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ICSID Decisions given in favor of Turkmenistan is enforced by Cindemir Law Office in Turkey.

Turkish Companies were sentenced to compensation at the International Arbitral Tribunal by Republic of Turkmenistan.

Turkmenistan’s Ministry of Justice resorted to the Turkish judicial system through Cindemir Law Office in order for Republic of Turkmenistan to collect the compensations that are contingent with the World Bank’s arbitration (ICSID), against the Turkish Companies. In the statement of the law office’s representative Lawyer Gökhan Cindemir said;

“Turkish Companies were sentenced to compensation at the International Arbitral Tribunal by Republic of Turkmenistan.”
Turkish Companies were sentenced to pay compensation to Republic of Turkmenistan by International Arbitral Tribunal. Headquarters located in Washington, “The International Centre for Settlement of Investment Disputes Arbitration Court” shortly known as “ICSID”, rejected all claims against Republic of Turkmenistan by Turkish companies and sentenced Kılıç İnşaat A.Ş. to pay a compensation of 1,078.215,00 American Dollars.

Within the frame of ten different contracts pursuant to Mutual Promotion and Protection of Investments Treaty, which is signed between Republic of Turkey and Republic of Turkmenistan in 2009, Kılıç İnşaat resorted to referring to arbitration of the World Bank against Republic of Turkmenistan with the claims of harmful activities towards the construction of the facilities, delaying the payments in this context, imposing unfair penalties, commencing judicial process unannounced and without the defendant party’s attendance. After claiming for 275.124.575 American Dollars, the lawsuit was rejected by three arbitrators by a large majority and Turkish company was sentenced to pay compensation.

In another trial, plaintiff İçKale Ltd. Şti.’s claims against Republic of Turkmenistan were rejected and aforementioned company was sentenced to pay a compensation of 1,747,521 American Dollars.

“Arbitration Board Rejected Appeal”
Appeal request by Kılıç İnşaat A.Ş. against the aforementioned sentence submitted in January 13 2014 was rejected by the arbitration board in July 14 2015 and confirmed the compensation of Republic of Turkmenistan.

“Republic of Turkmenistan began the initiatives to collect their dues”
It was found out that through their lawyers in Turkey, Republic of Turkmenistan initiated the necessary legal actions against the companies that were sentenced by the arbitration in order to collect their dues.
Arbitral rulings by the ICSID in the relevant countries in accordance with “Contract of Settling the Investment Disputes between Founding Countries of the International Centre for Settlement of Investment Disputes (ICSID) and Citizens of Other Countries”, of which Turkey is known to be a party of and is signed on 24.6.1987, are considered as a local court ruling and can be directly subjected to enforcement.

“Other International Arbitration Boards Also Decided that Turkish Companies acted under Unjust Manners”
UNCITRAL, Affiliated to United Nations, other arbitral rulings in accordance with the arbitration rules put into effect by “United Nations Council of International Trade Law” also sentenced Turkish companies to remit compensation to Republic of Turkmenistan. Within this scope, 11 Turkish claimants of the pending case (Erhas and others) and businessman Faruk Bozbey were sentenced to compensation as well.

Enforcement of US Judgments in Turkey

Contact : gokhan@cindemir.av.tr

As a civil based law country (continental European Law) in Turkey, enforcement of foreign judgments are entitled to specific provision in International Private Act (MOHUK). It is noteworthy to mention that Turkey is not part of European Union and accordingly Brussels Convention and other relevant legislation which deal with judgement enforcement does not have any effect in Turkish Law.

The Conditions of Exequatur (Enforcement ) Article 38 of MOHUK (Turkish International Private Law Act)

The court of competent jurisdiction shall render the exequatur under the following conditions:

  1. a) The presence of an agreement, which rests on the principle of reciprocity, between the Turkish Republic and the State where the judgment has been rendered, or a provision of law or an application de facto enabling the execution in that state of judgments rendered by the Turkish courts,
  2. b) The judgment shall have been rendered on a subject, which does not come under the exclusive jurisdiction of the Turkish courts,
  3. c) The judgment shall not have been expressly contrary to the public policy,
  4. d) Pursuant to the laws of that place, the person against whom execution is requested shall have not been duly cited to the court that rendered the judgment or represented before that court, or a judgment by default shall have been rendered as contrary to these laws and this person shall have not objected to the Turkish court against the request for execution through basing on one of the matters above,
  5. e) The law, which is authorized in accordance with the Turkish rules of conflict of laws,shall have not been applied in the foreign judgment concerning the civil status of the Turcs and the defendant, who is a Turkish citizen, shall have not objected in this respect against the execution.

In consideration of these information, what is the final situation with US court decrees in Turkey?

