When are such acts ethical? When they are not?
When are such acts ethical? When are they not?
Which of 1 and 2 is correct? Or maybe both incorrect?
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The rule is very simple. In English, whenever a sentence begins with a question word (those are words like when, what, why, where, who and so on and so forth), the auxiliary verb (sometimes called helping verb for simplicity's sake) or different forms of the verbs to be or to have must necessarily follow the question word. It can't happen any other way. That's just how it works in English. Not observing this rule means that you will end up with wrong grammar. Therefore, it is correct to say:
When does the show begin?
While it's not correct to say:
When the show begins?
That's why of the two sentences that you posted only sentence #2 is correct: When are they not? However, note that we are talking about complete sentences here, not clauses situated somewhere in the middle or at the end of bigger sentences. If the expression in question was a clause that was part of a bigger sentence, this rule would no longer apply. On the contrary, the situation would be the exact opposite:
Did he tell you when the show begins?