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DEBT COLLECTION LAWYERS IN TURKEY

How Can a Foreign Individual or Company Collect Its Receivables in Turkey?

When a foreign individual or company does business with a Turkish partner—whether in trade, services, or investment—unpaid invoices or breached payment obligations can cause serious financial strain. Collecting a debt in a foreign country requires navigating unfamiliar legal systems, procedures, and cultural nuances. This article explains, in detail, how a foreign creditor can collect receivables in Turkey and the practical steps involved.

1. Understanding the Legal Framework for Debt Collection in Turkey

Debt collection in Turkey is governed mainly by:

• The Turkish Enforcement and Bankruptcy Law (EBL) – regulating enforcement proceedings, asset seizures, and bankruptcy processes.

• The Turkish Code of Obligations – defining contractual obligations and default rules.

• International Treaties – including conventions on recognition and enforcement of foreign judgments or arbitration awards.

Foreign creditors have the same legal rights as Turkish creditors.

2. Initial Steps: Amicable Collection (Pre-Legal Stage)

Before starting formal proceedings, most Turkish lawyers recommend attempting an amicable resolution:

• Sending a formal demand letter in Turkish.

• Contacting the debtor directly through authorized representatives.

• Negotiating a payment plan or settlement.

• Involving trade attachés or chambers of commerce.

This stage is faster, less costly, and preserves business relationships. In many cases, debtors settle to avoid legal costs and reputational risks.

3. Enforcement Proceedings in Turkey

If the debtor does not respond to amicable demands, the creditor can initiate enforcement proceedings through the Turkish Enforcement Offices.

There are two main procedures:

a) Enforcement Without Judgment

• Used when there is no court decision but the debt is certain and due.

• The creditor files a claim with the enforcement office.

• The debtor has 7 days to object; otherwise, enforcement continues with asset seizures.

b) Enforcement With Judgment

• Used when the creditor already has a court decision or an arbitration award.

• The enforcement office enforces the decision without giving the debtor the chance to object to the debt itself.

4. Recognition and Enforcement of Foreign Judgments or Arbitration Awards

If the foreign creditor already holds a court judgment or arbitration award from their home country, it cannot be directly enforced in Turkey.
The creditor must apply to a Turkish court for:

• Recognition (acknowledging the decision’s validity in Turkey).

• Enforcement (allowing execution against debtor’s assets).

This process requires:

• Proof that the judgment is final in the foreign country.

• Reciprocity between Turkey and the issuing country (or applicable treaty).

• Compliance with Turkish public order principles.

5. Precautionary Measures: Asset Freezing (Injunctions)

Foreign creditors can apply for a precautionary attachment (ihtiyati haciz) to prevent debtors from disposing of assets before the case is concluded.
To obtain this, the creditor generally must:

• Show credible evidence of the debt.

• Provide a security deposit (unless exempt by treaty).

This step is critical when there is a risk the debtor may hide or sell assets.

6. Time Limits (Statute of Limitations)

Under Turkish law, the statute of limitations varies depending on the type of receivable:

• Commercial debts: generally 10 years.

• Trade receivables from goods or services: 2 years and 10 years in many cases.

• Shorter periods may apply for certain claims.

Acting quickly ensures legal rights are preserved

 

7. Practical Tips for Foreign Creditors

• Check bilateral treaties between Turkey and your country for exemption from security deposit requirements.

• Keep all contracts, invoices, delivery notes, and correspondence—these will be crucial evidence.

• Consider including arbitration clauses in future contracts for faster dispute resolution.

• Use trade credit insurance or factoring to reduce collection risk.

Is It Necessary to Deposit a Guarantee (Security) to File a Lawsuit in Turkey?

When a foreign individual or company seeks to initiate legal proceedings in Turkey—whether for debt collection, contract enforcement, or other civil claims—one of the first questions they often ask is whether they must deposit a guarantee before filing the lawsuit.

This requirement, known as security for costs (teminat), is an important consideration in international litigation in Turkey. Below, we explain the legal basis, exceptions, and practical implications.

1. Legal Basis for the Security Deposit Requirement

Under Article 48 of the Turkish Enforcement and Bankruptcy Law (EBL) and Article 84 of the Turkish Code of Civil Procedure (CCP), foreign plaintiffs may be required to deposit a security to cover potential litigation expenses and the defendant’s losses if the case is unsuccessful.

