SCOPE AND EFFECTIVENESS OF POSTPONED ARTICLE 346 OF THE TURKISH CODE OF OBLIGATIONS FROM THE PERSPECTIVE OF LEASE AGREEMENTS
ABSTRACT
After the entry into force of the Turkish Code of Obligations No. 6098 (“Turkish Code of Obligations”), various provisions regarding rental law, including Article 346, were postponed for eight years, finally coming into force on 01.07.2020. Article 346 of the Turkish Code of Obligations (prohibition of regulation to the detriment of the lessee), which also came into force at that time, does not apply in all rental relations. In accordance with the Turkish Commercial Code No. 6102 (“Turkish Commercial Code”), the provision applies to persons whose lessee is deemed to be a merchant or a private law legal entity or a public law legal entity in workplace leases. Due to issues of public order, the provision not only applies to lease agreements concluded since its entry into force but may also apply to lease agreements concluded before 01.07.2020. As a matter of fact, with the entry into force of these regulations introduced by the legislator, lessees, whose bargaining power is relatively “weak” in workplace leases, have further increased protection. Although the Turkish Code of Obligations came into force on 01.07.2012 following its publication in the Official Gazette on 04.02.2011, not all of its provisions came into force on the same date.
I. INTRODUCTION
Although the Turkish Code of Obligations came into force on 01.07.20121 following its publication in the Official Gazette on 04.02.2011, not all of its provisions came into force on the same date. Various provisions regarding rental law were postponed for five years in accordance with Article 2 of the Law on Amendments to Certain Laws in order to Expedite Judicial Services No. 6217, ("Law No. 6217") in response to demands and pressures from shopping malls, real estate investors, etc., whose investments would have been severely affected at that time.2
Provisional Article 2 of Law No. 6217:
“Provisional Article 2 – In workplace leases, where the Lessee is deemed to be a merchant in the Turkish Commercial Code and to be a private and public law legal entity, Articles 322, 324, 330, 339, 341, 342, 343, 345, 346 and 353 of the Turkish Code of Obligations No. 6098 dated 11/1/2011 shall not be applied for 5 years from 1/7/2012. In this case, the provisions of the lease agreement shall be applied in accordance with the freedom of contract in relation to the issues specified in these articles in the lease agreements.”
This postponement was subsequently extended for another three years in accordance with Article 53 of the Law on Amendments to Certain Laws and Decree With Force of Law No. 6353 ("Law No. 6353"), making the duration of the postponement a total of eight years.
Article 53 of Law No. 6353:
“Article 53 – Provisional Article 2 of the Law no. 6217 dated 31/3/2011 Law on Amendments to Certain Laws in order to Expedite Judicial Services has been amended as follows.
Provisional Article 2 – In workplace leases, where the Lessee is deemed to be a merchant in the Turkish Code of Obligations or a private law or public law legal entity, Articles 323, 325, 331, 340, 342, 343, 344, 346 and 354 of the Turkish Code of Obligations Law no. 6098 dated 11/1/2011 shall not be applied for 8 years from 1/7/2012. In this case, the provisions of the lease agreement shall be applied in accordance with the freedom of contract in relation to the issues specified in these articles in the lease agreements. In cases where there are no provisions in the lease agreements, the provisions of the former Code of Obligations are applied."
As a result, provisions regarding rental law were postponed until 01.07.2020. These provisions, which came into force on that date, apply in cases where the lessee is a merchant in accordance with the Turkish Commercial Code or a private law legal entity or a public law legal entity and a workplace lease is available. One of the postponed provisions, Article 346 of the Turkish Code of Obligations, will be evaluated in terms of its effect on past and future leases and the law of effectiveness.
II. TERMS OF APPLICATION OF POSTPONED PROVISIONS
A. EXISTENCE OF A WORKPLACE LEASE
Article 346 of the Turkish Code of Obligations may only be applied to workplace leases. However, according to Acar, the workplace lease referred to in the Article does not only apply to roofed workplace leases but to all kinds of workplace leases3.
