Turkey: Enviromental Finance Energy Law In The Republic Of Turkey In 2009

Last Updated: 19 May 2009
Article by Hakan Hanli

1. ENVIRONMENTAL INSTITUTION & POLICY: "AUTHORITY & ENFORCEMENT"

The legal efforts on environmental protection commenced with the Turkish Civil Code dated 1926 and as amended 2001 and the Obligations Code dated 1926, and followed by General Sanitation Law dated 1930, Municipalities Law dated 2005, Forest Law dated 1937 and 1956 as amended in 2003 and 2004, Development and Mining Law dated 1985 as amended in 2004, and others in Turkey.

The consistent legal and administrative efforts on the environmental protection continued during the 1970s. The "Prime Ministry Undersecretariat for the Environment" was established as an extension of the State Ministry responsible for the co-ordination of all national and international activities concerning the environment policy in 1978.

The "Prime Ministry Undersecretariat for the Environment" was replaced by the "Ministry of Environment" in 1991 by a Statutory Decree numbered 443. The Ministry of Environment was merged with the Ministry of Forestry by Law dated May 8, 2003 and numbered 4856. The new Ministry was named the "Ministry of Environment & Forestry ("MEF") of Republic of Turkey".

The established Constitutional and statutory principles (Articles 44, 45, 56, 168, 169, 170) on the environmental protection form are the basis of Environmental Policy in Turkey. In particular, according to Article 56 titled "Health Services and Conservation of the Environment" of Turkish Constitution dated 1982 stipulates that: "Everyone has the right to live in a healthy, balanced environment.  It is the duty of the state and citizens to improve the natural environment, and to prevent environmental pollution. To ensure that everyone leads their lives in conditions of physical and mental health and to secure cooperation in terms of human and material resources through economy and increased productivity, the state shall regulate central planning and functioning of the health services. The state shall fulfil this task by utilizing and supervising the health and social assistance institutions, in both the public and private sectors. In order to establish widespread health services general health insurance may be introduced by law".

Turkish Environment Law numbered 2872 was promulgated on August 9, 1983, as amended recently in 2006. Under the Environment Law, the activities covered by the MEF are as follows: (i) appropriate land use; (ii) conversation of natural resources, (iii) protection of plant and animal species; (iv) prevention of pollution; (v) raising public awareness; (vi) setting environmental policies and strategies; (vii) coordinating environmental activities on local, national and international levels; (viii) issuing environmental licences; (ix) collecting information; and (x) organising training activities.

According to Article 2 of Law numbered 4856, the MEF is commissioned with, inter alia, monitoring developments carried out at international, national and local levels, coordinating and cooperating with the other institutions [particularly, United Nations ("UN"), Organisation for Economic & Cooperation Development ("OECD"), European Union ("EU"), Ministry of Health, etc. and organisations such as the Environmental Agencies, Non-Governmental Organisations ("NGOs"), etc.]. Turkish Environment Law provides for the regulation of structure and competencies of the governmental authorities which administer and enforce the environment law.

The MEF has the following main divisions: (i) General Directorate for Environment Management; (ii) General Directorate for Environment Impact Assessment & Planning; (iii) General Directorate for Forestation & Erosion Control; (iv) General Directorate for Forestry & Rural Affairs; (v) General Directorate for Nature Preservation & National Parks; (vi) Department of Research & Development; (vii) Department of External Relations & EU; and (viii) Department of Training & Publications.

The MEF has permanent organs to enable the public participation of people in the environmental protection and the development activities.

These are as follows: (i) Higher Council for Environment ("HCE"); (ii) Local Environmental Councils ("LEC"); (iii) Advisory Council for Environment & Forestry ("ACEE"); and (iv) Central Hunting Commission ("CHC").

At the provincial and municipality levels: "Provincial and Municipality Directorates of Environment".

1.2. Authority Environmental Law Enforcement

The Authorities mentioned in question 1.1 basically enforce the Environment Law through the various administrative mechanism established within the effective legislations. They effect control of components of the environment and the related factors such as:

  1. Preventive control: It is effected during the licensing procedures.
  2. Current control: On the quality of the components of the environment.
  3. Follow-up control: Aimed at the establishment of the result of implemented environmental measures under the respective environmental permit or licences in compliance with the mandatory terms and conditions.

