Law and regulation of concurrent delay in Turkey

Jurisdiction without developed jurisprudence

1. Is concurrent delay a well developed and understood concept?

Although there are no specific regulations on concurrent delay, there are scholarly opinions and precedent cases available on the topic of default. 1 Yargıtay 15. HD., E. 2016/4747 K. 2018/756 T. 22.2.2018; HGK., E. 1991/340 K. 1991/467 T. 09.10.1991; HGK., E. 2012/13-161 K. 2012/216 T. 21.3.2012; HGK., E. 2012/13-162 K. 2012/217 T. 21.3.2012.  In this respect, provisions in relation to “default” under the Turkish Code of Obligations Law No. 6098 (hereinafter: “Law No. 6098”) may be applied by analogy.

Turkish law allows parties to agree on application of laws of other nations or incorporate standard contracts (e.g: FIDIC) to their agreements. There is no unified approach to interpretation of FIDIC agreements within Turkish jurisdiction. Nevertheless, parties are free to settle matters of concurrent delay outside of the court, using an approach similar to the British courts by way of mediation or arbitration. In fact, 20 % of the Arbitral Tribunals held by the Istanbul Arbitration Centre (ISTAC) consist of construction contracts. Casework Report of ISTAC, https://istac.org.tr/wp-content/uploads/2018/05/rakamlarla_istac_en.pdf (last accessed on 03.01.2020). As the content of such settlements are not accessible to the public, further information on the methods used outside of the Court cannot contribute to the development of the doctrine.

2. Is there a generally understood and accepted definition of concurrent delay and when it arises?

There is no specific definition of concurrent delay under Turkish Law. Nevertheless, Article 117 of Law No. 6098 shows a clear path on the matter of default by stating: “The default occurs with the notice of the creditor”. The communications intended to put the other party in default, to terminate the contract or to withdraw from the contract between merchants shall be conducted in line with the Article 18 of Turkish Commercial Code, which requires the utilization of registered letters, telegrams, or registered e-mail addresses as well as notices made through notary publics.

The sole “payability” (“ödenebilir olması”) of an obligation, does not suffice to the occurrence of a default for the debtor. The creditor’s notice of default regarding the performance is necessary as well. As a rule the debtor will go into default, if these two conditions are present. 

However, there are exceptions; if the debtor and the creditor have agreed on a specific day of performance in their contract, then a notice of default is not needed for going into default. In a contract of synallagmatic nature, the party that has gone into default by the other party not performing its obligation, can give that party a reasonable period to perform or may request the Court's intervention on giving the creditor the reasonable period.

3. How is the issue of concurrent delay treated?

Law No. 6098 does not make explicit reference to concurrent delays, and there is no case law on this specific issue. In Turkish practice, subjects of “concurrent delay” and “default” are generally governed within contracts. 3 Yargıtay 15. HD., E. 2010/4513 K. 2011/744 T. 14.02.2011.  Within the rulings of the Turkish Supreme Court (“the Court”), it can be observed that the Court usually interprets the contract and/or uses its power of discretion in line with the general principles of contract interpretation and contributory fault (“birlikte kusur”).

In case of a delay in the due delivery - which constitutes default under Turkish Law - the contract parties may determine a penalty clause that may compensate the damage prior to occurrence of the damage. The presence of the penalty clause accelerates the execution of the contract by forcing the parties to fulfill their contractual obligations. Penalty clauses under Turkish Law are valid and frequently applied. It is unanimously agreed that these clauses constitute an extension of the principle of “private autonomy”.

4. Are there any general principles that apply to the treatment of concurrent delay?

The parties may agree on the beginning of work and specify a time for delivery. If this has not been done, the essence of the contract must be taken into consideration to evaluate a reasonable period. Therefore, an extension of time for any period of concurrent delay would not be granted automatically. 

In Turkish jurisprudence, there are no specific kinds of delay which statutory rules have been constituted for. However, if the contractor fails to perform within the set period, the creditor may terminate the contract and may use his/her right of choice arising from the Law No. 6098. 4 HGK., E. 2012/13-161 K. 2012/216 T. 21.3.2012.  Under Article 125 of the Law No. 6098, the Employer may either deny the specific performance and claim its positive damages or cancel the whole contract and claim its negative damages. However, if the Employer intends to sustain the contract and request specific performance, then the Employer is required to grant an additional time of reasonable length, whose length is to be determined on a case-by-case basis. According to Article 123 of the Law No. 6098, in a bilateral contract, if one of the parties is in default the other party may grant a proper time to perform the obligation or may demand from the judge to grant proper time. It should be also noted, that Article 124 regulates the circumstances, in which the extension of time is out of question. These circumstances are as following: 

  • If it is obvious from the circumstances or attitude of the contractor that granting time would be ineffective;
  • If the performance of the debt is useless for the employer because of default;
  • If it is obvious from the contract that the performance will not be accepted as the performance of the debt, if it has not been fulfilled within a specific time or time period. 

5. How is the question of evidence as to causes and periods of delay dealt with?

In front of Turkish courts, the rule for evidence is “proving by deed”, where the expert reports constitute a supportive means of evidence. 

Since there are no unified opinions on nor legal definition of the additional payments and periods of concurrent delay, these period/costs are unlikely to be allocated to a certain cause and each individual claim shall be examined by the competent court according to its own discretion. However, the Court might decide during the proceedings that it is necessary to obtain the advice of experts and analysts. In Turkish jurisprudence, the party that receives an unfavourable court ruling, shall be burdened with the Court expenses on a pro rata basis. (The Court expenses will be distributed in accordance with the actual ruling of the Court.) 

6. Would a contract term which provides that one or other party will take the risk of concurrent delay be effective in your jurisdiction?

In a case, where one party takes the risk of concurrent delay, the risk allocation may be interpreted as a form of non-liability clauses. Turkish Law generally allows parties to agree on non-liability clauses and grants a broader freedom to merchants, as long as it stays in compliance with the prudent merchant principle. The limitation brought to non-liability clauses prohibits parties from benefiting from such clauses in cases of gross fault or fraud. 5 Yargıtay 15. Hukuk Dairesi, 22.12.2014 tarihli ve 2014/5266 E., 2014/7471 K. sayılı kararı.

7. The SCL Protocol scenario

An event that is at the Contractor’s risk under the contract (a “Contractor Risk Event”) will result in five weeks delay to completion, delaying the contract completion date from 21 January to 25 February. Independently and a few weeks later, a variation is instructed on behalf of the Employer which, in the absence of the preceding Contractor Risk Event, would result in delay to completion from 1 February to 14 February.

7.1 Is the Contractor entitled to an extension of time in respect of the variation? If so, for how long?

The agreement provisions might determine the matter of granting an extension of time, for instance if the provisions foresee that FIDIC terms will apply, the Employer variation would entitle the Contractor to an extension of the contract completion date. In these circumstances, the Contractor will be entitled to an extension of time for the period of delay caused by the Employer variation. In case that the Employer and Contractor have jointly caused the delay (as appears to be the case in the above scenario), they would be liable for their defective fraction and accordingly the compensation amounts, and the extension of time would be settled by the courts, unless otherwise agreed between the parties.

7.2 Assuming the Contractor is contractually entitled in principle to recover delay-related costs relating to the variation, for what period (if any) could it recover those delay-related costs?

As mentioned in the previous answer, if the Employer and Contractor have jointly caused the delay, any compensation would be settled by the courts. This includes a determination of any entitlement to delay-related costs arising from the Employer variation.