Navigating court actions against insurers in Turkey

Turkey for avoiding direct actions.

The right of direct action against insurers contained in TCC did not bring the jurisdiction of Turkish courts automatically. When the jurisdiction of Turkish courts was challenged, this objection became a strong procedural defence because Turkish law requires that insurers would be sued where they are domiciled or where their branch or agent is located.

Procedural Law

Article 1478 of the Turkish Commercial Code (TCC) provides “A (third party) person who suffers from damages may claim its loss up to the insured sum directly from the insurer provided that the claim is brought within the time bar period applicable to the insurance contract.”

The foregoing amendment under Turkish law was a great concern to the P&I Clubs and liability insurers as to whether claimants would enforce their claims where there was no security for their claims.

Prima facie, the Article 1478 was a perfect solution for claimants whose claims are not secured where the defences available to insurers seemed limited and there was little prospect to defend claims in merits.

The P&I Clubs and the liability insurers were reluctant to appear before Turkish courts because appearance would have been taken as acceptance of the jurisdiction of Turkish courts.

However, technicalities saved the day for insurers that were domiciled in a foreign country without any branch in

On the other hand, Turkish procedural law does not give any right for a special appearance for procedural objections. Therefore, the P&I Clubs and liability insurers would raise a jurisdictional objection together with other defences in response to claims with reply submissions to protect their rights. Submitting defences over jurisdiction objection only would have had negative impact if the jurisdiction objection had been dismissed.

Despite all the uncertainties, jurisdiction objection succeeded in court cases where direct legal actions against insurers by third party claimants were dismissed over this procedural objection if such insurer is not domiciled or has no branch in Turkey.

The jurisdiction objection must be submitted in reply petition in Turkey where the defendant should properly indicate the court having jurisdiction over the dispute. Otherwise, it is not possible to bring this defence in later stages of litigation. Should the jurisdiction objection be made improperly, the Turkish court would assume jurisdiction and would hear the court case against the insurer.

Jurisdiction objection saved liability insurers in direct actions, but, an unexpected door was opened for the insured to bring legal action in Turkey when they have a dispute with their insurers.

Coinsurance Implications

It is not uncommon that risks are insured by a group of insurers in an insurance policy where underwriters share the risks based on the proportion that they agree to cover.

One of the insurers may be given the power as a claim leader to decide any matter relating to the demands being made under the insurance policy on behalf of all insurers so that the claims leader would be the one deciding for claims.

It is possible that the location of the claim leader may affect the applicable law and jurisdiction clause in an insurance policy while the main terms of insurance policy may be another strong reason for governing law and jurisdiction.

For example, in marine insurance policies, we may frequently see a jurisdiction clause providing that English, Norwegian or German courts would have jurisdiction to hear disputes. The foregoing is mostly due to who is the leader under the policy and/or what main terms of insurance policies are, and/or where the risks are placed.

What if a dispute arises under the policy and an insurer or a group of insurers are sued in another jurisdiction? In Turkey, the jurisdiction clause contained in the insurance policy may not be as strong as expected. Therefore, the insured may commence a legal action in Turkey despite a jurisdiction clause under the insurance policy against its insurers.

Domestic Jurisdiction

The general rule in Turkey is that the jurisdiction shall be decided in accordance with the domestic jurisdiction laws where normally jurisdiction clauses providing jurisdiction of courts outside of Turkey are respected.

But, there are specific rules that help the liability insurers to avoid claims in direct actions against insurers, working against insurers in a dispute with its insureds under insurance policy.

Jurisdiction Agreements

As noted above, jurisdiction agreements are allowed under Turkish Law if they are made in writing. Jurisdiction clauses are thus well respected under Turkish law but not without exceptions.

It is very common to include a jurisdiction clause in insurance policies especially those that are underwritten by multiple insurers.

However, if insurers are sued in Turkey under the insurance policy, it may not be possible to rely on the jurisdiction clause in the policy to dismiss the case, even if such policy is signed, accepted or confirmed by the insured. The exception arises from the specific regulations for a dispute arising from insurance contracts.

When the direct actions are dismissed by the courts, the legal formula was that insurers can be sued in Turkey:

> If the actual workplace of the insurer is in Turkey or

>If the branch office or agency that concluded the insurance contract is located in Turkey.

In addition, any jurisdiction clause against the above would be invalid in accordance with Turkish law. Turkish courts have an equal and fair approach in applying the above rules.

In a dispute between a Turkish insurance company and foreign reinsurers (under the reinsurance policy providing the jurisdiction of Turkish courts) the court dismissed the court action on the basis that the reinsurers would be sued where they are domiciled because the jurisdiction clause found the jurisdiction of the Turkish court invalid.

The approach of the Turkish courts is therefore just to enforce the rule of law equally without any protection for nationality including Turkish persons and insurance companies.

Insurers should therefore be aware that any jurisdiction clause that they may plan to rely on in a potential dispute would be invalid if the insurers are sued by insureds in Turkey.

This does not automatically mean that a foreign insurer can be directly sued in Turkey or insurers do not have any remedy to avoid a legal action in Turkey. But, in any case, one of the two conditions above must have been met for a foreign insurer to be sued before Turkish courts.

