales of the sandwiches bearing the subject trademark have reach millions, (ii) brochures and  printouts of advertising posters, (iii) printouts   from   several McDonald’s   websites, (iv) a   printout from en.wikipedia.org as proof of use. The EUIPO however asserts that the evidence is insufficient to establish genuine use of the trade mark since the affidavits, despite having probative value, are only statements given by one of the parties while the rest of the evidences originate from McDonald’s. As to the websites, it is hold that the presence of the subject trademark has an impact on showing the use of the trademark but having the trademark on a website is not by itself sufficient to prove use of the trademark. As regards to the brochures and printouts of advertising posters, it is stated that those materials are not enough to show whether any product have actually been sold. Finally, EUIPO explains that the printout from Wikipedia website is also not reliable since the content of the website is created and changed by people. As a result, the world famous fast food trademark “BIG MAC” has been cancelled due to non-use because of a failure on proof of use. 

In the same vein, the CoA rules – with its decision numbered 2013/12512 E. 2014/1977 K. and dated February 05, 2014 – that the photos submitted by the defendant as proof of use do not provide any information about the date and also no additional evidence was provided to attest to the dates on which the photos have been taken. The CoA adds that the invoices are also inadmissible since they do not refer to the trademark in question. This decision gives an insight about the nature and content of evidence that is deemed to be capable of proving the use and which qualifications the evidence must have to that end. 

On the other hand, evidence that is not found to be sufficient for proving the use could be found sufficient when it comes to different goods and services. Indeed, another recent precedent of CoA General Assembly of Civil Chambers, numbered E. 2014/11-106 K. 2016/67 and dated January 22, 2016, holds that brochures and printouts of advertising posters are sufficient to show genuine use of the trademark on “construction services” and it is not imperative that the trademark is used on the real estate that is being constructed too.  

In general, invoices, sales contracts, commercial records attesting to the commercial transactions about the trademark in question are considered as solid evidence since they can show the use made for commercial profit and with market share motivation, surely provided that these contain the kind of information stated above. 

The foregoing represent the main elements of proper trademark use and due evidence that could refute non-use claims. Lack of these elements might cause the trademark to be cancelled upon a non-use action but there are also justifications for non-use, which would prevent cancellation. Below we explore the issues that do and do not justify non-use in light of the case law. 

3. Precedents on Issues that do not justify Non-Use of Trademark

The issues justifying non-use of a trademark are, in summary, the circumstances that would make use of trademark impossible in every aspect. In that sense if there is a change that could allow use of the trademark, the CoA does not see a due justification for non-use. With a view to provide insight as to the events and issues that are not considered to be justifying non-use, below we provide as few precedents that could serve to that end: 

• The case has been filed with the claim for cancellation of the “PINAR” trademark due to non-use. The defendant argues that the trademark has declared concordat and ever since, their business volume has been downsizing; the trademark had been seized and the trademark has been allowed to be used by third parties. The first instance court have accepted the case and cancelled the trademark since there was no evidence submitted to the court showing any use of the trademark neither by the proprietor nor the licensees. Also the economic difficulties, such as concordat or seizure, are not regarded as justifications for non-use of the trademark. The decision was appealed by the defendant and approved by the CoA with its decision numbered 2007/10093E. 2008/13302 K. and dated 24.11.2008.
• The plaintiff filed a non-use cancellation action for the trademark “PENGUEN”, arguing that the subject trademark has been used only on the ice-cream goods and not on the other goods and services covered under the scope of the subject trademark. The defendant stated that the proprietor had declared bankruptcy, therefore they were not able to use the trademark and this is a valid justification for non-use. The CoA has been examined the case and concluded in its decision numbered 2001/844 E. 2001/3429 and dated April 09, 2001 that the proprietor do not lose its legal personality by declaring bankruptcy and the trademark right can still be made subject to business transactions by the bankruptcy administration. In light of the foregoing, declaring bankruptcy was not found as a justification for non-use since there were several ways to use it despite the bankruptcy.  
• The applicant of the trademark “TERE” has filed an infringement case against the well-known “TEREM-YAĞ” and the defendant made a “non-use defense” against the plaintiff and requested the first instance court to reject the case. Accordingly, the first instance court has hold that the plaintiff has not renewed its trademark “TERE” and the trademark had lapsed in 1988; further, the plaintiff himself went out of business 4 years after the lapse of his trademark, in 1992. Therefore, the expropriation of his factory producing the products bearing the earlier trademark “TERE” in 1986 cannot be considered as justifications for non-use of the trademark. The decision has been appealed by the plaintiff but the decision was approved by CoA. Later, the plaintiff applied the CoA for a revision of decision and CoA rejected that as well with its decision numbered 2002/1719 E. 2002/2064 K. and dated March 08, 2002. 
• The claim in the lawsuit reviewed by the first instance court is cancellation of trademark due to non-use with respect to certain goods and services registered under its scope and revocation of the trademark for the rest of the goods and services due to bad faith. The defendant has argued that several pending legal proceedings that were pursued for protecting the trademark against third party infringements and the intensity of the advertisements made for the trademark to establish its place and ownership in the market has created a challenge for proper use. But the Court ruled that justifications for non-use of a trademark are circumstances that would objectively make it impossible for the proprietor to use the trademark. Accordingly, economic inabilities and challenges, such as not being able to compete with the competitors, are not considered a due justification for non-use of the trademark. The decision has been approved by the CoA in its decision numbered 2015/7331 E. 2016/2600 K. and dated March 09, 2016.
• Finally, in a non-use action filed against the “HAVELLS” trademark, it has been argued the sector changes of the proprietor after the registration of the trademark and the economic crisis in the country affected the business badly and the governmental authorities did not grant the necessary permits for the production of the products that would be bearing the trademark. Ultimately the defense was that it was not possible to make business regarding the products bearing the trademark and requested the Court to acknowledge this defense as justification for non-use. But the Court did not agree with this defense and cancelled the trademark due to non-use. The CoA approved the first instance court decision with its decision numbered 2015/1512 E. 2015/6851 and dated May 13, 2015. 

