The Constitutional Court of Turkey (“Constitutional Court”) has annulled Article 1 of Law No. 1567 on the Protection of the Value of the Turkish Currency (“Law”), which granted the President broad regulatory powers regarding foreign exchange and precious metals transactions as well as the value of the Turkish currency, on the ground that it violates the principle of the non-delegability of legislative power.
The 13th Chamber of the Council of State, in a case brought for the annulment of the decision revoking the operating licence of a precious metals exchange intermediary institution and of the secondary legislation forming the basis of that decision, concluded that Article 1 of the Law was unconstitutional and applied to the Constitutional Court by way of objection.
The contested provision was examined by the Constitutional Court particularly in light of Article 7 of the Constitution, which enshrines the principle that legislative power cannot be delegated. In this context, the Court underlined that the provision confers upon the President powers relating to the purchase and sale of foreign exchange, banknotes, shares and bonds, and to the export from and import into the country of these instruments as well as precious metals/precious stones and any goods and assets containing them, together with commercial papers and means of payment, and to the protection of the value of the Turkish currency – in other words, powers covering a substantial and wide segment of economic life.
The Constitutional Court stated that this regulatory field is directly connected with the right to property, freedom of contract and freedom of enterprise, since the decisions to be taken may interfere with individuals’ ability to dispose of their assets and to conduct commercial activities. Accordingly, the Court held that restrictions on fundamental rights and freedoms are at stake in this area and that, pursuant to Article 13 of the Constitution, such restrictions must be imposed “by law”.
In its judgment, the Constitutional Court referred to its previous case law on the derivative nature of the executive’s regulatory powers within the framework of the principle of the non-delegability of legislative power. It reiterated that the regulatory space left to the executive may only concern matters for which the basic principles and framework have been drawn by law and that leaving an unlimited, vague and wide regulatory field to the executive is incompatible with Article 7 of the Constitution.
In this regard, the Constitutional Court found that:
- Article 1 of the Law merely refers to the objective of “protecting the value of the Turkish currency”, and this objective alone is not sufficient to determine the limits of the regulatory power granted to the President;
- The Law does not set out which principles, criteria and limits are to govern the decisions to be taken in relation to the purchase, sale and movement of foreign exchange, precious metals and related assets;
- The power granted to the President covers a very broad and indeterminate field, without the basic principles and essential rules being laid down by law.
On these grounds, the Constitutional Court concluded that there had been a transfer of authority incompatible with the principle of the non-delegability of legislative power and decided to annul Article 1 of the Law.
The Constitutional Court further determined that annulling Article 1 of the Law rendered the application of Article 2 (regulating the publication and entry into force of the decisions to be taken by the President) and Additional Article 5 (regulating the application of provisions favourable to those concerned in cases where the decisions taken by the President are amended in their favour or repealed) impossible. These provisions were therefore also annulled.
The annulment decisions will enter into force nine months after the publication of the Constitutional Court’s judgment in the Official Gazette.
You can access the full text of the Constitutional Court’s decision through this link. (Only available in Turkish)
