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October 2025 – The Turkish Constitutional Court's Plenary Decision in Caner Şafak (published in the Official Gazette on 29 September 2025) reviewed the prevailing judicial approach to proving additional damages.
What is Additional Damage?
Article 122 of the Turkish Code of Obligations ("TCO") defines additional damage as a creditor's loss exceeding statutory or contractual interest. In other words, it covers real losses arising from late payment that go beyond default interest. For instance, if a creditor must borrow at a higher interest rate or suffers from adverse exchange rate movements due to delayed payment, such losses qualify as additional damages.
Current Practice
For many years, Türkiye's Court of Cassation has consistently held that general economic conditions such as inflation, currency volatility, or rising interest rates are "well-known and abstract facts" and therefore insufficient to establish additional damages on their own. Courts have emphasised that these indicators do not ease the creditor's burden of proof and have required the creditor to substantiate actual losses caused by delayed payment with specific evidence.
Accordingly, creditors must demonstrate, for example, that they were forced to borrow at a higher rate, incurred a real loss due to currency depreciation, or faced additional financial burdens. This approach prioritises "provable, case-specific loss" over general economic realities and has become the dominant judicial stance.
Constitutional Court's Assessment
The Constitutional Court found that this strict approach violated the right to property (Constitution, Art. 35) and the right to access justice (Constitution, Art. 40). It held that dismissing a creditor's claim of loss from inflation or currency fluctuations as "abstract" effectively deprived individuals of meaningful judicial protection and created a structural imbalance in favour of debtors.
The Court underlined that Article 122 of the TCO has become ineffective under current economic conditions and issued a formal notification to the legislature, urging parliament to address the gap and expand the provision's scope through statutory reform.
Conclusion
The Constitutional Court expressly called upon the legislature to take action. The decision The decision sends a clear signal aimed at restoring the balance between creditor and debtor interests. Strengthening Article 122 of the TCO through legislative intervention is intended to prevent debtors from exploiting inflationary conditions in bad faith and to ensure effective protection of both property rights and the right to access justice.
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