4. A Discussion on “Plain Packaging” from the Perspective of Non-Use of Trademark 

Similar to the European Union legislations to protect public health, Turkish Government made an amendment on the present Article 4 of the Law No. 4207 on November 15, 2018. Accordingly, cigarette packaging has to contain warning notes, which should take 85% of the packaging, and monotype calligraphy for the trademarks on same colored packaging. The Law No. 4207 stated that the details of plain packaging are going to be determined by a regulation to be prepared by the Ministry of Agriculture and Forestry (“Ministry”). 

To that end the Ministry published the Regulation Pertaining the Procedures and Principles on Manufacturing, Labeling and Supervision of Tobacco (“Regulation”) on March 01, 2019. The Regulation provides that the outer surface of the packaging; 

• shall be on the color numbered Pantone Cool Gray 2 C Matte, 
• shall contain the trademark with its additional letter capitalized on the front surface of the package 
• shall be on monotype font which is “Helvetica” and font size without special symbols such as “&” and without any embossment or gold foil. 

This recent amendment prevents many well-known tobacco trademarks to be used due to the obligations connected to “plain packaging”. Therefore, although there is no doubt that sole verbal trademarks will be exempt from this discussion, since only a determined style will be used on the packaging according to the Regulation, it is a conundrum whether the trademarks that contain figurative – or both figurative and verbal – elements will be exposed to non-use actions after 5 years starting with the beginning of plain packaging implementation. 

With a view to shed some light into the abovementioned issue, we can make note of the non-use action filed against Bacardi’s BREEZER trademark by KIRBIYIK FREEZER. This action was rejected due to the acknowledgement of Bacardi’s justification of non-use, which focused mainly on the regulative prohibitions on the exportation of the alcoholic drinks at that time. The Court had held that the prohibitions are due and solid justification for non-use. This is a rare example of the issues that could pass as justification for non-use of a trademark and it follows in general terms that regulative prohibition is a due reason justifying non-use. 

An additional argumentative topic on this discussion can be made on the issue of whether the trademark uses on each cigarette itself is sufficient. As known, the tobacco trademarks are not only used on the packaging, but also on the cigarettes itself in a small size. Since the trademark uses on the cigarettes are not covered in the Regulation restrictions, those trademark uses might be deemed enough to rebut non-use claims.

5. Consequences of Non-Use of Trademark

A trademark that has not been used by the proprietor for 5 continuous years can be made subject to a cancellation action due to non-use and the effect of cancellation was retrospective, before the annulment of the relevant law stipulation. Indeed during the period where Decree no. 556 was in force, the consequence of the non-use was provided as a cause for “revocation”. But upon annulment of the relevant law clause, i.e. Article 42-1(c) of the Decree No. 556, non-use actions were reformed and gained the nature of cancellation actions. Thus the effects of a cancellation due to non-use are prospective.

The Court, in a cancellation action due to non-use, focuses on the matter of trademark use for 5 continuous years preceding the date on which the case is. The decision in such cases the cancellation decision will be effective from the date of decision. Then again as per Article 27/2 of IPC, in case the cancellation conditions have been met on a date earlier than the filing date of the lawsuit, the plaintiff can request the Court to render its decision effective from that earlier date on which the conditions were met.

6. Conclusion

Both international agreements, to which Turkey is a party, and national trademark regulation expects the proprietor to use its trademark and attaches sanctions to non-use. Despite the annulment of Article 14 of Decree No. 556, which happened only four days before the effective date of IPC, created a lacuna on regulation-wise, trademark owners are still expected to use their trademark in business transactions with the purpose of gaining profit and creating a market share. 

As an exception of this obligation for use of trademark, non-use of the trademark is rendered exempt from repercussions in case of a justification for the non-use event. The justifications for non-use of trademark are different from reasons connected to force majeure. These justifications are expected to be borne from circumstances that would objectively make it impossible for one to use the trademark. Indeed, the economic crises, bankruptcy or declaring concordat are not found to be sufficient as a proper justification for non-use. On the other hand, legal prohibitions or obstacles are found to justifying non-use of the trademark. 

In broader terms, justification for non-use of trademark must be connected to a circumstance that would objectively make the use of the trademark impossible, regardless the circumstance being of natural, economic or legal nature. Yet, even though the certain circumstance might make the use of trademark challenging or unfeasible for the proprietor, such situations are not found to be sufficient enough to constitute due justification for non-use. 

(First published by Mondaq on June 24, 2019)

I. Introduction: Merger, in general, is a complex procedure which requires detailed and long formalities. Simplified merger creates an option for the joint stock companies to merge in a faster way without being subject to certain transactions.

In order to shorten merger procedures for companies that already own at least 90% or more of the voting rights, the Turkish Commercial Code numbered 6102 (“TCC”) has adopted the concept of simplified merger from Swiss Merger Law and incorporated similar provisions contained therein. The underlying reason for narrowing the shareholding percentages was that the risks that may arise for the minority shareholders in case of a merger of two companies with a prior shareholding relationship are usually lower or less significant.¹

However, the TCC also limits the type of companies that can benefit from the simplified merger procedures. Preamble of TCC expressly states that simplified merger procedure is only applicable to capital stock companies (i.e. joint stock companies and limited liability companies).

Simplified mergers of capital stock companies are categorized into two types under the TCC. In the first group the acquiring company owns 100% of the voting rights of the acquired company and in the second group it owns 90% of the voting rights of the acquired company. 

