- Introduction
With the decision of the Constitutional Court [“the Court”] dated 17.07.2020, published in the Official Gazette dated 9 October 2020 and numbered 31269[1], in line with the cancellation of some of the provisions of the Road Traffic Law dated 13.10.1983 and numbered 2918, which have been the subject of discussion for a while, insurance companies remained in uncertainty at the point of loss and compensation calculations.
The issues discussed within the scope of the cancellation of the provisions to be detailed below are the nature of liability insurance, the authority of the administration in terms of “General Conditions” and the position of the General Conditions, which is the regulatory act of the administration over against the provisions of the Turkish Code of Obligations [“TCO“] numbered 6098 regulating the issue of tort.
First of all, it should be noted that financial liability insurance is a type of insurance that guarantees that the insurance company will pay the compensation to be paid by the insurance company, limited to the amount of coverage, due to the loss items that the insurance holder may be legally liable for, if the risk that constitutes the subject of the insurance occurs.
At this point, the relevant regulation is made with the Road Traffic Law No. 2918 [“the Law”][2], which is a special law, and liability arises in accordance with Article 85 of the Law.
“If the operation of a motor vehicle causes the death or injury of a person or damage to something, in case the motor vehicle is operated under the title or business name of an enterprise or with a ticket issued by that enterprise, the operator of the motor vehicle and the owner of the enterprise to which it is affiliated shall be jointly and severally liable for the damage incurred.”
Although financial liability insurance is voluntary, following the approval of the European Convention on Compulsory Insurance against Civil Liability in respect of Motor Vehicles [“European Convention“][3], the liability insurance is mandatory in order to prevent unfair consequences and is currently under the Insurance and Private Pension Regulatory and Supervisory Authority [“IRSA”] in order to make arrangements for the content of compulsory insurance contracts.
Even though there are many discussions in terms of the place and effect of the General Conditions in the hierarchy of norms, in the last case the issue was brought to the Constitutional Court by the courts of first instance and the Constitutional Court cancelled some provisions of the Law regarding the General Conditions.
- What are the provisions cancelled by the Constitutional Court?
It has been decided by the Constitutional Court to cancel the following provisions of the Law:
- In the first sentence of the Article 90 of the Law which has amended by the law numbered 6704 and dated 14/4/2016, the phase “… and in the general conditions prepared under this Law ..” and,
- Subparagraph (i) of the Article 92 of the Law added by the law numbered 6704 and dated 14/4/2016.
The revoked Article 90 before it was repealed is as follows: “Compensations within the scope of compulsory liability insurance are subject to this Law and the procedures and principles stipulated in the general conditions prepared under this Law. Regarding the aforementioned compensations and non-pecuniary damages, the provisions of the Turkish Code of Obligations dated 11/01/2011 and numbered 6098 regarding tort shall be applied for the matters not regulated in this Law and general conditions. ” And subparagraph (i) of the cancelled Article 92 is as follows:
“Article 92– Excluding compulsory liability insurance:
- i) Claims other than the coverage defined with the general terms and annexes of compulsory liability insurance prepared within the framework of this law”
At this point, it is understood that the provisions of the Law regulating the determination of the compensations within the scope of compulsory liability insurance according to the General Conditions were annulled by the Constitutional Court.
As a matter of fact, reference was made to the provisions of TCO regarding tort in the form and scope of pecuniary damages and moral compensation before the amendment of Article 90. After the amendment of the Law, the General Conditions at the point of compensation to be calculated by insurance companies have been prioritized and it has been stipulated that the provisions of the Law and TCO will only be applied if there is no provision in the General Conditions. At this point, the issue that has been cancelled by the Constitutional Court is, in short, a matter of priority.
- What is the legal situation arising from the cancellation decision of the Constitutional Court?
The problem in this decision of the Court is the question of the scope of the legal liability of the operator due to the damage caused to third parties because of the operation of motor vehicles.
During the evaluation period, together with the provisions of the TCO, the provisions of the Law as a special law and the place of the General Conditions, which is the regulatory act of the administration based on the Law, were discussed in the hierarchy of norms and the subject was debated especially in terms of the rule of law and the principles of legality. In fact, the scope of the compensation debt is determined according to the TCO, since the responsibility arising from the operation of the motor vehicle is actually the responsibility arising from the tort. On the other hand, in accordance with the compulsory liability insurance, which is envisaged to secure the compensation claims of third parties who are damaged due to the compensation debt of the operator, the scope of the indemnity debt of the insurance company is determined according to the General Conditions.
