Category: Turkiye

As a result of the increasing global trade, the international debt collection has become a more important issue nowadays. Given that debt collection proceedings vary across countries, this article explains the costs of initiating execution proceedings in Turkey.

As explained in our article titled “How Can a Foreign Company/Individual Collect Its Due Receivables in Turkey?”, under Turkish law, there are various forms of execution proceedings. Yet in every type, foreigners must pay a security deposit corresponding to 20% of the total debt to initiate a legal action in Turkey. Nevertheless, if there is reciprocity between the nation of the debtor and Turkey, the creditor will be exempted from this requirement. The principle of reciprocity may be achieved through international conventions, laws, or actions, e.g., the Hague Convention dated 1961.

I.                If the receivable is secured with pledge:

In cases where the receivable is secured with pledge, the creditor is obliged to foreclose the pledge via applying to enforcement offices before initiating a debt collection proceeding.

The creditor can pursue the enforcement with a judgement [see II.A. below regarding the costs] or enforcement without judgement [see II.B. below regarding the costs] depending on whether the pledge is based on a court decision or not. Hence the cost of the foreclosure will depend on the enforcement proceeding that is followed, as explained below. In both cases, other costs arising from the sale of the pledge will be deducted from sales revenues.

II.                If the receivable is not secured with pledge:

A. Enforcement of a Court Decision / With a Judgement:

• Application fee [≌ TRY 60 (approx. EUR 6)]

• Other costs [g., notice fee]

• [If so] Costs arising from being represented with an attorney [except the attorney’s fee and cost for issuance of power of attorney] including the fee of power of attorney [≌ TRY 25 (approx. EUR 3)]

B. Enforcement Without Judgement / Via Enforcement Offices:

• Application fee [≌ TRY 60 (approx. EUR 6)]

• Other costs [g., notice fee]

• [If so] Costs arising from being represented with an attorney [except the attorney’s fee and costs for issuance of power of attorney] including the fee of power of attorney [≌ TRY 25 (approx. EUR 3)]

• Advance fee [0,5% of the total amount to be collected] As regards the debts in foreign currencies, the advance fee will be calculated as per the TRY equivalence of the debt based on the exchange rate on the date of initiation of the enforcement

Accordingly, for instance, the cost of collecting a debt of EUR 100,000.00 on April 2021 will be as follows in each proceeding:

• Enforcement with a judgement: [≌ TRY 100 (approx. EUR 10)]

• Enforcement without judgement: [≌ TRY 5,100.00 (approx. EUR 510)]

By Baris Ulker, Senior Associate, Guleryuz & Partners

Egemenoglu has advised Escar Turizm Tasimacilik Ticaret A.S. on the TRY 165 million initial public offering of its shares on Borsa Istanbul. 

Escar is a Turkish provider of fleet rental and leasing, as well as vehicle retail services. 

According to Egemenoglu, the nominal value of the shares is TRY 11 million, with the issued capital ratio following the IPO estimated at 20.26%. In addition, according to the firm, while the nominal value of one share was TRY 1, the selling price was set at TRY 15, thus the total initial public offering size is estimated at TRY 165 million. Furthermore, according to Egemenoglu, “a total of 29,810 investors, including 29,678 domestic natural and legal person investors, 63 foreign natural and legal person investors, 67 domestic institutional investors, and 2 foreign institutional investors, purchased shares” in Escar’s IPO.

Egemenoglu’s team consisted of Senior Associates Efra Aydin Can and Ayse Derya Elcin.

Release is one of the primary resolutions the shareholders can adopt regarding board of directors [“Board”] members. With release, the general assembly approves the transactions carried out by the Board members during the relevant fiscal year in terms of their economic and legal consequences. Hence, the corporation loses the right of action upon release. As such, the release resolution is considered to be a “negative acknowledgement of debt” and therefore removes any debt.

Nevertheless, release does not cover all actions taken and transactions performed by Board members. In this respect, Board members’ liability persists in matters outside the scope of the release. Moreover, a valid release resolution may affect the person’s capacity to sue, and it may also alter the statute of limitations. Therefore, practitioners frequently experience hesitations regarding the plaintiff’s capacity to sue or the applicable statute of limitations when filing a liability lawsuit.

