Read
Debt Collection through Provisional Attachment in Turkish Law
Date: 09/01/2018
Att. Levent Cengiz
levent.cengiz@cengiz.av.tr
Debt Collection through Provisional Attachment in Turkish Law
1) Introduction
In principle, a creditor is permitted to seize the debtor’s assets to collect a debt only after succeeding in the legal proceedings, that is, when it’s allowed by a relevant authority that he/she is entitled to do so. However, as the proceedings may take a long time, a mechanism is required to secure the debt until the end of the process, especially if there is a risk that the debtor would transfer his assets to a third party. In this sense, provisional attachment decision enables the creditors to seize the debtor’s assets before the dispute is finalized, or even before it is started. Therefore, the courts issue provisional attachment decisions in order to prevent the debtors from rendering the current or future proceedings futile. This article aims to provide brief information regarding provisional attachment indicated in Articles 257 – 268 of the Turkish Execution and Bankruptcy Code (“EBC”).
2) Conditions for Provisional Attachment
In principle, the debt must be due in order to apply for provisional attachment. However, under certain circumstances, it may be issued for deferred debts as well.
2.1) Due Debts
First of all, pursuant to Article 257/1 of the EBC, the creditors can resort to provisional attachment only for monetary debts. In other words, the debt must be liquid. Secondly, provisional attachment is not an option if the receivable is guaranteed by a pledge, as it does not need additional protection. However, if the amount guaranteed by pledge does not cover the whole debt, it’s possible to apply for provisional attachment for the unsecured amount of the debt.[1] Furthermore, the creditor can apply for provisional attachment, even if there is a contract of surety for such debt, as surety is not considered as a pledge.[2]
2.2) Deferred Debts
In addition to the conditions outlined for due debts, provisional attachment decision may be issued for deferred debts, if one of the conditions indicated in Article 257/2 is satisfied. In this respect, if the debtor:
It should be noted that provisional attachment is issued by the courts; however, the procedure is not considered as a lawsuit. Nevertheless, the creditor must apply to the court with a petition along with the documents proving the debt (258/1). In this sense, approximate proof is sufficient, so complete proof is not required.[3]
3.1) Competence and Venue
As Article 258/1 refers to Article 50 of EBC, venue is determined according to the general rules of the Code of Civil Procedure. However, if the provisional attachment is based on a court decision, the creditor can apply to any court. Although there is no provision regarding competence in the EBC, it’s subject to the general rules as well. For instance, commercial courts are competent for commercial disputes.[4] Briefly, the creditor can apply to the court for provisional attachment before or during a pending lawsuit/execution proceeding. On the one hand, the general rules apply, if provisional attachment is requested before commencing a lawsuit/execution proceeding against the debtor. On the other hand, if the creditor applies for provisional attachment during a pending lawsuit, provisional attachment decision can only be issued by the court hearing such lawsuit filed against the debtor.
3.2) Security
According to Article 259 of the EBC, the creditor must provide security for the damages likely to be suffered by the debtor or a third person. However, if the application is based on a court decision, security is not needed. In case the creditor has a document equivalent to a court decision, the court has the discretion as to whether the security is needed or not.
3.3) Time Limits
If the court accepts the request, the creditor must observe two important time limits in particular. Firstly, the decision must be implemented within ten days beginning from the date of the decision. It must be performed through one of the execution offices in the judicial locality of the court issued the decision (261/1). Secondly, if the application is done before starting a lawsuit/execution proceeding, the creditor must commence a lawsuit/execution proceeding against the debtor within seven days starting from (i) the implementation of the provisional attachment decision or (ii) the delivery of the minutes of the provisional attachment, if the implementation was not performed in the presence of the creditor (264/1). Otherwise, the provisional attachment will become void.
3.4) Appeal
If the application is rejected, the creditor is entitled to appeal the decision. The regional court’s decision on this matter is final (258/3). If the application is accepted, the decision can only be objected to the court issued the decision, if the decision was given in the absence of the debtor (265/1). In this case, the debtor must appeal the decision within seven days starting from (i) the implementation of the provisional attachment decision or (ii) the delivery of the minutes of the provisional attachment, if the implementation was not performed in the presence of the debtor. The court’s decision can be appealed, and the regional court’s decision on this matter is final (265/5).
4) Conclusion
Provisional attachment is a reliable method to secure the debt until the end of the process, especially if there is a risk that the debtor would transfer his assets to a third party. Although it’s available for due debts, under certain conditions, it can be obtained for deferred debts as well. Moreover, the general rules apply for competence and venue, if provisional attachment is requested before commencing a lawsuit/execution proceeding; however, if the creditor applies for provisional attachment during a pending lawsuit, it can only be issued by the court hearing such lawsuit. Also, if the application is not based on a court decision, the creditor must provide security for the damages likely to be suffered by the debtor or third person. Furthermore, the creditor must observe certain time limits; otherwise, provisional attachment may become void. Finally, if the parties appeal the court’s decision, the regional court’s decision on this matter is final.
[1] 11th Civil Chamber of the Court of Cassation (Supreme Court), decision dated 02/03/2016 and numbered 2016/2270. See also Baki Kuru, Execution and Bankruptcy Law written according to the Regional Courts of Appeal, Legal Publications, Istanbul – 2016, p.471.
[2] Kuru, Ibid, p.471.
[3] 11th Civil Chamber of the Court of Cassation, decision dated 14/05/2012 and numbered 2012/7701. See also Talih Uyar, Commentary on Execution and Bankruptcy Law, Bilge Publications, 3rd Edition, Ankara-2013, p.3989.
[4] Kuru, Ibid, p.472.
