Allegations

Famous football player Cristiano Ronaldo is facing a US$1 billion class action lawsuit in Florida, USA, for allegedly promoting the offering and sale of unregistered securities in collaboration with Binance, the world’s largest cryptocurrency exchange. Those suing him claim that they made the investments relying on Ronaldo’s statements and incurred losses.

On the other side of the world, in Istanbul, Türkiye, famous football players are again parties to a lawsuit, but unlike Ronaldo, they are plaintiffs.

In this lawsuit, some football players and business people (the Plaintiffs) allege that a private bank’s (the Bank) former branch manager (the Defendant), using her title in question, collected millions of US dollars from the Plaintiffs in bags of cash, with the promise of investing in a non-existent fund linked to a famous football coach, which would provide returns many times higher than market conditions, defrauded them by embezzling some of this money, and forged documents when the Plaintiffs requested documentation.

The Defendant alleges that she was defrauded, threatened, beaten, and deprived of her freedom. It is also alleged that audio and video recordings of the Defendant were taken during and after money “transactions,” a tracking device was placed in a bag delivered to her, and that these records and the data of the tracking device, as well as correspondence with the Defendant via messaging applications, were leaked to the public.

In addition, suspicions of tax evasion, money laundering, and loan sharking are expressed, as millions of US dollars in dispute allegedly changed hands in cash.

On the other hand, since it is claimed that Defendant used her title as the Bank branch manager while committing the alleged actions and that the events took place in the Bank, the liability of the Bank is also in question.

In this context, the Bank has three types of potential liabilities: (i) criminal liability toward the State, (ii) administrative liability toward the Banking Regulation and Supervision Agency, and (iii) civil liability toward the Plaintiffs or the Defendant.

This study focuses on the Bank’s potential civil liability toward the Plaintiffs.

But first, we should note that each action mentioned in these allegations is a crime, and everyone is innocent until proven guilty. Additionally, damaging a bank’s reputation through any media outlet is a crime. Therefore, at this stage, we must wait for the criminal proceedings to be completed, assume that each person in question may be innocent, and consider the personality rights of the natural persons and legal entities concerned.

(Constitution of the Republic of Türkiye Article 38; Turkish Civil Code Articles 24-25; Turkish Criminal Code Articles 86, 106, 108-109, 132-137, 157-158, 207, 241, 247, 282; Tax Procedure Law Articles 341, 352-353, 359; Banking Law Articles 74, 146 et seq.; Law on Prevention of Laundering the Proceeds of Crime Article 4; Tax Procedure Law General Communiqué No. 459 Article 4).

Basic Principles

Some basic principles need to be taken into consideration while analyzing private law relationships (e.g., credit-debt, purchase-sale, marriage, divorce, inheritance), which are:

• Acting honestly is the limit of exercising rights and fulfilling obligations. So, one who abuses a right will not be able to enjoy the legal protection expected from that right;
• One trying to gain a right will be assumed to be in good faith. However, one who does not exercise the due diligence expected from them will not be able to enjoy this assumption;
• One cannot gain rights based on their negligence;
• One should prove their claims; and
• Evidence obtained illegally cannot be considered in proving an event.

These basic principles also apply to the relationships between the Plaintiffs, the Defendant, and the Bank.

(Turkish Civil Code Articles 2, 3, 6; Turkish Code of Obligations Article 52; Law of Civil Procedure Articles 29, 189-190).

Does the Bank Have Civil Liability Toward the Plaintiffs? If So, What Is the Basis?

Regarding the return of the money allegedly embezzled by the Defendant or compensation for the alleged damages, at this stage, we can only discuss the possibilities as the litigation processes are currently ongoing.

So, considering the three sources of debts under Turkish law of obligations, which are (i) contracts, (ii) torts, and (iii) unjust enrichment, we can initially ask the following:

• Is the Bank liable for breach of contract?
• Is the Bank liable for torts?
• Is the Bank liable for unjust enrichment?

Is the Bank Liable for Breach of Contract?

A contract must first exist to discuss whether there is a breach of contract.

If there are any contracts between the Plaintiffs and the Bank, they will be revealed during the litigation process and will be submitted to the case file. Because banking-related agreements are made in writing or electronically via Internet banking or mobile banking, otherwise they are invalid. Similar rules apply to investment services provided by banks.

