Commercial Reputation of Companies Under the Protection of the AYM
Official titleDecision of the Constitutional Court Dated 24/2/2026 and Bearing Application Number 2021/21908
The Constitutional Court has ruled that in an action for damages filed on the grounds of unfair termination of a tender contract and damage to commercial reputation, the Regional Administrative Court's disregard of the circumstances of the concrete case violated the right to a fair trial.
Details of the Regulation
The applicant company won the elevator tender of Karaman Municipality; however, following the unilateral termination of the tender contract on the allegation that an investigation was being conducted against company officials regarding the Fetullahist Terrorist Organization and/or Parallel State Structure (FETÖ/PDY), it filed various lawsuits. The initial lawsuit filed for the annulment of the tender termination and the forfeiture of the guarantee bond was dismissed and became final. Subsequently, the lawsuit for the annulment of the decision on debarment from tenders concluded in favor of the applicant. Finally, an action for material and non-pecuniary damages due to unfair termination was filed; while the Court of First Instance dismissed the claim for material damages, it awarded non-pecuniary damages in part, but the Regional Administrative Court entirely dismissed the claim for non-pecuniary damages as well. The Constitutional Court, stating that the Regional Administrative Court ignored the direct impact of the erroneous findings regarding the company's officials on the legal personality of the company and the damage to its commercial reputation, and furthermore failed to consider that the Decree Law article serving as the basis for the termination had previously been annulled by the AYM, concluded that failure to evaluate issues that are clearly evident in the proceedings violated the right to a fair trial. The Court held that the right to a fair trial was violated and sent the case file to the relevant courts for a retrial. The applicant's claims for compensation were dismissed, but it was decided that the litigation expenses be paid.
Questions You Might Have
- How can investigation allegations against a company's officials affect the company's commercial reputation?
- According to the Constitutional Court, erroneous findings regarding company officials and administrative sanctions imposed as a result (contract termination, debarment from tenders) may directly damage the commercial reputation of the company's legal personality.
- How does a statutory provision annulled by the AYM affect the validity of administrative acts subsequently performed based on this provision?
- According to the decision, the fact that subparagraph (g) of Article 11 of Law No. 4734, cited as the basis for the tender termination, had been annulled by a previous AYM decision weakens the legal basis of the termination executed pursuant to this article and strengthens the claim of unfair termination.
- Can legal entities (companies) claim non-pecuniary damages?
- Yes, according to the jurisprudence of the Court of Cassation and the Constitutional Court, it is accepted that legal entities also possess personal rights (honor, dignity, reputation) and may claim non-pecuniary damages in cases of attacks against these rights.
Key Terms
- Hakkaniyete uygun yargılanma hakkı
- An element of the right to a fair trial, it refers to conducting the judicial process in a fair and balanced manner and ensuring the parties' rights of claim and defense under equal conditions.
- İrat kaydedilmesi
- The act by which money or property deposited as a guarantee or security is appropriated by the administration or beneficiary in its own favor upon the occurrence of a specific event (for example, termination of the contract).
- Kesin hüküm
- Decisions rendered by courts that become final through the exhaustion of legal remedies or because resorting to them was not deemed necessary, which are mandatory to comply with and execute, and whose objection or re-examination of subject matter is impossible.
- Bireysel başvuru
- A legal remedy exercised before the Constitutional Court upon the exhaustion of ordinary legal remedies, claiming that rights and freedoms have been violated by public power.
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REGAS Commentary
This decision emphasizes that administrative acts concerning companies in public tenders must be meticulously examined by judicial authorities and that serious allegations, particularly such as affiliation with terrorist organizations, must be based on concrete evidence. The negative impacts of administrative acts based on false or erroneous information on the commercial reputation of companies must be taken into account in actions for damages. For companies and all citizens carrying out commercial activities, it constitutes an important precedent demonstrating that the right to a fair trial is under guarantee against unlawful acts of the administration. At the same time, it reveals how significant the impact of a previous Constitutional Court annulment decision is in current proceedings.