The Authorities, as part of their control powers, may impose "one-off" or "recurrent administrative fines" and/or "undertake coercive administrative measures" on the polluter/s, including inter alia the "suspension of industrial operations". An act constituting a violation of the Environment Law may also constitute "a crime" pursuant to Turkish Criminal Code, including "imprisonment".

1.3. Right To Obtain Environment-Related Information

Article 30 of Environment Law stipulates that: "under the Information Obtaining Law (numbered 4982, dated October 9, 2003), any people have the right to obtain publicly available information on the environment". Therefore, public authorities are obliged to provide the written requested environmental information within the statutory period following the application thereto.

2. ENVIRONMENTAL FUNDING: "PROGRAM & INITIATIVE FINANCING"

Turkish Private Banks started to consider and to evaluate the funding of the environmental risks on an international level very recently. On January 2009, a leading Turkish private bank (Yapı Kredi Bankası A.S.) in collaboration with United Nations Environment Program Finance Initiative ("UNEP FI") organized a conference in Istanbul in which Turkish finance sector's social liability with regard to its environment perspective has been discussed.

In the same conference, the leading sustainable finance institutions in Turkey such as Turkish Industrial Development Bank ("TSKB"), Türkiye İş Bankası, and Vakıf Bankası have presented their new initiatives in funding the environmental projects or development of investment tools with sustainable contents and new banking activities.

TSKB (as a leading finance institution in Turkey for industrial development) became a member of UNEP FI and took its place among international institutions sensitive for environment and sustainable development.  Thus, TSKB brought all of its activities in this field up to an international level and complied with international standards where it used to be a leader in Turkey for improving of sustainable development by granting funds to renewable/ recyclable energy and environment projects.

3. ENVIRONMENT-FRIENDLY RENEWABLE ENERGY: "WIND, GOE-THERMAL & BIO-ENERGY"

Renewable Energy Resources: In Turkey, renewable energy resources may be cycled and produced in electrical power production facilities and their establishment is subject to Turkish Public Tender Law numbered 4734, dated January 4, 2002.

The renewable energy resources facilities/plants are classified as bio-energy facilities, hydroelectric power plants, thermal power plants, geothermal power plants, natural gas cycle plants, wind power plants, nuclear power plants and they are deemed as electrical power production facilities according to the Communiqué regarding Classification of Similar Works to the Construction Works Based on Work Experience promulgated in Turkish Official Gazette on December 29, 2005 numbered 26038.

By this regulation, Turkish Public Tender Institution aimed to prevent the non-compliance with the competition principle determined in Article 5 of Turkish Public Tender Law. Thus, establishment of such plants/facilities shall be deemed as works "similar" to each other.

  1. Wind Power Energy: In Turkey, seven (7) measurement stations are completed mostly in the Aegean and Marmara Regions, and in fourteen (14) measurement stations measurement studies are still continuing. Upon meteorological studies performed in space, it is determined that Turkey is very rich in producing of wind power.

    In the coming centuries, it is expected that such renewable source will be able to complete with other electrical power production systems.
  2. Geo-Thermal Energy: Among geo-thermal sites operating in Turkey, five of them are available for electrical power production. Turkey targets 500 MW electrical powers for 2010 to be gained from geo-thermal energy in total. There is no specific Geo-Thermal Energy Law in effect in Turkey and valuable support for Turkish Mining Inspection and Examination Institution is needed in this field.
  3. Bio-Energy/Biomass Energy: Turkey uses wood and plant wastes as bio-gas energy resource since decades. In Turkey, the studies with regard to bio-gas production have been initiated first in 1957 but they have been ceased in 1987. Recently, such studies have been initiated again and the establishments of waste thermal plants have been accelerated.

Turkish Investors also perform their activities with regard to wind power, geo-thermal, solar-thermal and bio-energy production by virtue of commercial companies established in accordance with Turkish Commercial Code. In this respect, they establish facilities or supply the necessary equipments and chemicals in accordance with Turkish Environmental Law and related legislations.

