From Sustainability Commitment To Legal Reality: An Assessment Of The Applicability Of Article 209 Of The Turkish Commercial Code In Corporate Environmental Liability

I. INTRODUCTION

The undeniable impact of the increasing production activities of commercial companies following the Industrial Revolution—particularly their destructive effects on natural ecosystems and the resulting human rights violations affecting local communities in underdeveloped or developing countries—has played a crucial role in shaping concepts such as sustainability, green finance, and renewable energy, which have dominated the agendas of international organizations and, in particular, developed countries.

The growing number of lawsuits filed primarily against multinational corporations operating in rural areas of underdeveloped and developing countries—aimed at halting their uncontrolled and unregulated activities and seeking compensation for the resulting damage—has laid the practical foundation of the sustainability doctrine. Through regulations introduced under the overarching theme of sustainability, the objective is to ensure that companies and their subsidiaries implement effective mechanisms to prevent irreversible environmental, climatic, and existential harm arising from their operations.

Although regulatory efforts and corporate compliance processes are still ongoing, lawsuits initiated by individuals, associations, or groups of persons continue to address claims based on different legal grounds concerning environmental

I. INTRODUCTION

The undeniable impact of the increasing production activities of commercial companies following the Industrial Revolution—particularly their destructive effects on natural ecosystems and the resulting human rights violations affecting local communities in underdeveloped or developing countries—has played a crucial role in shaping concepts such as sustainability, green finance, and renewable energy, which have dominated the agendas of international organizations and, in particular, developed countries.

The growing number of lawsuits filed primarily against multinational corporations operating in rural areas of underdeveloped and developing countries—aimed at halting their uncontrolled and unregulated activities and seeking compensation for the resulting damage—has laid the practical foundation of the sustainability doctrine. Through regulations introduced under the overarching theme of sustainability, the objective is to ensure that companies and their subsidiaries implement effective mechanisms to prevent irreversible environmental, climatic, and existential harm arising from their operations.

Although regulatory efforts and corporate compliance processes are still ongoing, lawsuits initiated by individuals, associations, or groups of persons continue to address claims based on different legal grounds concerning environmental damage and rights violations that have occurred, are likely to occur, or whose effects are ongoing. In this article, we will examine precedent cases—both concluded and pending—along with their legal grounds and discuss which alternative legal bases may be invoked under Turkish law to support similar claims.

II. GENERAL PRINCIPLES

1. Environmental Liabilities of Commercial Companies

Considering the current position and capacity of commercial companies, which are fundamentally established for profit-making purposes, it is evident that they are now involved in nearly every aspect of life and that their sphere of influence is remarkably extensive. In particular, the broad operational scope of multinational corporations has created a pressing need for the detailed regulation of their activities.

The core legal responsibilities of companies with respect to environmental and sustainability policies can be summarized as follows:

1. Conducting Activities in Compliance with Legislation
2. Reporting and Transparency
3. Protecting Stakeholders from Potential Adverse Impacts
4. Evolving Operations to Reduce Carbon Costs

As a result of technological advancements in communication and transportation over the past century, commercial companies have expanded their operations far beyond the borders of their home jurisdictions. In fact, for companies established in developed countries, it has become a strategic choice to conduct their operational processes—particularly manufacturing activities—through subsidiaries located in less developed or developing countries.

Indeed, in European countries where fundamental human rights, including third-generation rights such as the right to a healthy environment, are guaranteed and strictly monitored through various mechanisms, commercial companies face significantly more severe sanctions in the event of environmental responsibility breaches. Moreover, these companies may be held liable not only for the actual damage caused but also for their failure to take preventive measures before such damage occurs.

Consequently, short-term commercial decisions made by companies may lead to irreversible consequences in the medium and long term.

2.  Precedent Cases and the Legal Grounds Invoked by Defendants

a. Aguinda et al. v. Texaco Inc.

Filed in 1993 as a class action lawsuit by the Indigenous peoples of the Oriente region of Ecuador, Aguinda et al. v. Texaco Inc. represents the first legal action concerning oil exploitation in the Amazon. The plaintiffs sought extensive compensation for the environmental devastation caused by decades of oil exploration and extraction activities conducted by a consortium controlled at various times by Texaco and Ecuador's state-owned oil company, Petroecuador.

