How to Collect Receivables from Turkey 10 October 2019
If a receivable is born through legal means, the creditor shall take legal action in order to collect receivables. The way of such collection from Turkey depends on the type of document issued for the receivable. Accordingly, other than filing an action of debt in the Commercial Court of First Instance; there are three ways of collecting receivables; as through enforcement with judgement and without judgement, and via the way of collection specific to the bills of exchange.
Enforcement Proceeding without Judgement
As of article 6 of Code of Civil Procedure, the execution office located in the settlement of the debtor is generally competent. However, since there is no absolute competence, different enforcement offices can be appealed. The provision of arbitration clause by the parties within the contract does not prevent appealing to the execution office.
The execution office sends a payment order to the debtor upon the request by the creditor. Within 7 days after the notification of payment order, the debtor may object to payment order. In this case, enforcement proceedings cease, and collection of receivables may take time. Therefore, the creditor may either file an action for annulment of objection within a year before the Commercial Court of First Instance, or request the Enforcement Court to remove the objection pursuant to article 68 of Bankruptcy and Enforcement Law (“Law”) within 6 months from the notification of objection.
If the creditor takes a removal of objection decision from the Enforcement Court, or an annulment of objection with the documents stated in Article 68 of the Law from the Commercial Court of First Instance, at least 20% compensation will be added to the amount of the receivable.
However, if the debtor does not object to the payment order within 7 days after notification, the payment order becomes final. At the request of the creditor, the attachment proceedings are initiated and the receivable shall be collected from the goods of the debtor by following the necessary procedures.
Collection of Receivables Specific to the Bills of Exchange
In case of a collection of receivable under a bill of exchange, the way of collection specific to the bills of exchange shall be applied pursuant to article 167 of the Law. In order to be able to apply to such way of collection, the receivable in question must be due and be bound to a cheque, policy or bond. Since it is a specific way to collect the receivable; it is still possible to appeal to enforcement proceedings without judgement for the receivables under a bill of exchange.
The attachment of the bill of exchange in the request is mandatory to issue enforcement proceedings. The debtor may object to the payment order sent; however, this does not stop executive proceedings unlike the enforcement procedure explained above. For this reason, this is a faster method of collecting receivables.
In order to stop the executive proceeding, the execution court shall make a decision to suspend execution. In case of suspension, the creditor may still request the initiation of attachment proceedings, yet seized goods cannot be sold due to debtor’s objection.
As of article 257 of the Law, the creditor can claim a provisional attachment before the Enforcement Court. The provisional attachment is imposed on debtor’s movable and immovable property of the debtor including the related bank accounts. Therefore, provisional attachment creates a safe mechanism for the collection of receivable.
Enforcement Proceeding with Judgement
In order to apply to the enforcement proceeding with judgment; the creditor is required to have a judgement such as a court decision or an arbitral award. Moreover, the decision of compromise or acceptance before the court, a notary note with unconditional acceptance, bail of appeals, or bail in the enforcement office as defined in Article 38 of the Law, are also considered as a judgement without the need for a court decision.
As of enforcement proceeding with judgement, the creditor may apply to any executive office in Turkey. However, the judgement regarding the receivable shall not be prescribed. Furthermore, the execution procedure can be started or continued during appeals, unless it is decided to suspend the execution by a superior court.
The advantage of enforcement proceeding with judgement is that, the debtor cannot object to the payment order. If the debtor pays the receivable within 7 days after notification, the proceeding is concluded. In case the debtor does not make the payment, the creditor may choose either foreclosure or bankruptcy to collect his receivable after the expiry of the 7-day period.
How Long It Takes to Conclude An Enforcement Proceeding
The proceedings before the Court of First Instance last an average of 2 years. If adversely decided, and the value of the receivable exceeds 4400 TL, the creditor may apply to Court of Appeals. If the value of the receivable exceeds 58.808 TL, the creditor may appeal before the Supreme Court after the decision of the Court of Appeals
