Precautionary Attachment in Turkish Law
What is Precautionary Attachment?
”Precautionary attachment” is the process of temporarily seizing the debtor’s assets by court order before the definitive attachment stage to ensure the timely payment of a monetary or collateral debt.
In debt relationships, the creditor generally wants the debt to be paid on time and in full. However, debtors who do not want to fulfill their debts can prevent the creditor from collecting their debt through legal means by taking advantage of the long duration of litigation or follow-up processes.
In this article, we will discuss in detail the conditions of precautionary attachment, how to request it, how it is decided, and other legal processes.
Conditions for Precautionary Attachment in Due Debts
The conditions for precautionary attachment in due debts are specified in Article 257 of the Enforcement and Bankruptcy Law.
1 – The Debt Must Not Be Secured by a Pledge
To request precautionary attachment, the debt must not be secured by a pledge. In other words, the debt to the creditor should not be secured by another asset.
A debt secured by a pledge is already under additional security, and in this case, there is no need for precautionary attachment.
The right of pledge is a limited real right that gives the creditor the authority to convert the pledged property into cash through enforcement and collect the debt if the debt is not paid. According to Article 45 of the Enforcement and Bankruptcy Law, for debts secured by a pledge, the pledge must first be converted into cash. Therefore, if a debt is secured by a pledge, the creditor cannot directly request precautionary attachment.
The term “pledge” in Article 257 of the Enforcement and Bankruptcy Law includes both movable and immovable pledges and other situations covered by the same article. In this context, for example, if there is a “right of retention” on the debtor, this right is also considered a pledge right, and therefore, the creditor cannot request precautionary attachment against the debtor.
However, since “personal surety (guarantee)” is not considered a strong guarantee by the legislator, precautionary attachment can be requested for the debtor who is a guarantor for the debt. It is stated that the creditor can request precautionary attachment due to risks such as the death or bankruptcy of the guarantor.
In some exceptional cases, precautionary attachment can be requested even if the debt is secured by a pledge:
a) According to Articles 45/II and 167/I of the Enforcement and Bankruptcy Law, a creditor based on a bill of exchange can apply to ordinary legal proceedings specific to commercial bills, even if the debt is secured by a pledge.
b) Pursuant to Article 45/III of the Enforcement and Bankruptcy Law, precautionary attachment can be requested for interest and annual installment debts secured by a mortgage.
c) A creditor whose debt is secured by a pledge can request precautionary attachment for the portion that is understood not to be covered by the value of the pledged property. In this case, the court will first appraise the pledged property. Subsequently, it can issue a precautionary attachment decision for the uncovered amount not secured by the pledge. However, if the established pledge exceeds the amount of the debt subject to precautionary attachment, no precautionary attachment decision can be made.
d) Ship creditors can request precautionary attachment despite having a pledge on the ship and freight.
e) Article 13/3 of the Turkish Commercial Code grants commercial enterprise pledge creditors the right to request precautionary attachment for their receivables. With an amendment to the Enforcement and Bankruptcy Law, the term movable pledge has been expanded to include commercial enterprise pledge.
f) If there is a dispute over the pledge, the creditor can request precautionary attachment for the debt secured by the pledge, provided that it does not prejudice the existence of the pledge. If the creditor follows the way of converting the pledge into cash, they will face an objection to the pledge due to the ongoing lawsuit. Therefore, it is not fair to require the creditor to convert the pledge into cash.
2 – The Debt Must Be Due
The debt must be due for precautionary attachment to be requested. Generally, since specific due dates are stipulated in the bills subject to precautionary attachment requests, the court must investigate whether the bill is due.
In doctrine, it is stated that the acceleration conditions in promissory notes are invalid and that this condition is only valid if agreed upon in a separate contract by the parties. This is also the direction of the Court of Appeals’ practices.
