TURKEY: An Introduction to Litigation

The Pros and Cons of Claim-Splitting 

When a general counsel informs the board about a new lawsuit that the company is going to have to defend, the counsel will almost certainly be asked to assess the additional risk that the suit is going to bring. Similarly, outside counsel are regularly asked to quantify their clients’ exposure from ongoing litigation at the end of the financial year, to be included in the clients’ financials. To make an accurate assessment of exposure requires sharp legal acumen and years of experience.

The good news for the novice lawyers who find themselves in these circumstances is that, if the suits have been filed in Turkey, then by law the damages claimed by the plaintiff must be indicated on the face of the complaint, and these can be used at a pinch as a bottom-line estimate. But there is also bad news: that number is almost always unreliable. This is because Turkish civil procedure rules allow plaintiffs to freely split their claims into so-called “partial suits” as long as they can assert a legal benefit for doing so. One can therefore never be certain whether a second action is coming after the first has been dispensed with.

In short, the concept of the partial suit allows a plaintiff to assert only a part of their demand in one lawsuit, and preserve the rest to be asserted in a second suit to follow, as long as the suit is divisible.

To US ears this will sound fundamentally wrong: under common law, a plaintiff must assert all their claims arising out of a single transaction at the same time, and any claims arising out of the same transaction that are not asserted in the first case are barred from being asserted in a subsequent action. For these purposes, a “transaction” includes all claims arising out of a common nucleus of operative facts, and this understanding necessarily includes both halves of the same claim. Thus, the US rules of res judicata clearly prohibit the idea of a partial suit, which the Turkish rules explicitly permit.

Perhaps the difference between these two approaches hints at a much deeper divergence between how the two legal systems seek to advance societal interests. The US rule is directed towards ensuring that the courts operate efficiently on a broad scale, possibly at the price of withholding sympathy from litigants who, for one reason or another, have failed to get their ducks in a row before knocking on the courthouse doors. Under the US rule, you will get your day in court, and have your dispute resolved relatively quickly and efficiently, but you have to do your part to make sure that the dispute you present to the court is developed to the fullest extent possible.

In contrast, the Turkish (or, more broadly, Continental) system is much more nurturing, accommodating and understanding, and sees itself as subservient to the economic well-being of individual litigants, perhaps at the expense of clogged dockets. So much so, that the chief policy reason advanced in support of the partial suit is that litigants who have claims that are difficult to prove should not be expected to bear the court costs of litigating their full claim at once, and should be given the opportunity to set out their case for only a part of their claim at a time, making court costs more manageable.

In this way, the plaintiff is allowed to try their luck in a test case, and assert the rest of their claim only if the test case is successful. The idea is that, with the merits firmly established in the first action, the only thing left to be litigated in the second action will be the extent of the damages. As the argument goes, under these circumstances, the second action may not even be necessary, the parties having every reason to settle or go through ADR now that the writing is on the wall as to the merits.

This argument does not, however, fully appear to take into account the second-order effects of such a policy. Firstly, by making it cheaper to try your luck at the courts, this policy incentivises plaintiffs to file frivolous suits, much like a discount on lottery tickets might increase sales. Secondly, the policy alters the balance between the litigants: the plaintiff is essentially allowed to take a flier on a long-shot claim at less than full price, while the defendant must defend as though the full amount of the potential claim were on the line. Indeed, this imbalance is one of the main arguments advanced against non-mutual collateral estoppel in the United States: a plaintiff who has adopted a “wait and see” approach and who has only filed suit after another, similarly-situated party has prevailed against a common defendant on common issues, is unlikely to be allowed to use offensive collateral estoppel.

In an interesting episode, the tension between the competing desires to achieve broader efficiency versus serving the best interests of individual litigants, has led to a smouldering showdown on the Turkish legal scene. When it was first promulgated, the Turkish law of civil procedure prohibited the filing of partial suits if the amount of the claim was undisputed between the parties. This rule was challenged in the Constitutional Court in 2012, on a theory that the rule offended the constitutional duty given to Turkish courts to provide judicial services in a speedy and cost-effective manner. But the rule was upheld by the Constitutional Court, on the explicit reasoning that the courts also had a duty to serve the broader public, and prohibiting litigants from splitting claims where the amount was undisputed would tend to advance that goal. However, following that victory, the rule prohibiting claim-splitting was removed from the law of civil procedure in a 2015 legislative act. This most recent change can be explained on a number of grounds, the most prominent one being that, as a matter of policy, the plaintiff is in control of the claim and is free to assert however much of it they want, at any time they want, up until the statute of limitations runs out.

In the end, the only backstop to the misuse of claim-splitting appears to be the requirement that there must be a “legal benefit” to splitting a claim. This is not a well-defined standard, and can be invoked whenever a litigant appears to be abusing their privilege. The most common instances in which “legal benefit” is found lacking are cases where plaintiffs (or their counsel) split claims in order to collect larger amounts in attorneys’ fees. However, counterintuitive as it sounds, it is generally thought that there is a “legal benefit” to allowing plaintiffs to file a test case before bringing their entire claim, and that is, in order to avoid wasting resources.

In previous years, there has been speculation in these pages as to why the Turkish legal system may be overburdened. This year, another possible answer can be added to that speculation: the courts’ willingness to charge for their services on a sliding scale, which is what claim-splitting amounts to in the end. To some, this is a feature, not a bug of the system. It is merely another choice in what is called the “iron triangle”: the trade-off that one must make between price, quality and speed, and this is where the Turkish system happens to have struck the balance. Litigants cannot be blamed for shaping their behaviour according to the incentives they have been given, and taking advantage of any perks that they are offered, and they will certainly be guided to the most effective shaping of their legal claims, including claim-splitting, as long as they have capable counsel on board from the start.