The purpose is to:

• Protect Turkish defendants from the risk of incurring unrecoverable costs.

• Ensure that the foreign plaintiff is acting in good faith.

• Safeguard the enforcement of cost awards in favor of the defendant.

2. Who Must Pay the Security Deposit?

Generally, foreign nationals (both individuals and companies) without domicile, residence, or business operations in Turkey must deposit security when filing a lawsuit.

This applies to:

• Civil lawsuits.

• Commercial disputes.

• Enforcement proceedings.

3. Amount of the Security Deposit

The amount is determined by the court and varies depending on:

• The value of the claim.

• The potential litigation costs.

• Complexity of the case.

It is usually a small percentage of the claim value and must be paid into the court’s account before the case proceeds.

4. Important Exceptions to the Security Requirement

Foreign plaintiffs do not have to deposit a guarantee if:

1. Reciprocity Exists

   • There is a bilateral treaty between Turkey and the plaintiff’s country waiving such a requirement.

   • Or reciprocity is established under customary international law.

2. Special Laws or International Conventions Apply

   • For example, the Hague Convention on Civil Procedure (1954) provides exemptions for nationals of signatory states.

3. Plaintiff Has Assets or Residence in Turkey

   • If the plaintiff can show they have attachable assets or a business presence in Turkey, the court may waive the requirement.

4. Case Falls Under Certain Urgent Legal Actions

   • Some precautionary measures may proceed without prior security if delay would cause irreparable harm.

What Documents Are Required to Initiate Enforcement Proceedings in Turkey?

When a creditor—whether Turkish or foreign—needs to recover an unpaid debt, one of the most effective legal tools in Turkey is enforcement proceedings through the Turkish Enforcement Offices. These proceedings allow creditors to collect receivables directly from the debtor’s assets, bank accounts, or income.

However, the process begins with the submission of specific documents. Missing or incorrect documentation can cause delays, objections, or even dismissal of the proceedings. This guide outlines what documents are required to initiate enforcement in Turkey and how foreign creditors can prepare them properly.

1. Understanding Enforcement in Turkey

In Turkey, enforcement proceedings fall into two main categories:

1. Enforcement Without Judgment – initiated when the creditor does not have a court judgment but claims a due and payable debt.

2. Enforcement With Judgment – initiated when the creditor has a court decision, arbitration award, or officially recognized debt instrument.

The required documents vary depending on which procedure you use.

2. Documents for Enforcement Without Judgment

When no court judgment exists, you must provide:

1. Enforcement Request / Petition (Takip Talebi)

   • Prepared in Turkish, submitted to the competent Enforcement Office.

   • Includes creditor and debtor details, debt amount, currency, interest rate, and payment demand.

2. Evidence of Debt (Optional but Strongly Recommended)

   • Invoices, contracts, delivery notes, promissory notes, emails, or signed acknowledgements of debt.

   • Strengthens your position if the debtor files an objection.

3. Power of Attorney (if represented by a lawyer)

   • Must be notarized and, if issued abroad, apostilled (or legalized) and translated into Turkish by a sworn translator.

3. Documents for Enforcement With Judgment

If you already have a court judgment or arbitration award, the following are required:

1. Final Court Decision or Arbitration Award

   • If issued in Turkey: Original or certified copy with confirmation of finality.

   • If issued abroad: Must undergo recognition and enforcement proceedings in a Turkish court before enforcement.

2. Recognition and Enforcement Decision (for foreign judgments)

   • A separate court decision confirming the foreign judgment is valid in Turkey.

3. Enforcement Request / Petition (Takip Talebi)

   • Specifies the details of the judgment and the enforcement demand.

4. Power of Attorney (same requirements as above).

4. Documents for Enforcement of Negotiable Instruments

For debts based on negotiable instruments (e.g., bills of exchange, promissory notes, cheques), you need:

• Original negotiable instrument.

• Protest (if applicable).

• Enforcement request.

• Power of attorney (if represented).

This route allows accelerated proceedings under the EBL.

Is a Different Procedure Required for Foreign-Currency Receivables in Turkey?

No, the basic debt collection process in Turkey is the same for debts in foreign currency and debts in Turkish lira. You can start enforcement proceedings in the original currency stated in your contract or invoice.

However, there are a few key differences to keep in mind:

• Exchange rate: If the debtor pays in Turkish lira, the amount is calculated using the Central Bank’s exchange rate on the payment day.