4. ENVIRONMENTAL INVESTMENT & PERMIT: "AUDIT & IMPACT ASSESSMENT"

The environmental permit is required for a wide range of commercial activities related to all installations falling under the official nomenclature of classified installations, depending on criteria linked to their polluting potential or danger. In other cases, a permit is required with the aim of ensuring the effective use of respective natural resources.

In line with the EU acquis, several regulations have been issued. The basic environmental permits as required by effective Environmental Regulations and Communiqués include: (i) project permits, i.e. for the construction of new, as well as the operation and the expansion of existing enterprises and equipment, issued under the Regulation Regarding the Environment Impact Assessment (1992 as amended on December 16, 2003, numbered 25318 and recently amended on July 17, 2008 numbered 26939); (ii) water use or wastewater discharging or/and other forms of use water permit, i.e. for rivers, lakes, etc. issued under the Regulation Regarding the Control of Water Pollution (1988 as amended on December 31, 2004 numbered 25687); (iii) waste management operations permit, i.e. for waste collecting, transporting, utilisation, etc. issued under the Regulation Regarding the Control of Solid Waste (1991 as amended in 2003/2004/2005); (iv) the presence of a hazardous substance on land may also require a hazardous substances consent permit issued under the Regulation Regarding the Control of Hazardous Substances and Products (1993 as amended on November 26, 2005 numbered 26005 and most recently amended on December 31, 2005 numbered 26040); (v) toxic chemical product permit issued under the Regulation Regarding the Control of Toxic Chemical Substances & Product (1993, as amended on February 17, 2005 numbered 25730); (vi) medical waste permit issued under the Regulation Regarding the Control of Medical Waste (1993 as amended on July 22, 2005 numbered 25883); (vii) noise permit issued under the Regulation Regarding the Control of Noise (1986 as amended on July 01, 2005 numbered 25862 and recently amended on March 7, 2008 numbered 26809 based on 2002/49/EC); and (viii) air quality permit issued under the Regulation Regarding the Control of Air quality Emerging from Industrial Facilities (1986 as amended on July 22, 2006 numbered 26236).

In general, it is a legal requirement that the operator of the installation that is making the "emission" or "discharge" or the "undertaking" of the prescribed activity holds the permit authorising this. The environmental permit can usually be transferred from one person to another provided the requirements of the particular regulation governing the grant of the permit are met. The provisions relating to the transfer of an environmental permit require the current operator and the proposed recipient of the permit to make a joint application to the related authority containing certain specified details.

4.2. Appeal Right Against The Decision Of An Environmental Regulator

The environmental authorities must deliver the permit within the period indicated (e.g. within ten (10) business days of filing) in related regulations.

The refusal of an operating permit may be appealed by the applicant before the superior administrative body (if any) and/or Administrative Courts within sixty (60) days of the notification of such refusal under the Administrative Procedure Law numbered 2577, dated January 20, 1982 (Article 7).

4.3. Environmental Audits Or Environmental Impact Assessments

An Environmental Impact Assessment ("EIA") is required for a particularly polluting industry or installation or project.

An EIA is mandatory for the forty (40) investment field proposals included in Annex-1 of the Regulation Regarding the EIA, such as: refineries; thermal electric power plants; radiation nuclear combustible; steel & iron melting industries; water ways; ports; shipyards; integrated meat facilities; forest product facilities; cement facilities, etc.

Once the EIA is approved by the authority, the investment proposal may be implemented in compliance with the terms set out in the approved EIA Certificate.

Additionally, according to the Regulation Regarding Environmental Audit promulgated by MEF numbered 27061, dated November 21, 2008 that superseded the earlier version of such Regulation numbered 24631, dated January 5, 2002, particularly polluting activities and industries are obliged to establish an Environmental Audit Units or to employ an Environmental Officer or to obtain Environmental Audit Service within the given term in such Regulation (18 up to 24 months based on the categorization of such particularly pollution activity or industry by this Regulation) effective as of January 1, 2009.