II. Types of Simplified Mergers and Facilitations Under Turkish Commercial Code

(a) Mergers Where the Acquiring Company Owns All of the Voting Rights of the Acquired Company

Pursuant to first paragraph of Article 155, simplified mergers where the acquiring company holds 100% of the voting rights of the acquired company are divided into two sub-categories: 

(i) Acquiring company holds all (100%) of the shares with voting rights of the acquired company; or  

(ii) A company or a real person or a legally or contractually connected group of persons hold all (100%) of the shares of the merging companies.

Under the first option where the acquiring company holds all of the shares with voting rights, the merging companies are generally parent and subsidiary companies. However, it is usually the parent company who acquires the subsidiary and a reverse merger is not likely to happen under simplified merger procedures.²

Under the second option where a company or a real person or a legally or contractually connected group of persons hold all of the shares with voting rights,  the merging companies are generally two sister companies or subsidiaries. For example, if a joint venture or a holding company owns all of the voting rights of both Company A and Company B and those two merge, such merger will be subject to the rules of a simplified merger.³

When compared with the ordinary merger procedures, companies are under lesser obligation to provide documentation and in granting rights to the shareholders when they merge in accordance with the first paragraph of Article 155 of the TCC.  For example, in ordinary mergers, merging companies have to prepare a merger report that explains the purpose and consequences of the merger and a merger agreement (which will be submitted for the general assembly’s approval) and should subsequently submit the merger agreement and merger report in their head offices and branches for the shareholders to inspect. 

Instead, in simplified mergers defined under this section, companies are not obliged to prepare a merger report or grant shareholders the right to inspect the merger agreement and merger report. Nevertheless, the companies are still obliged to prepare a merger agreement containing fewer clauses, which will be explained in detail below. However, they have the option to not submit the agreement for the general assembly’s approval. 

In any case, the merging companies have to have the balance sheet audited, which is the basis of the merger as year-end balance sheet, by an independent auditing company, alongside its year-end financial statements.⁴

For the validity of the merger agreement, it is sufficient to include the information mentioned below: 

(i) Trade names, legal status, headquarters of companies participating in the merger; in the case of a merger by formation of a new company, type, trade name and headquarters of the new company,

(ii) Cash payment for withdrawals in accordance with Article 141, if necessary, 

(iii) Date on which the transactions and activities of the acquired company is considered as performed on the account of the acquirer company,

(iv) Special benefits granted to managing bodies and managing partners, 

(v) Names of the shareholders with unlimited liability, if necessary.

(b) Mergers Where the Acquiring Company Owns Shares with At Least 90% Voting Rights of the Acquired Company

Pursuant to the second paragraph of Article 155, a merger where the acquiring company holds at least 90% of shares of the acquired company that has voting rights will be subject to the rules of simplified merger provided that:

(i) the minority shareholders are offered, in addition to the participation rights in the acquiring company, a cash or other compensation payment in accordance with TCC, which is equivalent to the real value of the participation rights; and

(ii) no additional payment or personal performance liability or personal responsibility of minority shareholders arise due to merger.

Similar with the first type of simplified merger, companies do not have to prepare certain documents. Pursuant to the second paragraph of Article 156, merging companies are not obliged to prepare a merger report. However, the companies are obliged to grant shareholders right to inspect and prepare a merger agreement containing fewer clauses. The company should grant the right to inspect 30 (thirty) days before the application to the trade registry for the registration of the merger. On the other hand, the company has the option to not to submit the agreement for the general assembly’s approval.

For the validity of the merger agreement, it is sufficient to include the information mentioned below: 

(i) Trade names, legal status, headquarters of companies participating in the merger; in the case of a merger by formation of a new company, type, trade name and headquarters of the new company,

(ii) Transfer rates of company shares, and, if provided, equalization amount; explanations regarding shares and rights of shareholders of the acquired company in the acquiring company,

(iii) Cash payment for withdrawals in accordance with Article 141, if necessary, 

(iv) Date on which the transactions and activities of the acquired is considered as performed on the account of the acquirer,

(v) Special benefits granted to managing bodies and managing partners,

(vi) Names of the shareholders with unlimited liability, if necessary.

III. Conclusion 

The simplified merger implemented by the TCC has created a more convenient and time efficient merger structure for companies that are already in a shareholding relationship. Thus, the simplified merger procedure has become more preferable for such companies, especially since ordinary merger procedure results in unnecessary delays and higher costs.

(First published by Mondaq on June 19, 2019)

1. Pulaşlı, Hasan, Şirketler Hukuku Şerhi, 3rd ed., Book 1, January 2018, pg.273
2. Pulaşlı, Hasan, Şirketler Hukuku Şerhi, 3rd ed., Book 1, January 2018, pg.274
3. Id.
4. Pulaşlı, Hasan, Şirketler Hukuku Şerhi, 3rd ed., Book 1, January 2018, pg.276

By Gonenc Gurkaynak, Partner, Nazlı Nil Yukaruc, Partner, and Busra Ustuntas, Associate ELIG Gürkaynak Attorneys-at-Law

On May 30, 2019, Ministry of Justice (“Ministry”) prepared the judicial reform strategy document (“Strategy Document”) which introduces comprehensive changes and improvements to the Turkish judicial system. Recep Tayyip Erdogan, the President of Turkey announced and presented the new reforms brought by the Strategy Document to the attendees of a conference on judicial reform strategy. 

The Strategy Document is not legally binding and might only be considered as a road map for the government that merely serves to set the general framework and objectives of the new legal reforms, which are expected to come into effect in the coming years. The timeline of implementation of the reforms are not determined and it is likely to become clearer when an action plan is published, which is also explained in the Strategy Document. 