The case was brought before the courts in New York, where Texaco's headquarters were located, and involved the representation of more than 30,000 farmers and Indigenous individuals. Following Texaco's acquisition by Chevron in 2001, the U.S. court ruled—under the doctrine of forum non conveniens—that Ecuador was the appropriate jurisdiction to hear the case.

In 2011, the provincial court of Ecuador held Chevron liable for the damage and ordered the company to pay USD 18 billion in compensation to the plaintiffs. This judgment was upheld by three higher courts, including the National Court of Justice, Ecuador's highest judicial authority, although the compensation amount was later reduced to USD 9.5 billion.

While Chevron's withdrawal of all its assets from Ecuador and its subsequent arbitration claim against the Ecuadorian government before the Permanent Court of Arbitration in The Hague have prevented the enforcement of the judgment, the Texaco case remains a landmark decision. It clearly illustrates the necessity of national and international legal frameworks to ensure accountability of multinational corporations for environmental damage.

b. Nevsun Resources Ltd. v. Araya

In Nevsun Resources Ltd. v. Araya, a case initiated in 2014 upon the application of three workers who fled Eritrea, the Supreme Court of Canada ruled on 28 February 2020 that a Canadian parent company could be held liable under customary international law for serious human rights violations—including forced labor, slavery, and inhuman treatment—committed through its subsidiaries at a mining operation in Eritrea. The applicants alleged that more than 1,000 workers were subjected to forced labor at the Bisha mine.

The Court rejected the company's reliance on the act of state and state immunity doctrines as grounds for exemption from liability. In doing so, it explicitly affirmed that fundamental jus cogens norms of customary international law may apply not only to states but also to corporations.

The plaintiffs sought millions of dollars in compensation for the harm they suffered, and the case established a significant precedent, demonstrating that corporations may be brought before the courts of their home country for their overseas operations.

c. Okpabi v. Royal Dutch Shell Plc.

In Okpabi v. Royal Dutch Shell Plc., members of the Ogale and Bille communities in Nigeria brought an action against Royal Dutch Shell Plc. (the parent company) and its Nigerian subsidiary, Shell Petroleum Development Company of Nigeria Ltd. (SPDC), for severe environmental damage resulting from extensive oil pollution in the Niger Delta. The plaintiffs alleged that Shell's failure to properly prevent and contain oil spills had led to the contamination of land and water resources, causing serious harm to public health and destroying local livelihoods.

The core legal question before the UK courts concerned whether the English courts had jurisdiction to hear the claim against the parent company. In February 2021, the UK Supreme Court unanimously held that there was a "real issue to be tried" with respect to the parent company's potential liability, affirming that a parent company may, in certain circumstances, owe a duty of care for the acts and omissions of its foreign subsidiaries. The Court placed particular emphasis on Shell's degree of control and oversight over its Nigerian subsidiary's operations as a key factor in establishing this duty of care.

This judgment represents a landmark development in transnational corporate liability, significantly strengthening the ability of affected communities to pursue legal remedies in the home states of multinational parent companies for environmental damage caused abroad.

3. National and International Legislation

Over the past 30 years, the number of cases in which damage and rights violations caused by subsidiaries have been attributed to parent companies has steadily increased. In parallel, international organizations—and, more recently, developed countries in particular—have begun to integrate preventive and protective measures into their legal systems, especially over the last decade.

Although regulatory frameworks on sustainability reporting have expanded in Türkiye in recent years, there is still no explicit domestic legal provision holding commercial companies directly liable for activities throughout their supply chains. However, the European Union's regulatory instruments—most notably the CSRD (Corporate Sustainability Reporting Directive) and CSDDD (Corporate Sustainability Due Diligence Directive)—impose indirect but significant compliance obligations on companies operating in Türkiye, thereby exerting strong pressure for the evolution of national legislation.

Under Turkish law, corporate environmental liability is predominantly assessed through the doctrines of tort liability and strict liability.

Examples of relevant EU regulations include:

Corporate Sustainability Due Diligence Directive (CSDDD):

Published in the Official Journal of the European Union in April 2025, this directive governs the legal liability of commercial companies arising from both intentional and negligent conduct. It aims to ensure that companies exercise due diligence to identify, prevent, mitigate, and remedy adverse human rights and environmental impacts throughout their operations and value chains.

