Adaptation Problem In Foreign Currency Indexed Consumer Loans 18 November 2019

Reflections of the economic crisis that has affected the world are particularly encountered in Turkey in the use of foreign currency indexed consumer loans. The reason why the foreign currency indexed loans is preferable is that the interest rate and hence the amount of installments to be paid is low and in short, the loan is more payable.

It is increasingly common for consumers receiving foreign currency indexed loans, to have difficulty in paying as a result of the appreciation of the foreign currency stemming from the economic crisis and to ask the courts to adjust their loan agreements.

1. Structure of the Consumer Loan Agreements

In each contract, equilibrium of the performances is established between the contracting parties. However, it is not always possible to observe equilibrium in the law of contracts. The reason behind of it is that the parties can freely decide the content and mutual acts of the contract in accordance with the freedom of contract.

Foreign currency indexed loans are long-term loans as they are generally subject to purchase of real estate. Therefore, in consumer loan agreements, generally agreed performances are fulfilled in parts during the term of the agreement rather than at the same time. In this process, due to the time spread of the performance of the contract, changes in the economic and legal status of the parties may occur. In such a case, an adaptation may be requested for the remainder of the partial performance.

2. Pacta Sunt Servanda (Agreements Must be Kept)

The effects of changes in the economic and legal situation on consumer contracts reveal the concepts pacta sunt servanda and the adaptation of the contract to the changing conditions.

According to pacta sunt servanda, although the circumstances have changed over time, the contracting parties must adhere to the provisions that are determined in accordance with the freedom of contract. The envisaged agreement will remain in force for the duration of the agreement and the amendments will have no effect on the agreement. The amendments shall have no effect on the contract. Adherence to pacta sund servanda may often leads to unfair consequences for equilibrium of interests. In such a case, the adaptation of the contract to changing conditions needs to arise.

3. Adaptation of the Contract to Changing Conditions within the Turkish Code of Obligations

Any misfortune and negativity experienced in the performance of the contract does not require the adaptation of the contract. The request for adaptation of the contract should be evaluated separately on case-by-case basis. The most important consequence of the hardship (excessive performance difficulties) stated in Article 138 of the Turkish Code of Obligations is, demanding for the adaptation of the contract. However, if the adaptation is not possible, the debtor may terminate the contract. It is mentioned in the said article that, an extraordinary situation which is not foreseen and not expected to be foreseen by the parties at the time of the contract occurs due to a reason not arising from the debtor, and the existing facts at the time of the contract are made to be changed in such a way that it is contrary to the rules of honesty, the parties may ask the judge to adapt the contract to the new conditions.

Adaptation shall also be allowed in cases where the consumer anticipates the subsequent change but does not anticipate that the consequences will be so severe.

The economic crises experienced in recent years and the negative effects of these crises on foreign currency indexed money debts have increased the demands for adaptation, with the decision to amend the Decision No. 32, the adaptation cases were again brought to the agenda.

As a result of the change following the conclusion of the foreign currency indexed loan agreement, the foreign exchange may have gained excessive value against the Turkish Lira. The depreciation of money can occur spontaneously, as a result of the devaluation decision of the competent authorities, or due to the economic crisis. This may cause a difficulty in performing the contract.

In the adaptation cases, the decisions of the Trial Courts and the Supreme Court were to reject the case by refusing the adaptation of foreign currency indexed credit contracts, since the fluctuations in foreign exchange were predictable due to the economic crisis.

“Those who have contracted and borrowed in foreign currency instead of the Turkish Lira, which constantly depreciates against foreign currency, should foresee that such increases may be experienced in foreign currency borrowing in the face of high inflation and economic crises in the country and the defendant should anticipate this against the course of foreign currency.”

It is possible to say that the extraordinary condition sought in the provision regarding the adaptation of the contracts to the changing conditions due to the excessive performance difficulties regulated in Article 138 of the Code of Obligations is realized by the decision of amendment to Law No. 32.

The extraordinary condition sought in the provision for the adaptation of contracts to changing conditions due to the excessive performance difficulties set out in Article 138 of the Code of Obligations realizes with the decision of the amendment made in the Law No. 32. Therefore, it is a fact that requests for the adaptation of the contract to be concluded as from 13.09.2018 cannot be easily rejected in accordance with the Statement related No. 32.

4. Decision No. 32 on the Protection of the Value of the Turkish Lira

With the amendment made to the Decision No. 32 on the Protection of the Value of the Turkish Lira; except as determined by the Ministry, residents of Turkey, contractual value and other payment obligations arising from such securities and real estate leasing, leasing and business, service and works contracts including securities and real estate purchase and sale, vehicle and financial leasing shall not be decided in foreign currency or indexed to foreign currency.

Aforementioned arrangements include only contracts concluded between residents in Turkey as defined in the resolution.

One of the measures taken by the Ministry of Treasury and Finance against the increase in exchange rates and inflation-interest rate is the decision regarding the bond of foreign currency indexed contracts to TL.

The Statement No. 32 on the Protection of the Value of the Turkish Lira, published on 06.08.2019, includes the amendments to Article 8 of the Decision on Foreign Currency and Foreign Currency Indexed Contracts. In the aforementioned statement, the contract price and the other payment obligations arising from the agreements are obliged to be re-determined in Turkish Lira within the scope of the Provisional Article 8 of the Decision No. 32 regarding the contracts which cannot be determined in foreign currency or foreign currency indexed agreements.

 With the mentioned amendment, the provisions of the Provisional Article 8, within thirty days from the date of 13.09.2018, except as determined by the Ministry; the contracting parties shall redefine the contractual amount in Turkish Lira, the amount specified in the mentioned paragraph and which have been previously agreed in the contract concluded in foreign currency in terms of foreign exchange, If the contractual value is not determined by the parties until 13.09.2018, it is foreseen to impose an administrative fine according to Article 3 of the Law No. 1567 on the Protection of the Value of the Turkish Lira.

In accordance with this article, the contractual price and the other payment obligations arising from these contracts shall be re-determined by the parties as the Turkish Lira in the contracts which cannot be determined in foreign currency or foreign currency indexed.

Cost determined in foreign currency but re-creating the scope of the present concluded that the contract will be determined as the Turkish lira, the contract date of conclusion of both parties are required to consider the issues that the residents in Turkey.

While establishing the scope of the existing contracts that the amounts which are determined in foreign currency but which will be determined as Turkish Lira, it must be taken into consideration that in the date of conclusion of the contract, both parties must be resident in Turkey.

Türkçe Versiyonu İçin : http://www.kasaroglu.av.tr/tr/dovize-endeksli-tuketici-kredilerinde-uyarlama-sorunu