Moreover, according to Article 6 of the Regulation Regarding Environmental Audit the industries and activities subject to the environmental audit are obliged to have the required environmental measurements and analysis made by either MEF or the laboratories of the private or public authorities or institutions authorized by MEF. For this purpose, MEF has promulgated a Regulation Regarding the Competence of the Environmental Measurement and Analysis Laboratories numbered 26988, dated September 5, 2008.

4.4. Authority's Enforcement Powers In Connection With The Violation Of Permit

The environmental legislations requiring the granting of a "permit" or an "authorisation" for the carrying out of an activity" or a "discharge" to the environment makes it a criminal offence to carry on the activity or make the discharge, other than pursuant to a permit and in accordance with any conditions that may be attached to it. These are typically strict liability offences with no requirement to prove "intention" or "negligence" in the commission of the offence.

In addition to their powers of prosecution, the authorities also have the power to issue notice to vary the terms and conditions of any permit granted or in a very serious case of non-compliance, "to revoke" or "to suspend" the operation of the permit and administrative fines.

The civil liability may also flow from a failure to hold a permit or to comply with a condition attached to it.

5. WASTE & SUBSTANCE: "RESIDUAL LIABILITY & RECOVERY"

5.1. Waste Definition And Categories

The definition of "Waste" is set out in the Regulations regarding the control of: (i) Solid Waste; (ii) Hazardous Waste; (iii) Medical Waste; (iv) Packaging Waste; (v) Oil Waste (with a sub-category of Vegetable Oil Waste); (vi) Battery, and Accumulator Waste.

This is essentially any substance or object falling within certain categories (e.g. substance, material, product, and item) listed in these regulations that the producer or any other person in possession of it, discards or intends or is required to discard. "Hazardous and Medical wastes" require additional duties and controls.

Additional controls also apply in the context of "trans-boundary shipment of waste" and "radio-active waste" is subject to different legislative requirements than waste generally.

5.2. Producer's Right Of Waste Storage/Disposal

Article 8 titled "Environment Protection Measures and Prohibitions" of the Environment Law stipulates that: "producers of waste must ensure that waste is managed so as to avoid its escape". In this regard, producers of waste are prohibited to dispose the waste on the site where it was produced directly or indirectly, store, carry, dispatch etc. such waste by damaging the environment and non-complying with the standards and methods determined in the related regulations.

The industrial non-hazardous wastes may be treated, collected, stored, and utilised by their producer with its own equipment according to a project for the production activity as approved by the authority.

The treatment of hazardous waste may be done directly by the producer, only on the basis of "a waste treatment" or "a complex permit" at sites, landfills or installation which are designated in the related permit. The producer of a hazardous waste is obliged to obtain the permission of the governor in case such producer would like to store its hazardous waste in its facilities temporarily in line with the provisions of the Regulation Regarding Control of Hazardous Waste. In case the producer of hazardous waste would not be able to store the hazardous waste in its own facility, such producer is permitted to store the hazardous waste in a suitable area owned by the producer having the necessary requirements.

The collection, temporary storage, recycles or disposal of the vegetable oil wastes are performed by the experts. In this regard, expert technicians and engineers shall be assigned in the related facilities. The governors are obliged to have the temporary storage areas established according to the Regulation Regarding Control of Vegetable Oil Wastes, to give them permission or to notify the cancellation of their permission to the MEF. Moreover, the governors are responsible to audit the recycle and temporary storage facilities regularly.

5.3. Producer Residual liability

The producer will retain liability: (i) if the producer has transferred the waste to a person who is not authorised to effect the respective waste management operations; and/or (ii) if the transfer is not done on the basis of a written agreement.

If the transferee has the required waste management authorisation and it has accepted the waste on the basis of a written agreement, liability in respect of the waste will be on the transferee.

In order to effectively pass on the burden of obligations with respect to the safe handling and disposal of waste after it leaves this site, the waste producer must ensure that the person receiving the producer's waste knowingly assumes responsibility for it under a written agreement with the waste producer.

Depending on the related regulation, the ultimate disposers are obliged to comply with certain liabilities provided by law before they close their facilities. In general, such disposers are also responsible to comply with the three-year business plan they have submitted to MEF or the related authority for the development of their facility or to notify any change in the scope of their activities.

