Press Release No: Individual Application 34/16
01.07.2016

PRESS RELEASE CONCERNING THE JUDGMENT OF CEMTUR SEYAHAT VE TURİZM LTD. ŞTİ. IN LIQUIDATION ON THE RIGHT TO PROPERTY AND THE RIGHT TO BE TRIED WITHIN A REASONABLE TIME

The Constitutional Court held, at its plenary meeting on 1/6/2016, with regard to the individual application lodged by Cemtur Seyahat ve Turizm Ltd. Şti. in Liquidation (application no. 2013/865) that there had been a breach of the right to property and the right to be tried within a reasonable time guaranteed respectively in Articles 35 and 36 of the Constitution.

The Facts

On 8/1/2003, the applicant initiated debt enforcement proceedings without judgment before the İstanbul 7th Enforcement Office at the 6th Chamber of the Commercial Court of First Instance for the collection of his receivables which it could not collect from the debtor Ulusal Basın Gazetecilik Matbaacılık ve Yayıncılık AŞ (“the Company”) for which the applicant provided personnel transportation services within the scope of a service contract. Upon the objection raised by the Company to the debt in question on 13/1/2003, the applicant filed an action for annulment of objection on 24/2/2003. While the action was pending, the Saving Deposits Insurance Fund (“the TMSF”) seized the Turkiye Imar Bank on 3/7/2003. The 2nd Chamber of the Şişli Magistrate’s Court ordered freezing of the rights and claims, other than the necessary expenses, of 179 companies including the debtor Company on 26/8/2003. The applicant acknowledged the receivable at the determined amount of 287,790 New Turkish Liras during the hearing dated 9/3/2004, and the Court decided to annul the defendant’s objection and to collect the compensation for denial of enforcement (“icra inkar tazminatı”).

By its interlocutory decision dated 11/5/2004, the 8th Chamber of the İstanbul Assize Court extended the scope of the decision on interim measure rendered by the 2nd Chamber of the Şişli Magistrate’s Court and gave a decision on the list of payments that they could make for enabling the companies of Uzan Group including the debtor company to continue their activities. In this decision, the personnel transportation fees were deemed to be among the payable fees.

The applicant proceeded with debt enforcement proceedings upon the decision becoming final, and movable and immovable properties of the Debtor Company were attached by virtue of the requests dated 12/5/2004 and 26/5/2004. Moreover, an order of attachment was registered by the Turkish Patent Institute on four brand marks registered in the name of the Debtor Company (star, starlife, star tek and ulusal medya) on 17/5/2004 and 15/6/2004 and by the İstanbul Governorship on 118 publications notably the Star Newspaper on 18/6/2004 and 21/6/2004. On 18/5/2004 the TMSF levied an attachment of 7,739 million New Turkish Liras in respect of the Debtor Company relying on the Law no. 6183.

The applicant also filed bankruptcy proceedings (“iflas yoluyla takip”) against the Debtor Company on 10/6/2004, and the representative of the Debtor Company managed by the TMSF requested stay of the applicant’s enforcement proceedings on 3/8/2004.

Upon the objection raised, the TMSF’s representative submitted a petition of 15/2/2005 and became an intervening party to the bankruptcy case opened before the 7th Chamber of the İstanbul Commercial Court of First Instance. At the hearing dated 22/2/2005, the TMSF’s representative noted that the management and control of the Debtor Company had been transferred to the Fund by virtue of the resolution of the Fund Board, and an interim measure had been imposed on that company; that an attachment initiated upon the request of the TMSF in pursuance of the Law no. 6183 and at the amount of 7.7 billion New Turkish Liras had been already levied on the Debtor Company; and that according to Article 206 of the Bankruptcy and Enforcement Law, the TMSF was in the 3rd place while the applicant was in the 4th place for collection of their receivables. The representative also stated that pursuant to Article 16 § 2 of the Abolished Law no. 4389, all enforcement and bankruptcy proceedings pending against the Debtor Company be discontinued. The applicant’s representative noted in his written declaration of the same date that referring to the decision of the 8th Chamber of the İstanbul Assize Court on extension of the previous decision on interim measure, the objection raised by the TMSF’s representative was not in good faith.

By the resolution of the TMSF’s Fund Board dated 23/6/2005 and no. 249, it was resolved that properties, claims and assets of five companies belonging to the Star Media Group including the Debtor Company be sold by forming a financial and commercial integrity, and it was announced that this sale would be made on 15/9/2005. 

By its decision dated 20/12/2005, the 7th Chamber of the İstanbul Commercial Court of First Instance dismissed the case requesting bankruptcy of the Debtor Company on the grounds that the third parties cannot request the attached properties of the companies which were seized by the TMSF and which would constitute financial integrity within two years, be taken under protection or be sold; and that bankruptcy of such companies cannot be ordered. The Court of Cassation upheld this decision.

In the period between September 2005 and March 2006, the assets of the Group companies which constitute a commercial and financial integrity, were sold by the TMSF through tenders made in pursuance of the abolished Law no. 4389. In this scope, the Start Newspaper’s Commercial and Financial Integrity consisting of properties, claims and assets of 5 companies including the Debtor Company was sold in exchange for USD 8,000.000 through a tender made on 25/1/2006, and accordingly a total amount of USD 8,779.463.17 was collected together with interest. After deduction of taxes and social insurance receivables from the amount collected, the remaining amount was transferred to the TMSF. 