In this article, we discuss the procedures, consequences, and nullification of a release resolution as well as its effects on a possible liability case.

I.                 Release Procedures

A. Adoption of a Resolution in the General Assembly: Explicit Release

According to the Regulation on the Procedures and Principles of the General Assembly Meetings of Joint Stock Corporations and the Ministry Representatives Attending These Meetings, release of the Board members is a mandatory agenda item in ordinary meetings of the general assembly of shareholders. Board members can also be released in an extraordinary meeting of the general assembly.

When the general assembly adopts a resolution to release the Board members, each Board members is individually released, rather than the Board itself as an institution. While most general assembly agendas contain “release of the Board” as an item, in fact, the Board members are being released individually. Therefore, the general assembly may choose to release some Board members while excluding others from the release resolution, and also may decide on a partial release, either in terms of a specific time period or particular transactions. However, general release resolutions are most common in practice.

There is no special statutory quorum for release resolutions. Hence, unless the articles of association necessitates an aggravated quorum, a resolution for release can be adopted by simple majority in a general assembly where shareholders holding at least one fourth of the total shares are present or represented through proxy.

B.     Approval of the Balance Sheet: Implicit Release

While Board members may be explicitly released as explained above, they may also implicitly be released [TCC Art. 424]. Accordingly, Board members are indirectly released when the general assembly approves the balance sheet for the respective fiscal year. However, the general assembly may also approve the balance sheet without releasing the Board members.

C.     Board Members’ Voting Prohibition in Release Resolution

Board members that are also shareholders cannot participate in voting regarding release [TCC Art. 436/2]. In these cases, shareholder’s voting right is suspended due to the conflict of interest. Likewise, Board members also cannot participate in voting of release of other Board members as they have a shared interest. This may sometimes render the adoption of a release resolution impossible. For example, in a corporation with a sole shareholder, if the shareholder is also a Board member, they cannot be released since they cannot partake in the voting regarding the release of the Board members.

Given that it also implicitly releases the Board members, they also cannot vote in the voting regarding the approval of balance sheets. However, if release and approval of balance sheets are separately voted or if the general assembly explicitly decides that the approval of balance sheets would not constitute an implicit release, the Board members may vote on the approval of balance sheets since it is no longer directly related to the release of Board members.

II.               Scope of the Release Resolution

Whether explicit or implicit, release is limited only to matters and transactions that the general assembly is aware of. Matters either unknown or that could not possibly be known by the general assembly are out of the scope of release resolutions. Once again, in implicit release, if the balance sheets contain records that obstruct the exposure of the current state of the company, or if some records are missing or absent, the approval of the balance sheets do not result in the release of the Board members [TCC Art. 424]. However, in such case, the balance sheets should have been faultily prepared on purpose.

III.             Can a Resolution for the Release of Board Members be Adopted Without Discussing the Financial  Statements

There are two differing opinions on the issue. Some scholars argue that since the law does not impose such a requirement, there is no connection between the discussion of the financial statements and the release resolution, while others assert the opposite––they state that there is a strong relationship between the financial statements and the release resolution, and the financial statements form the basis of this decision. In this context, financial statements must be discussed for a valid release decision.

It is noteworthy that, in its ruling in recent years, the Court of Cassation considers the discussion of the financial statements as a prerequisite for the validity of the release. [23rd Legal Division Judgment no. 2016/3941 E. 2019/183 K. dated 28.01.2019]

Indeed, financial statements including balance sheets and release are closely connected. Therefore, if the minority shareholders request for a one-month delay for the discussion of the financial statements and related topics [TCC Art. 420/1], the discussion on the release resolution should also be delayed. Otherwise, the following voting and therefore the release decision will have been taken in contempt of the law.

IV.           Can a Resolution for Release be Reversed?

TCC explicitly states that a resolution adopted for the release of the Board members cannot be reversed [TCC Art. 558/1]. As a formative right upon Board members, release resolutions come into effect when they are received by the other party and cannot be posthumously reversed. However, <especially with the specific mention in TCC Art. 558 titled “effects of release”> there is no regulation preventing a lawsuit for the nullification of the general assembly meeting in which the release resolution was adopted. Therefore, those who can file a lawsuit for the nullification of the general assembly pursuant to Art. 446 of the TCC can do so in cases where a release resolution was adopted against the law, articles of association and in particular, against goodwill within 3 [three] months following the resolution. 

