PRECAUTIONARY ATTACHMENT DECISIONS AS SAFEGUARDS IN THE ENFORCEMENT OF FOREIGN JUDGEMENTS

24.12.2018

 

In order for a foreign court decision or arbitration award to be executed in Turkey , the decision or the award has to be subject to an “enforcement case” before the Turkish courts and the enforcement case has to be heard in accordance with related Turkish Laws. The foreign decision/arbitration award shall be effective in Turkey only after the enforcement decision is rendered by the court.

Although the court can only examine the cases for enforcement of foreign judgements in terms of some specific criteria and in regard to public order, obtaining an enforcement decision from the court can take a long process because of the large number of files in the Turkish courts and the fact that the legal remedies in Turkish Law System are multi-staged.

As a result of this long process, the defendants might take some fraudulent actions on their assets to prevent themselves from the results of the enforcement case by disposing of their possessions. The party losing the case before the foreign authorities may act in order to dispose of his/her assets while the process of enforcement of the foreign decision is in progress. This poses a significant risk to a party who has already won the case before the competent court.

Depending on this situation, in order to ensure the collectability of the receivables which are subject to a foreign judgment that has not been enforced yet, it becomes very important for the plaintiff to obtain “temporary legal protections” against the defendant in case he or she dismisses the property while the enforcement case is in progress 

Within this scope, it is explained in this article whether Turkish Law allows the plaintiff who requests enforcement of a foreign judgment to obtain “a precautionary attachment decision” before the foreign judgement is enforced in Turkey.

In accordance with Turkish law, pursuant to the provisions of Turkish Civil Procedural Law  No. 6100 and Bankruptcy and Enforcement Law no 2004 , a plaintiff is entitled to ask a temporary legal protection from the court before/during the case. According to these laws there are two ways of obtaining a "temporary legal protections” which are “precautionary measure” and “precautionary attachment”. 

The “precautionary attachment decision”, which has the effect of freezing the debtors’ assets to ensure the satisfaction of the debt is an important means of securing the counterparty's acquisition by eliminating the possibility of transferring the assets of the counterparty until the case has been concluded.

According to the article 257/1 of the “Bankruptcy and Enforcement Law”; a precautionary attachment decision on  debtor’s assets can be granted with respect to unsecured receivables that are due and payable, or for receivables not yet due and payable; where the debtor has no specific place of residence or has commenced actions to conceal or dissipate assets with the aim of avoiding payment.

In this regard, the issue arises on point of whether the decision of a foreign court or a foreign arbitration award can be the basis for a precautionary attachment decision before being executed by an enforcement decision.

In its decision no. E. 2004/9775, K. 2004/13391, dated 30.12.2004, the Supreme Court responded to this question positively. According to the Supreme Court’s decision, the plaintiff requesting enforcement of  the decision of the foreign arbitrator given according to the rules of ICC arbitration, may request a precautionary attachment decision on debtor’s properties(1). In this decision, the Supreme Court decided that;

“Due to the fact that the award, which was decided to be enforced, could not be enforced before its finalization and the subsidiary formal procedure of the precautionary attachment could not be completed, rescission of the precautionary attachment was decided on the grounds that the objection was justly raised to the precautionary attachment, and the judgment was appealed by the representative of the plaintiff.  Depending on the decision in relation to the appeal of the foreign award, the plaintiff requested a precautionary attachment, and the rendered precautionary attachment was revoked upon the debtor’s objections. Although the enforcement of award could not be executed before becoming final, there is no legal obstacle for requesting a precautionary attachment based on this award. Whether the subsidiary formal procedure of the precautionary attachment is completed or not is the next stage and cannot be the justification of the judgment. The court rejected the objection by taking into account this aspect.”

Additionally, 11th Civil Chamber of Supreme Court decided in one of its decisions that(2);  there was no legal obstacle to the request for a precautionary attachment decision,  even though the foreign decision cannot be executed before the enforcement decision is rendered. According to this decision;

"The purpose of enforcement decision is to ensure the judgments which are rendered in relation to civil cases in foreign countries and become final according to the acts of state, to be executed in Turkey. Accordingly, in order to render a decision for precautionary attachment having the characteristics of a measure concerning a claim which is determined by a decision or an award of a foreign court, there is no need to seek a condition for enforcement of a foreign judgment. (…) On the other hand, as stated in the article 6 of International Arbitration Law No. 4886, since it is possible to render a decision for precautionary attachment before or during arbitration, a precautionary attachment can be ruled after rending a decision.”

According to the common practice of the majority of the Civil Chambers of the Supreme Court, the temporary protection measures may be decided before or during the enforcement case.

As an another example to this common practice, 6th Civil Chamber of Supreme Court stated  in its decision dated 14.04.2014 and numbered  2014/3906 E. 2014/4941 K.  that;

The purpose of enforcement decision is to ensure the judgments which are rendered in relation to civil cases in foreign countries and become final according to the acts of state, to be executed in Turkey. Accordingly, in order to render a decision for precautionary attachment having the characteristics of a measure concerning a claim which is determined by a decision or an award of a foreign court, there is no need to seek a condition for enforcement of a foreign judgment.

In addition, it should be added that in the Article 6 of International Arbitration Act no 4686  the precautionary attachment decision is clearly determined. According to this article,

“It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection or an interim attachment and for a court to grant such measure or attachment. Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order an interim measure of protection or an interim attachment during arbitral proceedings. The arbitral tribunal may require any party to provide appropriate security in connection with such measure or attachment.”

In accordance with the article, since a precautionary attachment can be decided before or during arbitral proceedings, depending on this, it can be clearly said that precautionary attachment can also be granted before rendering a decision in relation to the enforcement of a foreign award.

Within the scope of our explanations above, in practice, it is seen that the party who does not wish to pay in accordance with the court or arbitration decision tends to transfer the assets to third parties, take them to another country or turn them into money in order to prevent the creditor from acquiring the receivables.

In order to avoid similar surprises, it is important to obtain a precautionary attachment decision, which is also one of the temporary legal protection measures, on the debtor's property to guarantee that the creditor will receive the receivable when the foreign judgement becomes enforceable in Turkey.

 

Att. Semra Gürçal 

 

Bibliography:


1. 19th Civil Chamber, E. 2004/9775, K. 2004/13391, T. 30.12.2004.
2. Supreme Court 11th Civil Chamber, 21.04.2015, 2004/4309 E., 2005/4022 K.
3. Supreme Court 11th Civil Chamber, 06.04.2014 T., 2009/1287 E., 2009/4176 K.; Supreme Court 19th Civil Chamber, 23.03.2015 T., 2015/1656 E., 2015/4049 K
4. Doç. Dr./Assoc. Prof. Zeynep Derya Tarman Enforcement Of Foreıgn Court Decısıons And Arbıtral Awards In Turkey And The Problems In Practıce http://dergipark.gov.tr/download/article-file/412015
5. Nuray Ekşi Yargıtay Kararları Işığında Icc Hakem Kararlarının Türkiye’de Tanınması ve Tenfizi http://www.ankarabarosu.org.tr/siteler/ankarabarosu/tekmakale/2009-1/5.pdf