Corporate Sustainability Reporting Directive (CSRD):

Adopted in 2022, this directive imposes an obligation on companies operating within the EU to disclose their environmental and sustainability impacts in a transparent manner through sustainability reporting. It strengthens corporate accountability by standardizing disclosure requirements and ensuring greater access to information for stakeholders.

Examples of national regulations aligned with European Union legislation include the following:

France – Loi de Vigilance: This groundbreaking law requires companies established in France with 5,000 or more employees in France or more than 10,000 employees worldwide to publish a "plan de vigilance" (vigilance plan). It also enables individuals who have suffered harm to bring compensation claims directly against the company.

Germany – Lieferkettensorgfaltspflichtengesetz: This law establishes a duty of care to ensure compliance with human rights and environmental standards throughout the supply chain, and further requires companies to conduct risk analysis, implement preventive measures, and establish a complaint mechanism. In the event of a breach, compensation claims may be brought under §823 of the German Civil Code (BGB), which governs tort liability, and NGOs are granted standing to bring legal actions on behalf of third parties.

Although Turkish law contains preventive regulations on specific issues, the main legislative framework forming the legal basis for environmental damage claims can be summarized as follows:

Constitution of the Republic of Turkey (Law No. 2709):  According to Article 56 of the Constitution, everyone has the right to live in a healthy environment, and the State is under an obligation to protect the environment pursuant to this provision.

Environmental Law (Law No. 2872): This law provides for administrative sanctions (such as fines and suspension of activities) against those who pollute the environment. Articles 28 and 30 regulate liability for damages in line with the "polluter pays" principle.

Turkish Code of Obligations (Law No. 6098): Environmental damage may be compensated under Articles 49 et seq., which govern tort liability, provided that the element of unlawfulness is established. Furthermore, under Articles 71 et seq., which regulate strict liability for dangerous activities, enterprises engaged in high-risk industries such as energy, chemicals, and petroleum may be held liable for damages even in the absence of fault.

Turkish Commercial Code (Law No. 6102): Although there are no explicit provisions directly addressing environmental issues, it is discussed in legal scholarship that boards of directors, pursuant to Article 369, are required to take environmental and sustainability risks into account as part of their duty of care and loyalty. In addition, Article 209, which regulates liability arising from reliance, may, when considered in light of relevant case law discussed above, constitute a noteworthy legal basis for corporate environmental responsibility.

4. A Mental Exercise: Can Article 209 of the Turkish Commercial Code Serve as a Legal Basis for Holding a Parent Company Liable for the Environmental Damage Caused by Its Subsidiary?

Article 209 of the Turkish Commercial Code can be regarded as a distinct provision establishing a legal basis for the liability of a parent company within a corporate group structure. According to its legislative justification, the provision was inspired by the 1994 Wibru/Swissair decision of the Swiss Federal Supreme Court and was incorporated into the Turkish Commercial Code No. 6102. Under this article, a parent company may be held liable where the trust created in third parties—based on its reputation, financial strength, or standing in the public sphere—ultimately proves to be unfounded.

The establishment of liability essentially requires the presence of five elements:

1. the existence of a group relationship, i.e., a parent–subsidiary structure;
2. the special trust created by the parent company;
3. the third party's engagement in a transaction or conduct in reliance on this trust, resulting in damage;
4. the subsidiary's use of the parent company's reputation; and
5. the damage arising from a culpable act.

The underlying purpose of this provision is to protect third parties who, in economic reality, rely not on the subsidiary but on the reputation of the group as a whole.

Accordingly, holding a parent company liable for environmental damage caused by the activities of its subsidiary is only possible if all five elements set out above are cumulatively satisfied. As a preliminary step, the company that caused the damage must qualify as a subsidiary within the meaning of Article 195 of the Turkish Commercial Code. Pursuant to this provision, a parent–subsidiary relationship exists where the parent company, directly or indirectly: holds the majority of the subsidiary's voting rights, has the right to appoint the majority of the members of the subsidiary's governing body, otherwise controls the majority of the voting rights, or where one commercial company is able to exercise control over another company through a contractual relationship or by other means.

The element of special trust created by the parent company through various means constitutes a distinctive feature of the analysis under Article 209 of the Turkish Commercial Code. Indeed, the idea that statements made by commercial companies regarding environmental awareness, social responsibility, or human rights may give rise to legal liability represents a relatively novel concept in Turkish commercial law practice.