One criticized issue is that courts generally do not issue precautionary attachment decisions for non-protested bills of exchange. In addition to the due date of the bill of exchange, it is not necessary to protest and attach this protest to the bill when submitting it to the court. It is sufficient that the due date of the bill has arrived for the holder. However, for the creditor to request precautionary attachment against recourse debtors, a protest of non-payment must be drawn, and this protest must be attached to the precautionary attachment request.
As for the check, since there is no due date, the check is paid on sight. Therefore, precautionary attachment can be requested before the issue date written on the check.
However, for precautionary attachment to be requested against the check debtors, the check must be presented to the bank within the term for payment or a protest of non-payment must be drawn by the creditor, and this protest must be attached to the precautionary attachment request.
Additionally, obtaining a payment ban decision from the court regarding the check does not prevent the check from being subject to precautionary attachment.
Conditions for Precautionary Attachment in Debts Not Yet Due
As summarized above, a precautionary attachment decision cannot be requested for a debt that is not yet due. According to Article 257 of the Enforcement and Bankruptcy Law, certain conditions must be met for such a request to be made. To summarize these conditions:
1 – The Debtor Does Not Have a Specific Place of Residence
When the creditor wants to request precautionary attachment based on this article, the court must be convinced that the debtor does not have a specific place of residence. Moreover, not having a place of residence does not only mean that there is no place of residence at all; it should also be understood as frequently changing existing places of residence.
2 – Precautionary Attachment in Case of Rejection of Composition Approval Request
According to the second paragraph of Article 301 of the Enforcement and Bankruptcy Law, the court rejecting the approval of the composition orders the precautionary attachment of all seizable assets of the debtor without requiring a guarantee. The court rejecting the approval request will automatically issue a precautionary attachment decision without seeking any other condition or request.
REQUEST AND DECISION OF PRECAUTIONARY ATTACHMENT
Precautionary attachment can be requested at a stage where the enforcement proceeding has not yet started or the lawsuit has not been filed, as well as after the lawsuit has been filed or the enforcement proceeding has started (Article 264 of the Enforcement and Bankruptcy Law).
The creditor requesting precautionary attachment must apply to the court to obtain a precautionary attachment decision. Without a court’s precautionary attachment decision, precautionary attachment cannot be placed on the debtor’s assets.
According to Article 258/1 of the Enforcement and Bankruptcy Law, the creditor must provide evidence to prove the debt and, if necessary, the reasons for precautionary attachment.
In the precautionary attachment request, convincing explanations should be made to the judge, especially about the debt not being secured by a pledge and the debt being due, and evidence of these should be presented.
Moreover, if the debt is not yet due but the debtor is hiding, transferring, or preparing to escape with their assets to avoid paying debts or engaging in fraudulent transactions, this situation should also be presented to the court.
Objection to the Precautionary Attachment Decision:
The process of objection and appeal against the precautionary attachment decision is shaped according to Article 265 of the Enforcement and Bankruptcy Law. The debtor can object to the reasons on which the precautionary attachment granted without ”hearing the debtor” is based, the court’s jurisdiction, and the security by submitting a petition supported by documents.
In the case of seizures conducted in presence, the debtor can file an objection to the court within seven days from the date of application or notification of the seizure.
Third parties can also object within seven days from the date they learn that their interests have been violated.
The court can accept or reject the objection by inviting the parties and examining the reasons shown. However, if the parties do not appear, a decision can be made based on the documents. An appeal can be made against the decision given on the objection. The regional court of appeal will review this appeal, and the decision is final. However, applying for an appeal does not stop the execution of the precautionary attachment decision.
Authorized Court
Precautionary Attachment
The authorized court to issue a precautionary attachment decision is the court of the place where the contract underlying the debt was made. In proceedings without a judgment, the enforcement office that is authorized is also authorized for precautionary attachment requests.
After filing the lawsuit or while filing it, precautionary attachment can be requested only from the court handling the lawsuit for the debt subject to the lawsuit. No other court, except the court handling the lawsuit, is authorized to issue a precautionary attachment decision.
