Turkey: The Constitutional Court Have Not Annulled The Provision Pertaining To The Obligation To Recruit An Attorney At Law For Certain Joint Stock Companies

The Constitutional Court have rejected the application with regard to the annulment of the article 35/3 of the Legal Profession Act Numbered 1136 - which requires appointment of an attorney- amended by the Law Numbered 5728 for certain joint stock companies.

Grounds of annulment application

An application had been made by Trabzon 2nd Criminal Court of Peace for the annulment of the relevant article with the case numbered 2010/10 before the Constitutional Court. The grounds for these applications were the incompatibility allegations of the act with the essential constitutional principles, such as state of law, equality, freedom of contract, right to privacy and legality of the penalties. Trabzon 2nd Criminal Court of Peace asserted in its challenge that the article 35/3 of the Legal Profession Act was contrary to the above-mentioned fundamental constitutional principles, which are higher-order legal norms.

Paragraph 3 of Article 35 of the Legal Profession Act

In the article 35/3 of the Legal Profession Act of which the annulment is requested by Trabzon 2nd Criminal Court of Peace, it is initially stipulated that all person with the capacity of filing a lawsuit may file a lawsuit and pursue it on their own without hiring any legal representative - the litigant in person. However, there is an exception to this general rule of litigant in person, for the certain joint stock companies, with the provision stating; "joint stock companies of which the authorized capital is equal to the fivefold or more of the authorized start-up capital mentioned in Article 272 of the Turkish Commercial Code and building societies which have one hundred or more members should recruit an attorney at law".

The relevant article also stipulates a sanction for the persons acting contrary to this provision. Pursuant to the article 35/3, "the public prosecutor shall determine an administrative fine on a monthly basis [...] for the institutions which do not recruit an attorney at law and consequently violates this paragraph".

Constitutional Court's decision

The Constitutional Court states the grounds for the rejection of the application with its decision numbered E. 2010/10 K. 2011/10 and dated 30.06.2011 which was published in the Official Gazette dated 18.02.2012 and numbered 28208.

The Constitutional Court firstly explains the social and economic importance of the joint stock companies. According to the Constitutional Court, "shareholders, employers, creditors and society have different benefits in joint stock companies and these companies with their immense capital and with the possibility provided by the limited liability and legal entity, play an important role in the progress of states." This role requires a balance between the benefits of the parties and also requires modern business management principles. In this framework, the Constitutional Court emphasizes that the state have a regulatory duty in the process of the national economy and general well being of the society to protect public interest and the article 35/3 of the Legal Profession Act should be evaluated in this regard.

The principle of state of law is associated with the above-mentioned explanations by the Constitutional Court. The Constitutional Court states that the scope of the obligation to recruit an attorney of law for certain joint stock companies is not ambiguous, but explicit with the justification of the relevant article where it is stipulated that "the purpose of this provision is to assure that joint stock companies are benefited from legal counseling not only during the lawsuits procedure but also before the litigation arise as a preventive legal measure because most of the litigations and legal problems arise out of omission of legal formality or failure to anticipate legal risks beforehand or during the creation of legal relations between the parties."

Subsequent to these explanations concerning the principle of state of law, the Constitutional Court evaluates the principle of equality. In this framework, the Constitutional Court states the purpose of the principle of equality as "essentially same or similar rules for same legal positions, matters and prevention of discrimination before the laws. The Constitutional Court emphasizes in its decision that the principal of equality should be understood as "legal equality". Hence, same provisions should be applied for the persons with same status -according to their different circumstances. As for the joint stock companies, even if the elements are same for all joint stock companies, because the joint stock companies with a large amount of authorized capital plays distinctive and exceptional role in the social and economic life in the state, these should be evaluated separately from the joint stock companies with a small amount of authorized capital. Hence, the Constitutional Court underlines the differentiation between joint stock companies with a large amount of authorized capital and joint stock companies with a small amount of authorized capital and clarifies that they are not on the same "legal status".

Another matter that is provided as grounds by Trabzon 2nd Magistrate Court of Peace is legality of penalties. The Constitutional Court states that the sanction for the non-compliance of the recruitment of attorney at law for the obligors is explicitly regulated under the article 35/3 of the Legal Profession Act and this regulation had been enacted before the contravening act was committed. Hence the relevant provision cannot be construed as being contradictory with the principle of no punishment without law.

The Constitutional Court lastly states on the subject of amendment to the secondary legislation of Legal Profession regulation, which made amendments to the article 35/3 of the Legal Profession Act -a primary legislation. The Constitutional Court indicates that consistency evaluation of a secondary legislations -The Legal Profession Regulation- to the Constitution is not one of the statutory duties of Constitutional Court to consider thus there is no need to make any remark on this matter.

Conclusion

According to our opinion, the decision of the Constitutional Court concerning the rejection of the annulment application is a fair, lawful and proper decision because the joint stock companies with large amount of authorized capital have important economic and social functions for the society and national interest. As is explained in detail by the Constitutional Court, we hold the same opinion with the court and consider that the relevant provision is not in contradiction with the essential constitutional principles.

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.

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