There is no central registration system in Turkey where the assets of an individual or legal entity are recorded, so it is necessary to resort to publicly available information/data when attempting to build an understanding of the assets owned by a debtor.
The initial publicly available information that proves to be useful where the debtor is a legal entity is the trade registry records kept by the Chambers of Commerce. These records will reveal if there are registered encumbrances over a company, a company’s registered capital and whether or not a legal entity has entered into liquidation proceedings, and may include board decisions on the purchase of shares/assets.
The second piece of publicly available information is the Land Registry records. Immovable assets possessed by legal/real persons are registered to the Land Registries of districts where such immovable assets are located. There is unfortunately no nationwide central data storage system for Land Registry records, and an investigation should be conducted at any particular Land Registries where the debtor’s immovable property is likely to be located. It is common practice to conduct investigations before the Land Registries where a debtor’s headquarters/place of residence is located, at the Land Registries where a debtor’s branch offices are located, and at other locations where a debtor’s commercial activity is concentrated.
An alternative pre-trial remedy for the identification of assets would be to apply for a precautionary attachment order before the Turkish courts, and request an attachment over the debtor’s assets. A creditor would be entitled to apply for a precautionary attachment order as long as the debt is due and is not secured by a lien, and provided that it proves the existence of the debt and the fact that it fell due with “persuasive” evidence; the Judge has total discretion to ascertain whether the evidence submitted is persuasive in nature or not. If the order is granted, the applicant will be asked to deposit counter-security with the court, at a value to be determined by the court (Turkish courts usually demand 10%-40% pro rata of the claim amount). A precautionary attachment order would allow the applicant to apply to the Bailiff’s Office and identify the assets owned by the debtor through the system at the disposal of Bailiffs – this system allows Bailiff’s Offices to identify immovable assets and vehicles owned by a debtor, via writs sent to third parties such as banks and any other relevant institution that may hold records of assets owned by the debtor or which may be indebted to the debtor.
Turkish judgments can generally be classified under two categories: interim judgments and final judgments. Interim judgments would consist of the following:
A final judgment, on the other hand, can be rendered as a result of the following:
Domestic judgments are enforced by way of initiating execution proceedings through Bailiff’s Offices. A judgment rendered by a first instance court is enforceable once issued, with certain exceptions. In other words, in most cases, an appeal does not stay the enforcement of a judgment, and the debtor would be required to deposit sufficient security to cover the full amount awarded in the judgment in order to have enforcement of the judgment stayed until the end of the appeal process.
The Bailiff’s Office will issue a payment order and serve it on the debtor once the execution proceedings are initiated. The debtor will be given seven days to pay the judgment sum, failing which the creditor can attach the debtor’s assets via the Bailiff; the assets would then be subject to a judicial sale and the creditor would seek recovery from the proceeds of the sale. In order to find assets for attachment, the Bailiff’s first step is usually to conduct an investigation – upon the application of the creditor – through an online database available to Bailiffs to ascertain whether the debtor possesses any immovable assets or motor vehicles. The customary procedure is then to pursue the funds held in the debtor’s bank accounts. The Bailiff would serve writs on banks operating in Turkey to enquire whether they hold accounts in the name of the debtor. The creditor will also be entitled to demand the attachment of the debtor’s earnings, receivables and wages by service of writs on the debtor’s employer and third parties who are liable for making such payments. If the debt will not be satisfied after all of these options have been followed, the usual practice is then to go with the Bailiff to the location(s) where the debtor’s commercial activity is centralised, as well as its headquarters/place of residence, for the purpose of attaching any assets held/kept at such locations.
Alternatively, a creditor may request the declaration of the debtor’s bankruptcy when filing the execution proceedings instead of the attachment of its assets. In this case, the debtor will once again be served with a payment order granting seven days for payment and notifying them that they will be declared bankrupt if they fail to make the payment. If the debtor fails to make the payment, the liquidation phase of the company shall begin and an administration desk shall be formed for the liquidation of the company’s assets and the dissolution of the company. Payment shall be made to the creditor from proceeds obtained through the judicial sale of the debtor’s assets, and the debtor’s record shall thereafter be deleted from the companies register. The potential disadvantage of this alternative route is that third party creditors of the debtor would be notified of the bankruptcy and liquidation, and would be given an opportunity to register claims with the administration desk, which might lead to certain claims taking priority over the original creditor’s claim.
