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Spotlight: Concerns about Constitutionality of Turkey’s New IP/O Regime in Civil Industrial Sectors

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On 06 February 2014, Turkish Parliament has enacted a 6518 Omnibus Bill, gazetted February 19th 2014, which adjoins a provision to article 3 of the Law No 4734 Public Procurement Law (“Law”) stipulating that purchase of goods and services provided to ensure innovation, local production and technology transfer under offset/industrial participation programs are not subject to Law No 4734. Following to such a legal basis, the Regulation on the Purchase of Goods and Services, With Reference to Article 3 (U) of Law No: 4734 (the “Regulation”) was issued by the Ministry of Science, Industry and Technology and gazetted February 15th, 2015.

For some, this somehow might appear as a milestone to establish an omitted national law from the scope of regular government procurement policies and the multilateral trade agreements on the way to become a member of The Agreement on Government Procurement (GPA) of WTO. However, it seems that Turkey’s inherited practice of fast-tracking legislative issues such as offsets under omnibus bills will result with the continuation of Turkey’s public procurement policies to come under fire in terms of constitutionality.

On the surface at least, the Regulation seems that it is in the absence of terminological compliance to the basis clause, 3 (U) of the Law, by having the expression of “industrial collaboration” which is completely different from the expression used in the Law.

The legal basis of the Regulation seems to become a highly controversial topic as well. According to the article 124 of the Turkish Constitution, The Prime Ministry, Ministries and the Statutory Bodies may issue regulations indicating the implementation of laws for the issues falling into their responsibilities, as long as they do not conflict with laws. This provision also relates to relationship of competency between constitution, laws, statutory decrees, by-laws, regulations and the other regulatory administrative acts and brings the questions associated with the constitutionality of the Regulation to mind.  In other words if there is no purview of a law (ratio legis) for implementation of certain issues, any exemption clause therein does not form the legal basis for those issues.

Moreover the Regulation contains many inconsistencies. These include the provisions related to procedures of implementation of IP/O regime programs. To give an example, the Regulation prescribes IP/O program methodology as the” tender to predetermined bidder” in accordance to the Law which was exempting itself as legal basis (!).

It is obvious that one of the areas that the strict principle of legality of the administration needs to be applied is tender process. It refers to a series of transactions which are organized, managed and monitored by public authorities for purpose of purchase of goods and services and requires complying with the rules of procedure provided in legislation in a competitive environment. Based on this,   it would not be a surprise if Turkish Constitution Court cancels the Regulation.

One of the other examples; pursuant to article 45 of the Regulation, consultancy services for preparation of the documents, to follow-up phases of the tender preparation and IP/O commitments might be bought according to the provisions of Law No. 4734 provided that the approval of the tender officer. Having no idea about the purpose of such a clause, such a referral requirement to the Law in this clause leaves a question mark over minds.

The foremost inconsistency come to the fore with article 51 saying that “In the absence of provisions in this Regulation, Law No: 4734, Law No: 4735 (Public Procurement Contracts Law) and the relevant provisions of the public procurement legislation in force issued by the Public Procurement Authority shall apply mutatis mutandis.”

Those all lead the questions related to one of the basic principles of the rule of law which is "certainty". According to this principle, the regulations should be clear, understandable, enforceable, and objective and include preventive measures for persons against arbitrary treatments of public authorities. The principle of certainty is linked to the “legal security” and the persons should know, within a determined certainty, what concrete actions and which cases, sanctions, or the results are led to the intervention of the administrative authority.

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