Whether the Bank breached its contracts can be discussed for such valid and existing agreements. In this regard, questions will arise regarding damages and negligence, which we will address in the torts section below.

Moreover, the Bank’s liability for the Defendant’s alleged actions that caused damages to the Plaintiffs may also be discussed under the liability for the acts of aides’ rule. The key question here will be: Were the Defendant’s activities related to fulfilling the obligations specified in the contract on the Bank’s behalf or related to matters outside the contract?

If the Defendant’s actions were related to matters outside the contract, the Bank would not be liable in this context, but if these actions were associated with fulfilling the obligations under the contract, questions would arise regarding damages and negligence, which we will address in the torts section below.

(Turkish Code of Obligations Articles 12, 112, 114, 116; Banking Law Article 76; Capital Markets Law Article 42; Regulation on Methods to Be Used by Banks for Remote Identification and Concluding Contracts in Electronic Medium Article 12; Communiqué on Methods to Be Used by Brokerage Houses and Portfolio Management Companies for Remote Identification and Concluding Contracts in Electronic Medium Article 13; Communiqué on Documentation and Registration Structure for Investment Services and Activities and Ancillary Services Article 5/A).

Is the Bank Liable for Torts?

The following questions must be analyzed to discuss torts liability:

• Did the Bank commit any illegal or immoral action against the Plaintiffs?
• If so, did the action in question cause any damages?
• Can the damages be proven?
• Was the Bank negligent? If so, what was the gravity of the negligence?
• Were the Plaintiffs negligent? If so, what was the gravity of the negligence?
• Can negligence be proven?
• Did any factor remove the causal link between the Bank’s action and the resulting damages? For example, did a third party or the Plaintiffs act in gross negligence?
• Were the Plaintiffs instrumental in causing or increasing the damages, or did they take precautions to mitigate it?

Depending on the answers to these questions, issues such as whether tort exists, if so, what the compensation amount should be, and whether the compensation amount should be reduced within the scope of the parties’ negligence or whether the liability for compensation should be wholly ruled out will become clear.

At this point, the Bank’s liability for the Defendant’s alleged actions that caused damages to the Plaintiffs may also be discussed under the employer’s liability rule. To hold the Bank liable in this context, it does not matter whether it was negligent or not. The key question here will be: Did the Defendant cause the alleged damages during and in connection with performing the work for which the Bank assigned the Defendant?

If the damages allegedly caused by the Defendant were not generated during and in connection with performing the work for which the Bank assigned the Defendant, the Bank will not be liable in this context.

However, suppose the damages allegedly caused by Defendant were generated during and in connection with the performance of the work for which the Bank assigned Defendant. In that case, the following question will arise: Did the Bank exercise due diligence to prevent damages while hiring its employees, giving instructions regarding their work, and supervising and monitoring them? In this case, if the Bank proves that it exercised due diligence, it will not be liable, but if it cannot prove it, it will be liable. When determining the scope of liability, questions will arise regarding damages, which we have addressed at the beginning of the torts section above.

(Turkish Code of Obligations Articles 49-52, 66).

Is the Bank Liable for Unjust Enrichment?

The following questions must be analyzed to discuss unjust enrichment liability:

• Was there a reduction in the Plaintiffs’ assets?
• If so, was there an increase in the Bank’s assets vis-à-vis this reduction?
• If so, was there a causal link between the decrease in the Plaintiffs’ assets and the increase in the Bank’s assets?
• Did the Plaintiffs’ assets decrease for achieving a legal or moral result or an illegal or immoral result?
• Was there no legal ground for the reduction in the Plaintiffs’ assets? Was it invalid, unrealized, or terminated if there was legal ground?

Depending on the answers to these questions, issues such as whether unjust enrichment exists, whether restitution can be requested, the scope of the restitution obligation, and, if not, whether enrichment will be recorded as income to the Treasury will become clear.

(Turkish Code of Obligations Articles 77, 79-81).

*          *          *

Many more questions can be asked and discussed. However, an in-depth analysis of the events and facts is impossible before the proceedings are completed, so we can only discuss possibilities now.

Av. Müge Önal Başer, LL.M., LL.B.

References

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