V.             Effects of Release on Liability Lawsuits

Effects on the Shareholders and Creditors’ Right of Action

If Board members do not fulfil their obligations arising from the law or the articles of association, their personal liability may arise. In such cases, the Board members face the risk of liability lawsuits from the corporation, shareholders and [in case of bankruptcy] creditors. For detailed information on the legal liability of Board members and the liability lawsuit, you can refer to our article “Legal Liability of Board of Directors Members“.

Release, as a form of debt exoneration, eliminates the right of action of the joint stock corporation regarding the respective fiscal year. However, in liability lawsuits, shareholders and creditors retain their right of action -within statutory limitations- due to direct or indirect damages. This is because of the fact that the shareholders and creditors’ rights of action are entirely independent of and does not derive from the corporation’s right of action. There is especially no doubt that the creditors’ rights of action will be retained following release.

The shareholders’ right of action, on the other hand, is not affected in terms of direct damages since there is no connection between release within the framework of corporate activities and the damage directly incurred by the shareholder. In terms of indirect damages, the release resolution removes the right of action of the shareholders who voted for the release and who acquired the share knowing the release resolution [TCC Art. 558/2]. Undoubtedly, a shareholder who votes in favor of release and proceeds to file a liability lawsuit against the Board members will have acted in bad faith. However, in cases where the shareholder is unable to manifest their will, they can exercise their right of action upon proving this inability. To sum up, the rights of action for shareholders who vote against the release resolution or do not attend the meeting are retained. That being said, in these cases, attention should be paid to the statute of limitations explained below.

By M. Tarik Guleryuz, Partner, and Zahide Altunbas Sancak, Partner, Guleryuz & Partners

Paksoy and SZA Schilling, Zutt & Anschutz have advised Germany’s DZ Bank AG on providing EUR 20 million in financing to Galata Wind Enerji for the development of the Taspinar Wind Energy Power Plant. Cetinkaya Taktak Semiz Baltali Yorukoglu advised the borrower.

According to SZA, the financing will be used for the purchase and installation of fourteen N149/4.0-4.5 Megawatt Nordex wind turbine generators for the plant located in Bursa province.

According to Paksoy, the Taspinar Plant is the largest power plant developed by Borsa Istanbul-listed Galata Wind.

Paksoy’s team was led by Partner Sera Somay and Senior Associate Soner Dagli.

The SZA Schilling, Zutt & Anschutz team was led by Partner Dietrich Stiller.

CCAO’s team was led by Partner Candemir Baltali and included Associates Ceren Yapici and Elif Naz Uzman.

On July 14, 2021, the Law No.7332 Amending the Animal Protection Law and Turkish Penal Law [“Amendment Law”] was published in the Official Gazette, and accordingly, the following significant amendments have been introduced to the Animal Protection Law No. 5199 [“APL”].

The most crucial amendment brought by the Amendment Law, which has been a matter of debate and expectation of public for a long time, is to qualify animals as “living beings”, rather than as “goods” as it was in the former regulation, and to adopt the sanctions accordingly.

With the Amendment, new crimes have been defined with regard to unlawful acts committed against animals, the scope of the pre-existing penal regulations and sanctions have been modified, and accordingly, prison sentence along with judicial fines have been stipulated as sanctions to these crimes, and also, the amounts of administrative fines set out in the current legislation have been increased. As such, killing an animal in danger of extinction, destroying an animal species, deliberately killing a pet or an animal, sexually assaulting or raping animals, torturing or treating a pet or an animal cruelly and making animals fight are now punishable by imprisonment. Moreover, committing these crimes against more than one animal at the same time or commitment of these by specialists such as veterinarians are accepted as aggravating circumstances. 

Nevertheless, to carry out an investigation on aforementioned crimes, including those committed by the owner, requires written application to the public prosecutor’s office by the provincial or district directorates of the Ministry of Agriculture and Forestry [the “Ministry”]. In this respect, if this condition is not fulfilled, it will not be possible for the prosecutor’s office to commence an investigation ex officio or upon a complaint.

