Non-genuine Benevolent Intervention in Another’s Affairs and Disgorgement of Profits Under Turkish Law
© Springer International Publishing Switzerland 2015
Ewoud Hondius and André Janssen (eds.)Disgorgement of ProfitsIus Comparatum – Global Studies in Comparative Law810.1007/978-3-319-18759-4_1414. Non-genuine Benevolent Intervention in Another’s Affairs and Disgorgement of Profits Under Turkish Law
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Faculty of Law, Istanbul Kemerburgaz University, Mahmutbey Dilmenler Cad. No: 26 34217 Bağcılar, Istanbul, Turkey
Abstract
This chapter discusses the availability of disgorgement of profits as a private law remedy under Turkish Law. It provides an account of legal spaces that eventually allow disgorgement of profits as a private law remedy. To a great extent these stem from the general rule of non-genuine benevolent intervention, which is stipulated in article 530 of Turkish Code of Obligations.
Keywords
Non-genuine intervention to another’s affairsInfringement of personality rightsLiability of an illegal possessor in bad faithInfringement of intellectual property rightsUnfair competitionAssistant Professor of Civil Law at Istanbul Kemerburgaz University, Faculty of Law. This article is based on the Turkish national report presented at the XVIIIth Congress of the International Academy of Comparative Law (Vienna, 2014) and also published in the book “Turkish National Reports to the XVIIIth Congress of the International Academy of Comparative Law” edited by Rona Serozan and Başak Başoğlu, and published by Vedat Kitapçılık upon whose approval, was updated later by the author.
Introduction
Disgorgement of profits is a remedy, which provides illegally gained profits to be disgorged. Under Turkish law, disgorgement of profits is an available remedy in Penal Law and Administrative Law.1 However, as a private law remedy, disgorgement of profits is also available in cases of benevolent intervention in another’s affairs. Benevolent intervention in another’s affairs is not regulated via a general provision in the General Part of the Turkish Code of Obligations. Controversially, it is regulated in the second part (Special Provisions) of the Turkish Code of Obligations2 between articles 526 and 531.
The main objective of the remedial system in private law is to compensate the loss. Accordingly, loss is the most important element for determining the compensation since the loss determines the maximum limit of the compensation.3 However, disgorgement of profits is a remedy that is independent from loss. Therefore, one view in the Turkish legal literature, the private law remedy of disgorgement of profits has a punitive character.4 In other words, the remedy of disgorgement seems to penalize those who have wrongfully attacked another’s rights with her/his own fault and for her/his own benefits. This view would bring the compensatory character of the private law remedies into question.
Although, under Turkish Law, as a rule, private law remedies do not have a punitive character, it may be further observed that certain provisions have a punitive character.5 For example, a view in the Turkish literature claims that,6 article 7 of Turkish Code of Obligations, which stipulates the sending of unsolicited goods, has a punitive character.7 According to the said article, the sending of unsolicited goods does not constitute an offer and the recipient is not obliged to return or keep such goods.8 Furthermore, in accordance with article 81 of the Turkish Code Obligations, it is not possible to make restitution for things given to produce an illegal or immoral outcome.9 The court may decide to assign these goods to the State Treasury.10 This provision aims to prevent the restitution of acquisitions made in order to produce an illegal or immoral outcome. It has been claimed in the legal literature that this provision has a punitive purpose.11 Likewise the remedy of disgorgement of profits could be considered as a unique remedy that has a punitive character.
Outlook of Non-genuine Benevolent Intervention in Another’s Affairs
The General Rule of Non-genuine Benevolent Intervention
Benevolent intervention in another’s affairs is regulated in the second part (Special Provisions) of the Turkish Code of Obligations between articles 526 and 531. However, these provisions have general character. In other words, these are actually general provisions, which are erroneously situated in the Special Part of the Turkish Code of Obligations. It is generally accepted in the legal literature that benevolent intervention in another’s affairs should have been regulated in the General Part of the Turkish Code of Obligations.12
There are two types of benevolent intervention in another’s affairs: traditional benevolent intervention in another’s affairs (negotiorum gestio), which is known as “genuine benevolent intervention in another’s affairs” and “non-genuine benevolent intervention in another’s affairs”. Genuine benevolent intervention in another’s affairs13 is considered to be a quasi-legal transaction whereas non-genuine benevolent intervention in another’s affairs is considered to be an illegal act.14
Non-genuine benevolent intervention in another’s affairs is stipulated in article 530 Turkish Code of Obligations. Accordingly, the principal has a right to appropriate any resulting benefits even if the intervener did not carry out the activities for the predominant interest of the principal. In other words, the intervener should (1) carry out activities (2) for her/his own interest (3) without an authority given by the Principal. Although it is controversial in the legal literature, the prevailing view claims that intervener must also be in bad faith.15 Existence of all these conditions enables the principal to disgorge the profits gained by the intervener.
