A foreign currency debt is a debt in which the currency of the debt relationship is different from the currency of the place of performance, the subject of which is a certain amount of money. If the debt in question cannot be collected, we have two options according to Turkish law: 1) Litigation 2) Execution proceedings. In today’s article, we will discuss the collection of foreign currency debt through enforcement proceedings.
If there is a foreign currency receivable to be collected in Turkey, the Enforcement and Bankruptcy Law No. 2004 should be consulted first. Pursuant to subparagraph 3 of Article 58 of the relevant Law, it is clearly stated that the amount of the receivable or the requested collateral must be stated in Turkish Lira and the interest in interest-bearing receivables must also be stated in Turkish Lira. Therefore, if the debt, the subject of which is a foreign currency, is to be collected by way of execution within the borders of the Republic of Turkey, the proceedings can only be initiated by converting it into Turkish Lira. In addition, in order for the foreign currency receivable to be subject to enforcement proceedings in Turkey, the creditor must calculate the interest from the date of default until the date of the proceeding and convert it into Turkish Lira. This rule is related to public order and must be taken into consideration ex officio at every stage of the proceedings. As the proceeding must be initiated in TL, the amount of the receivable must be shown in TL in the payment order. Otherwise, an indefinite complaint may be filed. If the payment order is served without complying with the aforementioned regulation, the payment order is canceled. The relevant decision of the HGK on the subject is as follows:
“Accordingly, the creditor is obliged to show the TL equivalent of the foreign currency receivable in the follow-up request, and accordingly, this obligation must also be fulfilled in the payment order. Since the aforementioned deficiency is related to public order and the sovereign rights of the state, it should be taken into consideration ex officio at every stage of the proceedings. (HGK decision dated 12.05.1999 and numbered 1999/12-271 E. – 99/301 K.)
As ECY Law team, in this article, we have explained how foreign currency receivables can be the subject of enforcement proceedings in Turkey. It should be noted that initiating enforcement proceedings and managing the legal process by making the relevant accounts in accordance with the law requires expert legal support. At this point, as ECY Law, we would be pleased to answer your questions and provide you with legal counseling and advocacy services with our expert staff.