Data concerning environmental, social, and corporate sustainability have become part of the records companies are required to maintain under both national and international regulations through ESG (Environmental, Social and Governance) and sustainability reporting obligations. In recent years, concepts such as sustainability and respect for nature have emerged as critical factors for both consumers and investors, leading companies to make significant expenditures on reporting activities and social responsibility projects. Reporting, which initially served as a compliance requirement, is increasingly being used as a marketing and reputation-building tool.

Regardless of its purpose, when such statements are made public and create a legitimate perception of care, diligence, and sensitivity in the eyes of the public regarding the company's operations, the parent company may be deemed a liable party under Article 209 of the Turkish Commercial Code. However, it must be emphasized that not every statement made by the parent company gives rise to liability; only those statements that create justified reliance on the part of the counterparty may trigger liability under this provision.

The third element concerns the reliance by the injured party on the trust created by the parent company in entering into a transaction with the subsidiary, and suffering damage as a result of that transaction. Although the nature of the damage is not expressly regulated in the article, it is interpreted broadly to encompass both pecuniary and non-pecuniary damages.

Another element is the subsidiary's use of the trust generated by the parent company. Drawing on the Wibru/Swissair precedent, where a subsidiary uses the parent company's logo, trade name, or trademark in its presentations, advertisements, or promotional materials to build trust, it is deemed to have benefited from the parent company's reputation in the public eye. In this context, where a subsidiary that is not subject to mandatory reporting due to its size derives credibility from the parent company's publicly shared sustainability reports or environmental commitments, this element may be deemed satisfied.

The final element stems from the fact that liability arising from reliance under Article 209 is a fault-based liability. Therefore, the parent company is not strictly liable for all damages, but only for those resulting from its own fault.

The liability arising from reliance under Article 209 of the Turkish Commercial Code can be directly linked to the phenomenon of greenwashing, which refers to companies projecting an environmentally friendly and sustainability-oriented image through claims that are either not followed in practice or misrepresent actual environmental performance.

A parent company may build trust and reputation through sustainability reports and environmental campaigns directed at society, investors, or consumers. If, however, its subsidiaries engage in activities that cause actual environmental harm, this trust is undermined. In such cases, liability may arise not only on ethical grounds but also at the legal level, and third parties who have suffered damage in reliance on the parent company's representations may, provided that the other conditions are met, hold the parent company liable under Article 209 of the Turkish Commercial Code.

Furthermore, since liability based on reliance is an independent liability regime arising from Article 2 of the Turkish Civil Code, it is also possible for greenwashing-based liability to arise either concurrently with or independently of Article 209 TCC. In fact, reliance liability grounded in the principle of good faith under Article 2 of the Civil Code may in some circumstances offer a more favorable legal remedy compared to Article 209 TCC.

This is because Article 209 TCC requires the existence of a transaction between the injured party and the subsidiary, whereas in practice, when such a transaction or contractual relationship exists, the parties generally prefer to pursue contractual liability claims due to evidentiary advantages. However, as demonstrated by precedent cases, in environmental disputes the injured parties are often not those who have entered into transactions or contractual relationships with the subsidiary. Instead, they are individuals or communities in a disadvantaged position vis-à-vis the company, who are not direct counterparties but non-contractual victims of the company's environmentally harmful activities.

III. CONCLUSION

Although sanctions for environmental damage and human rights violations resulting from corporate activities are primarily addressed through public law instruments and administrative measures, the private law bases on which compensation claims may be pursued remain a compelling subject of legal discussion. In particular, the attribution of environmental harm caused by multinational enterprises through their subsidiaries to the parent company is increasingly being advanced across different legal systems on various legal grounds and is reinforced by emerging case law.

In the Turkish legal framework, Article 209 of the Turkish Commercial Code holds special significance in this regard. In situations where a transaction or legal relationship exists between the injured third party and the company, the potential application of reliance-based liability under Article 209 TCC should be carefully assessed as a viable legal avenue.

Conversely, in cases where no such transaction or legal relationship exists, reliance liability derived from Article 2 of the Turkish Civil Code offers a more effective and flexible legal foundation. In this way, inconsistencies between a company's publicly declared environmental commitments and its actual conduct are no longer confined to the sphere of ethical concerns but evolve into a private law liability issue.

The growing recognition of environmental damage as a matter with private law consequences represents a paradigm shift in corporate accountability, compelling companies to reconsider and realign their sustainability strategies and communications with their actual practices.

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