LEGAL CHARACTERISTICS OF PAYMENT ORDER AND THE FINALIZATION OF THE ENFORCEMENT PROCEEDING IN TURKEY
Enforcement Department and Enforcement Directorates
Under Turkish Enforcement Law, the governmental mechanism which enables the debt to be performed forcibly is the enforcement department.
The most important component of the aforementioned enforcement department within the Turkish Law system is an enforcement office. Enforcement Offices are primarily in charge of debt enforcement. A creditor who wants to initiate an enforcement proceeding applies to the enforcement office.
The Enforcement Office is the initial agency to which creditors apply both for enforcement proceedings and bankruptcy procedures. Enforcement Offices are authorized to take actions for collecting debts or enforcing court judgments.
In this respect, the enforcement office sends payment orders or enforcement orders to debtors following the initiation of enforcement proceedings by creditors. If the requirements of the orders are not met and the enforcement proceeding becomes final, the enforcement office is authorized to seize and sell the debtor’s assets, upon the creditor’s request, and to pay the creditor’s claim with the acquired money.
Initiating Enforcement Proceeding:
Pursuant to Turkish Enforcement and Bankruptcy Law No. 2004, there are three types of enforcement proceedings;
i) Proceedings of General Lien,
ii) Proceedings of Bills of Exchange, and
iii) Proceedings of eviction of leased real estates by enforcement proceedings.
General Lien proceedings only apply to pecuniary and security claims. A General Lien is initiated by a request to be filed by the creditor to the enforcement office.
The creditor submits its enforcement proceeding request to the enforcement directorate in writing and the enforcement office (the bailiff) examines whether this enforcement proceeding request meets the conditions prescribed in the Law. If the enforcement office is satisfied that the conditions have been met, the bailiff shall issue a payment order or an enforcement order and then send it to the debtor. (Article 60 of Enforcement and Bankruptcy Law)
At this stage, the creditor may collect its claim against its debtor in two ways under Turkish Law:
The first enforcement proceeding is that the creditor may bring a lawsuit before the court and receive a final verdict (judgment) and the creditor will be able to collect its debt thereafter (Enforcement proceeding with judgment). Upon the enforcement proceeding request, if the request complies with the conditions prescribed by the Law, an enforcement order shall be sent to the debtor.
The second enforcement proceeding is that the creditor may apply to any enforcement office without any necessity for receiving any final verdict (judgment) through the court and the creditor may collect its debt through the enforcement office: Article 58 of Enforcement and Bankruptcy Law (Enforcement proceeding without judgment). In such enforcement proceedings, if the request is in consistent with the conditions prescribed by the Law, the bailiff shall issue a payment order and send it to the debtor.
Issuing and Serving a Payment Order:
As it is explained above, the enforcement office receiving the enforcement proceeding request shall issue a payment order and send it to the debtor.
The payment order creates expected provisions and consequences on condition that it is served on the debtor. Therefore, the enforcement office receiving the enforcement proceeding request shall issue a payment order and send it to the debtor within three days at the latest of the enforcement proceeding request: Article 61/I of Enforcement and Bankruptcy Law.
The payment order states that the debtor has to pay its debt or, in case of any objection, has to file an objection. If the debtor does not do either of these, the enforcement proceeding shall continue (the assets could be seized) against the debtor.
The payment order is served on the debtor by the enforcement office. If the enforcement proceeding is initiated against more than one debtor, each joint guarantor has to be served a separate payment order: Article 61/II of Enforcement and Bankruptcy Law. The notifications served by the enforcement offices are made in writing and in accordance with the provisions of the Turkish Notification Law: Article 21 of Notification Law.
Upon being served service with the payment order, the debtor is forced to accept or deny the debt which is the subject of the enforcement proceeding. The debt can be denied by filing a petition to object to the payment order.
Objection to Payment Order and Finalization of Payment Order:
If the debtor objects to the payment order:
If the debtor objects to the payment order within seven days as of the date of service of the payment order, the enforcement proceedings shall be ceased thereupon: Article 66 of Enforcement and Bankruptcy Law.
In order to proceed with the enforcement proceedings, the creditor has to apply to the court to request the annulment or cancellation of the debtor’s objection. While the objection continues, the payment order can only become final once the court decides in favor of the creditor.
In addition, the debtor may always waive or withdraw its objection, and the payment order becomes final upon the waiver of objection.
If the debtor does not object to the payment order within seven days:
The payment order becomes final if the debtor does not present any objection within 7 days following service of notice of the payment order: Article 78 of Enforcement and Bankruptcy Law.
Finalization of the payment order can occur explicitly or implicitly. Likewise, the payment order may become final if the debtor waives the objection within the objection period.
If the debtor does not object to the payment order within 7 days as of the date of service or the payment order becomes final by waiver of an objection, the enforcement office shall seize and sell the debtor’s assets and then pay the creditor’s claim with the acquired money, in accordance with its authority arising from the law and upon the creditor’s request.
As is seen above, in order for the enforcement office to seize the debtor’s assets, the payment order has to become final. Under Turkish Law, when a payment order becomes final, an aforesaid payment order would become an instrument having the qualifications of a judgment. Upon finalization of the payment order, the creditor may request the seizure of the debtor’s assets.
Att. Semra Gürçal