This situation causes the difference between the compensation debt calculated within the scope of the TCO of the operator and the compensation debt calculated according to the General Conditions of the insurance company with which the contract has been signed to secure this debt. The reason for this is that; the rules regarding the calculation of compensation regulated in the General Conditions, which are the regulatory act of the administration, differ from the rules for compensation for real damages stipulated by the TCO.
There is no consensus in the doctrine as to whether this situation is illegal or not. According to one view; although the legislative power cannot be delegated as stated by Article 7 of the Constitution, it is possible for regulations and other administrative regulations to fill the framework of the law, to explain and interpret the law, and to regulate the details by further concretizing the provisions of the law and it does not mean the transfer of legislative power.[4] In this direction; we are of the opinion that the principle of legality is fulfilled and does not constitute contrary to the Constitution, on the basis that the General Conditions are stipulated in the Law and its framework is drawn by the Law.
Unlike the opinion of the Constitutional Court we are of the opinion on the subject of the priority implementation of the General Conditions over against the TCO that, the issue shall be evaluated within the scope of general law-special law rules. In this respect it should be emphasized that the Law, which is a special law, and the General Conditions constitute a whole. Thus, the reference to the General Conditions should be regarded as a reference not only to the General Conditions, but to the Law as a whole. In that case, this regulation does not constitute unconstitutional, based on the principle that “special law has priority over the general law“.
On the contrary to this opinion, the Constitutional Court found the rules on betting unconstitutional, as the administration had a wide discretionary power stating that the scope of the liability is not regulated by the law and that the scope is foreseen to be determined by the General Conditions, which are the regulatory act of the administration, and that the debt to arise in this direction is always changeable by the administration. According to the Constitutional Court, the basic framework and principles at the point of determining the scope of the debt were not determined by law and left directly to the administration.
- What is the significance of the general terms?
As mentioned above; following the approval of the European Convention by the Council of Ministers, the compensation claims of persons who suffered damage due to the operation of motor vehicles are covered by the compulsory insurance system. Hence, insurance companies authorized to work in the accident insurance branch are obliged to make insurance, as it is obligatory for the operators to take out liability insurance in order to meet the responsibilities regulated by Article 85 of the Law.
In this context, the obligation to make an insurance contract is regulated by the Turkish Commercial Code No. 6102 of 13/1/2011 and the Insurance Law No. 5684 of 3/6/2007. In accordance with Article 11 of the Insurance Law, it is stated that the main content of insurance contracts will be regulated in accordance with the General Conditions approved by the Undersecretariat and which will be applied in the same way by insurance companies.
At this point, the purpose of subjecting the basis of insurance contracts to the General Conditions is to ensure that those who want to be insured make a contract with accurate and sufficient information about the scope of the insurance, since the insurance legislation requires technical and detailed information. It should be noted that, the General Conditions are the regulatory procedures of the administration and are secondary to the law and are important in terms of regulating the procedures and principles regarding the rights and obligations of the concerned parties.
- What does it mean to cancel the compensation provisions while the general conditions are not cancelled?
As regulated by Article 93 of the Law; The General Conditions of compulsory liability insurance are determined by the Ministry and published in the Official Gazette. These article has been also objected and The Constitutional Court did not find the relevant provision unconstitutional, on the ground that it was possible to leave the regulation of the details to be carried out by making general expressions in the law on matters that the Constitution does not explicitly require to be regulated by law. Thus, according to the constitutional jurisprudence[5], a matter that is not required to be regulated by law according to the Constitution may be left to the regulatory procedures of the administration provided that it has a legal basis.
In this respect, the Constitutional Court, which interprets the regulation of general conditions within the framework of its authority to make regulatory action to the executive, did not cancel the General Conditions, but the provisions on compensation were cancelled on the grounds that the provisions on compensation were regulated by the administration in a way that the regulatory authority of the administration was exceeded and the issues that should be regulated by the law narrow the limits set by the law.
At this point it is understood that; the existence of the General Conditions and their regulation by the administration do not merely contradict the Constitution, but the provisions that the compensation liability arising from traffic accidents will be applied primarily in terms of the General Conditions constitute against the Constitution.
- How will insurance companies calculate indemnification risks in what period?
In line with the cancellation of the provisions prioritizing the General Conditions regarding the calculation of the legal liability arising from the operation of motor vehicles on the road; although the execution of the Law is not suspended, the compensation calculations will be made in accordance with the Law and the provisions of the TCO in terms of the lawsuits to be filed as of the decision, since it has been ruled that the relevant articles are unconstitutional. However, it should be noted at this point that the decisions of the Constitutional Court have future effects and will be valid as of the date of publication in the official gazette according to the 153rd Article of the Constitution. In this respect, we are of the opinion that, in terms of the lawsuits filed prior to this decision, in accordance with the legal certainty principle, the judgment should be carried out by observing the system before the Constitutional Court decision.