Att. Levent Cengiz
levent.cengiz@cengiz.av.tr
Debt Collection through Provisional Attachment in Turkish Law
1) Introduction
In principle, a creditor is permitted to seize the debtor’s assets to collect a debt only after succeeding in the legal proceedings, that is, when it’s allowed by a relevant authority that he/she is entitled to do so. However, as the proceedings may take a long time, a mechanism is required to secure the debt until the end of the process, especially if there is a risk that the debtor would transfer his assets to a third party. In this sense, provisional attachment decision enables the creditors to seize the debtor’s assets before the dispute is finalized, or even before it is started. Therefore, the courts issue provisional attachment decisions in order to prevent the debtors from rendering the current or future proceedings futile. This article aims to provide brief information regarding provisional attachment indicated in Articles 257 – 268 of the Turkish Execution and Bankruptcy Code (“EBC”).
2) Conditions for Provisional Attachment
In principle, the debt must be due in order to apply for provisional attachment. However, under certain circumstances, it may be issued for deferred debts as well.
2.1) Due Debts
First of all, pursuant to Article 257/1 of the EBC, the creditors can resort to provisional attachment only for monetary debts. In other words, the debt must be liquid. Secondly, provisional attachment is not an option if the receivable is guaranteed by a pledge, as it does not need additional protection. However, if the amount guaranteed by pledge does not cover the whole debt, it’s possible to apply for provisional attachment for the unsecured amount of the debt.[1] Furthermore, the creditor can apply for provisional attachment, even if there is a contract of surety for such debt, as surety is not considered as a pledge.[2]
2.2) Deferred Debts
In addition to the conditions outlined for due debts, provisional attachment decision may be issued for deferred debts, if one of the conditions indicated in Article 257/2 is satisfied. In this respect, if the debtor:
- 257/2-(1): does not have a definite place of residence,
- 257/2-(2): makes preparations to hide his assets or to run away from his creditors, or commits fraudulent acts that violate the creditor’s rights in order to avoid his commitments, provisional attachment may be issued against such debtor.
It should be noted that provisional attachment is issued by the courts; however, the procedure is not considered as a lawsuit. Nevertheless, the creditor must apply to the court with a petition along with the documents proving the debt (258/1). In this sense, approximate proof is sufficient, so complete proof is not required.[3]
3.1) Competence and Venue
As Article 258/1 refers to Article 50 of EBC, venue is determined according to the general rules of the Code of Civil Procedure. However, if the provisional attachment is based on a court decision, the creditor can apply to any court. Although there is no provision regarding competence in the EBC, it’s subject to the general rules as well. For instance, commercial courts are competent for commercial disputes.[4] Briefly, the creditor can apply to the court for provisional attachment before or during a pending lawsuit/execution proceeding. On the one hand, the general rules apply, if provisional attachment is requested before commencing a lawsuit/execution proceeding against the debtor. On the other hand, if the creditor applies for provisional attachment during a pending lawsuit, provisional attachment decision can only be issued by the court hearing such lawsuit filed against the debtor.
3.2) Security
According to Article 259 of the EBC, the creditor must provide security for the damages likely to be suffered by the debtor or a third person. However, if the application is based on a court decision, security is not needed. In case the creditor has a document equivalent to a court decision, the court has the discretion as to whether the security is needed or not.
3.3) Time Limits
If the court accepts the request, the creditor must observe two important time limits in particular. Firstly, the decision must be implemented within ten days beginning from the date of the decision. It must be performed through one of the execution offices in the judicial locality of the court issued the decision (261/1). Secondly, if the application is done before starting a lawsuit/execution proceeding, the creditor must commence a lawsuit/execution proceeding against the debtor within seven days starting from (i) the implementation of the provisional attachment decision or (ii) the delivery of the minutes of the provisional attachment, if the implementation was not performed in the presence of the creditor (264/1). Otherwise, the provisional attachment will become void.
3.4) Appeal
If the application is rejected, the creditor is entitled to appeal the decision. The regional court’s decision on this matter is final (258/3). If the application is accepted, the decision can only be objected to the court issued the decision, if the decision was given in the absence of the debtor (265/1). In this case, the debtor must appeal the decision within seven days starting from (i) the implementation of the provisional attachment decision or (ii) the delivery of the minutes of the provisional attachment, if the implementation was not performed in the presence of the debtor. The court’s decision can be appealed, and the regional court’s decision on this matter is final (265/5).
4) Conclusion
Provisional attachment is a reliable method to secure the debt until the end of the process, especially if there is a risk that the debtor would transfer his assets to a third party. Although it’s available for due debts, under certain conditions, it can be obtained for deferred debts as well. Moreover, the general rules apply for competence and venue, if provisional attachment is requested before commencing a lawsuit/execution proceeding; however, if the creditor applies for provisional attachment during a pending lawsuit, it can only be issued by the court hearing such lawsuit. Also, if the application is not based on a court decision, the creditor must provide security for the damages likely to be suffered by the debtor or third person. Furthermore, the creditor must observe certain time limits; otherwise, provisional attachment may become void. Finally, if the parties appeal the court’s decision, the regional court’s decision on this matter is final.
[1] 11th Civil Chamber of the Court of Cassation (Supreme Court), decision dated 02/03/2016 and numbered 2016/2270. See also Baki Kuru, Execution and Bankruptcy Law written according to the Regional Courts of Appeal, Legal Publications, Istanbul – 2016, p.471.
[2] Kuru, Ibid, p.471.
[3] 11th Civil Chamber of the Court of Cassation, decision dated 14/05/2012 and numbered 2012/7701. See also Talih Uyar, Commentary on Execution and Bankruptcy Law, Bilge Publications, 3rd Edition, Ankara-2013, p.3989.
[4] Kuru, Ibid, p.472.