 The Fund Board subsequently decided to liquidate the Debtor Company having no asset constituting a value upon the sales made on 16/11/2006. In the Debtor Company’s balance sheet forming a basis for the liquidation, the applicant’s receivables was recorded in the 4th place as TRY 59,517.06 while the TMSF’s receivables was indicated as TRY 21 billion in the list showing the sequence of payments, which was published in the Trade Registry Gazette dated 9/5/2012.

When the applicant, which could not collect its receivables from the Debtor Company, could not receive any reply from the TMSF administration to its written warning of 20/7/2006 in which it requested payment of its receivables, it filed an action for annulment and for compensation of the receivables plus its legal interest before the 8th Chamber of the İstanbul Administrative Court against the implied dismissal decision on 17/11/2006. By its decision dated 20/2/2008, the Administrative Court dismissed the action on the ground that “there is no legal obligation indicating that the debts of the Debtor Company are to be paid by the Fund”. The Supreme Administrative Court subsequently dismissed the applicant’s appellate request and the request for rectification of the judgment. 

The Applicant’s Allegations

The applicant maintained that although it had levied attachment on the Debtor Company’s properties and assets which were sold and it had taken necessary steps for enabling the payment of its receivables, it had not received any payment as a result of the public interferences; that the TMSF administration had exercised its power in an arbitrary manner which would infringe the right to property of the third parties; and that the damage incurred had been charged to the third parties instead of those causing the Bank to go bankrupt and although other certain creditors had been provided with payments, it had not received any payment. The applicant also alleged that as the Debtor Company had been liquidated, it would have no opportunity to collect its receivables; that the court decisions were lack of justification; and that the period of proceedings had been lengthy. The applicant accordingly maintained that there had been a breach of the right to a fair trial, the right to property and the principle of equality.

The Court’s Assessment

In brief, the Constitutional Court made the following assessments within the scope of this application:

a. Alleged Violation of the Right to Property

Both the Ministry and the Department of Legal Affairs of the TMSF stated that the applicant’s failure to collect its receivables does not stem from the public administration’s fault. It was resulted from the fact that the Debtor Company had no more assets. The applicant’s receivables which were rendered recoverable by the applicant were blocked due to the TMSF’s interferences. The applicant was not involved in the liquidation process of the Debtor Company which had no ability to make payment to the applicant, and all transactions were performed by the TMSF. Under all of such circumstances, it is impossible to acknowledge that the addressee of the applicant is only the company all assets of which have been liquidated, which has run into debt and has been under control of the TMSF; that the TMSF had no responsibility; and that the applicant’s failure to obtain its receivables occurred at the end of an ordinary process of enforcement and bankruptcy proceedings.

As the applicant’s right to property was interfered with as a result of the actions performed by relying on the regulations which grant priority, superiority and privilege to the TMSF’s bank-related receivables, these interferences were assessed under the State’s authority to control the use of property or to regulate property.

The applicant’s relation with the Debtor Company is a commercial relationship based on a service contract for rendering personnel transportation service and is not related to banking activities, the use of bank resources or causing damage to the bank.  In such case, the applicant’s status vis-a-vis the damages of a seized bank which were undertaken by public may be considered as a third party in good faith. 

The applicant was prevented from collecting its receivables which were due from the Debtor Company and which were rendered recoverable through the attachments levied by the applicant due to the public interferences upon the seizure of the Debtor by the TMSF. It is impossible for the applicant to foresee the interferences to be made by virtue of the Laws issued after the date when it concluded the contract with the Debtor Company and it provided service.    What is foreseeable for the applicant having levied an attachment for its receivables is, at the worst, equal distribution of sales revenues as per the Laws no. 2004 and 6183 in case of an attachment proceedings based on public receivables.

All assets of the Debtor Company were sold by the TMSF without following the processes envisaged in the Laws no. 2004 and 6183 but on the basis of the Laws no. 4389 and 5411. The applicant was not included in this process in which TMSF had the powers of a creditor and of an enforcement and bankruptcy office and determined all conditions. All of the revenues obtained at the end of the sale were allocated for the other public receivables and TMSF’s receivables derived from the seized bank in spite of the power given by the Law no. 5411 and ordering the payment of good- and service-related receivables pertaining to previous periods.

In this process, the rights of the applicant considered to be a third party in good faith were not taken into consideration, and the applicant was deprived of the opportunity to collect its receivables. The damages incurred due to the Bank, which was under the control and custody of the State and which went bankrupt, were indirectly and partially charged to the applicant.   

Given the above-cited reasons and the legal uncertainty caused to occur to the detriment of the applicant, it has been concluded that the fair balance between the applicant’s right to property and the public interest was impaired to the detriment of the applicant.

It has been consequently held that there was a breach of the right to property guaranteed under Article 35 of the Constitution.

b. Alleged Violation of the Right to Be Tried within a Reasonable Time  

The number of parties to the actions which are subject-matter of the application and characteristics of the procedural actions required to be performed on account of the nature of the actions reveal that the impugned proceedings are complex. However, when assessed as a whole, it has been considered that, there is no reason, in these actions, to depart from the decisions rendered in respect of the proceedings subject to the Laws no. 1086, 2004 and 2577; and that there is an unreasonable delay in the length of proceedings lasting for almost ten years.

It has been consequently held by the Constitutional Court that there was a breach of the right to be tried within a reasonable time, which is guaranteed in Article 36 of the Constitution.

 

 

This press release prepared by the General Secretariat intends to inform the public and has no binding effect.

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