Enforcement Through Seizure Specific to Negotiable Instruments in Turkish Law

Enforcement Through Seizure Specific to Negotiable Instruments

Debts arising from private law relationships may occur between individuals. If these debts are not fulfilled, individuals cannot claim their rights on their own. In fact, our law prohibits this situation, known as self-help. Therefore, in such a dispute, individuals should seek resolution through courts. In terms of enforcing court decisions, relevant state organs should be approached. The branch of law that regulates how the state collects debts and how the bankruptcy process works is called enforcement and bankruptcy law.

Enforcement law is known as partial enforcement, while bankruptcy law is known as universal enforcement. Enforcement law involves the seizure, sale of the debtor’s sufficient assets through enforcement bodies, and the payment/distribution of the obtained money to the creditor(s) to enable one or more creditors to recover their debts.

 

ENFORCEMENT METHODS

Enforcement methods include three types: non-judicial enforcement, judicial enforcement, and enforcement by converting pledges into money. As long as the creditor has a judgment or a document equivalent to a judgment, judicial enforcement can be pursued for all debts. In terms of money and security debts, non-judicial enforcement can be initiated without the need for a judgment or a document equivalent to a judgment. If there is a pledge concerning the debt, the creditor must initiate enforcement by converting the pledge into money if the debt is not fulfilled.

There are four types of non-judicial enforcement methods provided for money and security debts. These are: general seizure enforcement, enforcement specific to negotiable instruments, enforcement for the eviction of leased immovable properties, and non-judicial enforcement specific to money debts arising from subscription contracts.

 

ENFORCEMENT SPECIFIC TO NEGOTIABLE INSTRUMENTS

There are several reasons for having a separate enforcement method specific to negotiable instruments. This method creates a strong presumption of the existence of the debt and negotiable instruments are trusted by the public. Moreover, a separate enforcement method is arranged to keep up with the speed required by commercial life.

 

Enforcement Request:

Negotiable instruments include checks, promissory notes, and bills of exchange. A creditor wishing to pursue enforcement specific to negotiable instruments must have one of these negotiable instruments. Since the enforcement method specific to negotiable instruments is essentially a subset of non-judicial enforcement, it can be used for money and security debts. Even if the creditor has a negotiable instrument, they have the option to choose between general seizure enforcement or enforcement specific to negotiable instruments. The creditor can pursue either of these two methods.

If there is a situation where enforcement by converting the pledge into money can be pursued, it must first be attempted. However, if the person also holds a negotiable instrument, the creditor can choose whichever method they wish. This situation constitutes an exception. The Supreme Court once stated that the creditor could pursue both methods simultaneously provided there is no duplication in collection, but it has since changed its decision. If the pledge only partially covers the debt, enforcement specific to the instrument can be pursued.

General seizure enforcement does not require any conditions, documents, or scrutiny. However, negotiable instruments require certain conditions to be met:

– Firstly, the creditor must have a negotiable instrument. Common documents, invoices, receipts, etc., cannot be used for enforcement specific to negotiable instruments.

– The creditor must be authorized. Being authorized means having the authority to collect the debt according to the chain of endorsements on the instrument.

– The debtor must not be any person but the debtor on the instrument and must hold a negotiable instrument. The enforcement officer must examine these aspects individually.

– Unlike general seizure enforcement, the creditor must attach the original of the instrument to the enforcement request and provide a certified copy to the enforcement office. This prevents the endorsement capacity of the instrument. Thus, no new creditors and enforcements arise, and confusion is avoided. For promissory notes and bills of exchange, there is no exception, but for checks, if partial payment has been received and the original is with the bank, enforcement can be initiated with a certified copy.

If the enforcement officer overlooks these aspects, the debtor cannot object to this situation. This is because the mentioned aspects are grounds for complaint, not objection. Since it is not related to the essence of the debt, the situation cannot be objected to. The aspects overlooked by the enforcement officer can only be complained about by the debtor. In terms of complaint periods, a dual distinction has been made; if the instrument is not a negotiable instrument, the complaint must be made within five days from the notification of the payment order, if the creditor does not have the authority to pursue, within five days from the payment order; complaints about the instrument not being due within seven days, and about the original of the instrument not being attached to the enforcement request within seven days.

These situations impose obligations on the enforcement officer, different from general seizure enforcement. In general seizure enforcement, there is no need for the enforcement officer to scrutinize, but for enforcement specific to negotiable instruments, the enforcement officer must examine the conditions ex officio. The enforcement officer is not obliged to examine other aspects. To ensure the balance of interests and to protect the debtor, the enforcement officer has been given the authority to supervise. This is because, unlike general seizure enforcement, the debtor’s objection to the payment order does not stop the enforcement in this method.

 

Payment Order:

After receiving the enforcement request and making the necessary examinations, if everything is in order, the enforcement officer must send a payment order to the debtor. Unlike general seizure enforcement, the payment order in this method must be sent immediately, not within three days. These periods are not peremptory. Since these periods are regulatory, the fact that the enforcement officer sends it later does not cause any problems.