As can be seen above, the first condition is presence of a mutual agreement with the country whose judgements will be enforced in Turkey. There is no specific agreement between USA and Turkey related to this issue. Accordingly, other conditions will come to an issue such as reciprocity.

Mostly, it is very difficult to prove reciprocity between USA in regards of legislation due to common law structure of the USA law (except State of Lousiana which has uniquely continental law background) . In this regard, generally Turkish Courts reject USA decrees based on the fact that there is no proof of a reciprocity between USA and Turkey. Please also note that, according to Turkish High Court decisions state that the first time enforcement of a foreign court decision does not constitute an obstacle for enforcement.

 Considering all these facts, in general we can say that USA decisions against Turkish defendants are not enforceable in Turkey. There is one exception for this general precedent.

One of a Turkish High Court decision related to enforcement matter states that in general it can be said that there is no reciprocity between USA and Turkey, on the other hand, every state of USA has different practice to enforce Turkish Decisions in its jurisdiction. For instance, one of Turkish High Court decision states that, Turkish first instance Courts must consider the law of USA’s specific state which judgement is given, and reciprocity must be determined based on that state’s attitude to Turkish judgements. Thus, if i Turkish Courts decisions are enforceable in the jurisdiction of judgement given state then first instance court must have accepted the enforceability of judgment.

Let me to exemplify it with an example, in case that Turkish Court decrees are accepted to be enforced in state of Florida, and if it can be proved by the applicant then US decree must be enforceable in Turkey based on reciprocity principle. Accordingly, proof of reciprocity in certain state of USA related to Turkish Decrees are priority to start a enforcement procedure in Turkey.

Lastly, there is also one more obstacle regarding Turkish Law for US applicants under “caution judicatum solvi” of Turkey. There is no any specific agreement between Turkey and United States stating that Turkish citizens must not pay any additional deposit fee to open a case in USA as foreigner. In that regard, based on reciprocity Turkish Courts seek for security deposit (generally 15 percent of disputed amount) from US applicants to start a case in Turkey.

Therefore, there are two obstacles which US citizens or US legal entities can confront with :

  1. Reciprocity of Enforcement of US Judgements
  2. Security Deposit Requirement for filing a case based on lack of agreement between Turkey and USA which regulates exemption of security deposit for Turkish Citizens in case of filing a case in USA.

 Accordingly, there are two critical points that US applicant must prove in Turkish Courts to enforce US Court decision. Firstly, applicant must prove that the judgement which is given from relevant state accepts also Turkish Courts Decrees in its jurisdiction. This can be proved by court decree examples obtained from local state courts stating Turkish Court’s decision is enforced. And also if there is specific law in that state which stating liberal provision for enforcement of  Foreign Court Decree.

Secondly, in case that applicant is not willing to remit security deposit to Turkish Court as 15 percent of disputed amount for filing a suit, then US applicant must also prove that Turkish Citizens are not subject to this requirement in their state.

As can be understood from this article, enforcement of US decisions in Turkey requires legal struggle which can be only achieved by US attorney and Turkish Attorney cooperation by submitting evidences proving reciprocity between the court practices.

Attorney Gökhan Cindemir
After he completed his high school degree in Turkey, he went to Belgium with AFSintercultural exchange program and completed his high school degree in Belgium. Upon his return to Turkey, he obtained his law licence degree from Marmara University of Law Faculty of Istanbul, Turkey. During his university education, he had participated in Philip C.Jessup International Law Moot Court Competition on behalf of Marmara University, Istanbul. He became member of Istanbul Bar Association, then after he had been granted to a master’s degree, LL.M by Gent University of Belgium in the field of European and Comparative law. He completed his one year millitary duty at Legal Affairs Department of Central Command Headquartes in Ankara with Lieutenant Rank. He speaks fluent English and has good command of Dutch and French. He is also authorized as a solicator, barrister.

Debt Collection in Turkey

Author: Av. Gökhan Cindemir 

cindemir@cindemir.av.tr – 00905325680647

This article aims to explain the procedures regarding debt collection. There are two separate procedures in Turkey in order to follow your debt. 1. Debt Execution Procedure which will be provided by Administrative Body and 2. Litigation Procedure which will be examined by the Court.
As regards to the first method, component debt collection lawyer initiate debt execution procedure via debt execution administration after that administration submits order of payment to the debtor. If debtor shall object the order of payment by claiming the inexistence of debt within 7 days (duration of 7 days stems from ordinary debt / credit relationship, it is five days for the debt stemming from check and bonds) subsequent to submission of the letter, the execution process shall be frozen and the only way to proceed the execution process shall be filing a litigation case to the debtor company.

