Material damage arising from an unlawful sealing or business closure act may, if the conditions are met, be made the subject of a full remedy action against the municipality. Although annulment of the closure decision is important, the real amount of the loss claimed and its connection to the closure must be proved separately. In the calculation, not only the date of the closure decision but also the period during which the business was actually closed and the net earnings that could not be obtained in that period are decisive.
Are sealing and closure the same act?
Sealing may be a method of implementing an administrative decision; closure, on the other hand, is the consequence of stopping the activity. Sealing one section of a business, closing the whole business and cancelling the license may produce different legal effects. For this reason, the decision, the record and the actual implementation must be examined together.
A decision of the municipal executive committee (encümen), an act of the licensing unit, a record of the municipal enforcement officers (zabıta) and a decision of another administration may be found in the same file. Without determining which conduct of which administration the compensation claim is based on, it is not enough to rest on the statement "the municipality closed my business." The relationship of liability between the authority that gave the decision and the unit that carried it out should be investigated.
How does annulment of the closure act affect the calculation of the loss?
An annulment decision provides a strong basis as to the unlawfulness of the act. However, the court's reasoning for annulment is important. The possibility that, after an act annulled solely because of a procedural deficiency, the administration may take a new lawful decision can affect claims of future income.
In compensation proceedings, the actual loss, the causal link with the administrative conduct and the position of the injured party must be examined separately. That the business could not continue operating for another reason, or that there was an independent obstacle relating to the license, may narrow the period of loss connected to the closure act.
What steps should be taken while the business is closed?
First, a copy of the closure decision and of the sealing record should be obtained. The date of service, the day of actual closure, the sealed area, the products left inside and the effect on operations should be recorded. The time limits for annulment of the decision and for a stay of execution are assessed separately.
Filing an action does not by itself stop the act. A stay of execution requires the conditions in Article 27 of the Administrative Procedure Law (İYUK) to be made concrete. Perishable stock, cancelled orders, the situation of employees and the consequences of the business remaining closed can be documented. An allegation of economic loss, on the other hand, does not take the place of an assessment of manifest unlawfulness.
The seal must not be removed by the operator on its own. The legal and practical conditions for opening the business should be followed within the framework of the decisions of the competent administration and the courts. The dates of removal of the seal, of reopening and of actually resuming work should be kept separately.
How is loss of operations calculated?
What matters is not turnover but a provable net loss
A business's monthly sales total does not show that a loss of the same amount arose for every month it remained closed. The variable expenses that would have arisen had sales been made, the costs saved and the mandatory expenses that actually continued are assessed together. The calculation must be based on the type of activity of the business and its financial records.
For example, a restaurant's turnover in past periods cannot be accepted directly as the compensation amount without knowing the seasonal customer intensity and product costs. In a workshop, existing orders, production capacity and the delivery schedule may be decisive. The same calculation template cannot be applied to every business.
Commercial books, tax returns, bank and POS records, the invoicing pattern, order contracts and the results of earlier periods must corroborate one another. An estimated income statement prepared only by the operator may be insufficient when not supported by other documents.
Why do the actual closure and opening dates matter?
The day on which the administrative decision was made and the day on which it was implemented may differ. Nor does the lifting of the decision always show that the business actually started operating on the same day. However, not every delay in reopening can be attributed to the administration; the reason for the delay is investigated.
The transfer of the business to a third party, the expiry of the lease, the owner's cessation of activity or another prohibition act may affect the period of loss. Activity carried out elsewhere while the business was closed, and the income obtained from it, is also assessed in an appropriate connection. The aim is to determine not a hypothetical gain but the real loss connected to the event.
Can rent, employee costs and spoiled products be claimed separately?
| Claim | Matter to be examined | Sample document |
|---|---|---|
| Lost profits | Net earnings, reasonable period, operating capacity | Books, tax returns, order and sales records |
| Continuing rent | Payment and the unavoidability of the expense | Lease, bank receipt |
| Employee costs | Actual payment, employment relationship and connection to the closure | Payroll, bank and social security records |
| Spoiled products | Quantity, expiry date, storage and loss | Stock list, invoice, destruction or finding record |
| Reopening cost | Necessity, reasonableness and connection to the event | Invoice, service and maintenance record |
It is not necessary for all of these items to be accepted at the same time and separately. In particular, adding separately an expense that has already been taken into account within the net earnings calculation may lead to double counting. The expert report must clearly show which item is included in which calculation.
For spoiled products, it may be examined whether access to the product was prevented by the closure and whether there was a reasonable possibility of protecting it. Requests made to the administration for evacuation or protection and the replies given are important. Neglecting reasonable conduct that could have prevented the loss from growing may affect the assessment of liability in the specific case.
