Recent Development

As noted in our previous alert dated July 21, 2016, Turkey’s Council of Ministers was expected to issue an executive order outlining the implementation of a state of emergency. On Saturday, July 23, 2016, the Council of Ministers issued an executive order to take measures to reestablish public security ("Executive Order"). The scope of these measures is limited to restoring public security; as such, these measures were not implemented to regulate or impact the Turkish financial markets or economy. Considering the aim and the scope of these measures, we do not expect them to affect the business environment as a whole, save for the entities whose operations have been halted by the government for suspected terrorist associations.

On Sunday, July 24, 2016, the Prime Ministry issued a circular regarding the communication of the duties set out in the state of emergency regulations, and established a state of emergency communication council composed of ministers. According to the circular, the implementation of the state of emergency orders will be coordinated in the cities by the city governors.

What are the Measures?

Some of the measures listed under the Executive Order are:

  • Closing certain institutions and confiscating their properties: Certain institutions linked to the Fethullah Terrorist Organization ("FETO") including foundations, schools, universities, associations, hospitals and unions have been closed, and their rights, receivables, assets and properties will be confiscated and transferred to the Treasury without their obligations being transferred. We recommend that you review the list of such entities in order to find out if you have a business relationship with them. The full list can be viewed here.
  • Extended term of custody: During the state of emergency, the term of custody can be extended for up to 30 days related to offenses (i) defined under the Law on Anti-Terrorism, (ii) against state security, (iii) against constitutional rules and order, (iv) against national defense, and (v) against state secrets and espionage as defined under the Turkish Criminal Code. Under the Turkish Criminal Code, the standard term of custody is 24 hours, and can be extended up to four days for crimes collectively committed by three or more persons. As the term of custody is extended only for certain crimes and conditions, it is highly unlikely for this to adversely affect the business environment.
  • Removal of judges: Judges that are found to be linked to the FETO will be removed from office. If you or your company is a party to a lawsuit that is being heard by one of these judges, it would be reasonable to expect certain delay in the proceedings caused by replacement of such judges.
  • Lease agreements and rights on property: Leases and rights on properties owned by the Treasury or public institutions, whose lessees and beneficiaries of rights on property are found to be linked to the FETO, can have their respective leases and rights unilaterally terminated by the owners of the relevant properties.
  • Limitations on attorney-client privilege: During the state of emergency, related to the offenses listed above only, the public prosecutor can order certain exceptions to the attorney-client privilege in communications between detainees and their lawyers. As such, communications can be recorded; communications can be held with the presence of an official; written documents between lawyers and detainees can be confiscated; and the length of communication can be limited. These measures do not affect attorney-client privileges in the ordinary course of business and will only apply to detainees in cases of particular circumstances, such as the endangerment of public security or that of the penal institution.

Conclusion

As expected, the primary focus of the measures is to eliminate threats against national security during the state of emergency. In line with the state of emergency's objective and previous statements released by the government, the Executive Order is limited to the measures directly impacting public security and do not aim to change the day-to-day lives of individuals, nor the country's financial markets, economy and business environment.