Constitutionality Review

Contested Provisions

The contested provisions stipulate that the insurer may terminate the liability insurance contract within fifteen days as of the notification by the former owner of the vehicle of its transfer and that the contract will be valid for further fifteen days after the termination date.

Ground for the Request for Annulment

It was maintained in brief that although the owner’s right to property over the vehicle ceased once the vehicle was sold, the liability arising from the insurance contract would persist under the contested provisions and therefore, the individual might be held liable for paying compensation even though she/he had no negligence. In this respect, it was further argued that holding someone accountable for an act or negligence he/she had not committed violated the right to property. In addition, it was asserted that the insurance contract was a consumer transaction and that the lack of clarity about the termination of the contract and leaving the discretion in this regard to the insurer contradicted the state’s obligation to safeguard consumer rights. The contested provisions were therefore claimed to be unconstitutional.

The Court’s Assessment

The contested provisions regulate how and when the contract between the insurance company and the former owner of the insured vehicle will be terminated in the event of transfer of the ownership of the said vehicle. These provisions confer discretionary authority upon the insurer to terminate the contract following the owner's notification, to the insurer, of the said transfer and stipulate that the contract shall remain legally effective and bear legal consequences for a certain period of time, even after the mutual declaration of intent by the parties to terminate it. Hence, the provisions restrict the freedom of contract safeguarded under Article 48 of the Constitution.

Once the vehicle is sold, the former owner’s physical and legal control and responsibility over the vehicle ceases. In addition, the former owner neither bears any supervisory obligation towards the new owner nor possesses the authority or power to control or means to direct the new owner’s actions. Holding the former owner liable for the actions of the new owner that might result in harm to third parties and fall entirely outside the former owner’s control, constitutes a severe interference. Imposing such a severe burden on the former owner can only be justified if no more lenient alternative measures are available. In this respect, the Court has assessed whether the continuation of the legal obligations of the former owner and the insurance company, as the contracting parties, for a certain period of time pursuant to the contested provisions constitutes a measure of last resort and whether a less restrictive measure on the freedom of contract could be implemented. The Court has observed that no constitutional impediment exists preventing the legislator from enacting a regulation requiring the new owner to obtain compulsory liability insurance in the registration of the vehicle or completion of the necessary documentation process following its sale or transfer. The Court has further concluded that it is not necessary to hold an individual liable for the actions of persons over whom they cannot exercise legal or physical control.

In this regard, the Court has determined that the contested provisions allowing the insured party, who has relinquished all control and supervisory authority over the vehicle upon its transfer, to be held liable for damages caused to third parties by the new owner during the term of the contract or even for fifteen days after the termination of the contract are not necessary. In light of these considerations, the Court has found that the pursued aim could be reached with less restrictive measures. Thus, the Court has concluded that the contested provisions infringed upon the principle of proportionality.

Consequently, the contested provisions have been found unconstitutional and therefore annulled.