It is also noteworthy to mention that in case of the litigation decision shall be in favor of creditor, unfair objection to the debt during debt execution procedure shall be subjected to the penal fee as 40% amount of the debt. That penal fee must be awarded to the creditor. On the other hand, the party as a creditor can also file a litigation case directly regardless of initiating debt execution.

The administrative debt execution fee is 0.05% of the debt amount and almost 10 € extra fee.
As mentioned above in case of objection, litigation shall come to an issue. The litigation process shall be governed by the court with the consideration of the evidences such as invoices, contracts, correspondences, accounting books and related proofs. This process will also encompass hearings including claim and counter claim procedure. The court fee related to litigation shall be also dependent on the amount of the debt. 59/1000 of the amount will be the litigation and the posting, expert fees and other possible court fees will be included to it. According to the act of fees of Turkey, it is sufficient to remit court fee’s ¼ in order to initiate litigation in the beginning. The rest can be remitted in previous hearings in advance of the decision.

Litigation must be implemented by a Turkish Attorney on the basis of a valid power of attorney as debt execution procedure also requires. Power of attorney can be obtained from Turkish embassies and consulates by the Turkish legal entities or Turkish citizens. Foreigner citizens and legal entities must obtain from relevant authorities in their country which are capable of issuing power of attorney based on the country’s law. Having power of attorney from these authorities will not make the power of attorney as valid in Turkey by itself. Apostille stamp requires for validity of Power of Attorney to be used in Turkey or approval of the power of attorney via Turkish embassy or consulate will be necessary. In case that the country is not the party of The Hague convention enabling Apostille, the only way to make power of attorney valid will be approval from mentioned Turkish embassies.

If the country of creditor applies some restrictions for Turkish Citizens and Turkish legal entities for filing a case particularly litigation case in the jurisdiction of said country, Turkish court will request security deposit from the creditor. In case that judicial assistance agreement or relevant convention’s ratifications lacks between Turkey and third countries, there is a security deposit obligation (Cautio Judicatum Solvi) for foreign legal entities or real persons who intends to initiate a lawsuit or enforcement procedure in Turkey. (Article 97 of the Turkish Code of Civil Procedure and Article 32 of the Code of Private International Law and International Civil Procedure). There is no certain provision laying down the percentage of amount related to deposit, however in practice courts determines %15 of disputed amount as a security deposit.

A Judicial Assistance Agreement Exists between Turkey and the Countries Mentioned Below

Germany, N. Cyprus ,Albania, Kuwait, Austria ,Lithuania, Azerbaijan, Hungary Bulgaria, Macedonia, Czech Republic, Algeria ,Moldova, China, Mongolia, Morocco, Uzbekistan, Georgia, Poland, India, Romania, Croatia, Tajikistan, Iraq, Tunisia, Jordan, Yugoslavia, United Kingdom, Ukraine, Switzerland, Italy, Kazakhstan

There are also countries exempt from security deposit due to reciprocity principle in Turkish Private State Law Act. These countries do not apply any security deposit to Turkish citizens and legal entities in case of debt recovery proceeding, accordingly Turkey does not seek any security deposit obligation for mentioned below countries: Russia, Egypt, Chile, Finland, Peru, Libya, Syria.

Remittance of Security deposit can be proved with several ways such as remittance of the amount to Turkish central bank account in foreign currency, guarantee letter from a bank, pledge on a real state, guarantee letter approved by a Turkish notary and bill of exchange. In the end of case or enforcement procedure, security deposit must be refund to creditor by the court. Real reason behind security deposit is to protect Turkish debtor for possible damages by foreign entities during procedure.

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ABOUT THE AUTHOR: Attorney Gokhan Cindemir
He graduated from Anatolian High School of Karadeniz Eregli, after his graduation he studied in Belgium with AFS intercultural exchange program. He obtained his law license degree from Marmara University of Law Faculty. During his university education, he participated in Philip C. Jessup International Law Moot Court Competition on behalf of the Marmara University. After his admission to Istanbul Bar Association in 2009, he obtained master degree (LL.M) from Gent University / Belgium in the field of European and Comparative law. His master research was about Freedom of Establishment In Relation With Turkey and EEC in the frame of Ankara Agreement. He is specialized in International Private Law, European Law, Real Estate Law, Penal Law and Tort Law. He speaks fluent English and has good command of Dutch and French. He is also authorized as a solicitor, barrister.

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Methods of Debt Collection In The Light of Turkish Law

contact us: cindemir@cindemir.av.tr
Av. Gökhan Cindemir

This article aims to explain the procedures regarding debt collection. There are two separate procedures in Turkey in order to follow your debt. 1. Debt Execution Procedure which will be provided by Administrative Body and 2. Litigation Procedure which will be examined by the Court.