The most important remedy for the benevolent intervention in another’s affairs is the disgorgement of profits (benefits).16 According to article 530, the principal has a right to appropriate any resulting benefits even if the intervener did not carry out the activities for the predominant interest of the principal. The right to claim for disgorgement of profits is specific to the Principal. When it is claimed by the Principal, the intervener is obliged to transfer all benefits that have been obtained via benevolent intervention and have pecuniary value to the Principal.17 Accordingly, net profits may be claimed. Net profit is calculated by adding interest to the gross profit and subtracting expenses from the total amount.18
As stated above, non-genuine benevolent intervention is considered to be an illegal act and it constitutes a separate source of liability.19 Although benevolent intervention seems similar to tort and unjust enrichment claims, they have major differences. First of all, claim for disgorgement of profits due to benevolent intervention, is independent from the remission of injured party’s assets whereas tort and unjust enrichment only focuses exclusively on the remission of injured party’s assets and therefore only such loss could be claimed.
Disgorgement of profits is a unique remedy since it is independent from the conditions of loss and impoverishment.20 Therefore, it is different from claims of compensation and restitution. Undoubtedly, there should be a causal link between the gained profits and the benevolent intervention.21 The principal has the right to claim profits which he himself would not have acquired or thought to acquire and this is so even if the intervener has acquired more profits than usual due to intervener’s own talent and efforts.22
The amount is calculated without considering the personal efforts of the intervener. It is calculated with respect to the actual profits gained. However, in some cases it could be difficult to determine or prove the actual profits since the intervener holds all the information regarding the actual profits. In such cases, it is accepted that the method of calculation for compensation shall be applied by analogy.23 Accordingly, in cases where it is not possible to determine or prove the actual profit, the judge decides on the amount of profit considering all relevant circumstances. However, the profit that the intervener failed to gain is controversial.24 Such profit shall not be considered. Only actual profit could be subject to the claim of disgorgement of profits.25 However, loss of profits due to benevolent intervention of another’s affairs could be claimed as a tort claim. It should be further noted that disgorgement of profits could be claimed even if the intervener has disposed of all of the profits. In such cases, a claim for actual profits may not be limited by the remaining amount.
It is alleged by one view in the legal literature that claims for disgorgement of profits could only be accepted if the claims for pecuniary and non-pecuniary damages are deducted from this claim.26 However, it is the author’s opinion that claims for disgorgement of profits should be accepted along with the claims for pecuniary and non-pecuniary damages. Nonetheless, in the case where the scope of the pecuniary damages is limited with the loss of profits, then either loss of profits or disgorgement of profits should be claimed since both claims coincide.
However, the gained profits could be more than or less than the loss suffered by the Principal. Generally, the gained profits of the intervener are considered to be corresponding to Principal’s loss of profits. Therefore, damages for loss of profits (lucrum cessans) and disgorgement of profits are competing claims. For example, in the case where the scope of the pecuniary damages is limited with the loss of profits, then either loss of profits or disgorgement of profits should be claimed since both claims coincide.27 In other words, Principal may not claim damages for loss of profits along with disgorgement of profits based on benevolent intervention. On the other hand, if Principal’s loss of profits is more than the gained profits of the intervener, then the Principal shall claim for damages for loss of profits instead of disgorgement of profits. However, in such claim, the Principal should be able to prove damages.
On the other hand, in case of damages for actual loss (damnum emergens), it is accepted that the damages for actual loss and the disgorgement of profits could be claimed together since the gained profits of the intervener may not correspond to the actual loss of the Principal. Likewise, non-pecuniary damages may also be claimed together with the claim for disgorgement of profits since the aim of the non-pecuniary damages is different than other damage claims.
One controversial and important issue regarding the disgorgement of profits is whether the claim for disgorgement of profits is accepted only in breach of absolute rights28 or also in breach of relative rights.29 In other words, is it possible to claim for disgorgement of profits in breach of contracts? This issue is highly debated in the legal literature.30 It is the author’s view that disgorgement profits could be claimed in breach of both and relative rights. However, a restriction should be made for the relative rights. Breach of relative rights shall enable the claim for disgorgement of profits only if such a breach intervenes with an exclusive and direct area of dominance that typically corresponds to the absolute rights.
