Building law and regulation in Turkey during Covid-19

On March 24, 2020, the Ministry of Treasury and Finance (the Revenue Administration) stipulated that among other sectors, construction companies are deemed to be in “force majeure” between April 1, 2020, and June 30, 2020.

On May 4, 2020, the government released a normalization plan. According to this plan, construction companies will be obliged to submit their tax declarations as of July 1, 2020.

In addition, institutions and companies providing services in the construction sector will be offered a training programme on the normalisation process from 4 May 2020. In addition, they will receive guidelines on the normalisation process prepared by the Ministry of Health.

The Turkish economic stability shield (Ekonomik İstikrar Kalkanı Paketi) worth TRY 100 billion (approx. EUR 14 billion) to reduce the impact of the COVID-19 pandemic on Turkish individuals and businesses, stipulates that (i) "force majeure" will be indicated in the credit records of companies that were unable to meet their financial obligations during the months of April, May and June to avoid a poor credit record of such companies, and (ii) credit and interest payments of borrowers facing cash flow disruptions due to the coronavirus pandemic will be postponed for three (3) months and the government will provide additional support to these companies if needed.

In the future, the government will pay 60% of the salaries of certain employees employed by employers who qualify for short-time work. In addition, for applications for short-time work compensation submitted due to the COVID-19 pandemic, the sixty (60) days review period has been lifted, so that the assessment of the employer's eligibility is granted on the basis of the employer's declarations. It is planned to remove the short-time work allowance from the COVID-19 measures as of June 30, 2020. Finally, the arrangements for making up for missed working time are to be extended to four (4) months (from two (2) months). This means that employers will be able to require employees to make up for the time missed due to the pandemic by working overtime without extra pay. This will continue for four (4) months once the effects of the pandemic have been eliminated.

There is no statutory definition of force majeure under Turkish Law. However, as per the precedents of the Turkish Court of Appeals, force majeure could be defined as “an unforeseen or unavoidable event that is impossible to predict and cannot be taken into consideration in advance and consequently cannot be eliminated, and which stems from an external factor. This event may come from a natural force (such as a storm, waterfall, flood) or from a third person’s act (like in tort) or a formal ban”.

According to Turkish law, events of force majeure only have a legal consequence if such an event makes it objectively impossible to fulfil the debt (for a certain or indefinite period of time). As there are no precedents of the Turkish Court of Appeal on pandemics, it is not clear whether and to what extent the courts will classify the COVID-19 pandemic as “force majeure”.

As per the applicable Turkish legislation, the debtor would not be liable for non-performance (ifa imkansızlığı) only if there is an impossibility of performance that is not attributable to itself and would be released of its obligations under the contract. On the other hand, if the impossibility of performance is temporary, the debtor would not be liable for any default during that period. 
However, the scope of impossibility shall be assessed individually for each case by the competent court in a potential dispute.

According to the current Turkish legislation, the debtor would only not be liable for non-performance (ifa imkansızlığı) if there was an impossibility of performance for which he is not responsible, and he was released from his contractual obligations. On the other hand, if the impossibility of performance is temporary, the debtor is not liable for any default during this period. 
However, the extent of the impossibility shall be assessed by the competent court in each individual case.

In addition, the debtor who has either not yet fulfilled his obligations under the agreement due to the excessive difficulty of performance (aşırı ifa güçlüğü) or who has done so by reserving his rights, would be entitled to apply to the court (i) to adapt the agreement to the new conditions or (ii) if an adaptation is not possible, to request the dissolution of the agreement (sözleşmeden dönme). In such a case, however, if the debt results from a continuing obligation, the debtor could exercise his right to terminate the contract. 

For the time being, there are no sector-specific legislative amendments providing for measures in connection with the epidemic. We expect that specific regulations will come into force if this pandemic continues. 

The Ministry of Environment and Urbanisation (the General Directorate of Construction) has taken some measures to provide more efficient services. The "Circular on Coronavirus Measures in Construction Inspection Services" prepared in this context was sent to the provincial governorship. Accordingly, applications to be submitted to the  General Directorate of Construction including all kinds of certification processes procedures for renewal of test authorisations, audit certificates, laboratory authorisation certificates, establishment authorisation certificates and audit certificates, should be addressed to the General Directorate of Civil Engineering in accordance with the instructions on its website www.yds.gov.tr. Furthermore, those who want to follow-up applications for a permit or auditor certificate may obtain information using the username and password of the person concerned, provided that the system registration is carried out via the abovementioned website. The establishment permit or auditor documents, which are renewed or issued for the first, are only handed over to the owners by the General Directorate at the end of the outbreak. It should be also noted that employers are prohibited from terminating employment contracts in the next three (3) months starting from April 17, 2020, except in cases of immoral, dishonourable, and malicious behaviour of the employees. However, employers may unilaterally instruct employees to take unpaid leave (ücretsiz izin) for no longer than three (3) months. This unilateral decision of the employer does not give the employee the right to terminate the employment agreement for just cause. However, in accordance with the government's normalization plan published on May 4, 2020, the prohibition on terminating employment contracts will be lifted on July 17, 2020.