The Strategy Document mainly touches upon the following issues: strengthening the rule of law and the independence of the judiciary and improving impartiality, protecting and promoting rights and freedoms more effectively, increasing the transparency of the legal system, simplifying judicial processes, facilitating access to justice, strengthening the right of defense and efficiently protecting the right to trial in a reasonable time. The Strategy Document focuses on the nine (9) aims which have been broken down to sixty three (63) objectives and two hundred and fifty six (256) activities.

Action Plan will cover the budget allocated for the identified objectives and targets, the competent/relevant institutions and the calendar to be adhered to within the framework of the relevant objectives.  In order to monitor the implementation of the Strategy Document, the Ministry will issue annual Monitoring Reports. These reports will be prepared in both English and Turkish and they will be made available to public.

The Ministry will also be setting up an organizational structure, Judicial Reform Strategy Monitoring and Evaluation Board (“Board”), with the participation of relevant institutions and organizations to resolve the problems that may arise in the implementation of the Strategy Document and to monitor the implementation process transparently. The Board is to be established within a maximum three months as of the publication of the Strategy Document. The Board is expected to organize meetings periodically and prepare monitoring and evaluation reports, which will be available for public access. 

The objectives of the Strategy Document and brief explanations regarding these aims are as follows: 

Aim 1: Protection and Improvement of Rights and Freedoms

Efforts under this aim will focus particularly on freedom of expression and press, right to assembly and demonstration and reasonable application of the arrest measures. Detailed provisions on rights and freedoms will be included in the Human Rights Action Plan, which will be published later on. The following activities will be carried out within the scope of this aim: 

– Legislation on and practice of freedom of expression will be analyzed to introduce provisions that expand the rights and freedoms of individuals.

– The assurances for legal remedies will be increased against judicial decisions concerning freedom of expression. The ways in which Regional Courts of Appeal’s decisions become final and binding after appellate reviews will be revisited in terms of the provisions concerning the freedom of expression with the aim of bringing an additional guarantee for the individuals by ensuring that the Supreme Court also reviews the decisions.

– Legislation and the application regarding custody, detention and other protection measures, affecting the right to freedom and security will be reviewed and measures will be introduced to ensure proportionate implementation of security measures.

– Law No. 5651 on Regulation of Broadcasts via Internet and Prevention of Crimes Committed Through Such Broadcasts and other related legislation will be reviewed and revised as necessary, particularly with a focus on freedom of expression and the methods of blocking access on the internet.

– It will be ensured that Constitutional Court’s decisions, rendered upon individual applications, concluding that there has been a violation can be used as a ground for retrial under procedural laws.

– Law No. 6698 on Protection of Personal Data will be reviewed in light of the EU acquis and works on harmonization will be completed. 

– A new domestic legal mechanism will be formed for examining applications for right to trial violations within a reasonable time and to award compensation, if necessary.

– To raise awareness and sensitivity for human rights in the judiciary, the compliance of the decisions, rendered by judges and prosecutors, with the decisions of the Constitutional Court and the European Court Human Rights will be monitored and taken into account in their inspection and promotion. Training courses on human rights and reasoning of judgments for arrest will be provided.

Aim 2: Improving Independence, Impartiality and Transparency of the Judiciary

Efforts under this aim will focus particularly on appointment, transfer and promotion of judges and public prosecutors, restructuring disciplinary procedures regarding the judges and public prosecutors, strengthening judicial conduct and expansion of scope of the activity reports in civil and administrative judiciary. Within the scope of this aim, judges and public prosecutors will not be relocated against their will and an interview exam during the admission of judges and public prosecutors will be conducted by a committee. Besides, disciplinary penalties will be redefined based on more objective criteria. Judges and public prosecutors will be given more extensive rights in disciplinary processes

Aim 3: Increasing the Quality and Quantity of Human Resources

Improving the quality of legal education, restricting the admission procedure for legal professions, improving the quality of pre-service and in-service trainings and increasing the number of judges, public prosecutors and judicial personnel in proportion to the workload are the main efforts which this aim will focus on. The following activities will be carried out within the scope of this aim:

– Duration of study and quotas in law schools, the success criteria required for admission,  fundamental principles regarding the quantity and quality of the existing academic staff in law schools will be reviewed and revised, as necessary. 

– Law school graduates will be subject to “Legal Proficiency Exam”, prior to becoming judge, prosecutor or notary assistant and start their legal internship. Those who succeed in the proficiency exam will then be allowed to take exams to become judge, prosecutor or notary assistant.

– Judge and prosecutor assistantship will be introduced to the Turkish judicial system as a new legal profession. Judge and prosecutor assistants will be allowed to participate in judicial services so that they can better prepare for the profession.

– Justice Academy of Turkey will be established to develop a new institutional structure for the pre-service and in-service training of judges and prosecutors with an academic approach. Human rights law will be included as a part of pre-service and in-service training programs along with legal methodology and legal argumentation programs. The number of judges and prosecutors receiving foreign language and postgraduate education abroad will be increased.

– Number of judges, prosecutors and judicial personnel, along with other professionals such as psychologists, sociologists and experts working in courthouses, will be increased taking into consideration the workload of these offices in the Council of Europe Member States. Attention will be paid to the principle of gender equality in recruitment of judges, prosecutors and legal staff. 

Aim 4: Enhancement of Performance and Productivity

Efforts under this aim will focus particularly on increasing the quality in the judicial system, right to be tried in a reasonable time, specialization in the court system, strengthening the Courts of Appeal, improving effectiveness and efficiency of court experts system, notification and service of judicial documents, use of technology in judicial system in a citizen-oriented manner, regulation of hearing times to ensure proper handling of each case by judges and public prosecutors, provision of forensic services and development of international mutual legal assistance and cooperation. The following activities will be carried out within the scope of this aim:

– Electronic notification system will be broadly used. Notification officials will be obliged to have training on site in order to prevent problems related to notification. 

