The 11th Civil Chamber of the Court of Cassation ("CoC"), in the context of a dispute arising out of a joint film production contract signed between the parties, agreed with the first instance court's finding that, in the absence of a clear determination in the contract as to when the film will be deemed to be completed, this moment should be determined as the time when the film registration certificate is obtained, and decided that the plaintiff was entitled to claim a penalty clause due to the defendant's failure to complete the film on time.1
In the subject case, the court of first instance determined that the phrase "fully preparing the film for release" in the contract meant "obtaining the film registration certificate" and that the film registration certificate was obtained on 07.06.2013, thus, the production of the film was not completed on the promised date. Later on, CoC concluded in the same direction with the court of first instance that the film was not fully prepared for release on 31.12.2012, since the film registration certificate was obtained on 07.06.2013, and that the plaintiff was right to demand a penalty clause.
This decision can be criticized both because it is incompatible with the nature and function of the film registration system and because it may cause some problems in practice.
First of all, there is no registration requirement under Turkish copyright law for copyright ownership. The mandatory registration system regulated under Article 13 of the Law No. 5846 on Intellectual and Artistic Works ("LIAW") functions only to prevent the infringement of the rights of film producers who make the first fixation of films and phonogram producers who make the first fixation of sounds, to provide ease of proof in determining the ownership of rights, and to track the exploitation of economic rights. In other words, this system does not function for the granting copyright ownership. Similarly, in the Regulation on the Record and Registration of Intellectual and Artistic Works ("Regulation"), this system is regulated as a non-constitutive administrative registration system with secondary functions as listed in the LIAW, rather than a primary function such as granting copyright ownership. In line with this rationale, the Ministry of Culture and Tourism does not have the authority to examine and evaluate the copyrightability of the work that is subject to the registration application, and even in the cases where it is determined that the applicant of the registration certificate made false representation about the ownership of the work, there is no legal or criminal consequence other than the revocation of the registration certificate pursuant to Article 13 of the Regulation.
Therefore, it is seen that the CoC's decision attribute a primary function to the mandatory registration system in the form of determining the moment of completion of a cinematographic work, exceeding the secondary function granted by LIAW and the Regulation. In this respect, it is considered that the decision is not in compliance with the letter and spirit of LIAW and the Regulation.
Moreover, the decision may cause some uncertainties in practice. This is because the registration certificate primarily aims to facilitate the distribution of cinematographic works. However, not all cinematographic works may be distributed through conventional methods such as screening in movie theaters or distribution by cassette. Instead, some works may only be published on digital platforms. Since there is no obligation to obtain a film registration certification in those cases, uncertainties regarding the moment of completion of the film may continue. In addition, even in cases where it is decided to distribute the film subject to the contract by screening it in a movie theater, the date of the screening may depend on the completion of certain prerequisites or the passage of a certain period of time after completion, and the completion of the film may actually precede the receipt of this certificate. On the other hand, since it may take time for the application for the film registration certificate to be finalized, leaving the issue of whether the film has been completed during this period controversial may cause problems in terms of dealing with the commercial activities regarding the marketing and promotion of the film in the intervening period or the validity of the transfers of rights to be made with respect to the work.
Therefore, when drafting film production contracts, the conditions regarding the moment of completion and the deemed completion of the film should be regulated in detail and care should be taken not to create a gap in the contract in this respect.
However, in cases where there is still a gap in the contract, we believe that it would be more appropriate to fill this gap in line with the principle of complementary interpretation in the light of the common hypothetical will of the parties and with the substitute law rules in the Turkish Code of Obligations bearing in mind that the "completion of the work" is indeed a material fact rather than a legal question and that film production contracts are mixed-structure contracts in which the elements of the work contract regulated under Art. 470 et seq. of the Turkish Code of Obligations predominate.
Footnote
1 The 11th Civil Chamber of the Court of Cassation decision numbered E. 2021/258 K. 2022/6133 and dated 21.09.2022
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