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Legal Alerts

11/05/2020

COVID-19: Shopping Malls Reopen with Suggested Operating Restrictions

Legal Alerts
Real Estate
General

Recent Development

In line with the Ministry of Health’s normalization plan announced last week, shopping malls will reopen on May 11, 2020. The Ministry of Health issued measures that shopping malls must undertake for their reopening and operation, but these measures have not been published in the Official Gazette. At this moment, we consider the announced measures as suggestions.

Shopping malls and their tenants must meet these suggestions for the good of regulatory compliance and public health.
No regulation had passed regarding the closure of shopping malls because of the COVID-19 pandemic, except several units in the shopping malls (i.e., restaurants, theatres, and playgrounds). Shopping mall operators/investors and retailers decided to suspend their activities at their own initiative for the sake of public health and due to some retailers’ tendency for the closure of their stores. Tenants were divided in their opinions; some wanted to open their shops and operate despite the pandemic, while others wanted to exercise caution and close their shops until the situation stabilized.
Shopping malls are important to Turkey’s economy, greatly impacting employment, supply chain and consumption in Turkey. Consequently, shopping malls were prioritized in the normalization plan. It is vital for malls and retailers to follow the ministerial suggestions to ensure public health, but these suggestions will also have an effect on the contracts between malls and retailers. Malls and retailers must continue to fulfill their obligations of “keeping the leased property available for use” or “keep the store open during working hours”. Failure or deficiency in taking the necessary precautions may further lead to loss of reputation.

Compliance with the suggestions comes with a price for the mall operators/investors. One of the legal and economic considerations that must be addressed in the upcoming days is to determine what portion of these costs malls can request from their tenants. The retailer associations’ requests a grace period for lease and common area expenses create additional costs for malls. A full account of the associated costs could help parties review their expenses and settle these matters.

Some tenants may also ask changes to their lease contracts, considering certain measures like the limited number of customers in stores, hygiene measures related to the clothing and cosmetics shops, and the prohibition of tables and chairs in food courts.

Although malls and retailers have a symbiotic relationship and are therefore usually capable of finding solutions to their problems, when things go south, litigation might be inevitable. Litigation could potentially harm the relationship between the parties and often take years. A cost and time effective alternative to litigation is arbitration. Malls and retailers can consider the inclusion of arbitration clauses in their agreements to resolve disputes with the Istanbul Arbitration Center (ISTAC).

In addition to the relationship between malls and shops, contracts related to third party services such as security, cleaning and maintenance should be evaluated in light of the new measures.

What are the suggested measures? 

1. Measures for Shopping Malls

(a) Measures related to entrances

  • Placing informative signs in shopping malls about COVID-19, as well as video and audio announcements about the rules in place;
  • Placing hand sanitizers at entrances and common areas;
  • Turning off air curtains at entrances;
  • Organizing entrances and exits so that customers do not physically come into contact with one another;
  • Placing one-way signs on the floors indicating the entrances and exits;
  • In areas where customers might have difficulty distancing, such as checkout lines, tape signs on the floor every one meter to indicate how far customers should stand from one another;
  • Increasing the number of entrances;
  • Controlling entrances to shopping malls by allowing in only the same number of people exiting;
  • Taking temperatures at entrances and turning away customers with temperatures over 38°C, and directing these customers to health services;
  • Making sure that guests enter the mall in order; and
  • Issuing announcements or video broadcasts informing customers to not shop in groups or to stay in the malls for more than three hours.

(b) Measures related to common spaces

  • Prohibiting the use of the tables located in food courts;
  • Prohibiting collective activities and promotion; the use of rest areas, playgrounds, cinemas, mosques, car wash stations, and valet services; eating in common areas; the use of wheelchairs; the use of smoking areas; and the use of baby high chairs;
  • Reducing the elevator capacity by 1/3; and
  • Limiting the number of people in the shopping malls to one person per 10 square meters.

