According to international trade and international law, it is accepted that parties are free to make contracts and determine the law to be applied.
States holds court decisions as indicators of judicial sovereignty and independence. Accordingly, in Turkish Law, the jurisdiction of Turkish Courts is considered exclusive and definitive. Enforcement and Bankruptcy Law is under the enforcement power of the state and since it concerns the public order, interference of another state on this issue is not accepted in Turkish Law as in many countries. For this reason, it is not possible that Turkish courts to enforce a decision of a foreign country's court or a foreign country's administrative decision.
International Private Law and Civil Procedural Law No:5718 ("Law") regulates legal relations with foreign elements in this scope. In cases involving territoriality and public order, the Law determines if the Turkish courts are strictly authorized even if the parties are free to choose the applicable law, or even if the parties have already chosen a foreign country's law. For this reason, it is of great importance for foreign companies to carefully examine the Law and take into consideration while concluding an international contract.
The Law foresees undermentioned requirements to enforce a foreign country's decision if a foreign country and a debtor who has assets in Turkey have decided an applicable law which is other than Turkish Law;
- Treaty of Reciprocity is made between Turkey and the country of jurisdiction.
- The court decision is made on a matter that is not in the exclusive jurisdiction of the Turkish courts.
- The court decision is not made by a country's court which is not related by the subject or the parties and the debtor has an objection.
- The court's decision is not be clearly contrary to the public order,
- The decision is in accordance with the defense rights of the defendant.
For foreigners to be able to levy an execution to collect their debt in Turkey according to a foreign country's decision, the decision should be recognized and enforced by Turkish courts.
Foreign companies also have the right to claim for their debts to be collected with respect to Turkish Law. Turkish courts determine the jurisdiction according to place of business rather than nationality of the debtor. Turkish Law considers Turkish courts are exclusively authorized when place of business of the company or place of performance is in Turkey.
In case the debtor is a company which its establishment place or place of business is Turkey, creditor shall commence execution proceedings and claim for enforcement from Turkish Courts.
Foreign persons should consider the following matters while commencing execution proceedings;
- Is there a contract with the debtor and if the contract is in Turkish? Also, if there is a clause stating that execution proceedings shall be made in a specific country?
According to Turkish Law, especially in international debts, parties of the contract may choose the applicable law. Therefore, they shall be liable to the applicable law.
- Creditor should prove its obligation stated in the contract has been fulfilled by documents.
- Creditor has the right of choice regarding the currency of the debt.
- Considering the document proves the debt; bill of exchange type documents which are listed in Bankruptcy and Enforcement law entitles the creditor impoundment of the debtor's assets immediately in the case that creditor deposits %15 of the debt as an assurance.
- Since the time and order is very significant in impoundment of the assets of the debtor, it is critical to start the execution proceedings when the debt is delayed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.