– Procedures will be developed for dispute resolution without hearings. In order to ensure foreseeability, hearing timelines will be prepared and implemented. Steps will be taken to ensure cases are concluded in one session. 

– The procedures concerning the recognition of the decisions rendered by foreign courts will be reviewed and simplified. International cooperation will be formed for cross border organized crimes, terrorism, financing of terrorism, cybercrimes, human trafficking, laundering of proceeds of crime and trafficking of narcotic drugs.

Aim 5: Ensuring Efficient Use of the Right to Self-Defense

Efforts under this aim will focus particularly on amending the procedure for admission to the attorneyship profession, active participation of defense in the proceedings and new practices enabling attorneys to fulfill their duties more easily. The following activities will be carried out within the scope of this aim:

– In order to start the attorney internship, individuals will be required to succeed in the “Legal Proficiency Exam”. The duration and productivity of the internship will be revisited. Regulations will be introduced to make sure that attorneys are able to work and be covered by insurance during their internship. 

– Attorneys rights on accessing information and documents will be extended. Some proceedings and actions, such as land registry and some rental agreements, will be conducted through attorneys in order to increase legal security. Mandatory legal representation for certain cases will be discussed in the judiciary. Regulations will be made requiring that documents presented by attorneys should be trustworthy and in the event of an objection by a party on appropriate grounds, the document will be subject to review. The tax burden on attorneyship services will be re-evaluated in order to strengthen the citizens’ right to access to justice. Rights of attorneys, such as receiving a special stamped passport, will be improved.

Aim 6: Ensuring Access to Justice and Enhancing Satisfaction from Service

Efforts under this aim will focus particularly on re-arrangement of application deadlines for legal remedies, strengthening the legal aid system, introducing disabled-friendly practices, practices related to women’s rights and measures facilitating access of the elderly and foreigners to justice, institutionalization of media and public relations in the judiciary and elimination of practices and approaches hindering court testimony. 

Aim 7: Enhancing the Efficiency of the Criminal Justice System

Efforts under this aim will focus particularly on strengthening the means for settlement before the prosecution and the investigation phases, review of balance between offence and the sanction by observing the principle of protection of rights and freedoms primarily the right to a fair trial, restructuring of the juvenile justice system, renewal of inconvenient general enforcement procedures in criminal enforcement field with the integration of modern technologies, correctional measures for the social reintegration of the persons and efficiency of the investigations and prosecutions concerning cybercrimes. The following activities will be carried out within the scope of this aim:

– Scope of the sanctions alternative to short term imprisonment sentences will be extended in terms of duration and type. Acts that are criminalized by the legislation will be revisited and those which could be converted to administrative sanctions will be defined and decriminalized. 

– Judicial registry archive records will be deleted without requiring a separate court decision and the duration for deleting will be shortened. The judicial statistics will be deepened with a multi-directional understanding for impact analysis of the new legal regulations and instant follow-up of the data on offences and criminality.

Aim 8: Simplification and Enhancement of the Efficiency of Civil and Administrative Trials

Efforts under this aim will focus particularly on simplification of civil proceedings and procedural provisions, prevention of misuse of right to access to justice, removal of applications deepening the disputes during the judicial resolution of disputes arising from family law, redefining the job allocation between notary publics and courts, strengthening enforcement and bankruptcy system, renewal of enforcement sale system by observing the balance between creditor and debtor and reducing the costs imposed on the citizens in the proceedings and simplification of administrative trial procedure. The following activities will be carried out within the scope of this aim:

– Separation of duties between the civil courts of first instance and civil courts of peace will be re-identified. New regulations will be introduced to solve claims and actions for a small amount with a simplified and expeditious trial procedure, to simplify the preliminary examination stage and written trial procedure and simplified trial procedure will be applied in all proceedings of which the subject can be measured with money and is below a certain monetary amount. Scope of consumer courts’ duties of will be identified again in proportion with the workload.

– Notary publics will be allowed to carry out some non-contentious proceedings and taking of evidence that is limited to the period when the action has not been initiated yet. 

– A new legislation will be introduced to regulate the management, personnel and organizational structure of the enforcement and bankruptcy offices. Virtual enforcement office application will be launched. The institution of trusteeship will be reformed through launching the licensed trustee practice and re-regulating the liquidation procedure. 

Aim 9: Expansion of Alternative Dispute Resolution Methods

Efforts under this aim will focus particularly on expansion of use of alternative dispute resolution methods in criminal and civil disputes and effective implementation of settlement for public lawsuits. 

(First published by Mondaq on May 31, 2019)

By Gonenc Gurkaynak, Partner ELIG Gürkaynak Attorneys-at-Law

The Turkish Medicines and Medical Devices Agency (“Agency”) announced¹ the Draft Regulation on Sales, Advertising and Promotion of Medical Devices (“Draft Regulation”) on May 9, 2019. The Draft Regulation will replace the Regulation on Sales, Advertising and Promotion of Medical Devices (“Regulation”) currently in force. Through the announcement, the Agency expressed that the Regulation requires an amendment as a result of practical matters presented during the implementation of the Regulation and the current needs of the sector. The Agency has invited suggestions and comments from concerned parties until close of business on June 9, 2019, by post or through the Agency’s official e-mail address.

One of the amendments the Draft Regulation introduces relates to a slight change in the procedure in the application for obtaining the authorization certificate and work permit for medical device sales centers. Both the Regulation and the Draft Regulation provide that the applicant will be notified in writing if the application documentation is incomplete. However, the Draft Regulation foresees the application will be rejected, in the event the applicant does not confirm completion of the documentation within forty five (45) days as of the notification, or if the second examination conducted by the local health authority following the applicant’s confirmation demonstrates that the documentation is still incomplete.