(c) Hygiene Measures in Shopping Malls

  • Disinfecting the stairs, common area door handles, handrails and elevator buttons at least three times a day;
  • Avoiding disinfection tunnel applications;
  • Placing informative signs about washing hands and mask use in the restrooms;
  • Providing single use towels and liquid soap in the restrooms;
  • Providing restroom faucets and soap dispensers with sensors, if possible;
  • Prohibiting opening and closing of doors manually; and
  • Using 1/10 Sodium Hypochlorite Cas No. 7681-52-9 in the cleaning waters when cleaning and disinfecting the restrooms.

(d) Measures Related to Air Conditioning and Ventilation

  • Providing effective ventilation (the suggestions do not provide a definition of “effective ventilation”, but there may be an argument that this criterion is met if the following points are met);
  • Regular filtering and testing of the ventilation system;
  • Ensuring the personnel performing filter replacements use N95 or FFFP2 masks, gloves and face shield;
  • Disposing of removed filters in double bags one within the other;
  • Increasing the frequency of cleaning air handling units;
  • Prohibiting the use of air conditioning systems other than central ventilation;
  • Providing ventilation 24/7;
  • Preventing individuals from walking or passing in areas where dirty air is exhausted; and
  • Ensuring personnel disinfect themselves after cleaning frequently used areas with soap and water.
  1. Measures for Retailers
  • Hanging posters related to COVID-19 measures in workplaces;
  • Providing hand disinfectant in the workplace, checkouts and exits;
  • Ensuring their staff utilize masks;
  • Installing preventative measures, such as red tape, plastic cone, in front of the store entrances to prevent crowds in the workplace;
  • Ensure the presence of maximum one person per 8 square meters, including personnel (e.g. if there are two employees in a 32 square meter store, only two customers can be inside the store at the same time);
  • Taking social distance measures inside and outside of the workplace (store entrance) and placing signs on the floors with at least one meter distance;
  • Ensuring the customers use the changing rooms as quickly as possible;
  • Guiding customers that they do not use changing rooms more than 10 minutes each and they do not remove their masks in the changing rooms; and ensuring that changing rooms are ventilated after each customer;
  • Ventilating the changing rooms by leaving the doors open when not in use;
  • In stores with more than two changing rooms, ensuring that customers alternate the changing room use (having customers use changing rooms numbers 1,3,5, then the next round of customers use changing rooms numbers 2,4,6);
  • Refrain from applying ultraviolet rays that are harmful to human health to products;
  • Prohibiting the trial of cosmetic products and perfumes;
  • Encouraging contactless payment methods and avoiding cash;
  • Cleaning the workplace daily;
  • Disinfecting frequently used areas after cleaning them with soap and water; and
  • Disinfecting cash register and table with disinfectants containing at least 70% alcohol.
  1. Measures for Shopping Malls and Retailer Employees
  • Providing hand sanitizer in the incoming goods area;
  • Reducing the number of employees in the goods acceptance department;
  • Prohibiting the spraying of disinfectants;
  • Complying with the measures for barbershops, hairdressers and beauty salons;
  • Refraining from employing personnel with COVID-19 symptoms, diagnosis or contact for at least 14 days after diagnosis;
  • Isolating infected staff and directing them to health services;
  • Minimizing the number of staff members working at the same time;
  • Providing personnel masks and mask replacements when these become damp or dirty;
  • Disinfecting hands while wearing new masks;
  • Mall management must provide meals to employees;
  • Prohibit eating in groups;
  • Establishing a glass wall for security personnel, and if this is not possible, ensure security personnel comply with social distance requirements;
  • Ensuring security personnel use personal protective equipment if in close contact (such as conducting body searches);
  • Not requiring employees use gloves if there is no possibility of contamination with body fluids;
  • Providing trainings on the use of personal protective equipment and ensuring the uninterrupted use of these equipment;
  • Ensuring employees throw gloves and masks  in double bags one within the other while disposing of them, and disinfect their face shields and goggles with at least 70% alcohol; and
  • Ensuring that the cleaning staff use medical masks and gloves.