Status of Foreign Legal or Personal Entities Regarding Debt Collection
It is important to note that Swiss Enforcement Law is reference law for Turkish Enforcement Law. Accordingly, decisions of Federal Courts of Switzerland have a significant place in Turkish precedent.
In case that judicial assistance agreement lacks between Turkey and third countries, there is a security deposit obligation (Cautio Judicatum Solvi) for foreign legal entities or real persons who intends to initiate a lawsuit or enforcement procedure in Turkey. (Article 97 of the Turkish Code of Civil Procedure and Article 32 of the Code of Private International Law and International Civil Procedure). There is no certain provision laying down the percentage of amount related to deposit, however in practice courts determines %15 of disputed amount as a security deposit.
Judicial Assistance Agreement exists between Turkey and the countries mentioned below:
Germany, N. Cyprus ,Albania, Kuwait, Austria ,Lithuania, Azerbaijan, Hungary Bulgaria, Macedonia, Czech Republic, Algeria ,Moldova, China, Mongolia, Morocco, Uzbekistan, Georgia, Poland, India, Romania, Croatia, Tajikistan, Iraq, Tunisia, Jordan, Yugoslavia, United Kingdom, Ukraine, Switzerland, Italy, Kazakhstan
There are also countries exempt from security deposit due to reciprocity principle in Turkish Private State Law Act. These countries do not apply any security deposit to Turkish citizens and legal entities in case of debt recovery proceeding, accordingly Turkey does not seek any security deposit obligation for mentioned below countries: Russia, Egypt, Chile, Finland, Peru, Libya, Syria.
Remittance of Security deposit can be proved with several ways such as remittance of the amount to Turkish central bank account in foreign currency, guarantee letter from a bank, pledge on a real state, guarantee letter approved by a Turkish notary and bill of exchange. In the end of case or enforcement procedure, security deposit must be refund to creditor by the court. Real reason behind security deposit is to protect Turkish debtor for possible damages by foreign entities during procedure.
Methods of Debt Collections in Turkey
According to Turkish Law, debt enforcement proceeding and action of debt are the methods which can be applied.
Action of Debt
Advantage of filing an action of debt rather than debt enforcement procedure is to have an opportunity to implement interim measures against debtor. Therefore, action of debt enables creditor to request interim measure against debtor in order secure its possible debt. Creditor must convince the court by proving necessity of interim measure and collection risk related to the debt. According to Turkish Law, interim measure enables creditor to secure his debt during the case by pledging over the debtor’s assets. Accordingly, as mentioned above it is necessary to prove that the debt is under risk.
In case that the court decides in favor of the creditor in connection with the debt, decision can be executed directly over the debtor. Subsequent to decision if the debtor shall not remit determined debt, assets pertaining to the debtor would be be easily seized and it can be converted to cash with attachment procedure.
Debt Enforcement Proceeding
Apart from action of debt, creditor can also apply to Debt Recovery Governmental Office in order to follow his debt. Upon an application, the department shall submit order of payment to the debtor. In case that debtor shall not object to the debt within 7 days (duration is 5 days for debts stemming from cheque, deed, deed approved by notary or other official documents proving debt) subsequent to submission, the debtor shall be considered as a party recognizing alleged debt by the law. In this case, creditor can initiate attachment proceedings against debtor in order to recover the debt. On other hand, if the debtor objects to alleged debt, creditor must file an action of debt in order to prove the legitimacy of debt.
Subsequent to debtor’s objection, continuation of debt collection process can be solely provided by filing a case called as action of debt. It is noteworthy to mention that if one of the party is a merchant or having a commercial legal entity in debt relation, component court must be commercial court rather than court of peace.
In case that debt stemming from a documents such as cheque, deeds, etc, legal case must be filed by the creditor at enforcement courts. In these cases, debtor must prove that the signature or stamp on the document does not belong to him. The subject matter in this case can be only the validity conditions of the document rather than context of debt.
cindemir@cindemir.av.tr
Atty. Gokhan Cindemir graduated from Anatolian High School of Karadeniz Eregli, after his graduation he studied in Belgium with AFS intercultural exchange program. He obtained his law license degree from Marmara University of Law Faculty. During his university education, he participated in Philip C. Jessup International Law Moot Court Competition on behalf of the Marmara University. After his admission to Istanbul Bar Association in 2009, he obtained master degree (LL.M) from Gent University / Belgium in the field of European and Comparative law. His master research was about Freedom of Establishment In Relation With Turkey and EEC in the frame of Ankara Agreement. He is specialized in International Private Law, European Law, Real Estate Law, Penal Law and Tort Law. He speaks fluent English and has good command of Dutch and French. He is also authorized as a solicitor, barrister.