Throughout the following provisions, there are several amendments relating to the physical and legal requirements of the infrastructure and personnel of medical device sales centers. For instance, sales centers are now required to be at least twenty five (25) square meters in size. Sales centers are now also able to provide sponsorship to scientific meetings, training activities, cadaver trainings, simulation trainings and online meetings which are scientifically or technically declared to be in relation with medical devices. Moreover, sales centers are not required to notify the Agency for researcher meetings of multi-centered domestic and international clinical researches that they are sponsoring. The audit intervals of sales centers have also been increased to at least once a year within the Draft Regulation, which is currently “every other year” as per the Regulation. Lastly, the Draft Regulation introduces a new standard where the authorization certificates of sales centers will be terminated indefinitely, as a result of their change of location.

One of the most critical amendments within the Draft Regulation could be the significant developments regarding advertising and promotion regulations. Both activities now include highly similar and even some identical provisions with the rules and principles laid out in Consumer Protection Law No. 6502 and Commercial Advertising and Unfair Commercial Practices Regulation (“Advertising Regulation”). The Draft Regulation introduces the most fundamental principles of the legislation with regard to advertising of medical devices, prohibiting commercial advertising by way of “misleading consumers or taking advantage of their lack of knowledge, risking their security, promoting violence or crime, deranging public health, taking advantage of children and the disabled” and “using inaccurate, misleading, exaggerated or uncorroborated information”. On top of this, in line with the Advertising Regulation, the Draft Regulation now includes the definition of surreptitious advertising, as well as the prohibition of surreptitious advertising of medical devices. The related provision is identical to that of the Advertising Regulation, which goes along the lines, “including or promoting trade names or company names within articles, news, broadcasts or programs for the purposes of advertising, by way of using names, trademarks, logos or other distinctive shapes or expressions pertaining to the products or services, without explicitly disclosing or clearly expressing that it is an advertisement”.

Provisions relating to free samples appear to have been removed from the Draft Regulation and have been incorporated into the provisions under “donations”. We may expect that the Agency will provide the details and additional rules relating to free samples through secondary guidelines. 

The Draft Regulation also significantly extends the provisions regarding administrative penalties and provides a more detailed list of potential violations.

(First published by Mondaq on May 24, 2019)

^{1.Please see https://www.titck.gov.tr/duyuru/tibbi-cihaz-satis-reklam-tanitim-yonetmelik-taslagi-09052019093043 for the full text of the announcement in Turkish (last access: May 23, 2019)}

By Gonenc Gurkaynak, Partner, Ceren Yıldız, Counsel, Sinem Ugur, Associate and Nazlı Gurun, Associate ELIG Gürkaynak Attorneys-at-Law

Basak Gurbuz is a Counsel at The Walt Disney Company Turkey, where she oversees the company’s legal and compliance matters. Prior to assuming her current in-house role, she was a Managing Associate with Gun + Partners. Her experience also includes time with Pekin & Bayar, the Yazici Law Firm, the Kasaroglu Law Firm, and Bayindir Holding.

CEELM: Basak, GCs are rarely seen as “deal makers” within their companies. Instead, they are usually seen as “deal breakers,” or at least “deal hurdles.” How can GCs change that perception?

BASAK: What I learned in the last four years since starting at Disney – my first in-house experience – is that legal should be and should be perceived as an integrated function, not merely a supportive function. We are one team, and we have a common purpose, so the legal function should be a part of the business and not simply sit backstage. We need to be on stage with the whole team and play an active role in the success of the business. 

In order to create this environment, it is vital to find ways to build this awareness and understanding through being assertive and constant communication. Needless to say, creativity and full compliance have to go hand in hand at all times.

CEELM: How do you go about bridging the gap in those differences in perspective?  

BASAK: I think it comes down to empathy at the end of the day. I always tell my colleagues to include me from the beginning, so that I can help them right on time. I also learned along the way that “help” is the magic word. 

There is the much-needed dark side of course – our red lines – that any legal counsel should be transparent with. 

When I have a new matter in front of me I have three options. In an ideal world, I can say “yes, this is good to go and here’s how we should do it and let me draw you a map.” Other times you need to simply say, in as transparent and friendly a manner as possible, “No – strict no – there is a specific legal provision or a company policy that says no.” And there’s always option three – saying “How about if we do it this way?” Of course, if you say “no,” this may create unease. If you take the third option you also learn to be creative – in terms of legal aspects, compliance matters, as well as generally in business. 

For sure, it is not the job of the legal function to be likeable at all times, and red lines need to be drawn every now and then, but I have learned that this does not mean we need to be constantly serious. I try to employ humor as an ice-breaker when dealing with people coming up to me and expecting to hear a simple “no” – and I found that this helps a great deal, while remaining transparent about those red lines that cannot be crossed. 

CEELM: You spoke about acting as an integrated whole with the other business functions. How do you achieve that?

BASAK: I listen. I talk to people and I try to collect feedback.  I do my best to follow my colleagues and sometimes even approach them for feedback. I sometimes go to our leadership teams and I do the same – I try to find out if they are ok communicating with the legal function. I try to learn when and why they are reluctant to do so and how I can overcome that.

CEELM: And what do you do when that feedback is negative? What’s the next step for you?

BASAK: I ask for concrete examples to be able to go through them – both to reflect as well as to help the people providing the feedback understand my position better. If I am told they feel I shot down a proposal, I make an effort to illustrate how I actually took “Option 3” – how I tried to show them alternatives. 

