The Constitutional Court Annuls The Core Provision Of The Law On The Protection Of The Value Of Turkish Currency

The Constitutional Court has delivered its decision dated 17 June 2025 (File No. 2024/193, Decision No. 2025/136), which was published in the Official Gazette No. 33048 on 15 October 2025.

1. Provision Subject to the Challenge

The 13th Chamber of the Council of State (Danıştay) referred the matter to the Constitutional Court, arguing that Article 1 of Law No. 1567 of 20 February 1930 on the Protection of the Value of Turkish Currency (the “Law”) was unconstitutional.

In essence, Article 1 of the Law conferred upon the President an authority to adopt decisions – including regulatory and restrictive measures – in relation to foreign exchange transactions, cash, precious metals and precious stones, articles manufactured from such metals and stones, and similar assets, as well as the export and import thereof, and more generally for the protection of the value of the Turkish currency.

2. Subject Matter of the Case and Procedural Background

The constitutional review arose incidentally in the course of administrative proceedings pending before the 13th Chamber of the Council of State.

In that underlying case, the claimant – an authorised intermediary institution – sought (i) the annulment of the administrative act revoking its operating licence; and (ii) the annulment of Article 21(1) of the “Regulation on the Operating Principles of Intermediary Institutions of the Precious Metals Exchange and on the Incorporation of Precious Metal Brokerage Institutions”, which had been published in the Official Gazette No. 26528 dated 21 May 2007.

The claimant argued, in summary, that the withdrawal of an operating licence is an extremely severe administrative sanction, and that the legal basis for such a sanction must be clearly and foreseeably set out in primary legislation. It submitted that, instead, the administration was purporting to found such sanctions entirely on secondary legislation (i.e. regulatory instruments), thereby breaching (i) legal certainty, (ii) the principle of foreseeability, and (iii) the requirement that any interference with fundamental rights be “prescribed by law”.

Against that background, the Council of State formed the view that Article 1 of Law No. 1567 was unconstitutional and therefore applied to the Constitutional Court by way of concrete norm review.

3. The Constitutional Court’s Assessment

By a majority, the Constitutional Court held that:

• The Law delegated to the President exceptionally broad powers.
• Decisions adopted pursuant to those powers enter into force on the day following their publication in the Official Gazette.
• Breach of those decisions may give rise to heavy administrative sanctions, including administrative fines and even revocation of operating licences.

Taking these elements together, the Court considered that the power granted under Article 1 in practice establishes a directly binding and prescriptive normative framework for economic actors.

The Court further reasoned that the Law does not lay down any substantive principles, criteria or limits, beyond a highly general and abstract policy objective described as “the protection of the value of the Turkish currency”. In the Court’s view, such an open-ended delegation effectively leaves the administration with unfettered discretion in an area that directly concerns constitutional rights and freedoms, notably the right to property, the freedom to conduct a business, and the freedom of contract.

On that basis, the Court concluded that the relevant delegation of power was incompatible with the principles of legal certainty and foreseeability and therefore unconstitutional. Consequently, the Court annulled Article 1 of the Law by majority vote.

In the dissenting opinion, it was argued that:

• the authority granted to the President is, in fact, purpose-bound and limited by the overall framework of the Law;
• the foreign exchange regime is a highly technical field which requires the executive to be able to intervene swiftly;
• it would be neither practical nor appropriate for Parliament to regulate this field in exhaustive detail at statutory level; and
• the requirement that Presidential decisions be published in the Official Gazette secures transparency, foreseeability and legal certainty.

4. Outcome of the Decision

As a result of the majority decision to annul Article 1 of the Law, the Constitutional Court also annulled Article 2 and Additional Article 7 of the same Law, on the ground that these provisions could no longer be applied in the absence of Article 1.

The Court determined that the immediate annulment of these provisions would risk causing prejudice to the public interest. It therefore ruled that the annulment would take effect nine months after the publication of the decision in the Official Gazette. Accordingly, the relevant provisions will formally remain in force until 15 July 2026.

• Likely Effects and Practical Implications

For many years, Law No. 1567 has operated as the framework statute for Türkiye’s foreign exchange regime. On the basis of this Law, the executive branch has been able to issue binding decisions in relation to (among other things):

• foreign currency transactions,
• capital movements,
• trade in precious metals, and
• circulation and use of payment instruments.

Those executive decisions have had a direct and immediate impact on financial institutions, intermediary institutions, the jewellery and precious metals sectors, and even exporters and importers.

Following the Constitutional Court’s ruling, this field can no longer be treated as one which may be left almost entirely to executive discretion. It will now fall to the Grand National Assembly of Turkey (the Turkish Parliament) to enact fresh primary legislation setting out:

• the fundamental principles of the regime,
• the boundaries of any delegated executive powers,
• the conditions under which such powers may be exercised, and
• a clear and foreseeable correspondence between specific conduct and specific sanctions.

By deferring the effective date of annulment by nine months, the Court has effectively afforded Parliament a legislative window in which to introduce such a new statutory framework.

If Parliament enacts new legislation before 15 July 2026, that legislation will define the new architecture of the foreign exchange / precious metals regulatory regime.

If, however, Parliament does not legislate within that period, significant legal uncertainty will arise in respect of:

• secondary legislation (regulations, communiqués, etc.) that was issued on the basis of the annulled provisions of Law No. 1567; and
• administrative measures (including administrative fines and, critically, licence withdrawals) that the administration might seek to take by reference to those secondary instruments after the annulment takes effect.

In our view, once the annulment becomes effective, the administration should no longer rely on secondary legislation whose sole statutory basis has been struck down. In practical terms, either (i) such secondary instruments should be expressly repealed by the administration, or (ii) they should be treated as having lapsed automatically for want of a lawful enabling provision.

Accordingly, in the absence of fresh primary legislation after 15 July 2026, any new administrative act (for example, an administrative fine or a licence revocation) purportedly based on those secondary instruments is likely to be vulnerable to challenge before the administrative courts by way of an action for annulment.