Creditors would be required to deposit a fixed fee to the Bailiff’s Office when enforcing a first instance court’s judgment. The fixed fee is a nominal amount depending on various factors such as the number of defendants, the manner of services of notifications, etc. Further to this, the costs to be incurred by the Bailiff’s Offices (eg, costs of foreclosure/attachment) shall be collected from the creditor at the initial stage, but the creditor will be entitled to recover such costs from the debtor when payment or judicial sale takes place and there are sufficient funds to cover the claim, fees and costs.
An application to commence execution proceedings can be drafted and proceedings can accordingly be filed quickly – in a couple of hours – by attending the courthouse in person or through the online national judiciary system. However, it is not possible to estimate the time it would take to finalise the enforcement proceedings as this would depend entirely on the reaction and asset position of the debtor and the stage at which the debt is collected. If payment is made by the debtor in full upon receipt of the payment order, proceedings would end in success in less than a month. Conversely, if the debtor refuses to co-operate, it would then be necessary to proceed with attachment of the debtor’s assets. Identifying the debtor’s assets is not always an easy task, especially when the debtor is evasive, which would lead to delay and may even cause the duration of enforcement to surpass a year. In the bankruptcy option described under 2.2 Enforcement of Domestic Judgments, proceedings are likely to take more than a year, or longer, depending on various factors, such as the number of creditors taking part in the liquidation and complications that may arise in the judicial sale of assets.
Execution proceedings to be initiated for enforcement of a domestic judgment reveal the assets owned by the debtor. Bailiff’s Offices have access to the online national motor vehicle registry database as well as the databases of Land Registries, and can identify the immovable assets and motor vehicles owned by a debtor. Additionally, writs can be served on banks by the Bailiff’s Office upon a request by the creditor, for the purpose of identifying accounts the debtor may hold with the banks in Turkey. Writs can also be served on any other registries/institutions (eg, trade registry, employer) by the Bailiff’s Office in an effort to ascertain any other assets the debtor may have (eg, company shares, wages, receivables). Apart from this, the creditor is entitled to request the Bailiff to attend the debtor’s headquarters or any other location where a movable asset is physically located and to attach the debtor’s asset(s) at that location.
Unfortunately, there is no system in place in the Turkish legal system that would reveal the assets owned by a debtor to a creditor whose claim has been attested by a Turkish court judgment bypassing the need to bring execution proceedings.
The enforcement of domestic judgments can be challenged before the Enforcement Courts if the sum adjudged thereunder has been paid (partial payment would lead to a partial challenge) or time barred. Such a challenge to execution proceedings would not stay the proceedings, but the Enforcement Court may stay the proceedings if it sees merits in the challenging party’s claims.
Further challenges can be brought if the payment order is not duly issued and served by the Bailiff’s Office. This situation can occur, for instance, if a claim that has not been accepted is being claimed from the debtor, if a mistake has been made in the calculation of the interest, or if a declaratory judgment is attempted to be enforced. In addition, the payment order should be duly served on the debtor so that the execution proceedings can continue. Improper service might cause delay in the conclusion of the proceedings if the debtor’s challenge in relation to the service of the payment order succeeds, in which case a fresh service would need to be made.
Declaratory judgments that serve the function of merely detecting the existence or non-existence of a legal issue (eg, the existence of a debt, loss of an asset, breach of a contractual relationship) would not be enforceable against the opposing party. Similarly, the constitutive judgments explained above would also be unenforceable, because negative constitutive judgments would be construed as being declaratory in nature and a positive constitutive judgment would establish a legal relationship by itself without the need of being enforced.
Another issue that can hinder enforceability is the lapse of the ten-year time bar that applies to the enforcement of domestic judgments. However, this ground is not taken into account by Bailiff’s Offices and Enforcement Courts on an ex officio basis, and would need to be pled by the debtor.
