Overseas debt collection in Turkey — court proceedings

Different rules apply to different commercial instruments. Debt collection for a check is processed in a different way than it is for an unpaid invoice.

The roadmap gives you several options to start the collection process, which means that for the same type of commercial instrument — such as an invoice, check or penalty clause in an agreement — there are different procedures to follow. Whatever the procedure chosen by the creditor to follow, the collection process should — reasonably — start with a pre-legal debt collection. This is certainly still legal but there is a chance of collecting the debt without the involvement of the court or execution office. This is certainly also a cheaper way. I am planning to write an article covering pre-legal debt collection in particular and will mention what and how it should be done.

After the pre-legal debt collection process, you will need to decide which procedure to follow: you can select the execution office-based collection proceedings or you can go for a lawsuit. The first option was already covered in the last article published last week. In this article I will give some information about starting a lawsuit against a local debtor. The article will cover the key matters and not the procedural matters as it would take a few more articles to write about it.

Once a creditor files a lawsuit before the courts, this requires a well-prepared statement of claim as the court will review the content of the invoices, the commercial records and commercial books of the parties, correspondence and notices between the parties, etc. during the course of the litigation. The most important item to be reviewed by the court is the invoice. Therefore, it is essential to identify the items that should be included in any invoice according to Turkish law.

As per the Tax Procedural Law, the below issues should at least be included in the invoice to be issued: the issue date of the invoice; the serial and item number; the full name of the issuing party; if available, the trading name of the company; its business address; the related tax office and account number; the customer’s full name; the trading name; the address; if available, their tax number and account number; the type of service, product or work; the amount, quantity, price and delivery date of the products sold; and the waybill.

The court will make a preliminary hearing and then will go into the substance of the matter where the creditor should substantiate the claims and prove it.

Once the local court makes its decision, either party can then appeal the decision and the final decision will be made by the Supreme Court of Appeals in that case. Following the final and binding decision of the court in favor of the creditor, the creditor then can submit the verdict to the execution office to collect the sum. Certainly this process is much smoother now as it is based on a court decision.