The other important changes brought by the Amendment Law are as follows:

• Local administrations have been granted the authority and duty to establish animal hospitals if needed.
• Cat and dog owners should now register their animals through digital identification methods.
• Pet shops are no longer allowed to sell cats and dogs. These animals can only be sold in pet production areas permitted by the Ministry.
• Individuals and legal entities have been authorized to establish natural life parks that are suitable for the habitat and free movement of animals.

By M. Tarik Guleryuz, Partner, and Baris Ulker, Senior Associate, Guleryuz & Partners

With entry into force of the “Law on the Amendment of the Code of Criminal Procedure and Some Other Codes” [“Amendment Law“] published in the Official Gazette dated July 14, 2021, the terms in the Administrative Procedural Law No. 2577 [“APL”] regulating the silence of the administration against the applications filed are shortened by half. In addition, some crucial changes were introduced to the Turkish Penal Code No. 5237 [“TPC“] and the Criminal Procedural Law No. 5271.

• Article 10 of the APL grants the right to apply to the administrative authorities for an administrative act or action to be carried out prior to seeking judicial remedy before administrative courts. In order to prevent a possible forfeiture in the event that the administration leaves this application unanswered, the inaction of the administration is deemed as the rejection of the application, after a certain period of time. This period, which was regulated as 60 [sixty] days in the APL before the Amendment Law, is now reduced to 30 [thirty] days. In the current situation, an administrative lawsuit can be filed upon the expiry of the 30-day period following the day of application to the administration.
• The status of the applications that have already been filed is also explicitly regulated with a temporary article added to the APL. Accordingly, the 60-day period will be valid for applications made before the effective date of the Amendment Law [i.e., 14.7.2021].
• Pursuant to Article 10 of the APL, the state of “giving an imprecise answer” upon the application filed to the administration is also regulated. As per the previous version of the article, if the applicant preferred to wait for a definitive answer from the relevant administration, the period to file a lawsuit was being suspended for 6 [six] months from the date of the imprecise answer. Now with the Amendment Law, this 6-month waiting period, during which the term of litigation will not run, is reduced to 4 [four] months.
• Another important regulation brought by the Amendment Law is related to the TPC. Accordingly, committing the crimes of willful murder, willful injury, wyte, deprivation of liberty, not only against the current spouse, but also against the divorced spouse, are now included within the scope of aggravating cases, thus require higher punishment.
• The foregoing amendments will be effective as of July 14, 2021, which is the date of publication in the Official Gazette.

By M. Tarik Guleryuz, Partner, and I.Selin Nacar, Associate, Guleryuz & Partners

Egemenoglu has advised the sole shareholder of Esitas Elektrik San. Ve Tic. A.S. on the sale of the entire share capital of Esitas Elektrik to Arteche Instrument Transformers S.L. Herguner Bilgen Ozeke reportedly advised the buyer.

According to Egemenoglu, Esitas Elektrik is the parent company of the Esitas Group, which sells low- and medium-voltage instrument transformers, low- and medium-voltage insulators, and LPCTs. Arteche is a Spanish multinational corporation with its headquarters located in Mungia, Spain. It develops equipment and solutions for the electric power industry, including generation, transmission, and distribution, with the company employing almost 2,400 people on 4 continents.

The Egemenoglu team consisted of Senior Associate Efra Aydin Can and Associates Erman Eralp and Buse Yonat.

With the most recent technological developments, Artificial Intelligence [“AI”] and related technologies are being deployed by governments and businesses alike in a wide spectrum of sectors. With applications of AI increasing exponentially in every possible aspect of society, there is no doubt an accompanying aspect of risk, which is nearly impossible to measure. In this article, we try to focus on the possible legal ramifications and liability risks associated with AI decision-making.

While there is no widespread agreement on a set definition for AI, it can most simply be defined as “the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings”. Today, AI programs are utilised in a plethora of areas in varying degrees. Given enough data and an accurate initial program, an AI can be used to identify faces, predict future criminality, or carry out seemingly more innocuous tasks like driving a car or providing the results for your internet search.