5.4. Producers' Obligations: "Take-Back And Recover Its Waste"

A producer could be obliged to take back and recover its waste in the case where it has disposed of the waste in a manner which is contradictory to the legislations.

In addition, in the case where the exported waste is not accepted by the importing country or by the country through which the waste was to be transported, an exporter of waste is obliged to ensure that it is: (i) rendered harmless; or (ii) utilised.

6. ENVIRONMENTAL LIABILITY: "ADMINISTRATIVE, CIVIL & PENAL"

6.1. Environmental Law & Regulations: "Breach & Liabilities"

According to Articles 20, 26, and 27 of the Environmental Law; liabilities for a breach of environmental legislations could be: (i) administrative; (ii) civil; or (iii) criminal liabilities.

  1. Administrative Liability/Fine: This liability can be corporate and personal. The Administrative liability is strict and the only defence is that the breach did not actually take place or in an unlawful pollution case that there is no causal link between the operator's activities and the pollution caused by the operator.

    According to Article 20 of the Environment Law, the administrative sanctions are usually "fines" and or according to Article 30 of the same law "suspension of the activities".
  2. Civil Liability/Indemnity: This liability can be corporate and personal.

    Article 41 of Code of Obligations stipulates that "anyone causing unjustified damage to another, be it by wilful misconduct, gross negligence or improvidence, is liable for compensation".

    Article 718 and following provisions of the Civil Code stipulates that "in the event of the unjustified use of proprietary rights, the other party who is under the risk of incurring damages may request the measures be taken for the prevention of such damages or the restoration to previous condition as well as indemnification for damages".

    A person, who through the environmental legislations breach, has caused damage to third party/ies is liable to compensate him/them. The infringed person/s may lodge a claim against the violator for termination of the violation and remediation of the consequences thereof.

    Possible defences are that damage arose out of "force majeure" or from an action of third party acting with "fraudulent intent" or "wilful misconduct", etc. may exclude or limit the liability of the infringer.
  3. Criminal Liability/Penalty: This liability is personal. Some of the environmental violations correspond to crimes under Turkish Criminal Code. The criminal liability lies on the person who has committed the crime.

    In case of criminal prosecution; the defences that could be raised are that there was "no fraudulent intent" or "negligence" and caused unlawful pollution case that the environment was not degraded by unlawful activity.

6.2. Operator Liability For Environmental Damage

Under the Civil Code and Environment Law; any person who has "negligently" or "intentionally" caused damages to another party/s is obliged to remedy him/them. Therefore, an operator may be held liable for causing the environment damages notwithstanding that the polluting activity is operated within the lawful permit limits.

6.3. Company's Directors And Officers Of Liabilities: "Wrongdoing"

The Directors and Officers of a corporation may be liable for the environmental wrongdoing of the corporation in case that "negligence", "fraudulent intent" and "diligence" can be proved under the Criminal Law.

The civil liability for damage caused to third party/ies by a corporation lies on the corporation. If damage is caused by directors and officers upon implementation of their assigned duties, they shall be jointly liable for the compensation for the damages.

The personal liability can also be imposed for the environmental law breaches where the offence committed by a company is proved to have been attributable to the consent or connivance of any director or other person acting in a similar capacity, or is attributable to "any act" or "neglect" on the part of any such person.

The directors and officers may only get the civil liability insurance.

6.4. Corporate Environmental liability: "Share Sale And Asset Purchase"

  1. Share sale: The target company continues to be liable for its past and future operations.
  2. Asset Purchase: The environmental liability will formally lie: (i) on the seller, if the breach of environmental law is made prior to the purchase; or (ii) on the purchaser, if the breach is committed after the purchase.

In both cases, it is recommendable for the purchase contract to expressly address the "environment liability" issue for the past operations of the target company or the asset on the basis of "proper environmental due diligence".

6.5. Lenders Liability: "Environmental Wrongdoing And/Or Cost Remediation"

Under the Environmental Law; lenders may not be liable for wrongdoings by borrowers. However, under the Civil Code, mortgage deed, lenders are unlikely to pick up liabilities for the environmental wrongdoings in the absence of any real liability to control the application of the monies lent to the borrower to prevent pollution occurring.