 

The elements that should be included in the payment order are regulated in Enforcement and Bankruptcy Law Article 168: “If the enforcement officer sees that the instrument is a negotiable instrument and that it is due, they shall immediately send a payment order to the debtor along with a copy of the instrument. The payment order shall include:

– The records that must be written in the enforcement request, except for the bank account number of the creditor or their attorney,

– A warning to pay the debt and the enforcement costs into the bank account of the enforcement office written in the payment order within ten days,

– If the instrument on which the enforcement is based is not a negotiable instrument, a warning to file a complaint with the enforcement court within five days,

– If the debtor claims that the signature on the negotiable instrument is not theirs, a warning to explicitly notify the enforcement court in writing within five days; otherwise, the signature on the negotiable instrument shall be deemed to have been made by them in the enforcement procedure, and if they unjustly deny the signature, they shall be sentenced to a fine amounting to ten percent of the debt subject to the enforcement and that enforcement shall continue unless a decision of acceptance of the objection is brought from the enforcement court,

– A warning that if they are not a debtor or if the debt has been paid off, or if the deadline has been extended, or if the debt has become time-barred, or if they have an objection to the jurisdiction, they must notify the enforcement court with a petition within five days along with the reasons and obtain a decision of acceptance of the objection from the enforcement court, otherwise, enforcement shall continue,

– A warning that if they do not object and do not pay the debt, they must declare their assets within ten days according to Article 74, if they object and it is rejected, they must declare their assets within three days according to Article 75, and if they

do not declare their assets or make a false declaration, they will be subjected to imprisonment, and if they do not declare their assets or make a false declaration, they will be sentenced to imprisonment.”

After these elements, the payment order is notified to the debtor. The debtor to whom the payment order is notified either pays the debt or objects to the debt or the signature. If the debtor does not pursue either of these two ways, they must declare their assets within ten days.

 

Objection to Signature:

The debtor can object to the signature within 5 days from the notification of the order. The signature objection must be made separately and explicitly, otherwise, the signature is considered to belong to the person. Unlike general seizure enforcement, in enforcement specific to negotiable instruments, the objection is made only with a petition. The objection is made to the enforcement court. None of the processes up to the sale stop due to the objection. Upon the objection, the enforcement court examines the signature and decides in favor of one of the parties.

Objection to Debt:

The debtor must object in writing with a petition to the enforcement court within 5 days from the notification of the payment order. The objection does not stop any enforcement process other than the sale. The procedures, duration, authority, and effect of objection to debt are the same as those of objection to the signature. In objection to the signature, the debtor denies their own signature; in objection to the debt, they claim not to be a debtor, or the debt has been postponed, etc. This method of objection is used for matters related to the debt other than the signature. The debtor is bound by the reasons for objection they present and cannot raise new reasons. The debtor must present official documents or documents with an acknowledged signature to support their objection and its acceptance. If the creditor denies this situation and the signature on the document, the court examines this objection. After examining the case, the court will decide to accept or reject the objection.

 

EXAMPLE SUPREME COURT DECISIONS RELATED TO ENFORCEMENT SPECIFIC TO NEGOTIABLE INSTRUMENTS

 

“Since there was no complaint made by the creditor against the general seizure enforcement payment order arranged contrary to the creditor’s enforcement request, it should have been taken into account that the enforcement continued as general seizure enforcement, and the general seizure enforcement should have been stopped due to the debtor’s objection, and the example 10 payment order sent specifically for negotiable instruments should have been canceled, whereas the written justification for rejecting the complaint is incorrect.”** (Supreme Court 12th Civil Chamber, 2015/9235 E., 2015/20059 K.)**

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“In the specific case, it was understood that the enforcement was initiated by the creditor against the debtor on 07.11.2012 based on an account summary and a notice, that the example 1 enforcement request arranged by the creditor indicated that the “Enforcement Specific to Negotiable Instruments” method was chosen, and that the example 10 payment order specific to negotiable instruments was notified to the debtor. In light of the above-mentioned and the legal regulations in Articles 167 and 168/1 of the Enforcement and Bankruptcy Law, it is incorrect for the creditor whose claim is not based on a negotiable instrument to initiate enforcement specific to negotiable instruments. Therefore, the enforcement should be canceled according to Article 170/a-2 of the Enforcement and Bankruptcy Law.”** (Supreme Court 12th Civil Chamber, 2014/16939 E., 2014/22588 K.)**

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“In the enforcement, it was understood that partial payment was deducted from the check amount before enforcement, and interest and check compensation were added. In this case, since the enforcement was initiated based on the check as a negotiable instrument, and the amount written on the check was demanded, the creditor has the right to initiate enforcement specific to negotiable instruments. Therefore, the court should examine the debtor’s objection to payment and decide according to the outcome, whereas the written justification for rejecting the objection is incorrect.”** (Supreme Court 12th Civil Chamber, 2014/5063 E., 2014/7938 K.)**

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“The court should have taken into account ex officio that the document subject to enforcement does not qualify as a negotiable instrument and decided to cancel the enforcement according to Article 170/a-2 of the Enforcement and Bankruptcy Law, but the written justification for rejecting the objection is incorrect.”** (Supreme Court 12th Civil Chamber, 2016/14103 E., 2017/5775 K.)**

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