Individual Application

The Facts

The Tariff for Insurance Premiums for Occupational Accidents and Diseases (“the Former Tariff”) adopted by the Decree no. 8/2569 of the Council of Ministers and published in the Official Gazette no. 17296 assigned, for “Air Transportation” works, the following line of business codes: “Maintenance of airports and works related to preparation for flight, ground services and maintenance works at airports” and “All works performed on planes (including air clubs)”. The hazard class and degree of the applicant’s workplace was registered within the scope of the line of business code for “All works performed on planes (including aero clubs)” on the basis of the workplace declaration.

The Tariff for Short-term Insurance Premiums (“the New Tariff”) adopted by the Decree no. 2008/14173 of the Council of Ministers and published in the Official Gazette dated 29 September 2008 and numbered 27012 (bis) assigned separate codes to “Airline passenger transportation” and “All works performed on planes (including air clubs)” and set a premium rate of 2% for the former and 6.5% for the latter. Following the entry into force of the Law no. 5510 on Social Insurances and General Health Insurance and the New Tariff, which was issued on the basis of the repealed Article 83 § 1 of the said Law, no change was made to the line of business concerning “All works performed on planes (including air clubs)” which had previously been determined in view of the hazard class and degree of the applicant’s workplace. Accordingly, the short-term insurance branches premium required to be paid by the applicant continued to be collected at a rate of 6.5% on the basis of the tariff for the relevant line of business.

The letter sent to the relevant units by the Social Security Institution (SGK) noted that due to the computer system, an error had occurred in the processes of conversion of registration records in respect of the employers whose line of business had changed on the basis of the new tariff for premiums and that the erroneous registration records had to be corrected until 17 May 2010. The applicant applied to the Istanbul Provincial Directorate and requested that the registration record concerning the hazard class and degree of the workplace be corrected as “Airline passenger transportation.” The applicant’s request was accepted and the premium required to be paid for short-term insurance branches was determined as 2% as of 1 January 2013.

The applicant filed a request with the administration, seeking refund of the premiums which had been overpaid since 1 October 2008. The applicant’s request was dismissed by the decision dated 12 March 2014 of the Commission for Line of Business Codes. The applicant brought an action before the Labour Court, requesting the annulment of the said act and the refund of the overpaid premiums. Having regard to the fact that the applicant failed to fulfil its obligation to make a declaration according to the New Tariff, the Labour Court dismissed the action, emphasising that there was no fault on the part of the administration in the overcollection of premiums. 

The Applicant’s Allegations

The applicant alleged that there had been a violation of the right to property due to the collection of the premiums for short-term insurance branches as a result of a calculation made on the basis of the wrong tariff and a violation of the right to an effective remedy in conjunction with the right to property due to the non-refund of the premiums which had been erroneously overcollected.

The Court’s Assessment

1. Alleged Violation of the Right to Property

The primary criterion to be taken into consideration in the context of the interferences with the right to property is the requirement that the interference must have a legal basis. If it is established that this criterion has not been met, it will be concluded that the right to property has been violated without any further examination as to any other criteria.

In the present case, the applicant was indisputably under an obligation to pay short-term insurance branches premium. The dispute concerned the rate of the premium to be paid by the applicant. The applicant continued to pay a premium at a rate of 6.5%, which was determined for the line of business code for “All works performed on planes (including air clubs)”, instead of a premium at a rate of 2%, which was determined for the line of business code for “Airline passenger transportation”.

In view of the fact that the hazard class and degree of the applicant’s workplace fell, without any hesitation, within the scope of the line of business code for “Airline passenger transportation” during the period of the New Tariff as in force as of 1 October 2008, it is obvious that the collected part of the short-term insurance branches premium exceeding the rate of 2%, which was determined for the applicant’s line of business code, lacked legal basis.

In these circumstances, it has been concluded that the interference with the applicant’s right to property as a result of premium accrual did not have a legal basis as regards the part exceeding the statutory rate. Accordingly, it has been considered that there is no need to assess whether the interference pursued a legitimate aim or was proportionate.

Consequently, the Court has found a violation of the right to property.

2. Alleged Violation of the Right to an Effective Remedy

It has been established that there was an overcollection from the applicant of short-term insurance premiums without any legal basis. In this case, the first issue to be examined by the Court as regards the right to an effective remedy is whether there was an effective legal remedy whereby the applicant could obtain redress for its damage.

In the present case, the Labour Court dismissed the action brought by the applicant although it had examined the substance of the dispute. Regard being had to the fact that the Labour Court examined the substance of the request for refund, it has been considered that in the present application there is no reason to question the availability of a legal mechanism for the refund of erroneously collected premiums.

The second issue to be examined by the Court is whether this remedy, which is established to be effective in theory, was available in practice in the applicant’s case. It appears that the Labour Court dismissed the action, holding that there was no fault on the part of the administration in the overcollection of the premiums. Referring to Provisional Article 1 (2) of the Decree of the Council of Ministers dated 22 September 2008, the Labour Court emphasised that the employers were obliged to make a declaration electronically or in hard copy about their line of business codes and that the applicant had failed to fulfil the obligation in question. The Labour Court also pointed to the fact that pursuant to the relevant provision of the New Tariff, the SGK was not obliged to make a notification and concluded that the overcollection of the premiums had been caused as a result of the conduct of the applicant who had failed to fulfil its obligation to make a declaration and that the administration thus had no responsibility in this regard.

The applicant’s failure to submit a request for its line of business code to be brought in conformity with the New Tariff following its entry into force may be considered as an omission and fault on the part of the applicant. However, it cannot be understood how the applicant’s failure to fulfil its responsibility to submit a request for its line of business code to be brought in conformity with the New Tariff could be linked to the refusal to refund the overcollected premiums. The applicant’s failure to fulfil the responsibilities laid on it so that its line of business code could be brought in conformity with the New Tariff does not eliminate the reality that there was an overcollection of the premiums. Although the applicant’s failure to fulfil its responsibilities may be taken into consideration in the assessment of its requests concerning the interest, this does not eliminate the principal receivable. In other words, such failure does not release the administration from its obligation to refund.

On the other hand, the administration has an obligation to act in compliance with the principle of good governance. The principle of good governance requires that where an issue in the general interest is at stake, the public authorities must act in good time and in an appropriate and above all consistent manner.

In the present case, it is clear that there was an erroneous premium accrual, regardless of the responsible party. The administration was obliged to correct such error once it became aware of it. The refusal to refund the premiums, which were clearly overcollected erroneously, due to the error resulting from the applicant’s conduct is not an act expected from the administration governed by the law. In a State of law, it cannot be considered that the administration refuses to refund an amount which was clearly collected unfairly. As mentioned previously, the applicant’s fault does not eliminate its right to file a request for refund. The constitutional guarantees of the right to property require the administration to refund the relevant amount. Moreover, it is obvious that whether there was a fault on the part of the applicant will be taken into account if the applicant claims interest.

In these circumstances, the Labour Court’s interpretation that the applicant’s fault released the administration from its obligation to refund is not considered reasonable, and the availability of a remedy to request refund was thus rendered meaningless. Due to such interpretation of the Labour Court, the legal remedy, which had been established to be effective in theory, lost its capacity to offer any prospect of success in the present case.

Consequently, the Court has found a violation of the right to an effective remedy in conjunction with the right to property.