Aside from what can be described as a direct risk of liability, lenders may also face risks to reputation as a consequence of lending.

7. CONTAMINATED LAND & GROUNDWATER: "ADMINISTRATIVE MEASURE & LIABILITY"

7.1. Liability For Contamination Of Soil Or Groundwater?

In general, according to Article 718 and following provisions of Turkish Civil Code; the polluter is liable for the contamination of soil or groundwater. The liabilities are as follows: (i) remediation; (ii) fine; and/or (ii) coercive administrative measures.

Where sites are still in active use, it is in practise the current or last operator who may be held liable for "clean-up" of the site, unless he can prove that he was not responsible for the pollution. The owner of the land can not be liable for clean-up in his capacity as owner. However, where such historical contamination is caused by waste, the holder of the waste could be considered liable, if the producer of such waste no longer exist or cannot be traced.

7.2. Personal Or Collective Responsibility

According to Article 28 of the Environmental Law, in general, the current operator is totally liable for the contamination (past and present). However, if it can be proved that: (i) the current operator is not responsible for the contamination; and (ii) if the previous operator who has effectively caused the contamination can still be traced, liability for such contamination will be borne by the previous operator. If the current operator proves it, the current operator is not responsible for a caused contamination.

Under the Environmental Law and Civil Code; if more than one person is responsible for the contamination, all of them are jointly liable vis-à-vis the infringed party.

Under the Administrative and Criminal Laws; "all accomplices are subject to the sanction provided for 'the committed administrative violation' or 'crime', as the nature and the extent of their contribution are taken into consideration".

7.3. Third Party Challenge

The environmental remediation options are enforceable, only if: (i) "the contamination is disclosed to"; or (ii) "found out by the authorities during controls".

The only other possibility causing the environmental remediation to be enforceable is due to a complaint from any third party.

It is not a requirement that such third party should incur damage from the contamination, simply becoming aware of the contamination is sufficient. However, incurring damages shall cause the third party to have the right to litigate before the Civil Courts for indemnification.

7.4. Transfer Of The Risk Of Contaminated Land Liability

Article 28 of the Environmental Law stipulates that: "a person may claim compensation from a previous owner or occupier who has caused the contamination. The prescription period for the claim is five (5) years".

Under the Code of Obligation, "the polluter may transfer the risk of contaminated land to a purchaser on the basis of a written contract". However, such transfer will be binding only on the purchaser and not on any environmental authorities or third party.

7.5. The Government's Authority

Turkish Government may not obtain compensation for moral damages, including inter alia aesthetic harms to public assets, e.g. rivers.

The only damages to property which could warrant compensation are, for example, expenses for clean-up.

8. POWERS OF ENVIRONMENTAL REGULATORS: "INSPECTION, INTERVIEW & PUNISHMENT"

Under the Environment Law; "the control powers of environmental authorities are quite broad".

The authorities and its inspectors are empowered to: (i) conduct site inspections; (ii) effect measurements; (iii) monitoring; (iv) require the provision of documents, data and explanations from the persons subject to the inspection or from third parties related to the carrying out of the controlled activity; and (v) take samples from current and potential sources of environmental pollution and/or damage.

The inspected persons are under the duties: (i) to cooperate with the environmental authorities; and (ii) to provide all required data and information.

The inspectors have the power to publish (i) the information about the prospect controls; and (ii) the fines awarded.

9. ENVIRONMENTAL POLLUTION: "REPORTING & DISCLOSURE OBLIGATIONS"

9.1. Environmental Pollution

Article 12 of the Turkish Environment Law stipulates that: "in the case of average or other environmental pollutions in excess of the limits established in related regulations or communiqués, the polluters and the persons responsible for ensuring compliance within the relevant limits are obliged to immediately inform the respective environmental authorities".

The environmental authorities are also obliged to immediately inform the Ministry of Health and the population affected by the existing excessive pollution by offering measures in order to protect the human health and environment, e.g. property.