Risks Associated with AI Usage and Liability

Given its widespread usage in nearly every aspect of our society, AI, especially data-driven decision-making and profiling algorithms, poses a real and serious risk against the exercise of legally recognised rights. Hostile and malicious applications of AI technologies raise concerns of freedom of expression, right to privacy and prohibition of discrimination, while unintentional errors in daily AI decisions may cause serious bodily or monetary harm in cases like autonomous vehicles and medical devices.

Taking into account that AI decisions are not ones made in an informational vacuum, but ones that exist in relation with many other actual and technological phenomena, the question of legal liability for AI actions becomes increasingly difficult to answer. In the world of AI and big data, there is an endless stream of data exchange and an infinitely complex chain of relationships between machines and humans, which in turn makes it that much harder to identify the responsible party for any given risk that realized. While it is sure that specific regulation about AI usage is to be made in the close future, the essential ethical and legal questions on our method of liability allocation should be asked and answered before taking legislative action.

As scholar Peter Cane noted: 

“Responsibility is not just a function of the quality of will manifested in conduct, nor the quality of that conduct. It is also concerned with the interest we all share in security of person and property, and with the way resources and risks are distributed in society. Responsibility is a relational phenomenon.”

Therefore, it is impossible to answer the question of liability allocation in a straightforward and standardised way, as the answer will inevitably be linked to every separate case in hand. With this in mind, as is the case with other, more conventional, conduct that is penalised in society, it would be a mistake to expect a single method of liability allocation to apply to each and every risk associated with the usage of AI and related technologies.

Can AI Systems be Held Liable for Their Own Decisions?

The first question that comes to mind for many of us about the responsibility arising from the use of artificial intelligence technologies is whether these systems, which seem to make decisions on their own, without any human influence, should be held accountable for the consequences of their own behaviour. 

Persons that can be held legally responsible, “legal subjects”, primarily consist of natural persons as in human beings. However, as a result of legal developments since the middle-ages, some structures that are not actual people can be recognized as legal subjects. According to some scholars, it can be said that the recognition of public and private institutions as “legal entities” is one of the cornerstones of the development of European Law.

Today, all around the world, legal entities as well as natural persons are seen as legal subjects. However, these legal entities are actually the sum of people who act consciously for a certain purpose and can also explain the purposes of these actions. On the contrary, artificial intelligence systems used today generally fall under the category of “narrow artificial intelligence”, that is, they consist of systems equipped with the ability to make decisions in a very specific area. Therefore, since it is not possible to state that these systems act consciously and independently, it can be said that they can only be legal objects and not subjects. While the discussion can once again arise if and when a conscious and general artificial intelligence system is produced, today it does not seem possible to hold artificial intelligence systems responsible for their own decisions.

What is the Legal Nature of an AI?

Now we know that artificial intelligence systems cannot be held responsible for their own actions and decisions and can only qualified as legal objects, the question of who will be held liable for possible damages arises. An important aspect of the question lies on the fact that artificial intelligence systems pass through the hands of many people such as software developers, producers, and data providers before they come into use.

While seeking an answer to the question of which of these people will be held liable for possible damages, first of all, the legal nature of artificial intelligence as a legal object should be addressed, and then the responsibility should be assigned according to the conditions in which the damage occurs.

Today, while the legal nature of artificial intelligence is a point of disagreement in European Law, the dominant view is that artificial intelligence systems that are in general use are in fact a “product” offered to end users and other manufacturers. Although there are contrary opinions, artificial intelligence systems can be evaluated as a product in the context of Article 2 of the Product Liability Directive 85/374, adopted by the Council of Europe [the “Directive“] and therefore can be evaluated in the context of “product liability” according to the Directive.

Among the discussions on the applicability of the Directive to artificial intelligence, a Regulation Proposal was published by the European Union in April 2021 to regulate legislation on artificial intelligence. The Proposal regulates many problems related to artificial intelligence but does not contain any regulation on liability. Another regulation is expected to be made regarding the question liability arising from artificial intelligence and related technologies at the end of 2021 or at the beginning of 2022. 

In Turkish law, the concepts of “products” and “producers” are not fully regulated under the Turkish Code of Obligations. “Intangible goods”, which arguably include AI technologies, were first included as “goods” in an amendment to the Customer Protection Act No. 4077 and the Regulation on Liability for Damages Caused by Defective Goods in 2003. After the abolition of this law and a long period of legal gap, Product Reliability and Technical Regulations Act No. 7223 [“PLTRA”] entered into force on 12 March 2021. In this act, intangible goods and by extension AI systems were classified as “products”.