A real Council of State decision: an incomplete profit calculation is not sufficient
The decision of the 2nd Chamber of the Council of State dated June 22, 2022, E. 2022/1643, K. 2022/3850, concerns the calculation of the loss arising from the license and closure acts of a business selling firewood and coal. The Chamber assessed the insufficient investigation of the dates of actual closure and opening, of the commercial records, of the assumption concerning capacity utilization and of the transfer of the business.
The outcome of the decision is the reversal of a judgment based on incomplete examination. The decision is not an example in which the turnover or loss amount asserted was accepted directly. The message it gives in practice is that the period of loss and the net earnings must be established with verifiable documents. The appeal procedures mentioned in the old file should not be transposed unchanged to every current case.
When is a full remedy action brought?
Together with or after an annulment action
Article 12 of the İYUK gives a person whose right has been violated by an administrative act different routes of action. A full remedy action may be brought directly; annulment and full remedy requests may be put forward together, or an annulment action may be brought first and a full remedy action pursued after the stage of decision indicated in the law. For losses arising from the implementation of the act, the date of implementation is also assessed.
Unless there is a special period, the general period for bringing an administrative action is 60 days. However, the service of the closure decision, the date of implementation, the decision in the annulment action and the service of the appeal decision may constitute different starting points. Which option was used must be clearly determined. It should not be assumed that there is a right to compensation without a time limit.
The distinction between an administrative action and non-implementation of a decision
In cases where the loss arises from an independent administrative action, the prior-application and time-limit regulation in Article 13 of the İYUK may come into play. By contrast, a loss arising from the implementation of a closure decision should not in every case be brought under this article. The distinction between act and action is made on the basis of the documents.
For a business kept closed despite a court's annulment or stay-of-execution decision, Article 28 of the İYUK is separately important. The service of the decision on the administration, what its execution requires and the delay in implementation must be proved. When the loss in the initial closure period and the additional loss arising from non-implementation of the court decision are added together, the same days must not be counted twice.
How are the case file and the expert examination prepared?
It is useful for the file to contain a chronology of events: the decision, service, sealing, the action, the stay of execution, service on the administration, removal of the seal and actual opening. Each line of this chronology should be matched with a document. The financial documents can also be arranged as before the closure, the closure period and after the opening.
The questions put to the expert should not ask only for the total amount of loss. The income period used, seasonality, expense items, costs saved, the capacity ratio and, if any, the transfer date should be explained. A report that does not show why the assumptions were chosen may not be suitable for review.
The claimant is the injured right holder. The losses of the property owner, the tenant operator and the company partner must be distinguished from one another. A company's commercial loss and a partner's personal loss claim are not treated as the same. The defendant administration and the competent court are likewise determined according to the nature of the act and of the loss.
Conclusion
Compensation for an unlawful closure requires a strong financial file in addition to an annulment decision. The period of actual closure, the net earnings and the continuing expenses must be clearly established. Obtaining the decision and records early, documenting the stock and preserving the commercial records markedly strengthen the later examination of the loss.
Related articles: A Municipality's Failure to Comply with a Court Decision: Enforcing Annulment and Stay-of-Execution Decisions; Compensation Action for Unlawful Demolition: Building Value, Property Damage and Loss of Earnings; Cancellation of a Workplace Opening and Operating License: Annulment Action, Stay of Execution and Return to Operation; Sealing and Closure of a Tourism Facility; Compensation for a Municipality's Service Fault.
Frequently Asked Questions
I had the closure act annulled; is a separate compensation action needed?
If no judgment has been given on the compensation claim in the annulment action, the appropriate full remedy route for the loss is considered. The time limit is determined according to the chosen route of action and the notifications.
Can I claim the past daily turnover for every closed day?
Past turnover is not a loss by itself. Net earnings, periodic variations, expenses and the sustainability of the activity are examined.
Is a claim possible if a newly opened business has no past record?
It may be possible; however, proof becomes harder. Concrete orders, contracts and reliable capacity data are important. A hypothetical expectation of high earnings is not sufficient.
Can a tenant operator also bring an action against the municipality?
The tenant operator can bring an action in respect of the violation of its own right and its own loss. The claims and the loss items of the owner and the operator must be separated.
When the seal is removed, does the whole loss period end?
The actual opening and the reasons for any delay are examined. Not every delay after removal of the seal can automatically be attributed to the administration.
Sources and legal bases
- Administrative Procedure Law No. 2577: Articles 7, 12, 13, 27, 28 and 36.
- Constitution of the Republic of Türkiye: Articles 125 and 138.
- Council of State, 2nd Chamber, E. 2022/1643, K. 2022/3850, June 22, 2022 — full text. Outcome: reversal for incomplete examination.