We compiled a table with common legal questions regarding the measures and divided them into their related practice areas.

Matters that must be assessed based on the dynamics of each lease contract

  • Which measures-related costs should the landlord pay? How should the common area expenses be calculated and managed?
  • For shops already facing difficulties in paying rent, how should they terminate their contracts?
  • How can a retailer terminate its store lease contract in the cheapest and easiest way?
  • What measures-related costs might be categorized as common area costs that retailers must pay?
  • Should the fidelity principle be reassessed for café, restaurant, playground and fitness centers lease contracts, considering the announced measures?
  • What are the contractual clauses or legal instruments applicable for shopping malls or retailers refusing to reopen?
  • What claims can be directed to shopping malls or retailers who fail to take the measures? How can the parties conduct an analysis or take actions on failing to take measures?
  • In terms of project financing, how will loan contracts of shopping malls affect negotiations with tenants? Are there any clauses that may affect such evaluation in the financing contracts?
  • Considering the measures, should the contractor system be re-evaluated or the contract modified? Is termination of the contract an alternative?
     (Lease Law)
Questions related to labor law:

  • What is the effect of the new shifts and employee number restrictions on the employment relationship?
  • What are the steps that may be taken regarding personnel that do not comply with the measures?
  • Is it possible to change employees’ workplaces due to the restriction on personnel number?
     (Labor Law)
Questions related to data privacy law:

  • Is it possible to measure the temperatures of visitors at the entrances of the mall or individual stores? Can the temperature data records be retained? Should explicit consents be collected?
  • Can malls conduct ID checks at the entrance, considering the nationwide stay-at-home curfews for individuals under 25 and above 65 years of age? Can the  copies of the ID check records be obtained?
  • Considering directing the potentially infected persons to the health organizations, should the health data be recorded and processed? Is there any restriction regarding the cross-border transfer of this personal data?
  • How should customers be informed about their rights under the data protection law in relation to what type and how their data is collected when entering malls?
  • Which methods are available to obtain explicit consent from customers?
     (Data Protection Law)
Questions related to dispute resolution:

  • What can retailers do to prepare for potential litigation concerning the adoption of the measures? What claims can shopping malls use in litigation? What is the role of parties’ failure to comply with the measures in such processes?
  • What are the advantages of arbitration since courts proceedings are suspended?
     (Dispute Resolution)

Conclusion

The public plays the most important role in compliance with the foregoing measures. Both shopping malls and retailers stated that these measures will only work if the public complies with them.

Since the suggested measures were only published by the press and there is no official governmental publication, parties who fail to comply with the measures are not subject to an enforcement action. However, we believe that all parties will follow the measures in order to protect public health.

The authorities tend to take swift actions for matters related to public safety and exercise their discretion power beyond their authorities; thus shopping malls, retailers and individuals may be subject to administrative fines if they fail to comply. Further, if these measures are published in the official city health councils’ orders or the Ministries of Interior or Health’s circulars,  and thus becoming legislation, those that fail to comply with the measures might be subject to administrative fines, license cancellations and similar actions.

For instance, the General Directorate of the Izmir Municipal Police sent letters to malls with the subject matter “Rules that reopened malls must follow” dated May 8, 2020. The letter includes measures similar to those indicated by the Ministry of Health. The letter states that malls that fail to follow the rules and comply with the measures may receive administrative fines pursuant to Article 282 of the Public Health Law No. 1593 for between TRY 289 and 3,180 (approx. USD 40 – USD 450), and Article 32 of the Misdemeanor Law No. 5326 for TRY 392 (approx. USD 30). In addition to the foregoing, the letter states that regarding acts constituting crimes under the Municipality Law No. 5393, the individuals involved may be subject to the criminal charges set forth under Article 195 of the Criminal Law resulting in imprisonment from two months to two years for individuals. Whether the respective administrative bodies have authority to impose the foregoing measures stated in the municipality’s letter is an ongoing contentious issue.

Please stay up to date with further developments through the Esin Attorney Partnership Coronavirus Helpdesk.