B. SUITABILITY OF THE ADJECTIVE OF LESSEE
The existence of a workplace lease alone is not sufficient for the application of the provision. The lessee must be deemed a merchant in the Turkish Commercial Code or a private law legal entity or a public law legal entity.
III. APPLICATION AREA OF ARTICLE 346 OF THE TURKISH CODE OF OBLIGATIONS
A. APPLICATION UNDER CONTRACTS CONCLUDED BEFORE ITS ENTRY INTO FORCE
Article 346 of Turkish Code of Obligations: “Prohibition of regulation to the Detriment of the lessee
Article 346-No other payment obligation can be imposed on the Lessee other than the rental fee and ancillary expenses. In particular, if the rental fee is not paid on time, the agreements that the penalty will be paid or that the subsequent rental fees will be due are invalid."
Concerning which rules applied during the period from 01.07.2012 until 01.07.2020, the date on which such provisions came into force, Inceoglu believes that, "As a result of the postponement of the effectiveness of Article 346 of the Turkish Code of Obligations in workplace leases where the Lessee is a merchant or legal entity, acceleration clauses and the determination of penalties related to non-payment in such leases has become possible until 20204, since there is no orderly regulation to the contrary in the Code of Obligations Law no. 818." The Supreme Court made decisions in this manner. As a matter of fact, in one of its decisions, the Supreme Court stated that the acceleration clause will be valid in this process in the following decision: "[...] In terms of the condition of consent, according to Article 53 of the Law No. 6353, which amends the provisional Article 2 of the Law No. 6217, in workplace leases where the Lessee is deemed to be a merchant in the Turkish Commercial Code or a private law or public law legal entity, Articles 323, 325, 331, 340, 343, 344, 346 and 354 cannot be applied for eight years from 01.07.2012, in which case the provisions of the lease agreement shall be applied in accordance with the freedom of contract regarding the issues specified in these articles in the lease agreements. The application of Article 346 of the TCO for the defendant Lessee who is a merchant has been postponed, and the acceleration clause agreed by Article 2 of the contract dated 01.10.2013 applies and binds the parties.5" It is controversial in the doctrine whether the lessee can be obliged to make a payment other than for the rental fee and ancillary expenses during the intervening eight-year period. Inceoglu also believes that "in the concrete case, if such provisions are included in lease agreements made after 01.07.2012, which are a general transaction condition, it is possible for them to be subject to the content audit stipulated in Article 25 of the Turkish Code of Obligations6". Indeed, the purpose of these postponed provisions of rental law is to protect the lessee in workplace lease agreements, as their bargaining power is relatively weak compared to lessors, who are economically in a stronger position, for example, shopping malls and real estate investors.
B. APPLICATION AREA AFTER ITS ENTRY INTO FORCE
One of the most important problems that arises due to the postponement of some provisions is undoubtedly the impact they have on leases that existed at the time the postponed provisions came into force. Turkish law adopts the principle of non-retroactivity as a basic principle. As a matter of fact, this principle is indispensable for the rule of law given the essential nature of the concepts of legal security and legal certainty. However, if the provisions of a new code relate to public morality and/or public order, the laws may be retroactive. When we consider this question of effectiveness in terms of the postponed provisions of the Turkish Code of Obligations, the first provision we should consider is Article 1 of the Law on the Effectiveness and Implementation of the Turkish Code of Obligations No. 6101 ("Law No. 6101"). Article 1 of Law No. 6101:
“Rule of non-retroactivity
Article 1- (1) The acts and transactions before the date of entry into force of the Turkish Code of Obligations, whether they are legally binding and the consequences, whatever law these acts and transactions realized while they were in force, as a rule, the provisions of that law shall be applied. However, the default, termination and liquidation of these acts and transactions after the entry into force of the Turkish Code of Obligations are subject to the provisions of the Turkish Code of Obligations."
It is possible to say that, in accordance with the Article, the postponed provisions are effective in leases made after the entry into force. However, as already mentioned, there are exceptional cases in terms of provisions related to public morality and/or public order. The provision to be looked at in this respect is Article 2 of Law No. 6101.
Article 2 of Law No. 6101:
“B. Retroactiviy
I. Public order and public morality
Article 2- (1) The rules of the Turkish Code of Obligations regarding public order and public morality apply to all acts and transactions, regardless of the date they take place."
