Execution Proceedings under Turkish law
Creditors, whose receivables (monetary receivables or guarantees) are not paid by debtors, are entitled to initiate execution proceedings against the debtors through execution offices. In Turkey rules to be applied to the execution proceedings are regulated under the Enforcement and Bankruptcy Law numbered 2004 dated 9 June 1932 (“EBL”). Creditors are granted with the right to collect their receivables through state power and with the help of the state authorities, i.e. execution offices.
Execution proceedings start with the payment request of the creditor against the debtor. During the proceedings, if requested by the creditor, debtor’s assets sufficient to pay the debt, can be seized. Seized assets (movable or immovable) will be sold and the debt will be paid with the sale amount.
Under Turkish law, enforcement and execution types are collected under two main groups, namely (i) partial enforcement, i.e. execution proceedings and (ii) collective enforcement, i.e. bankruptcy proceedings.
This memorandum aims to give general information regarding execution proceedings which are can be faced frequently in practice.
1 Execution Proceedings
Execution proceedings have three types of sub-groups: (i) proceedings based on a verdict; (ii) proceedings without a verdict; and (iii) foreclosure of collateral.
i. Proceedings Based on a Verdict
Execution proceedings based on a verdict are regulated under Article 24 to 41 of EBL.
In order to initiate such procedures, the creditor whose rights are infringed or not fulfilled, the creditor must apply to the competent court and request the prevention of the infringement or fulfilment of the right subject to the request.
In the event that the court decides in favour of the creditor, the creditor will be entitled to apply to the execution office for the performance of the verdict. The enforcement office will issue an official payment order and send it to the debtor. In the event that the debtor does not comply with the payment order in due course, the verdict will be fulfilled via execution offices.
The verdict can include a monetary receivable but also delivery of a specific good or fulfilment of a right. It even can contain rights arising out of domestic relations such as the custody right of a child. Since such procedures are based on a verdict, apart some specific exceptions, the debtor cannot object to the payment order.
ii. Proceedings without a verdict
Other than proceedings based on a verdict, EBL regulates another type of execution proceeding valid for monetary or collateral receivables. In this type of proceedings, the creditor is entitled to initiate an execution proceeding against the debtor although there is no verdict on that end. For this kind of proceeding, the request of the creditor submitted to the enforcement office is sufficient for the commencement of the relevant proceeding. The base of the receivable can be checks, bills, invoices, running accounts or lease receivables. Such proceedings can even be without need of showing the source of the debt.
After the request of the creditor, execution office is obliged to send a payment order to the debtor. The debtor has seven days to object to the debt and the payment order. In the event that the debtor does not object to the payment order in due course the debt becomes final and the creditor can continue with the proceeding steps for the collection of the debt.
If the debtor objects to the request within the time period determined under the EBL, the executions proceedings will cease. In this case the creditor must file an action for the nullity of debtor’s.
iii. Foreclosure of collateral as execution proceeding
In the event that the receivable is secured with a collateral, foreclosure of such collateral can be used as an execution proceeding. If the creditor has a collateral as security for its receivables, other kinds of enforcement procedures cannot be used and foreclosure of the collateral has to be exhausted first in order to collect its receivables. (EBL Article 45)
Collateral’s creditor shall request the payment of the debt through the sale of the collateral, if the debt is not paid in due course. The lex commissoria rule is also valid for Turkish enforcement rules.
If the collateral is not sufficient for the debt, the creditor is entitled to apply other kinds of enforcement procedures for the collection of its receivables.
TIPS: In order to conduct procedures in accordance with EBL, creditors have to request specific procedures. Enforcement offices do no conduct any procedures ex officio without the request of the creditor. If an execution proceeding is started against a debtor but no request has been made within a year beginning from the opening date of the file, the execution file will be closed and the creditor has to renew the file.
Another point which has to be kept in mind is that the sale of the goods of the debtor, seized during the procedures, has to be requested within six months beginning from the seizure. This deadline is one year for immovable. In the event that the sale of the goods and immovable is not requested with the time period determined under the EBL, the seizures on that goods will automatically be null and void.
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