Though often perceived as neither a glamorous nor exciting field, enforcement law has been and will continue to be the somber reality all legists eventually face. Whether you’re an independent attorney successfully negotiating a favourable deal in mediation proceedings or filing a claim for compensation as an international firm representing a multinational conglomerate, sooner or later, all paths lead to enforcement, because: What happens when they refuse to pay?
Developing a firm grasp on enforcement proceedings and debt collection allows for the uncertainty of financial gain to dissipate, ensuring tangible results for both attorneys and clients.
In this article we shall be primarily focusing on the most commonly sought after areas of debt collection in Türkiye.
Firstly though, for the purposes of providing a brief overview, it is important to note that motions to initially commence enforcement proceedings, including debt collection, as well as subsequent motions and petitions regarding the aforementioned proceedings thereafter are processed and implemented by enforcement offices in Türkiye, in adherence to the Turkish Code of Execution and Bankruptcy (Act No. 2004 of 9 June 1932).
These enforcement offices are under the governance and supervision of Turkish enforcement courts, though they are not regarded as a subordinate body either. Rather, these offices are governmental bodies, whose sole duty is to apply the law of enforcement.
The offices, made up of executive officers and directors, categorised as civil servants, possess the authority of coercion, which may be defined as the authority to give orders as well as instructions to law enforcement officers or local authorities whilst implementing their duties. Disciplinary provisions of the Turkish Code of Civil Servants (Act No. 657 of 14 July 1965) are applicable to these executive officers, directors, and their assistant staff.
This practice of debt collection contrasts with the United Kingdom in particular, as the nation opts to utilise the practice of debt collection agencies for collection proceedings, which do not possess any other legal authority from the original creditor, as opposed to a governmental body.
Though enforcement proceedings are implemented and overseen by enforcement offices, claims, motions and petitions in relation to these proceedings are required to be prepared and submitted by creditor and debtor alike, hence the importance and demand of legal assistance within this field.
The collection process is initiated with a written or verbal motion by the creditor, after which a payment or execution order, depending on the nature of claims, is issued to the debtor. Commencing the finalisation of the proceedings and differing according to the type of applicable collection procedure implemented are the stages of seizure, judicial sale and distribution of assets. Cases in relation to the aforementioned proceedings are in the jurisdiction of Turkish courts, competence of which is dependent on the nature of initial claims.
Which brings us to enforcement proceedings without judgment; the gift of a mostly hassle-free debt collection.
In order to initiate this form of enforcement procedure, the claimant is not required to obtain any sort of judgments, verdicts or even provide any supporting documents; proof of claim is not essential, which is why many opt for this collection procedure due to its convenience. As Türkiye is not currently a member of the European Union, the EU small claims procedures in relation to the pursuance of cross-border claims are not applicable, highlighting the convenience of initiating enforcement procedures without the need for obtaining any other additional documents.
The general authorised enforcement office is the debtor’s place of residence, however it is note-worthy that this is not absolute as in the instance that there is a contract subject to these proceedings the enforcement office in the place where the contract was formed also has jurisdiction.
After taking the first step in the process by filing a motion, either written or verbal, the authorised execution office issues a payment order to the debtor.
The debtor against whom proceedings without judgment have been initiated may object to the debt, signature (in the instance where the claimant has submitted a document containing the alleged signature of the debtor) and/or jurisdiction of the enforcement office within seven days of receiving the payment order.
Though the debtor must physically submit the petition of objection to the enforcement office (either directly to the issuing office, or one closest on duty), attorneys may use the National Judiciary System to file this motion online using their electronic signature. In fact, all matters relating to debt collection such as the motions, petitions, objections, formal requests and even initiation of court proceedings as well as asset inquiries may be submitted and the process reviewed through this system, hence highlighting the effectiveness of attorneys in these matters.
In the instance that the debtor opts to file a petition of objection, proceedings shall be ceased until the claimant files a motion to the court for either an action for annulment of objection within a year of the objection, or, in the case that the claimant has supporting documents of proof of debt as per Article 68 of the Turkish Code of Execution and Bankruptcy, the withdrawal of objection within six months of the objection. In the event that this action concludes in favour of unfairness of the objection, the ceased enforcement proceedings will continue and the debtor will be required to pay compensation for bad faith damages.
However, if the debtor fails to file their objection within the allocated time frame, the proceedings will be finalised, resulting in the next stages of collection, which are the seizure, judicial sale and distribution of assets.
Though enforcement proceedings without judgment are quite relatively the go-to enforcement procedure due to its broad scope and convenience, it is important to convey that if a claim is being made in relation to a bill of exchange, the most beneficial form of collection is the enforcement proceedings of bills of exchange.
Categorised as a form of enforcement proceedings without judgment, submitting a document in the form of a bill of exchange (as listed restrictively in Articles 670 to 823 of the Turkish Commercial Code, Act No. 6102 of 13 January 2011) that is not being honored by the debtor is a prerequisite for initiation of proceedings.
It is crucial that bills of exchange are submitted for collection within three years of the date of issuance at the latest, after which the document will no longer be deemed a bill of exchange, hence the inability of commencing enforcement in this matter. No need to fret though. If the statute of limitations of three years has passed, application for enforcement proceedings without judgment is always a viable option.
The effectiveness of the collection procedure specifically intended for exchange of bills shows itself in the fact that the debtor has only five days to submit their objections and ten days to complete payment after receiving the payment order from the governing enforcement office. Petitions for objection can only be submitted to the presiding Turkish Court of Enforcement and, apart from judicial sales, does not cease enforcement proceedings per se.
The most fundamental element of this collection method contributing to its effectiveness relative to creditors is that objections to the claim citing that the debt is not owed, has already been paid or that the creditor has given additional time for payment can only be proven by either an official document or one that contains an acknowledged (by the creditor) signature of the debtor. Hence, by restricting forms of admissible evidence to the aforementioned, the possibility of proving the faithfulness of objections with evidence such as witnesses has been eradicated.
Owing to this high standard of proof debtors must uphold in the event they choose to object, creditors in Türkiye who obtain a bill of exchange prefer this form of collection procedure.
In the event that The Turkish Court of Enforcement adjudges in favor of unfairness of the objection, the debtor will consequently be required to compensate bad faith damages, however, in the instance that the court forms a verdict in favor of the objection, enforcement proceedings will cease immediately and termination will occur as soon as the judgment has been finalised, in conjunction with the claimants liability for bad faith damages if proven to be malicious or acting in bad faith.
In summation, despite an abundance of varying forms of enforcement and debt collection proceedings in Türkiye depending on the nature of claims, the most common enforcement proceeding opted by attorneys and claimants alike are those without judgment due primarily to their convenience and effectiveness.
Disclaimer: This article is intended for informational purposes only and is not intended as nor should be taken as legal advice.