The special debt collection procedure for negotiable instruments is a distinct enforcement route available to creditors holding such instruments. In this process, a creditor possessing a valid negotiable instrument, either as a beneficiary or holder, may pursue their receivables through a procedure that—while subject to specific formalities outlined below—is generally more straightforward than standard non-judicial enforcement proceedings.
What Are Negotiable Instruments?
Negotiable instruments are a limited class of instruments defined under the Turkish Commercial Code. These instruments are characterized by their negotiability and their legal validity regardless of the underlying transaction that led to their issuance. Chief among them are cheques, promissory notes, and bills of exchange; other instruments such as bills of lading may also be classified under this category. Foreign negotiable instruments that have been issued in compliance with the laws of another country may also be used for debt collection purposes in Turkey, provided that they meet the necessary legal criteria.
Negotiable Instruments Issued under Foreign Laws
In international commerce, it is common for merchants to issue negotiable instruments such as promissory notes or bills of exchange to one another. However, such instruments are not always issued in accordance with Turkish law. In these instances, pursuant to the Act on Private International Law and Procedural Law No. 5718, the formal validity of the legal act is determined according to the law of the place where it was executed. Nevertheless, even if the instrument was drawn up abroad and is invalid under that jurisdiction’s law, it may still be deemed valid in Turkey if both parties are Turkish nationals and the instrument satisfies the requirements set forth under Turkish law (Turkish Commercial Code, Article 767).
Enforcement Procedure
To initiate the special debt collection process in Turkey, the creditor must first determine the competent enforcement office and file a request for proceedings, provided they hold a matured negotiable instrument and are either the beneficiary or the holder thereof. The application must include the nature and amount of the debt, the applicable interest rate (noting that negotiable instruments are commercial transactions per the Turkish Commercial Code, and thus the “advance interest rate” applies), and identification of the debtor and creditor, among other details.
A crucial requirement in these debt collection proceedings is the submission of the original negotiable instrument alongside the enforcement request. In cases where the proceedings are initiated in a jurisdiction different from where the creditor is located, the original instrument must be forwarded to the relevant enforcement office via judicial correspondence. Without receiving the original instrument, enforcement offices will not process the issuance of the payment order.
Once the enforcement request is submitted and the original instrument provided, a payment order is issued and served upon the debtor. The debtor must either pay the debt within 10 days or, if they dispute the existence of the debt or claim that the signature on the instrument is not theirs, they must file an objection with the Enforcement Court within 5 days of receiving the order.
Debtor’s Objections
The debtor may challenge the enforcement proceedings on two main grounds: denial of the debt or denial of the signature.
- Objection to the Debt: If the debtor claims that they do not owe the debt or owe a lesser amount than stated in the instrument, they must file an objection with the Enforcement Court within 5 days of being served with the payment order. The debtor may assert that the debt has been paid, that they are not liable, or that the debt has been postponed—but such claims must be supported by official documentation or written acknowledgment from the creditor.
- Objection to the Signature: If the debtor alleges that the signature on the instrument is not theirs, they must clearly and separately file this objection with the Enforcement Court within 5 days of service. If no such objection is raised, the signature on the instrument is presumed to belong to the debtor. It is worth noting that objections regarding lack of authority to sign should be classified as objections to the debt, not to the signature.
Attachment Process
If the debtor does not object or pay the debt within the allotted 10-day period, the enforcement becomes final and the creditor may proceed to the attachment phase. At this stage, the creditor may request the seizure of the debtor’s movable or immovable property sufficient to cover the debt. The attachment is valid for one year, after which it may be renewed. If the creditor requests a sale during this period, the process moves to the liquidation stage.
Final Remarks
Compared to standard non-judicial enforcement proceedings, the special procedure for negotiable instruments offers time and evidentiary advantages to the creditor, particularly due to the presence of a signed instrument. However, this route also entails certain procedural nuances that must be navigated carefully. For this reason, it is advisable to work with a professional to manage the debt collection process meticulously. Errors in calculating interest rates, maturity, or limitation periods can have adverse consequences, including unexpected attorney fees or procedural costs.
For foreign parties, especially those seeking to enforce negotiable instruments issued under foreign law, it is highly recommended to first examine the validity of such instruments under Turkish law and to consult with lawyers experienced in international commercial law.