There is no central register in Turkey of all judgments; all Turkish courts and Bailiff’s Offices keep their own files and store them once judgments are finalised. Therefore, one would need to conduct research before the specific court or Bailiff’s Office that rendered the judgment or handled the proceedings in order to locate and access a particular court file or a judgment contained therein.
There is no procedure that allows the automatic enforcement and execution of a foreign judgment in Turkey. In order to enforce foreign judgments in Turkey, the party seeking the enforcement must commence legal proceedings before the competent Turkish court. These enforcement proceedings are merely procedural in nature: the Turkish courts, in principle, do not delve into the merits of the case.
Before court judgments of a foreign country can be validly enforced in Turkey, one of the following conditions must be met:
Turkey is not a party to any multilateral international treaties or conventions on the enforcement of foreign judgments rendered in commercial disputes similar to the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, but the domestic legislation that regulates the enforcement of foreign judgments – namely, the Code of International Private and Procedural Law no. 5718 – is amended and updated based on the relevant EU Regulations, even though Turkey is not a member of the EU. There are specialised international treaties to which Turkey is a party, such as the Convention on the Contract for the International Carriage of Goods by Road or the Convention concerning International Carriage by Rail, which also address the enforcement of foreign judgments, although only in relation to the scope of said conventions.
Bilateral treaties have been executed between Turkey and several countries, including Austria, Bulgaria, Croatia, the People’s Republic of China (Hong Kong also benefits from the provisions of the relevant treaty), Italy, the Turkish Republic of Northern Cyprus and Ukraine, which provide for the reciprocal recognition and enforcement of their court judgments.
There is no exhaustive list of countries that have mutual de facto reciprocity with Turkey. In the majority of cases, legal precedents are looked at when deciding whether or not reciprocity exists. De facto reciprocity exists with Germany and the United Kingdom in the enforcement of foreign judgments rendered in these jurisdictions.
Turkey is a party to the 1954 Hague Convention on Civil Procedure. Under Article 18 of the Convention, orders for costs and expenses of proceedings made in a contracting state against the plaintiff or party intervening that are exempted from the provision of security, deposit or payment under the first and second paragraphs of Article 17, or under the law of the State where the proceedings have been instituted, shall, upon a request made through diplomatic channels, be rendered enforceable without charge by the competent authority, in each of the other contracting states. The same rule applies to judicial decisions whereby the amount of the costs of the proceedings is subsequently fixed.
The order for costs and expenses shall be rendered enforceable without a hearing, but subject to subsequent appeal by the losing party in accordance with the legislation of the country where enforcement is sought. The authority that is competent to decide on the request for enforcement shall itself examine:
The enforcement of foreign judgments is subject to the conditions provided under Article 54 of the Code of International Private and Procedural Law no. 5718 (“Code”). Under Article 54, a foreign judgment may be enforced in Turkey as long as reciprocity exists with the country in which the judgment is rendered and said judgment/dispute is not subject to the exclusive jurisdiction of Turkish courts. Accordingly, judgments including but not limited to interim judgments and injunctions, judgments relating to the ownership and possession of immovable property, execution orders and bankruptcy judgments are not enforceable in Turkey.
The Code also stipulates that foreign judgments that are evidently in breach of the Turkish public order cannot be enforced, although there is no clear scope of “Turkish public order” contained in the law or precedents. Examples of matters that the Turkish courts have deemed to be against the Turkish public order include the violation of the European Convention on Human Rights (in particular, Article 6: the right to a fair trial) and judgments that are against common decency or morality. The mere incompatibility of the procedural rules applied in the proceedings with Turkish procedural rules does not render the judgment unenforceable. For example, Turkish rules of procedure require all judgments to set out grounds for accepting or dismissing an action but a foreign judgment will not be denied enforcement solely for not containing such grounds.
If the foreign judgment is rendered by a court that does not have any real relation or link to the subject matter of the case or the parties, albeit deeming itself competent, the judgment rendered by this court will not be enforced in Turkey. However, the Turkish courts will make such an examination only upon an objection raised by the party against whom enforcement is sought. This does not mean that the jurisdiction of the court that has rendered the judgment will be reviewed by the Turkish court but that enforcement would be denied if there is a complete lack of connection between the dispute and the court.
