Turkey: The Question Of Jurisdiction In Lawsuits Regarding The Companies To Which Saving Deposit Insurance Fund Was Appointed As Trustee

INTRODUCTION

The Savings Deposit Insurance Fund (“SDIF“) is a public legal entity with administrative and financial autonomy established to protect the rights of savers from corruption and irregularities. 

As is known, pursuant to Article 133 of the Criminal Procedure Code No. 5271 (“CPC“) regulating the appointment of trustees for company management, trustees have been appointed by judges or courts to companies that are affiliated, associated or connected to terrorist organizations that are determined to pose a threat to national security. However, with the Decree Law No. 674 (“Decree Law“), the duties and powers of the trustees in the said companies to which trustees were/will be appointed were transferred to the SDIF, and then the Decree Law No. 674 was enacted into law by Law No. 6758 dated 24.11.2016. In the following period, additional regulations were made regarding the companies and assets whose trusteeship duties were transferred to the SDIF or for which the SDIF was appointed as trustee, and the “Procedures and Principles for the Implementation of Article 19 of Law No. 6758 dated 10.11.2016” was published. It is the primary objective and duty of the SDIF, as well as its legal obligation, to manage the activities of the companies to which the SDIF has been appointed as trustee in accordance with commercial practices, like a prudent merchant, and to maintain the contribution of these companies to the national economy.

The fact that the SDIF is an administrative authority with public legal personality, but the fact that the companies it manages within the scope of its trusteeship duty may also become a party to legal disputes arising from private law relations causes different opinions to emerge regarding the determination of the competent court in such disputes. As it is known, in our legal system, jurisdiction is a rule of procedural law regarding which court will hear a case, and it is important to determine whether the administrative jurisdiction or the judicial jurisdiction has jurisdiction in cases regarding the companies to which the SDIF is appointed as a trustee. In this article, the different views on the jurisdiction of the SDIF will be discussed in detail.

A. EVALUATION IN TERMS OF ADMINISTRATIVE JURISDICTION

In order for a transaction to be considered as an administrative transaction, the elements of authority, form, reason, subject matter and purpose of the administrative transaction must be evaluated together. Therefore, if a decision made by the administration contains these elements together, an administrative act may be mentioned and a lawsuit for the annulment of the administrative act may be filed before the Administrative Courts authorized in the administrative jurisdiction for the annulment of this act. 

Pursuant to Article 12 of the Administrative Procedure Law No. 2577 (“ALPL“), the type of lawsuit to be filed for unilateral executive decisions that are in the nature of administrative transactions is the annulment lawsuit. In this context, pursuant to Article 2 of the ALPL, annulment lawsuits may be filed by those whose interests are violated for the annulment of administrative acts because they are contrary to the law in terms of authority, form, reason, subject matter and purpose.

When the provisions of the legislation are examined, Article 11 of the ALPL titled “Application to higher authorities” states; 

“Before filing an administrative lawsuit by those concerned, the abolition, withdrawal, modification or new action may be requested from the higher authority, or if there is no higher authority, from the authority that has taken the action, within the administrative lawsuit filing period. This application stops the administrative lawsuit filing period that has started to run.”

Pursuant to the provision, before filing a lawsuit for the cancellation or removal of the administrative action, there is the right and possibility to apply to the superior authority of the authority that established the administrative action or, if there is no superior authority, to the authority that made the action.

Pursuant to this right and possibility, paragraphs 1 and 2 of Article 111 of the Banking Law stipulate;

“In order to protect the rights and interests of depositors within the framework of the powers granted by this Law and other relevant legislation, the Savings Deposit Insurance Fund has been established with public legal personality, administrative and financial autonomy for the purpose of insuring deposits and participation funds, managing the Fund banks, strengthening their financial structure, restructuring, transfer, merger, sale, liquidation, execution and finalization of the follow-up and collection of the Fund receivables, management of the Fund assets and resources and performance of other duties assigned by the Law,

The Fund is independent in performing its duties. Decisions of the Fund shall not be subject to the audit of expediency. No body, authority, authority or person may give orders or instructions to influence the decisions of the Fund Board.”

If the application made to the SDIF, which is not affiliated to any supreme institution, has a legal personality, and has administrative and financial autonomy, does not yield any results, the illegality of the said decision of the SDIF, which cannot be subject to any supervision, can only be claimed through an annulment lawsuit to be filed in the administrative jurisdiction with the request for the annulment and stay of execution of the Administrative Transaction.

Therefore, although the SDIF ensures the management of a company that is a private law legal entity, it may take unilateral actions in terms of some of its decisions and practices due to the fact that it is a public institution. Although it may be considered that the acts and transactions carried out by the SDIF acting in the capacity of a trustee are not in the nature of administrative acts, and that these acts and transactions are not based on the public interest but on the necessity of commercial customs and conditions, the appointment of the SDIF as a trustee is itself a transaction carried out mainly for the public interest. This is because the main duty of the SDIF in terms of the companies to which it is appointed as a trustee is to prevent the shareholders and creditors of these companies from being victimized and to prevent a potential damage to the public.