Since 01.07.2020, Article 346 of the Turkish Code of Obligations has been in force. The controversial issue, however, is whether Article 1 or Article 2 of Law No. 6101 applies to residence leases concluded during the period of Turkish Code of Obligations Law No. 818 in terms of the postponed Article 346 of the Turkish Code of Obligations. In both the dominant opinion of the doctrine7and its various decisions, the Supreme Court believes8 that the Article is related to public order because it is intended to protect the lessee who is in a relatively "weak" position in rental relations. Accordingly, it is also effective under lease agreements concluded before the introduction of Article 346 of the Turkish Code of Obligations, which was postponed; and it is possible to say that it also applies in cases that are currently available in accordance with Article 7 of Law No. 6101.
Article 7 of Law No. 6101
“Application for current cases
Article 7- (1) Article 76 of the Turkish Code of Obligations on public order and public morality and temporary payments, 88th on interest, 120th on default interest and article 138 on excessive performance difficulties are also applied in the cases being seen.”
IV. NATURE AND AIM OF THE INTRODUCTION OF ARTICLE 346 OF THE TURKISH CODE OF OBLIGATIONS
The principle of freedom of contract has been adopted in Turkish law. However, this freedom cannot be interpreted in an unlimited way. Certain provisions arising from public order and/or public morality are mandatory provisions of the law and the parties are not able to issue a clause contrary to these provisions in contractual relations established in accordance with their own will. There are also some mandatory provisions in the Turkish Code of Obligations. Accordingly, Article 346 of the Turkish Code of Obligations, which includes the prohibition of regulation to the detriment of the lessee, is a mandatory provision.
However, it should be noted that the existence of mandatory rules does not mean that they are always created in the public interest or for public order. It is possible to say that Article 346 of the Turkish Code of Obligations, which was postponed, relates to public order in terms of residence leases. This is because the party in the position of lessee in such leases is in a relatively weak position compared to the lessor. However, it is not consistent with concrete facts to say that a merchant, who is a lessor in a workplace lease and has an obligation to act prudently, is in a weak position. As a matter of fact, considering the fact that the relevant provision was postponed for eight years in terms of workplace leases, it is possible to say that the legal regulation in question is not indispensable.
As mentioned in a Supreme Court decision; “There is no doubt that this legal regulation in Article 346 of the Turkish Code of Obligations, which was introduced to protect the Lessee, is related to public order9". The purpose of introducing this provision is to prevent certain fees being charged under the name of "key money" as they were in old lease agreements, ensuring that acceleration clauses and penalties that may cause the lessee severe economic damage are invalid. Another purpose of the Article was to prevent the lessee from being held responsible for maintenance, repair, etc. expenses.
V. CONCLUSION
It is possible to say that, as of 01.07.2020, a new era of workplace leases began with the entry into force of the postponed provisions of the Turkish Code of Obligations regarding rental law. Lessees with weak bargaining power in relation to powerful lessors, for example, shopping malls, have more protection under the new provisions. In particular, in accordance with Article 346 of the Turkish Code of Obligations, one of the postponed provisions, the lessee shall not be obliged to make any payment except for the rental fee and ancillary expenses. In cases related to public order, where only one rental fee is not paid, the subsequent rental fees will be due and any penalty that creates a severe economic burden for the lessee may be considered invalid even where it is regulated in the contract. However, due to the lack of any finalized judicial decisions on the subject, it is possible that a contrary decision could be made in court where sufficient justifiable arguments are presented.
BIBLIOGRAPHY
MURAT İNCEOĞLU, Kira Hukuku Cilt I, İstanbul 2014 MURAT İNCEOĞLU, Kira Hukuku Cilt II, İstanbul 2014 FARUK ACAR, Kira Hukuku Şerhi, İstanbul 2017 KEMAL ATASOY, Sözleşme Özgürlüğünün Kamu Düzenine Ayrılık Sınırı, İstanbul 2020 MUSTAFA KIRMIZI, Açıklamalı – İçtihatlı Kira Hukuku, Ankara 2020.
