The article examines, within the framework of the last paragraph of Article 125 of the Constitution, whether the damage suffered by businesses closed under Covid-19 measures can be compensated and who will bear this compensation.
According to the article, in the case law of the Council of State, the principle of equalization of sacrifice is applied as a ground of strict liability for damage arising from acts and actions of the administration that are lawful but impose an excessive burden on certain persons.
The article takes the view that those whose workplaces were closed have borne a heavy burden for the benefit of the greater part of society and that, under this principle, the State’s liability to pay compensation has arisen.
Because of the coronavirus (Covid-19) outbreak, which emerged in Wuhan, China, and was declared a “pandemic” by the World Health Organization on March 11, 2020, many countries took measures to combat the disease.
Under these adverse conditions, the economic life of merchants has been deeply affected by the closure of commercial enterprises or by the administrative restrictions imposed in the social sphere, and merchants have suffered very serious pecuniary damage. In this situation, the question of compensation for the pecuniary damage incurred by commercial enterprises arises. In this article, we will try to answer the following questions: is it possible to compensate the pecuniary damage of commercial enterprises, and if so, how and by whom will the obligation to pay compensation be met?
For the concept of compensation to come into play, there must be an unlawful act, damage must have occurred as a result of it, and there must be an adequate causal link between the act and the resulting damage. The place of the concept of compensation within administrative law is regulated in the last paragraph of Article 125 of the Constitution.
“The administration shall be liable to compensate for damage arising from its own actions and acts.”
This provision forms the constitutional basis of the financial liability of the administration in Turkish law. The financial liability of the administration arising from public law has no legal basis other than the last paragraph of Article 125 of the Constitution. Unlike in private law, there is no general statutory provision governing the financial liability of the administration for damage arising from its acts and actions of an administrative nature. The framework, rules and principles of the administration’s financial liability arising from the field of public law have been established by the case law of the Council of State, taking the said provision of the Constitution as the starting point.
As a rule, the administration is obliged to compensate for damage caused by the public service it carries out, and damage arising from administrative actions and/or acts is compensated within the framework of the rules of administrative law. According to the case law of the Council of State, the financial liability of the administration is divided into two: fault-based liability and strict liability; strict liability, in turn, is classified according to the ground on which it rests as dangerous activities, occupational risk, social risk and equalization of sacrifice. While in fault-based liability the fault of the administration is the basic condition of liability, in cases of strict liability the administration may be held financially liable even if it is not at fault.
On the other hand, while under the principles of dangerous activities, occupational risk and social risk, which are among the cases of strict liability, the unlawfulness of the administrative act or action is regarded as an indispensable element for holding the administration financially liable, under the principle of equalization of sacrifice, which is also a ground of strict liability, the act does not need to be unlawful for the administration to be held liable.
The principle of equalization of sacrifice, also called the principle of equality before public burdens, stems from considerations of equity and fairness. It is accepted that, where a part or the whole of society benefits from the acts lawfully adopted or the actions lawfully carried out by the administration for the purpose of realizing the public interest, placing the burden arising from them on only one part of society is incompatible with justice and equity. Justice and equity require that the benefits and burdens arising from the administration’s acts and actions that are beneficial to the public be shared equally across society. Expecting only certain persons to bear the burdens of public activities whose benefits are enjoyed by the whole public or by a certain part of it also undermines the principles of social justice and proportionality.
Built on these considerations, the principle of equalization of sacrifice has become a principle of liability frequently relied on in decisions of the Council of State concerning claims for compensation for damage arising from acts and actions of the administration that are lawful but impose an excessive burden on a certain person or persons. In its decision of February 8, 2012, Docket No. 2010/4187, Decision No. 2012/429, the Eighth Chamber of the Council of State made the following findings regarding the principle of equalization of sacrifice:
"(...)the principle of equalization of sacrifice, or the principle of equality of citizens before public burdens, provides that the burdens of the administration’s lawful actions and acts, the benefits of which are shared by the whole of society, do not fall on a certain person or persons, and that the damage suffered is compensated even if the administration is not at fault. Under the principle of strict liability, the administration is obliged to compensate for damage arising from its lawful actions as well."
In the case that was the subject of the decision of the Eighth Chamber of the Council of State of February 8, 2012, an action was brought on the grounds that a facility built on the plaintiff’s immovable property had been damaged by road construction works carried out by the defendant administration. The court of first instance dismissed the action on the grounds that the administration was not liable for damage caused by its works increasing safety and comfort on highways. The Chamber reversed the decision on the following grounds:
"(...) in the present case too, the administration carried out a service and engaged in an activity in order to realize the public interest and meet a social need. Although the whole of society will benefit from this service of the administration, the plaintiffs have been placed under a burden and forced to bear a special sacrifice in favor of the public interest. The balance in the distribution of public burdens that has been upset in this way must be restored through equalization. This equalization, in turn, will be achieved by the administration compensating the damage of the plaintiffs who suffered damage because of this service undertaken to realize the public interest."
Similarly, in another case, an action was brought for compensation for the damage suffered because the road passing in front of the buildings on the plaintiff’s immovable property had been raised; the decision of the court of first instance, which awarded compensation on the grounds that, since the whole of society benefits from the road improvement works carried out by the defendant administration in the public interest, the damage suffered by the plaintiff had to be compensated by the defendant administration within the framework of the principle of equalization of sacrifice, was upheld. (Council of State, 8th Chamber, Docket No. 2008/2870, Decision No. 2008/4124, 4/6/2008)
In decisions of the Plenary Session of the Administrative Law Chambers of the Council of State (İDDK), too, the principle of equalization of sacrifice has been assessed within the scope of the administration’s financial liability. In its decision of February 19, 2015, Docket No. 2013/509, Decision No. 2015/454, the İDDK dealt with an action brought for compensation for the damage suffered because the plaintiff’s immovable properties could not be irrigated after a water channel was destroyed during the construction of a divided highway commissioned by the defendant administration; the action had been dismissed on the grounds that there was nothing unlawful in the administration’s action, and the İDDK reversed the decision of the court of first instance on the grounds that not only had it not been sufficiently investigated whether the administration was at fault, but it had also not been investigated whether, even if it was not at fault, the administration bore strict liability in the case within the framework of the principles of "equality before public burdens" and "equalization of sacrifice".
In the context of the pandemic declared in connection with Covid-19 and the administrative measures taken during this process, many workplaces were closed, and the measures taken having regard to the benefit of the greater part of society, as part of the administration’s responsibility arising from the public health service, created a serious burden for a part of society. For this reason, leaving a part of society under a heavy burden for the benefit of the other, larger part, and closing their shops, workplaces and stores, is incompatible with the principle of social justice, as we have tried to explain above. We consider that, for the reasons we have explained above, the State’s liability to pay compensation has arisen in order to alleviate this burden that has been borne and to equalize the sacrifice.
In all these processes, it will be in the parties’ interest to obtain legal support from a lawyer in order to avoid any loss of rights.
This article is a general assessment prepared in accordance with the legislation in force on its date of publication; it does not constitute a legal opinion. This English text is a translation of the Turkish original; in case of any discrepancy, the Turkish version prevails.