• Interest: You can claim the interest rate in your contract; if none is stated, the official rate for foreign-currency debts applies.

• Documents: All documents must be in Turkish or officially translated, and foreign documents must be apostilled/legalized.

• Practical tip: Always state both the foreign currency amount and its Turkish lira equivalent in your filing.

In short, the steps are the same, but currency conversion and interest calculation rules make it important to prepare your claim carefully.

What Legal Remedies Are Available for Foreign Creditors Filing a Lawsuit in Turkey?

Foreign creditors who want to recover debts in Turkey have several legal options:

1. Litigation (Court Case)

   • You can file a lawsuit in a Turkish court to prove your claim and get a judgment against the debtor.

   • Once you win, you can use that judgment to start enforcement proceedings.

2. Enforcement Proceedings

   • You can apply directly to the Enforcement Office to collect your debt, either with or without a court judgment.

   • This allows you to seize the debtor’s assets, bank accounts, or other property.

3. Precautionary Measures (Asset Freezing)

   • You can request a precautionary attachment to freeze the debtor’s assets before or during the case.

   • This helps prevent the debtor from hiding or selling their property.

How Is Interest and Late Payment Penalty Applied in Turkey?

When a debt is not paid on time in Turkey, the creditor can claim interest and sometimes a late payment penalty. How this is applied depends on the agreement and the law:

1. If There Is a Contract

   • If your contract states an interest rate or late payment penalty, that rate will usually apply—unless it is higher than what the law allows.

2. If There Is No Contract Rate

   • The legal default interest rate set by Turkish law will apply.

   • For commercial debts, the rate is usually higher than for personal debts.

3. Currency of the Debt

   • For Turkish lira debts, the legal TL interest rate applies.

   • For foreign-currency debts, the Central Bank’s official interest rate for that currency is used.

4. Late Payment Penalty

   • In commercial transactions, an extra penalty may be claimed if agreed in the contract or allowed under the Turkish Commercial Code.

Tip: Always put the interest rate and payment terms in writing in your contracts. This avoids disputes and makes enforcement faster.

How Is an International Arbitration Award Recognized and Enforced in Turkey?

If you win an arbitration case abroad against a Turkish company or person, you cannot directly enforce the award in Turkey. First, you must have it recognized and enforced by a Turkish court.

Here’s how it works:

1. Apply to a Turkish Court

   • File a request for recognition and enforcement of the award.

   • The court checks if the award meets legal requirements.

2. Main Requirements

   • The award must be final in the country where it was made.

   • Turkey and the country of the award must both be parties to the New York Convention or have reciprocity.

   • The award must not violate Turkish public order.

   • The parties must have had a fair opportunity to present their case.

3. Documents You Need

   • Original or certified copy of the award.

   • Original arbitration agreement.

   • Apostilled/legalized and sworn Turkish translations of both.

4. After Court Approval

   • Once recognized, the award can be enforced like a Turkish court judgment.

   • You can then start enforcement proceedings to seize assets or collect payment.

Tip: Use clear arbitration clauses in contracts and keep all procedural documents safe—they will be needed for recognition.

What Is the Role of Local Legal Counsel and Attorneys in Turkey?

When dealing with legal matters in Turkey—especially debt collection, lawsuits, or enforcement—having a local lawyer is very important.

Here’s why:

1. Expert Knowledge of Turkish Law and Procedure

   • Turkish legal system, courts, and enforcement offices have specific rules and deadlines.

   • A local lawyer knows these details and can avoid costly mistakes.

2. Document Preparation and Translation

   • Legal documents must be prepared in Turkish and follow local formats.

   • Lawyers handle translations, notarizations, and legalization of foreign documents.

3. Representation in Courts and Enforcement Offices

   • Only licensed Turkish attorneys can officially represent clients in Turkish courts and enforcement proceedings.

   • They file petitions, attend hearings, and negotiate on your behalf.

4. Strategic Advice and Negotiation

   • Lawyers advise on the best legal options and strategies to collect your debt efficiently.

   • They help negotiate settlements or payment plans.

5. Handling Complex International Issues

   • Cross-border enforcement, recognition of foreign judgments, and treaties can be complicated.

   • Local counsel guides you through these complexities and coordinates with foreign lawyers if needed.

In short: A trusted local attorney is your key partner for successfully navigating Turkey’s legal system and protecting your interests.