Competent Court
The competent court to issue a precautionary attachment decision is the Civil Court of Peace or Civil Court of First Instance (or Commercial Court of First Instance), depending on the amount of the debt.
In essence, the competent court is not explicitly specified in the Enforcement and Bankruptcy Law. In Article 258 of the Enforcement and Bankruptcy Law, it generally mentions the term “court” and states that the provisions of the Code of Civil Procedure (HMK) related to competence will be applied.
If precautionary attachment is requested for interest accrued since the due date, the amount of this interest is not considered in determining the competent court.
In practice, it is often requested to apply for precautionary attachment for accrued interest as well, but it is not stated in the petition, or even if requested, courts usually issue precautionary attachment decisions only for the principal debt.
In this case, creditors request accrued interest together with the principal debt when submitting a follow-up request, and send a payment order to the debtor for the total amount. However, if precautionary attachment is requested from the court, the past-due interest should also be specified separately in the petition, and the court should consider this request when making its decision.
Decision on the Request for Precautionary Attachment
Upon the request for precautionary attachment, the court is free to hear both parties or not (Article 258/II of the Enforcement and Bankruptcy Law). If there is a risk of the debtor concealing their assets and precautionary attachment needs to be granted without hearing the debtor, the court will grant this decision.
In practice, precautionary attachment decisions are generally granted without hearing the debtor (without a hearing). The creditor should not be required to prove their claim with written evidence beyond legal transactions. If damage has occurred as a result of a tortious act, the creditor should be able to base their claim on any kind of evidence.
In the request for precautionary attachment, the creditor must support their claim and the reasons for precautionary attachment with evidence sufficient to convince the court. This proof does not need to be complete as in the main case, but if the court is “more or less convinced” of the existence of the claim and the reasons for precautionary attachment, it should grant the precautionary attachment decision.
The court should issue a precautionary attachment decision based on the circumstances at the time of the request. However, if the conditions for precautionary attachment that were initially incomplete are later completed, the court cannot reject the request.
Providing Security by the Creditor
The creditor requesting precautionary attachment is obliged to provide security for all damages that the debtor and third parties may incur if the attachment is found to be unjustified (Article 259/1 of the Enforcement and Bankruptcy Law).
If the debt is supported by a judgment, no security is required (Article 259/II of the Enforcement and Bankruptcy Law). The judgment must also be finalized. Additionally, no security is required for precautionary attachment decisions granted in cases of rejection of the approval of composition (Article 301/II of the Enforcement and Bankruptcy Law).
What Is the Amount of Security in Precautionary Attachment?
Although the judge has discretion in determining the amount and form of security in precautionary attachment, in practice, security is usually taken between 10% and 15% of the debt. However, if the parties have previously agreed on the form of security in a contract, the security will be evaluated in this amount.
If there are changes in the situations and conditions requiring security, the judge may decide to reduce, increase, change, or remove the security.
If the debt is based on a document with the nature of a judgment (Article 38 of the Enforcement and Bankruptcy Law), the court will decide whether security is required (Article 259/III of the Enforcement and Bankruptcy Law).
The creditor presents the receipt showing that the determined security has been deposited in the court treasury to the court file, and the precautionary attachment decision is given to the creditor only then. Therefore, the creditor cannot obtain a precautionary attachment decision without depositing the security in the court treasury, and it is not possible to implement the precautionary attachment decision without depositing the security.
How Is the Return of Security in Precautionary Attachment Realized?
The court clerk investigates whether the legal conditions for the return of the security have been met and presents it to the court. If the court understands that the reasons for providing security no longer exist, it decides to return the security.
For the court to make this decision, it must be understood that a lawsuit for damages has not been filed within one month after the judgment or the enforcement proceeding has become final, or the attachment decision has been lifted.
Although the return of security in precautionary attachment is regulated in the HMK Regulation, it is not regulated in the HMK. Therefore, regarding the issue of the return of security in precautionary attachment, the provision of return of security in precautionary measures in HMK Article 392/f.2 will be applied by analogy.