9.2. Investigation Of The Land For Contamination

Article 12 of Turkish Environment Law and related regulation stipulate that: "an affirmative obligation to investigate land for contamination may be imposed as a pre-condition for the issuance of an environmental permit or in an issued permit or be prescribed by the authorities as a potential polluter".

The investigation of land for contamination may be conducted: (i) during licensed activity; (ii) upon; or (iii) after closure of a facility.

9.3. Merger And/Or Takeover (M&A) Transaction

The Environmental Law establishes no specific obligation for the environmental disclosure in relation to merger and/or acquisition (M&A) transactions.

Upon official notification of the M&A, the rights and obligations of the ceased company are inherited by the prospective purchaser who purchased it. The obligation to observe the legislations and to refrain from pollution and degradation of the environmental problems should be disclosed to the prospective purchaser, whilst observing relevant prescription.

Under certain circumstances, for example during the due diligence process the failure of a seller to disclose environmental problems may be qualified as an act of bad faith during negotiation, entitling the prospective purchaser to compensation for the losses incurred.

10. CORPORATE LIABILITY: "SHAREHOLDER, DIRECTOR & OFFICER"

10.1. Indemnifier's Potential Liability

Under Turkish Code of Obligations: "a person may limit exposure for factual or potential environmental related liabilities on a written contractual basis by including 'a clause'". This clause will not be binding on the environment and other public authorities.

However, "a payment" under an indemnity could discharge the indemnifier's potential liability for that matter, only in respect of the other contracting party. These will not limit the administrative or criminal liabilities.

10.2. Company's Environmental Liability

Under Turkish Commercial Code and Accounting Standards, the actual environmental liabilities are included in the company's balance sheet.

According to the Accounting Standards; "uncertain timing" and "amount of liabilities" may be recognised "as provisions" and included in the balance sheet in accordance with the "principle of caution" in drafting the balance sheet.

In case of group restructuring, the transfer of the contaminated assets to a subsidiary would not exclude the liability of the parent company in its capacity as the previous owner which has caused the environmental liability.

In principle, the dissolution of the company would not allow an escape from the environmental liabilities for which, to a certain extent, the company's shareholders would remain liable.

10.3. Parent Company & Its Subsidiary/Affiliate's Environmental Liability

A shareholder in a limited or joint-stock companies may not be held liable for breaches of the environment legislations caused by the companies. These types of companies are liable only up to their own property and their shareholders may only lose their contribution in the company's capital, if the company goes bankrupt.

Under general principles of Commercial Code "a legal entity is responsible for its subsidiaries or affiliates and may be held liable for the contaminated land owned by its subsidiaries or affiliates".

10.4. Protection Of "Whistle-Blowers"

Under the Environment Law, there is no special legal protection for "whistle-blowers" reporting the environmental violations/matters.

10.5. Group Or Class Actions/Claims

The Environment Law does not provide for any "group or class actions" regarding the environmental damages. However, under the Administrative Procedure Law "group or class actions" are possible primarily in case of annulment of an administrative act before the Administrative Court.

"Group or Class actions" are also possible to go before the Civil and/or Criminal Courts for the environmental damages. For example, Bergama case (gold research by using cyanide), Gökova case (thermal central), Cargill case (starch company), etc.

11. UN, EU & TURKEY: "CLIMATE CHANGE & EMISSIONS TRADING"

Turkey became a party to the "United Nations Framework Convention on Climate Change ("UNFCCC")" and the "Kyoto Protocol" and for such purpose enacted a Law of Conformity numbered 5836, dated January 5, 2009 published in Turkish Trade Registry Gazette numbered 27144, dated February 17, 2009.

Turkey has also established a "National Climate Coordination Group ("NCCG")" to carry out the national studies in line with those conducted by all countries of the UNFCC. The NCCG has published several influential findings, including the "National Report on the Protection of the Atmosphere and Climate Change" and a "National Report on Energy and Technology".

The European Union ("EU") and Turkey Accession Partnership/Negotiations opened up on October 3, 2005. Therefore, the priorities and intermediate objective and conditions for Turkey have been set up for the full membership process by the European Commission (EC) in 2005.