It should be mentioned though, that it is very important to submit a correct jurisdiction objection as advised above in explaining direct action against insurers. This is because, under Turkish law, the defendants are required to submit any objections against the jurisdiction or the competency of the court under certain conditions and in their first submissions.

If the conditions are not met, the court assumes its jurisdiction. Therefore, the claimants take their chances in Turkey on the prospects of a wrongful objection to be submitted by the defendants.

In summary, in disputes arising from insurance policies, a Turkish court may seize jurisdiction regardless of whether there is an exclusive jurisdiction agreement in the relevant policy or may dismiss a court case even if the jurisdiction clause provides Turkish jurisdiction.

However, it should be noted that the jurisdiction would not affect the choice of law which may continue to apply even before a Turkish court.

In practice, insurers may choose to initiate a preventive action in order to avoid legal action in a place other than a court contained in the jurisdiction agreement.

Some countries have remedy of injunction orders. However, such an order has no binding affect for the Turkish courts. The insured may simply proceed with its legal action if preferred and the strength of anti-suit injunction depends on whether insured/claimant would be affected by such order.

In some areas of business, insureds may choose to disregard such preventive actions. Another reasonable question would be whether the insured may enforce a judgement of a Turkish court.

Global business and the international nature of the insurance market may make the enforcement possible where insurers may have premiums in Turkey and other jurisdictions where premiums would be available to attach. Therefore, each case should be carefully reviewed by insurers if they are sued in Turkey and such cases may be avoided with procedural objections.

Compared with other types of disputes, insurers and insureds rarely take the matters to the courts. Therefore, remedies under Turkish law mostly work in favour of insurers, particularly for the P&I Clubs and liability insurers.

A healthy ship is a happyship

Avoiding the risks of air duct contamination

There is a misconception regarding the air quality that mariners are exposed to while on board a vessel. The common belief is that merchant mariners spend almost all their time breathing fresh sea air when onboard. But nothing could be further from the truth. The reality is that nearly all their time is spent inside a closed environment.

This includes sleeping and relaxing in staterooms, having a meal or doing laundry, the gym, or watching a movie or TV, then working inside the wheelhouse, galley or engine room for 12 or more hours a day, seven days a week, for weeks or months at a time.

To simplify the above explanation, all merchant mariners have breathed a lot of “indoor air.” Studies conducted by the US Environmental Protection Agency (EPA) indicate that indoor air pollution may be two to five times worse than outdoor pollution in a large city.

Dangerous Dust

During Belfor Restoration Services’ inspections on ships, we have observed dust accumulating under the ventilation system diffusers or air vents and, in many instances, the diffusor itself covered with dust. We have observed this in common areas and staterooms and pretty much all over the accommodation areas, bridge and engine control room.

The dust not only accumulates in the vents but also inside the HVAC system like motors, blowers, heat exchangers and ducting.

If you were to inspect the dust closely with a microscope, you would be shocked at what you would find.

Particles such as flakes of dead skin, hair and insectsremains make up the dust. This eventually creates a dense, mat-like environment in which bacteria, mould, dust mites and allergens can flourish.

No wonder the indoor air quality, in many cases, is so much worse than the outside air pollution of a busy city. This is not good news for mariners who spent most of their time indoors, despite breathing the fresh air outside.

Statistics also have shown that mariners are more likely to have impaired lung function and are more likely to have asthma, fatigue and heart disease because of long term exposure to poor indoor air quality.

In addition to these health hazards, there is a high risk of fire hazards as a result of dust and grease build-up in the galleys’ exhaust ducting pipes. It can lead to devastating consequences if a fire occurs because it will cause the fire and smoke to spread to other parts of the vessel.

Essential Maintenance

To ensure the safety of your crew members and vessels, it is essential to maintain the air ducts properly at regular intervals. Belfor Restoration Services has the expertise, personnel and the right equipment to provide the proper solutions to keep the risk as low as possible.

Mould remediation is a complex process involving much more than simply spraying and wiping clean the affected surfaces.

Large-scale mould removal requires expert knowledge and specialised equipment to carry out the remediation work. Certain situations require mould removal specialists to guarantee effective remediation, regardless of the size of the impacted area.

In addition to mould remediation, reducing the fire hazards associated with the contamination of exhaust pipes from galleys is also a task that requires trained personnel, equipment and the right chemicals.

The process of decontamination and removal of fire hazards from exhaust ducts on galleys is very different to the decontamination of air ducts.

Belfor Restoration Services has developed methods and trained personnel to carry out the decontamination of air ducting and exhaust systems successfully at short notice when required. We have worked in cruise ships, oil tankers, container ships, FPSO vessels, oil rigs and accommodation such as in the US, Europe, Australia, Korea, Japan and Singapore.

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Asia 27 April 2023

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10.15-11.00: PANEL DISCUSSION: How Recent Political Conflict and Sanctions are Changing the Marine Insurance Landscape

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PRESENTATION: When Your Engine Room Turns into a Swimming Pool

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DISCUSSION: Pushing the Limits?

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Liquefaction, From Instruction to Resolution – A Material Girl’s Point of View

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DISCUSSION:

Nurdling Along: Cleaning Up New Forms of Pollution

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Panellists: David Campion, Senior Technical Advisor, ITOPF, Darren Waterman, Regional Director Asia Pacific, Oil Spill Response, Suzanne Byrne, Group Claims Director, West of England P&I Club