Of course, it’s difficult sometimes for other business functions to accept it, since people feel they are losing money when you alter their plans. I just try to remember that and also go through the concrete examples and ask myself: “Was I too hard?”, and “Can I be more flexible?”, etc.

CEELM: You also emphasized the importance of empathy. How do you build that?

BASAK: It’s certainly difficult. I am a lawyer. I am not numbers-focused in the first place. I try to understand in good faith what my colleagues are trying to achieve – maybe hitting their budgets, their revenue targets, and so on – but it is not an easy exercise. I try to see myself as a sales person, and I think I have gotten better over time in understanding my colleagues and resorting to “no’s” only in rare instances, but of course if red lines arise, there is nothing I can do. In that case, I’ve learned to invest some time in explaining why we cannot cross certain lines to help build up empathy from their side as well. 

CEELM: We’ve been talking about broad approaches until now, so let’s look at some specifics. Let’s say you learn of a new deal you’ll need to support. What’s your first step?

BASAK: I need to make sure I understand the business and business case completely. I talk to my manager to get some feedback on that to help guide me if necessary. I try to be flexible and understand the deal and the goals and angles of every party involved. I then, of course, immediately need to apply my notions of law and compliance that are relevant to the deal and develop my strategy to facilitate it.

CEELM: When and at what stage do you involve external counsel?

BASAK: When we’re talking about very complicated deals – such as large M&A or real estate deals – I of course turn to external team support to stretch my resources. 

CEELM: And when picking the firm you’d be working with, if you had to prioritize one of the two, would you opt for a firm that has worked with you in the past and has a good understanding of your company, or a firm that has more experience on similar deals in the past. Why?

BASAK: The second is most likely, though a scenario where you have both is obviously ideal. If I understand a different firm that is better in the specific field that I need than those I worked with in the past, I’d definitely try them out, since the deal needs to run smoothly and perfectly.

CEELM: What about the instruction to the firm – what’s your checklist for that?

BASAK: It depends a bit on the deal. I would summarize the case with a confidentiality note. I would try to understand if they can help and how. I would lay down the work structure as I need reports from my external counsel frequently – I want to know what they are doing and if they require any feedback & guidance from me or the company to progress in the deal. I always make sure I have a call with them to make sure they have the necessary expertise and, of course, if they are ok with our budget expectations. 

CEELM: You mentioned your budget. What’s your preferred fee structure?

BASAK: I tend to prefer capped fees rather than hourly rates – something that tends to be common practice these days. 

CEELM: As a final thought, what do you believe is the single most important thing GCs need to develop in themselves as professionals to act as deal makers for their companies?

BASAK: To understand and get a better sense of the business side of things, I think. Reading up on the latest business trends is very important. In my case, I need to read up on the media trends, the developing media tools, etc. I need to make sure I share a language with my colleagues to be able to understand the drive behind new deals. We always need to remember we are legal people first and foremost but we cannot isolate ourselves in a purely legal world if we want to be true deal makers.   

This Article was originally published in Issue 6.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Bahar Yenerer is the General Counsel of Atos in Turkey. Prior to joining Atos in 2012 she spent two years as a Senior Lawyer with ELIG. Prior to that she was a Senior Legal Counsel with Turkcell, Head of M&A and Corporate Affairs with the Yamaner & Yamaner Law Office, a Lawyer with Tekin Law Office, and a Legal Consultant with the Serap Zuvin Law Offices.

CEELM:  Based on your experience, how has the role of the GC evolved in the last few years?

BAHAR: The role of the General Counsel is most definitely one of the ones that has seen most changes in recent days and it is constantly evolving. The main reason for that is that, today, the expectations for GCs have shifted from them being providers of pure legal input to them being business-oriented advisors. A GC is expected to act as a true business partner who supports the business as a whole, not just raise concerns over potential legal risks when needed. 

Of course, this is happening while the old responsibilities are still in place. We still lead the legal department, many of us still handle compliance, we still oversee disputes when necessary, and we still supervise contracts, but all of these responsibilities are now a given, and we’re expected to handle all of these aspects handled smoothly while providing strategic advice to the company.

The GC needs to adapt and evolve with these enhanced expectations from our internal clients and our companies. At the same time, we need to ensure we push to change our own JDs to facilitate that. 

CEELM: How so?

BAHAR: The scope of the GC was more limited in the past, and that was reflected in the organizational set-up. In the past, they’d be asked to offer input on a matter brought to their attention from a legal perspective, and then their job would be done. Today we are a part of management meetings and need to train ourselves to also understand what the business wants to achieve and be able to proactively provide input such as, when needed, offer guidance as to how we can take some risks. 

Of course, we always see and assess risks, but we’re now expected to build up and apply our business knowledge and experiences and focus them towards advising how to mitigate risks while keeping the goals of the company as the end goal – not just to say “we can’t do this.”

CEELM: So how do GCs need to adapt in terms of skills and knowledge to meet these increased expectations?

BAHAR: The first obvious aspect is that we need to move beyond our legal knowledge training and position ourselves as part of the business. We need to understand it from the ground up to allow us to guide our internal client. The second aspect is that we need to enhance our soft skills today far more than we needed to in the past. To act as an advisor rather than a stop-gap requires quite a bit of interpersonal diplomacy.

CEELM: What do you believe has been driving this change?

BAHAR: I think it’s two self-enforcing factors. When you are a GC, you quickly realize you need to live and breathe with your company to be able to do your job well. You need to understand its needs and you need to immerse yourself in the business to be able to give any form of advice effectively. With that, the expectations of your company as to how well you understand it evolves and it soon becomes a question of you needing to adapt to these needs to be a part of the organization going forward. 