Provided that the party against whom enforcement is sought raises an objection, the Turkish court will also examine whether said party was duly called to or represented before the foreign court under the laws of the country in which the judgment is rendered. In such a case, the Turkish courts will also examine whether the foreign judgment was rendered in the absence of the party in violation of the domestic laws of the foreign country.
Once the foreign judgment is rendered, served on the parties and finalised (ie, no longer open to appeal), an enforcement action must be commenced before the competent Turkish court. Under the Code, the minimum documents that are required to be submitted to the court are the original of the foreign judgment or a certified copy, and written confirmation that the judgment is final.
Enforcement proceedings should be commenced before the relevant court of first instance. Once the first instance court renders its decision, whether for or against the enforcement of the foreign judgment, such decision is open to appeal by the parties. Under Turkish law, there is a two-tier appeal system where the decisions of the first instance court can be appealed before the Court of Appeal and the appeal decisions of the Court of Appeal can be appealed before the Court of Cassation. Unlike most other judgments, a decision for the enforcement of a foreign judgment or award would be stayed if appealed by the defendant.
If enforcement is granted and finalised (after all appeals), then the enforcing party must apply to the relevant Bailiff’s Office to request the execution of the enforcement decision.
Enforcement proceedings are subject to a fast-track procedure, which is aimed at concluding such proceedings efficiently and quickly. Having said this, there are ways for the respondent to delay enforcement, prolonging the conclusion of the first instance proceedings from six months to more than a year (excluding any appeals).
When filing for the enforcement proceedings to be commenced before the Turkish court, the applicant is required to deposit court fees. The court that will hear the case will be assigned at random, and will determine the amount of fees to be required on either a fixed fee basis or a pro-rata basis, depending on the type of the action. However, as there is a division of opinion between the courts as to the type of fees that should be collected in enforcement proceedings, it is possible that either type of fees may be demanded by the assigned court. The fixed fee is a minimal amount not higher than EUR100-200, whereas the pro-rata fee is calculated at 6.831% (subject to annual review) of the claim amount. 25% of these fees is payable in advance and, if the court rules in favour of the applicant (ie, enforces the awards), the remaining 75% will become payable by the defendant and the applicant will become entitled to collect the 25% already paid from the defendant.
Please also note that the rules of Turkish civil procedure allow defendants to request foreign applicants to pay security for costs (cautio judicatum solvi) at the beginning of the enforcement proceedings, unless there is a bilateral or multinational agreement waiving such security requirement, such as judicial assistance treaties.
It is also worth noting that legal costs would not be recoverable as Turkish courts do not award the successful party legal fees agreed between the lawyer and his/her client. A minimal fee based on the Minimum Attorneyship Fee Tariff would be awarded, but to the lawyers of the successful party. The same would be true if the enforcement action is dismissed – ie, the court would award legal fees based on said tariff in favour of the defendant.
The enforcement of a foreign judgment can be challenged by the respondent on the following grounds:
More information is provided regarding the above grounds under 3.3 Categories of Foreign Judgments Not Enforced.
There is no procedure that allows the automatic enforcement and execution of a foreign arbitral award in Turkey. In order to enforce foreign arbitral awards in Turkey, the party seeking the enforcement must commence legal proceedings before the competent Turkish court. These enforcement proceedings are merely procedural in nature: the Turkish court would not delve into the merits of the case.
Turkey is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“NY Convention”). If the jurisdiction in which the foreign arbitral award was rendered is not a party to the NY Convention, the domestic legislation that regulates the enforcement of foreign arbitral awards (namely, the Code of International Private and Procedural Law no. 5718) will be applied by the Turkish courts, and is mostly in line with the NY Convention.
In accordance with the Article I, paragraph 3 of the NY Convention, Turkey has declared that it will apply the NY Convention on the basis of reciprocity to the recognition and enforcement of awards made only in the territory of another contracting state and only to differences arising out of legal relationships, whether contractual or not, that are considered as commercial under Turkish law.
Turkish courts will only enforce final arbitral awards and not interim measures granted by the tribunal. If a valid arbitration agreement exists between the parties and the dispute is arbitrable, Turkish courts enforce arbitral awards in the manner and following the criteria set out in the NY Convention and the Code in cases where the NY Convention is not applicable.