It should be noted that a specific statute of limitation is not regulated for claims arising from the non-genuine intervention in another’s affairs. Thus the applicable statute of limitation is debated in the legal literature. It is alleged by one view in the legal literature that the claims arising from the non-genuine intervention in another’s affairs should be subject to general statute of limitation of 10-years stipulated under article 146 of Turkish Code of Obligations31 where another view suggests that 5-years statute of limitation foreseen for the mandate in article 147/5 of Turkish Code of Obligations.32 The prevailing view in the legal literature alleges that the statute of limitation foreseen for the tort claims in article 72 of Turkish Code of Obligations should be applicable.33 Accordingly, the statute of limitation is 2 years from the date the Principal becomes aware of both the intervention and the intervener. In any event, tort actions are time barred for 10 years from the date of the act.
Infringement of Personality Rights
Claims of an injured party in the case of infringement of personality rights are dealt with by Article 25 of the Turkish Civil Code. Accordingly, the rights of injured parties to claim for disgorgement of profits is reserved as clear reference is made to benevolent intervention in another’s affairs in the second paragraph of the aforementioned article. Thus, the application of the law on benevolent intervention in another’s affairs is not limited to the rights to assets, but it is also applicable in the case of infringement of personality rights.
It should be noted that the law on benevolent intervention in another’s affairs is not applicable in all cases of infringement of personality rights. Therefore, the conditions of benevolent intervention in another’s affairs must be demonstrated in each case of infringement of personality rights before those rules of benevolent intervention apply. Also, the intervener must have gained profits due to the benevolent intervention in order for the injured to claim for disgorgement of profits. If the intervener has not gained any profits due to the benevolent intervention, the injured party only has the right to claim compensation.
According to the wording of Article 25/II, the injured party has the rights to claim compensation for both pecuniary and non-pecuniary loss as well as disgorgement of profits. However, this is controversial in the legal literature. According to the first view in the legal literature,34 which is in line with the wording of the provision, it is possible to claim both compensation for pecuniary and non-pecuniary loss and disgorgement of profits. According to another view,35 compensation for pecuniary or non-pecuniary loss and disgorgement of profits may not be claimed together. For the third view,36 it is possible to claim both the compensation for non-pecuniary loss and the disgorgement of profits together while the claims for pecuniary loss and the disgorgement of profits are competitive claims; it is only possible to claim one of them. As for the final view in the legal literature,37 it is possible to claim both the compensation for non-pecuniary loss and the disgorgement of profits together. As for the claim for the compensation of pecuniary loss, this view distinguishes the compensation for the actual damage and compensation for loss of profits. Accordingly, in the case of actual damage, both the compensation for pecuniary loss and the disgorgement of profits may be claimed together, while in the case of loss of profits, either compensation for pecuniary loss or disgorgement of profits may be claimed.
Liability of an Illegal Possessor in Bad Faith
For claims depending on rights or presumption of possession, the scope of the restitution obligation of the illegal possessor is stipulated under articles 993–995 of the Turkish Civil Code depending on whether the possessor is in good or bad faith.38 According to article 993, an illegal possessor in good faith is not liable for the perishing of or damage to the possessed goods. An illegal possessor in good faith is not liable even she/he destroys the goods intentionally.39 Moreover, an illegal possessor in good faith is not liable for utilization of the possessed goods or profits gained or failed to have been gained.40 It is controversial in the legal literature whether it is possible to claim for the disgorgement of profits depending on the non-genuine benevolent intervention of another’s affairs. However, as stated above, the prevailing view claims that article 530 of the Turkish Code of Obligation is only applicable for the intervener in bad faith.41 Therefore, gained profits may not be claimed from the illegal possessor in good faith according to article 530 of the Turkish Code of Obligation.
The scope of the restitution obligation of the illegal possessor in bad faith is stipulated in article 995 of the Turkish Code of Obligations. Accordingly, an illegal possessor in bad faith is strictly liable for the perishing of or damage to the possessed goods.42 Accordingly, liability of an illegal possessor in bad faith is independent of fault.43 In cases where the illegal possessor in bad faith has sold the possessed goods, it is controversial in the legal literature whether it is possible to claim compensation from the illegal possessor in bad faith if there is chance to make restitution for the goods from the buyer. According to one view in the legal literature, it is not possible to claim for compensation of the value of the goods from the illegal possessor in bad faith,44