Another big aspect is technology, which creates two additional forces. First, technology creates new risks – cybersecurity has been one of the most important topics for all companies these days, for example, and the GC is one of the key people who can help in mitigating the massive potential financial and reputational damage if things go wrong on this. On the other hand, technology has helped and will continue to help us overcome the ever-increasing work-flows we are faced with and generally help us be more efficient. With the routine work on our plates being moved out of the way, it is important for us — and it is natural to expect us to – focus on new opportunities. 

CEELM: How, then, does a General Counsel get to understand the business better?

BAHAR: First and foremost, make sure you are constantly connected with management. Have regular check-ins, understand what they are working on and what they are occupied with. Do the same as much as possible with the rest of the colleagues throughout the organization. Also, your business is not insular. Talk to your GC peers from other companies and try to connect yourself as much as possible with the business environment as a whole. It is no longer enough for you as a GC to keep apprised of how various pieces of legislation are being changed – you need to understand how companies – both yours and the rest – are working and what trends are influencing their operations. 

CEELM: Looking towards the future, what are you most excited about on the horizon?

BAHAR: The most exciting thing for me right now is technology. It has already impacted our lives greatly both in terms of everything I already described, but even beyond that.  As in any industry, technology enables flexibility in the workplace. New technologies make things more accessible remotely and give us the opportunity to be connected to business constantly. And, of course, the positive impact it has had on global teams is massive. 

Technology for sure is what I am most excited about. The possibilities are endless in how it will affect our lives. And I am sure it will never come down to being fully replaced by any form of tech – rather, I’m excited to see how much it’ll improve our work in a great way.  

This Article was originally published in Issue 6.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Introduction: As one of the top twenty energy consumers worldwide, Turkey experienced rapid economic growth beginning in the early 2000s, and its energy requirements increased accordingly. The demand for energy in Turkey has been growing at an average rate of 6.5% over the past decade and official reports predict that the country will continue at this pace through 2020. The high demand for energy, liberal market conditions, and government incentives are attracting both domestic and foreign investors to the Turkish renewable energy market.

Historic Milestones at a Glance: Turkey began to liberalize its local electricity market in the early 1980s, and the liberalization of the energy market gained speed in 2001 with the establishment of the Energy Market Regulatory Authority and the enactment of the Electricity Market Law, which separated generation, transmission, distribution, and trading activities. As part of this process, the regulatory framework for renewable energy resources was introduced in 2005 with the Law on the Use of Renewable Energy Resources for Generating Electricity (the “Renewable Energy Law”), which, among other things, regulates the feed-in tariffs and incentives for renewable energy, creating an appetite among both domestic and foreign investors.

Official Targets: To address the country’s dependence on imported energy and to direct investors into environmentally-friendly means of energy production, in December 2014, Turkey’s Ministry of Energy and Natural Resources (the “Ministry”) published the National Renewable Energy Action Plan for Turkey, which was closely aligned with the EU’s renewable energy directives. This action plan sets out Turkey’s renewable energy strategy until 2023, aiming for significant increase in the volume of power generation and the share of renewable resources in the overall power generation. These targets include: (a) raising the share of energy produced from renewable resources up to 30% on a national level; (b) increasing the installed capacity of wind power to 20,000 MW; and (c) establishing solar energy plants with an aggregate installed capacity of 3,000 MW. In order to ensure the realization of these goals, strong incentives are provided to investors for energy generation activities from renewable resources, including feed-in tariffs, incentives for the use of locally manufactured equipment, facilities in land acquisitions, and regulatory approvals and tax advantages. 

Ongoing Efforts: According to the current legislative framework, renewable energy power plants commissioned before December 31, 2020 are entitled to benefit from a purchase guarantee as well as feed-in tariffs in USD for a period of ten years starting from their commissioning. The incentives that will enter into effect in 2021 are yet to be established by the legislative organ. 

Although the purchase guarantee and feed-in tariffs moved Turkey towards its goal of increasing the share of renewable energy sources in overall power generation, the market is uncertain as to the sustainability and continuance of the current levels of support due to exchange rate volatilities and macroeconomic factors. However, since these incentives play a key role in ensuring the realization of Turkey’s long-term energy goals, and in light of the government’s public statements, agenda, and draft legislation, there is not, apparently, any risk at the moment that the incentives will be cancelled. On the contrary: recent amendments to the Electricity Market Law introduced a general framework for the regulation of renewable energy resource areas (RERAs), which aims to efficiently utilize renewable energy resources, accelerate investment procedures, and reinforce technology transfers through domestically manufactured equipment requirements. On October 9, 2016, the Ministry issued the Renewable Energy Resource Areas Regulation, superseding the previous regulation and providing details on how the RERAs will be made accessible to investors. Accordingly, investors investing in RERAs must use domestic equipment to benefit from the Ministry’s cooperation with the administrative procedures associated with the enterprise (such as obtaining permits and licenses), and will be granted a purchase guarantee.

Current Landscape and Future Considerations: In line with high energy demand, over the past decade the country’s dependence on imported energy rose from 52% in 1990 to 76% in 2018. A significant volume of oil and natural gas is imported, leading to concerns regarding the foreign trade deficit and environmental issues. Given the unexplored potential in terms of renewables-based power generation, there is still space for future development. For instance, no offshore-wind plant has been commissioned yet, although recent research identifies high growth potential for offshore wind in Turkey. The Mediterranean and Aegean seas particularly represent offshore potential.  

Finally, the overall lukewarm outlook of recent macroeconomic trends affected the Turkish energy market, made evident by investors’ shift to operational assets from greenfield assets. To boost ongoing interest in the energy market, a possible next step would be to streamline the process for investors and ease their procedural burden during investment periods. 

By Duygu Turgut, Partner, and Guven Mavis, Senior Associate, Esin Attorney Partnership

This Article was originally published in Issue 6.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.