“Laws, presidential decrees, or the Rules of Procedure of the Grand National Assembly of Turkey or provisions thereof, shall cease to have effect from the date of publication in the Official Gazette of the annulment decision.”
- How should the legal situation be regulated after the cancellation decision?
The cancelled provisions regarding the General Conditions, which regulate the procedures and principles of the Law in detail, show that the framework of the issue should only be drawn by the Law and General Conditions, which violate the Law and / or narrow the provisions of the Law, should be rearranged and the General Conditions should be harmonized with the Law in line with the Constitutional Court decision. On the other hand, as it is seen in the Constitutional Court Decision, since the issue constituting the contradiction in the event subject to objection is the high discretionary power left to the administration, arranging the relevant regulations within the scope of the Law instead of being left to the administration to be regulated in the General Conditions by making a Law amendment will eliminate the contradiction problem specified by the Constitutional Court.
Because, in the current situation, there is uncertainty in terms of which provisions of the General Conditions are valid and which provisions are invalid, both for the injured and insurance companies. And this uncertainty can only be clarified by the IRSA by reconsidering the “General Conditions”. In fact, there are many ongoing lawsuits at this point, and there is an uncertainty and legal insecurity in terms of the continuation of the trial process. At this point, it is seen that the system will be able to be settled with the case law to be formed in line with the revised General Conditions.
- Conclusion
In line with the cancellation decision of the Court, which is an extremely important decision regarding the compensation liability of insurance companies arising from traffic accidents; although there are different opinions in the doctrine, The Constitutional Court is of the opinion that the rules of objection lead to a difference between the calculation made by the insurance companies and the actual loss to be determined in accordance with the provisions of the TCO and that the formula for calculating the compensation to be paid by insurance companies makes it open to change by the administration at any time, and annulled these provisions as unconstitutional. In this direction, insurance companies have remained in uncertainty at the point of the relevant calculations, and in order to eliminate this uncertainty, the Law shall be amended to cover the provisions in the General Conditions in accordance with the principle of inalienability of legislation . However, until the Law is amended, the General Conditions should be revised as soon as possible by considering the reasons behind the cancelled provisions and the issue should be clarified by making it in line with the provisions of the legislation.
References
- Constitutional Court decision dated 17.07.2020, published in the Official Gazette dated October 9, 2020 and numbered 31269 (9 Ekim 2020 tarihli ve 31269 numaralı Resmî Gazete’de yayımlanan Anayasa Mahkemesi 17.07.2020 tarihli karar) https://www.resmigazete.gov.tr/eskiler/2020/10/20201009-17.pdf
- Road Traffic Law No. 2918 (2918 sayılı Karayolları Trafik Kanunu) https://www.mevzuat.gov.tr/MevzuatMetin/1.5.2918.pdf
- European Convention on Compulsory Insurance against Civil Liability in respect of Motor Vehicles https://rm.coe.int/16800656cd
- Ali D. Ulusoy, New Turkish Administrative Law, Yetkin Pub., 2nd Edition, Ankara 2019, p.118 et al. (Ali D. Ulusoy, Yeni Türk İdare Hukuku, Yetkin yay., 2. Baskı, Ankara 2019, s.118 vd.)
- The Constitutional Court, 19/2/2020, E.2018/91, K.2020/10, § 110 (AYM, 19/2/2020, E.2018/91, K.2020/10, § 110)
[1] Constitutional Court decision dated 17.07.2020, published in the Official Gazette dated October 9, 2020 and numbered 31269 (9 Ekim 2020 tarihli ve 31269 numaralı Resmî Gazete’de yayımlanan Anayasa Mahkemesi 17.07.2020 tarihli karar) https://www.resmigazete.gov.tr/eskiler/2020/10/20201009-17.pdf
[2] Road Traffic Law No. 2918 (2918 sayılı Karayolları Trafik Kanunu) https://www.mevzuat.gov.tr/MevzuatMetin/1.5.2918.pdf
[3] European Convention on Compulsory Insurance against Civil Liability in respect of Motor Vehicles https://rm.coe.int/16800656cd
[4] Ali D. Ulusoy, New Turkish Administrative Law, Yetkin Pub., 2nd Edition, Ankara 2019, p.118 et al. (Ali D. Ulusoy, Yeni Türk İdare Hukuku, Yetkin yay., 2. Baskı, Ankara 2019, s.118 vd.)
[5] The Constitutional Court, 19/2/2020, E.2018/91, K.2020/10, § 110 (AYM, 19/2/2020, E.2018/91, K.2020/10, § 110)