Who Can be Held Liable for AI Decisions? 

AI is classified as a product both according to the Directive and the newly adopted PLTRA in Turkish law. Therefore, liability for possible damages should be assessed in accordance with this classification.

The Directive and PLTRA are compatible in many respects. Most importantly, in both regulations, it has been stipulated that the manufacturer and the importer, along with the distributor who is secondarily responsible, will be jointly liable for the damages suffered by the user and non-user third parties, for any damage caused by a defect in the product. Another important aspect observed in both regulations is that the manufacturers, importers, and distributors are held liable on the basis of strict liability. For strict liability to arise, the manufacturer does not need to be in fault, and can be held liable regardless of their conscious decisions or their awareness of the defect.

Since the Directive and PLTRA adopt the principle of strict liability, it is sufficient to prove that the product is defective, the damage occurred and the causal link between the defect in the product and the damage in order for the manufacturer to be held responsible. In Turkish law, it is argued that the burden of proof regarding the defectiveness of the product should be interpreted as narrowly as possible. Even in decisions adopted prior to the PLTRA, the Court of Cassation ruled that, “Due to the complex nature of manufacturing, it will be impossible for the injured person to prove some issues, therefore the presumption of defect should be accepted as proof.” Therefore, the damage caused by the product constituted proof in itself that the product was defective. Especially since artificial intelligence systems consist of very complex software, algorithms and databases, it may be almost impossible for the injured person to prove that the artificial intelligence that causes the damage is defective. While the PLTRA has not yet been applied broadly due to its recency, tis line of reasoning will prove to be healthier for its application.

By Zahide Altunbas Sancak, Partner, Guleryuz & Partners

International trade has grown exponentially, and international trade undoubtedly means international debt collection. Especially, while the number of financially distressed companies is rapidly increasing due to the Covid-19 pandemic, international debt collection has become more important than ever. Debt collection proceedings are in general similar for both Turkish and foreign companies and individuals. Accordingly, this article highlights the significant points on how a foreign company or individual can collect its receivables in Turkey.

Under Turkish law, there are various forms of execution proceedings. In all methods, foreigners must pay a security deposit corresponding to 20% of the debt to initiate a legal action in Turkey. Nevertheless, if there is reciprocity between the nation of the debtor and Turkey, the creditor will not have to pay the deposit. The principle of reciprocity may be achieved through international conventions, laws, or actions, e.g. the Hague Convention dated 1961. It should be noted that further costs would accrue within the debt collection proceedings, please see our article titled “Cost of Debt Collection Proceedings in Turkey” for information on those costs.

The creditor must follow the method explained under “I.” if the receivable is secured with pledge. In other cases, the creditor can initiate the proceedings to enforcement with judgement based on a foreign court decision ratified in Turkey or a Turkish court decision, or if there is no court decision, directly apply to the enforcement offices to initiate debt collection proceedings.

I.                If the receivable is secured with pledge:

In cases where the receivable is secured with pledge, the creditor is obliged to foreclose the pledge via applying to enforcement offices before initiating a debt collection proceeding.

The foreclosure process depends on the nature of the pledged property.

1. If the pledge is on a movable property, the foreclosure proceedings can be initiated before the enforcement office against the debtor. The debtor may object to the payment order within 7 [seven] days; otherwise, s/he will have to pay the debt within15 [fifteen] days. The procedures following the debtor’s objection will be the same as the enforcement with a judgement explained under “II.A.” or enforcement without judgement explained under “II.B.”, depending on the nature of the pledge. The only exception is when the debtor does not object to the debt but to the pledge, the creditor has the right to pursue the general enforcement proceeding that is the enforcement without
2. If the pledge is on an immovable property, then the foreclosure proceedings may be initiated before the enforcement office against the debtor or the 3^rd party owner of the The debtor may object to the payment order within 7 [seven] days; otherwise, s/he will have to pay the debt within 30 [thirty] days. The procedures following the debtor’s objection will be the same as the enforcement with a judgement explained under “II.A.” or enforcement without judgement explained under “II.B.” depending on the nature of the pledge.

