Crisis and Adaptation Actions in Turkey

One of the most important items of the tourism receipts is the revenue earned from sale of goods and services to tourists. Jewellery, leather, carpet and souvenirs retail; bath-spa operations, water sports and car rental are also the lines of business earning the most revenue with respect to service sector.

The revenue earned from the above listed lines of businesses is the sole profit itemhaving the highest profit margin and many people from agency to guide, from incoming company to tour operator having a share from this profit (under the name of commission, head tax, tips, etc.) and sometimes remaining after deducting costs. So much so that, package tour sales with zero profit became an ordinary application in tourism for this reason.

Usually, the rentals paid in advance by the lines of businessesat the beginning of the season form the greatest cost for the businesses rather than the costs relating to goods and services.These rentals are amongst the most important revenue sources for the hotels.

Goods and services being sold in these premises are arranged in a manner to address the tourist group making the most shopping and the working personnel are chosen among those having an extreme command of the language and culture of that tourist group.Often foreign workers are employed by obtaining work permit and by meeting their accommodation, transportation and food requirements, and for this reason;the cost of a foreign national employee is much higher than that of a normal worker.

When the rental paid and the cost of the employees are considered, will the tourism operators (leather, jewellery, stores, baths, spas, etc.),having rather high costs,be still bound by the contracts they had signed, in the face of extraordinary developments and fluctuations occurring in the tourism sector?

The rule reigning in law of contracts and also adopted in the Turkish legal system is the code of “loyalty to the contract”.Loyalty to the contract principle is the general rule.However, this general rule is limited with the other principles of private law.The balance between the parties at the time of conclusion of the contract may become disrupted due to exceptional circumstances occurring afterwards. Loyalty to the contract may become unbearable for one party due to these exceptional circumstances.Exceptional circumstances are the developments occurring through no fault of the parties such as war,rising terrorism incidents,embargo,inflation,economiccrisis,dramatic devaluation, etc. In such circumstances, loyalty to the contract and contract equity compete with each other and adhering strictly to the contract constitutes a contradiction to law, equity and objective goodwill rules.

In such circumstances, Turkish legal system vested rights to the contracting parties to file “adaptation action” and empowered judges to adapt the contract in accordance with the changing conditions.Accordingly, the conditions of contract are redrawnin favour of the party, for whom the loyalty to the contract became unbearable, with the adaptation action to be filed in the face of exceptional circumstances occurring through no fault of the contracting parties such as war, embargo, economic crisis, rising terrorism incidents and the contract is improved in accordance with equity.

Also, there are many decisions of the Supreme Court Assembly of Civil Chambers and the Supreme Court Civil Chamberson requesting the intervention of the judge for the adaptation of the contract within the framework of rules of equity and conscience.As an example to these;

The Supreme Court Assembly of Civil Chambers"In contracts containing mutual performances, in the cases of disruption of balance between performances due to exceptional circumstances, making discharge of debt difficult and perhaps making it impossible, "collapse of the underlying basis of the transaction” comes to the fore. In such circumstances, judge may be requested to intervene in the contract to make changes in a contract drawn up within the framework of improvisation or clausula rebus sic stantibusclause".

As we tried to explain briefly herein above, Turkish Legal System allows filing of adaptation action and requesting judge to intervene in the contract for the adaptation of the contract due to exceptional circumstances such as war, terrorism, economic crisis, etc.

Undoubtedly that the plane crisis experienced with Russia in the previous days and immediately afterwards the embargo placed on tourism upset all the equilibriums in the sector and put the tourism establishments into rather a tight spot.Last year approximately 4 million 400 thousand Russian tourists visited Turkey, but undoubtedly fluctuations will be experienced in tourism sector as Russian travel agencies will suspend the sale of tours to Turkey as of 1 January 2016 with the decree signed by Russia after the plane crisis. The developments experienced between Turkey and Russia and bringing the nations in question on the brink of war are not the circumstances that could be foreseen by anyone. It certainly will not be easy for the tourism establishments, whom positioned themselves entirely on Russian tourist group, offering goods and services according to their liking and preferences, choosing their employees among Russian speaking personnel, to begin afresh and adapt themselves to another market customer.Especially when the countries covered by the efforts of the Ministry of Tourism concerning substitute markets and whether these efforts will come to fruition remaining uncertain, there is no need even to discuss the impossibility of discharging of debt from the viewpoint of tourism establishments,especially under credit and rental burden.

As all these adverse circumstances prohibit tourism establishments, whom signed their contracts before the crisis and getting ready for the new season, to remain loyal to theircontracts, and with the adaptation action vested on them by the law, now it is time for the operators, whom had been sharing the profit until now, to share also the burden from now on.

OCTOBER 2015