During this harmonisation/transposition process, Turkey is aligning the related EU acquis on "Emissions Trading Schemes ("ETS")". In parallel, the "Emissions Trading Market" is developing.

The ETS participation is expected by way of: (i) direct; (ii) Climate Change Agreement; (iii) project; and (iv) trading in Turkish National Plan.

12. TOXIC CHEMICAL SUBSTANCE & PRODUCT: "ASBESTOS & DISASTER"

12.1. Experience Of USA And EU: "Asbestos & Disaster"

"Asbestos" is defined and held subject to strict measures and methods with respect to all stages from production to disposal as waste, both in (i) the Regulation Regarding the Control of Toxic Chemical Substances and Products (dated 1993, as amended on February 17, 2005 numbered 25730) and (ii) the Regulation Regarding the Control of Hazardous Waste (dated August 27, 1995 as amended on November 26, 2005 numbered 26005 and most recently amended on December 31, 2005 numbered 26040).

Failing to notify the Governorship of the presence of asbestos, let alone disposing of it without a permit is "a material violation".

An employer having knowingly exposed his employee(s) to asbestos is deemed to have committed an "inexcusable fault" and is subject both to: (i) the civil sanction (payment of damages); and (ii) the criminal sanction (imprisonment).

The number of claims filed for damages due to the asbestos exposure has increased considerably. However, the experience levels have not reached the experience level of the USA and EU.

The price of an Environmental Risk matter negligence or fault would be more risky and high costly for a company, as well as for the environment. For example, Exxon-Valdez oil spill occurred in 1989 is considered "one of the most devastating men-made environmental disasters ever occurred at sea". In this case, the Senior Executives of Exxon-Valdez would have considered the environmental aspect and foreseen such "Environmental Risk" earlier than it has occurred, Exxon-Valdez would have not been: (i) caused an environmental disaster, and (ii) prevented to pay a heavy indemnity/penalty far beyond its assets.

12.2. Duties Of Owners/Occupiers Of Premises

The person using asbestos in their activity and/or working with the product containing asbestos are obliged to ensure measures for the "prevention" or "decrease" of asbestos emissions in the air, water and of asbestos containing solid waste upon its source.

The employers in this sector, where asbestos exposure is "available" or "possible", are subject to additional reporting and other obligations. Exposure to asbestos must be evaded or restricted to the minimal level and employees must be provided with protective working clothing and be informed of the asbestos risk which is also the subject of a periodic assessment and health control.

The owners/occupiers of premises, where asbestos is located, may be prescribed specific measures by the environmental and/or health protection authorities for the "avoidance", "limitation" or "remediation" of asbestos contamination.

According to Articles 15 and 16 of the Environment Law; "the authorities may exercise 'the closure of the site'".

13. ENVIRONMENTAL RISK: "INSURANCE"

13.1. Environmental Risk Insurance

Environmental insurance is rarely offered as an independent product in the insurance market. The environmental risks are usually covered by the general civil liability insurances.

In certain limited cases, the insurance of environmental risks is mandatory under the New Insurance Law (numbered 5684, dated June 3, 2007 published in Turkish Trade Registry Gazette numbered 26552, dated June 14, 2007) and related regulations.

13.2. Environmental Insurance Claims In Turkey

The environmental insurance claims figures are not available on the relevant market. However, it appears that the environmental insurance policies have not been the object of significant claims to date.

14. BRIEF ENVIRONMENTAL UPDATES IN TURKEY

Turkish Ministry of Environment and Forestry is working on the promulgation of a Draft Regulation with respect to Reducing of the Ozone Layer Depleting Substances.

The Draft Regulation aims to determine the terms and conditions for use of the substances and remove the use of certain substances by reducing the consumption thereof within a calendar year, which have been controlled under the Montreal Protocol with respect to the Substances Depleting the Ozone Layer and the amendments thereof to which protocol Turkey is also a party.

The Draft Regulation is governed by certain provisions of Environmental Regulations including but not limited to the Toxic Chemicals Regulation referred to above and is in accordance with European Commission Directive with respect to the Substances Depleting the Ozone Layer numbered 2037/2000/EC announced on the website of the Ministry and still open for discussions.

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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