Doing business with Turkish companies can be lucrative, but like in any jurisdiction, payment disputes may arise. If your company is based outside Turkey and you face difficulties in collecting debts such as unpaid invoices, dishonored checks, or other outstanding receivables, the Turkish legal system provides various remedies to secure your rights.
In this article, we will explore the legal avenues available to foreign creditors for debt collection in Turkey, including enforcement proceedings based on invoices and promissory instruments like checks. We will also explain how ÖNBAY Law Firm, with its extensive experience in international commercial disputes, has successfully assisted numerous foreign clients in recovering their outstanding receivables in Turkey.
Methods for CollectIng Debts In Turkey
Foreign companies dealing with Turkish businesses have several legal options when facing unpaid debts. The two main legal avenues for debt enforcement in Turkey are:
- Enforcement Proceedings Based on Invoices (General Debt Collection)
- Enforcement Proceedings Based on Checks (Special Enforcement for Negotiable Instruments)
Each method follows different legal procedures and has some specific requirements.
1. Collecting Unpaid Invoice Debts Through General Enforcement Proceedings
If a foreign company has delivered goods or services to a Turkish company, but the invoices remain unpaid, the creditor can initiate an enforcement proceeding without a court judgment under the Turkish Enforcement and Bankruptcy Law.
Procedure of EnforcIng UnpaId InvoIces In Turkey
A. Filing an Enforcement Proceeding with the Turkish Enforcement Office
- – The creditor must file an enforcement claim with the Turkish enforcement office located within the debtor’s jurisdiction.
- The enforcement request should include:
- The unpaid invoice details
- The amount due (including interest if applicable)
- The contract or commercial agreement (if available)
- Any relevant correspondence proving the debt
B. Payment Order Notification
- Once the request is filed, the enforcement office will issue a payment order and serve it to the debtor.
- The debtor has seven days from receipt to either:
- Pay the debt in full
- Object to the enforcement order, which may temporarily halt the process
C. Abolition of Debtor’s Objection
- If the debtor objects to the enforcement order, the creditor must initiate a legal action before a Turkish court to have the objection removed.
- If the creditor has strong evidence (such as signed invoices, contracts, or email correspondence), the court will likely rule in favor of enforcement.
D. Seizure and Liquidation of Debtor’s Assets
- If the debtor fails to pay or does not object within seven days, the enforcement process continues.
- The creditor may request the seizure of the debtor’s assets, including:
- Bank accounts
- Real estate
- Commercial vehicles
- Movable property in business premises
- If the debtor does not settle the debt within the prescribed period, the creditor can auction the seized assets to recover the owed amount.
2. Collecting Unpaid Checks Through Special Enforcement Proceedings
In Turkey, checks are classified as negotiable instruments under the Turkish Commercial Code. Unlike invoices, checks provide an expedited enforcement procedure.
A. What Is a Check Enforcement Proceeding?
- If a Turkish debtor fails to honor a check, the creditor can file an enforcement proceeding based on negotiable instruments.
- This method is faster and more effective than general enforcement procedure, as debtors have fewer legal means to challenge the enforcement.
B. Steps for Check-Based Enforcement Proceedings
1. Filing an Enforcement Application
- The creditor must file an enforcement application at the enforcement office which is located within the debtor’s jurisdiction.
- Required documents include:
- The dishonored check
- Bank protest records (if available)
- A detailed debt statement
2. Immediate Payment Order Issuance
- The enforcement office will issue a payment order to the debtor.
- The debtor has five days to pay.
3. Limited Grounds for Objection
- The debtor may only object on specific legal grounds such as:
- Forgery
- Expired statute of limitations (which is three years for a check)
- Payment already made
4. Asset Seizure and Liquidation
If the debtor does not pay or successfully object, the creditor can proceed with asset seizure and liquidation, as in general enforcement cases.
How ÖNBAY Law Fırm Assısts Foreıgn Companıes ın Thıs Procedure?
At ÖNBAY Law Firm, we specialize in assisting international clients with their commercial debt recovery in Turkey. Our legal team has successfully handled numerous cases where foreign companies faced difficulties in receiving payments from Turkish businesses. We offer:
- Tailored Legal Solutions – We evaluate each case individually and choose the most efficient legal route.
- Fast & Effective Enforcement – We ensure swift filing of enforcement proceedings, reducing delays.
- Negotiation & Mediation – We explore amicable settlement options to avoid prolonged litigation.
- Full Legal Representation – From enforcement to litigation, we handle all steps of the collection process.
- Asset Recovery Strategies – We assist in tracing and seizing debtor assets.
If you are a foreign company struggling to recover outstanding debts from a Turkish business, contact ÖNBAY Law Firm today for expert legal assistance.
FAQ
1. How long does it take to recover a debt in Turkey?
The timeline depends on the debtor’s response. If there is no objection, enforcement can take a few months. If the debtor contests, court proceedings may extend the process to one or two years.
2. Can a foreign company directly initiate enforcement in Turkey?
Yes, foreign companies can file enforcement proceedings, but they must appoint a Turkish attorney to act on their behalf.
3. What happens if the debtor refuses to pay after asset seizure?
If the debtor’s assets are seized but not voluntarily paid, the creditor can request a public auction to sell the assets and recover the debt.
4. Are Turkish court decisions enforceable internationally?
Yes, if a Turkish court issues a ruling, it can be enforced in many jurisdictions through international treaties and bilateral agreements.
5. Can mediation be used for debt collection in Turkey?
Yes, mediation is mandatory for some commercial disputes. While not always required for enforcement cases, negotiation and mediation can sometimes lead to faster debt resolution.
Conclusion
Recovering outstanding debts from Turkish companies requires a strategic legal approach. Whether through general enforcement for invoices or negotiable instrument enforcement for checks, foreign creditors have strong legal options. By working with a trusted Turkish law firm like ÖNBAY Law Firm, creditors can navigate the Turkish legal system efficiently and maximize their chances of successful debt collection from Turkish companies.
For expert legal assistance in collecting debts from Turkish companies, contact ÖNBAY Law Firm.