Notwithstanding the primary character of the foreclosure of pledge, if the receivable has arisen from a bill of exchange such as cheque, the creditor may also initiate the debt collection proceeding peculiar to bill of exchanges [without first pursuing the foreclosure of pledge]. 

II.                If the receivable is not secured with pledge:

A.     Enforcement of a Court Decision / With a Judgement:

If the relevant decision has been rendered by a foreign court, then first it will have to be ratified in Turkish courts. Please see our article titled “Enforcement of a Foreign Court Judgment in Turkey” on the enforcement of a foreign court decision in Turkey.

To collect a debt by filing a lawsuit before Turkish courts, there are two essential conditions:

• The place where the debtor carries out its transactions and activities must locate in Turkey if the debtor is a legal entity, or the place of performance should be in Turkey.
• The parties must not have chosen a jurisdiction other than 

If these two conditions are fulfilled, a foreign company or individual can file a lawsuit to collect the debt on the competent court.

In case the court renders a favorable decision for the creditor, the creditor has the right to apply before enforcement offices to execute the court decision. It is noteworthy to mention that in principle, for the execution, there is no need to wait for the decision to become final so long as the decision is rendered by a Turkish court, while the decisions of foreign courts that are ratified by Turkish courts can be executed only after they become final, i.e. when the court decision becomes uncontestable before a higher court whether upon entry of the judgment or if the debtor does not appeal to a higher court within the given period for appeal, or where available legal remedies are completely exhausted through appeals.

The enforcement office issues a payment order against the debtor upon the creditor’s enforcement request. The debtor can object to the payment order before the enforcement office only by claiming that the debt is already paid, that the payment is postponed, or that the statute of limitation is expired. The debtor is not allowed to object to the debt for any other reason.

B.     Enforcement Without Judgement / Via Enforcement Offices:

In case there is no court decision according to which the debt has become definite, the creditor can directly apply to the enforcement office for initiation of debt collection proceedings. The debtor may object to the payment order within 7 [seven] days.

If the debtor objects to the payment order, the creditor should apply to the Enforcement Court for removal of the objection within 6 [six] months so long as the creditor has a document issued by the relevant authority and containing the acknowledgement of the debt and/or the debtor’s signature. In other cases, the creditor may file a cancellation of objection lawsuit before the relevant court within 1 [one] year.

If the court renders a favorable decision for the creditor, the creditor has the right to request a compensation for denial of the debt which corresponds up to 20% of the debt amount. On the other hand, if the court renders a favorable decision for the debtor and if the creditor initiated the lawsuit in bad faith, the debtor has the right to request a compensation which corresponds up to 20% of the claim.

If the debtor does not object to the payment order and does not pay the debt within 7 [seven] days or if the debt becomes

definite after the objection proceedings explained above, the creditor may request attachment of the debtor’s assets.

Following the attachment, these assets will be sold by the enforcement office so that the debt can be paid to the creditor with the sales revenue. 

It should be noted that there are specific rules applicable if the receivable is arisen from a bill of exchange, such as cheques, bond. For instance, the objection period decreases to 5 [five] days, and the grounds for objection may differ given the nature of the bill of exchange.

By M. Tarik Guleryuz, Partner, and Baris Ulker, Senior Associate, Guleryuz & Partners

Sertac Kokenek has been promoted to Partner at Esin Attorney Partnership, Baker McKenzie’s Turkish affiliated firm.

Kokenek has been with the firm for 11 years and has been acting as the Head of the Employment practice since 2017. According to Esin, “he has been advising local and multinational clients on various matters in relation to employment advisory matters including redundancies, employee stock options, restructurings, disciplinary matters, and the termination of senior executives, in addition to employment litigation, immigration, social-security-related issues, and compliance matters.”

Kokenek previously spent over two years with Bener Law Office between 2007 and 2009. He holds an LL.M. from Cambridge University.

“Our pride in welcoming Sertac, who has started his career in our firm as a summer intern in 2003 and been with us over a decade following his LL.M. degree, now as a partner at our firm is unparalleled,” commented Managing Partner Ismail Esin.