As explained under 4.2 Variations in Approach to Enforcement of Arbitral Awards, Turkey has declared that the NY Convention would only be applied in the enforcement of awards that are considered commercial in nature. Furthermore, the Code requires that the award is rendered about a subject matter that is recognised as being arbitrable in Turkish law. The scope of arbitrability is not clear but can generally be identified as a dispute which the parties are free to refer to arbitration. Examples include disputes concerning in rem rights over immovable property, the eviction of tenants, family law matters such as divorce and paternity, bankruptcy and foreclosure.
Disputes that are not considered civil, such as criminal proceedings and administrative measures, are also not considered arbitrable under Turkish law, which follows that an award issued in such proceedings will not be enforced by Turkish courts.
Once the final arbitral award is rendered, served on the parties and finalised (ie, no longer open to appeal), an enforcement action must be commenced before the Turkish courts. Under the Code, the minimum documents that are required to be submitted to the court are the original or a certified copy of the arbitration agreement and the original or a notarised copy of the award. It would also be useful to submit to the Turkish court confirmation in writing issued by the arbitrator/tribunal that the award has become finalised and enforceable and is binding on the parties.
Enforcement proceedings are commenced before the competent court of first instance. Once the first instance court renders its decision, whether for or against the enforcement of the arbitral award, the decision is open to appeal by the parties. Under Turkish law, there is a two-tier appeal system where decisions regarding first instance court judgments can be appealed before the Court of Appeal and the Court of Appeal’s judgments so rendered can then be appealed before the Court of Cassation.
If enforcement is granted and finalised (after all appeals), then the enforcing party must apply to the relevant Bailiff’s Office to request the execution of the enforcement decision.
Enforcement proceedings are subject to a fast-track procedure, which is aimed at concluding such proceedings efficiently and quickly. Having said this, there are ways for the respondent to delay enforcement, varying the conclusion of the first instance proceedings from six months to more than a year (excluding any appeals).
When filing for enforcement proceedings to be commenced before the Turkish court, the applicant is required to deposit court fees. The court that will hear the case will be assigned at random, and will determine the amount of fees to be required on either a fixed fee basis or a pro-rata basis, depending on the type of the action. However, as there is a division of opinion between the courts as to the type of fees that should be required in enforcement proceedings, it is possible that either type of fees may be demanded by the assigned court. A 2016 amendment of the Code of Fees has brought a level of clarity to practice, stipulating that pro rata court fees shall not be applicable in the enforcement of domestic and foreign arbitral awards. However, it is still too early to say for certain that the implementation of this amendment by Turkish courts will end the debate regarding the type of fees.
The fixed fee is a minimal amount no higher than EUR100-200, whereas the pro-rata fee is calculated at 6.831% (subject to annual review) of the claim amount. 25% of these fees is payable in advance and, if the court rules in favour of the applicant (ie, enforces the awards), the remaining 75% will become payable by the defendant and the applicant will become entitled to collect the 25% already paid from the defendant.
Please also note that Turkish civil procedure allows defendants to request foreign applicants to pay security for costs (cautio judicatum solvi) at the beginning of the enforcement proceedings, unless there is a bilateral or multinational agreement waiving such security requirement, such as judicial assistance treaties.
It also worth noting that legal costs would not be recoverable as Turkish courts do not award the successful party legal fees agreed between the lawyer and his/her client. A minimal fee based on the Minimum Attorneyship Fee Tariff would be awarded to the lawyers of the winning party. The same would be true if the enforcement action is dismissed – ie, the court would award legal fees based on said tariff in favour of the defendant.
There are specific procedural grounds on which an enforcement action may be dismissed by the Turkish courts. If the party seeking enforcement in Turkey is also a party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention), then the exhaustive list under Article V of the New York Convention provides the grounds available to challenge the enforcement of a foreign arbitral award, which are as follows:
If the party seeking enforcement is not a party to the New York Convention, then the Code will apply, which governs the enforcement of foreign arbitral awards. The grounds available under the Code are also exhaustive, as follows:
The Code does not specify whether these grounds are to be examined by the courts on their own accord or upon an objection raised by the respondent.