When the decision of the Civil Division of the Court of Dispute dated 26.02.2018 and numbered 2018/106 E. and 2018/107 K. is examined;

“…The jurisdiction and resolution of the lawsuits filed due to disputes arising from administrative transactions, administrative actions and administrative contracts, which are established with a unilateral declaration of will by using public power in order to carry out public service within the rules of administrative law, are within the jurisdiction of the Administrative Judiciary…”

The unilateral and enforceable unilateral and enforceable transactions that have all of the elements of authority, reason, subject matter, form and purpose of an administrative transaction and that are carried out by the SDIF in relation to the companies of which it is the trustee should be accepted as administrative transactions and the administrative jurisdiction should be authorized to resolve these disputes.

B. EVALUATION IN TERMS OF JUDICIARY JURISDICTION

The SDIF carries out trusteeship activities in line with the objective of managing the activities of the companies to which it is appointed as a trustee in accordance with commercial practices and like a prudent merchant, and maintaining the contribution of these companies to the national economy.

In disputes to be resolved by judicial review in administrative jurisdictions, first of all, it is necessary to determine whether the transaction subject to the lawsuit is an administrative transaction or not. Even if it is established by administrative authorities, judicial jurisdictions are authorized to resolve disputes arising from transactions and contracts subject to private law provisions.

Article 403, paragraph 2 of the Turkish Civil Code No. 4721 (“TCC“) stipulates that a trustee shall be appointed to perform certain tasks or manage assets. Article 427 of the TCC stipulates that if a legal entity is deprived of the necessary organs and cannot be managed in any other way, a management trustee shall be appointed by the guardianship authority. Article 460 of the TCC titled “Management of Assets” states that “If the trustee is assigned with the management and supervision of an asset, he/she may only perform the works necessary for the management and protection of that asset. The trustee's ability to perform other works depends on the special authorization to be given by the represented person, or the permission of the guardianship authority if the represented person is not in a position to give this authorization.”

The management trustee's ability to perform ordinary management works does not depend on a special authorization given by the represented person, nor does it depend on the permission of the guardianship authority. It is possible to give examples of collection of receivables, payment of debts, and taking measures to protect the assets as examples of ordinary management works. The trustee is obliged to exercise due diligence while fulfilling this duty, just like other persons assigned with guardianship affairs. It is stated in Article 467 of the TCC that the trustee shall be liable for the damages caused by his/her negligent behavior while fulfilling his/her duty, and it is stipulated in Article 469 of the TCC that the civil courts of first instance shall be in charge in the compensation cases to be filed.

Pursuant to Article 133 of the Code of Criminal Procedure, in the event that there are strong grounds for suspicion that the offense is being committed within the framework of the activities of a company and it is necessary to reveal the material truth, the judge or court may appoint a trustee for the execution of the company's affairs during the investigation and prosecution process, and pursuant to Article 19 of Law No. 6758, if it is decided to appoint a trustee for companies pursuant to Article 133 of the Code of Criminal Procedure, the SDIF will be appointed as the trustee. Article 133 of the Code of Criminal Procedure pursuant to Article 19 of Law No. 6758, the SDIF will be appointed as the trustee, the Fund may apply its powers related to the Banking Law No. 5411 by analogy in its duty as a trustee and in sale or liquidation transactions, and the relevant parties may apply to the competent court against the actions of the trustee in accordance with the provisions of the Turkish Civil Code and the Turkish Commercial Code.

Therefore, the transactions carried out by the SDIF, acting as a trustee, based on commercial rules and customs, without considering the public interest and unilaterally, will be evaluated according to the principles of commercial law, not the principles of administrative law, and disputes will be heard by the judiciary jurisdiction.

CONCLUSION

When determining the jurisdictional remedy in disputes in which the SDIF is appointed as a trustee, it is not accurate to say that the administrative jurisdiction will be in charge due to the fact that the SDIF is a public legal entity, nor is it possible to say that the judicial jurisdiction will be in charge based on the fact that the SDIF exercises its trusteeship powers on behalf of a private law legal entity.

In this case, the subject matter of the dispute should be examined rather than the status of the SDIF, and if the decision taken or implemented by the SDIF has the characteristics of a unilateral and enforceable action, and if it results from the SDIF's use of public power, it should be accepted as an administrative action and the dispute should be resolved in the administrative jurisdiction.

Likewise, all kinds of transactions of public institutions and organizations cannot be directly evaluated within the scope of administrative law, and if the SDIF acted as a private law legal entity and did not use public power while carrying out the works and transactions, it would be accurate to resolve the dispute in the judiciary jurisdiction.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.