EXECUTION OF THE PRECAUTIONARY ATTACHMENT DECISION
The execution of the precautionary attachment decision is carried out in accordance with Articles 79-99 of the Enforcement and Bankruptcy Law. That is, the enforcement office places precautionary attachment on the debtor’s assets, rights, and receivables according to the provisions of general attachment and takes precautionary measures on the attached assets according to the provisions of general attachment.
Competent Enforcement Office
The competent enforcement office for the execution of the precautionary attachment decision is the enforcement office within the jurisdiction of the court that issued the precautionary attachment decision (Article 261, I of the Enforcement and Bankruptcy Law). This authority is absolute. If the assets to be precautionarily attached are located elsewhere, the competent enforcement office requests the enforcement office where the assets are located to execute the precautionary attachment (Article 261, II of the Enforcement and Bankruptcy Law).
In such cases, the clear information specifying the content of the precautionary attachment decision must be written in the instruction sent to the requested enforcement office. In the instruction, it should be particularly stated which assets of the debtor are decided to be precautionarily attached, thus preventing the enforcement office responsible for executing the precautionary attachment decision from attaching assets not specified in the decision.
Duration
The creditor’s request for the execution of the precautionary attachment decision is subject to a period. The creditor must apply to the competent enforcement office within ten days from the date the precautionary attachment decision was issued and request the execution of the precautionary attachment decision (Article 261, I .c.1 of the Enforcement and Bankruptcy Law).
If the creditor does not request the execution of the precautionary attachment decision from the competent enforcement office within ten days from the date the decision was issued, the precautionary attachment decision automatically lapses (Article 261, I c.2 of the Enforcement and Bankruptcy Law).
Since this ten-day period starts from the date of the decision, the courts must write the date on which they issued the precautionary attachment decision as the decision date. However, in practice, courts sometimes write the request date as the decision date as if they issued the decision on the same day after examining the precautionary attachment request for a few days.
Enforcement Officer’s Actual Execution of the Precautionary Attachment Decision and Drawing up a Minute
The enforcement office implementing the precautionary attachment cannot investigate whether the material and formal conditions required for issuing the precautionary attachment decision have been met. That is, it cannot question the legality of the precautionary attachment decision. However, if a decision is wrong and its execution also affects the implementation, the enforcement officer should not execute the decision.
In this case, the enforcement office rejects not the precautionary attachment decision but its execution. If the precautionary attachment decision includes the seizure of the debtor’s assets that cannot be seized, the enforcement office should refrain from executing the decision. If the enforcement office executes this decision and seizes non-seizable assets, a complaint can be filed against this seizure.
The enforcement office must satisfy itself with the attachment of the assets specified in the precautionary attachment decision, regardless of whether their value is sufficient to cover the debt.
Although the creditor has requested the execution of the precautionary attachment decision within ten days, if the enforcement office has seized the debtor’s assets before or after placing the precautionary attachment, and the debtor has objected to the payment order in the general attachment and thus suspended the enforcement proceeding, this does not prevent the enforcement office from executing the precautionary attachment decision.
If a foreign currency claim is requested for precautionary attachment, the claim must first be converted into Turkish lira, and then the precautionary attachment request should be made. If the court issues a precautionary attachment decision in foreign currency, the enforcement officer executing this decision should refuse its execution. However, in practice, it is seen that foreign currency claims are seized without being converted into Turkish lira.
For the precautionary attachment of immovable properties, generally, the site is not visited, and the enforcement office informs the Land Registry Office where the immovable is registered that the immovable has been seized. The seven-day periods specified in the relevant articles of the Enforcement and Bankruptcy Law start from the date the precautionary attachment on the immovable is notified by the enforcement office to the creditor and the debtor.
The officer seizing the debtor’s assets precautionarily draws up a precautionary attachment minute. If the debtor has no assets at all, the minute is considered a definitive certificate of insolvency. If it is understood that the value of the seizable assets is insufficient to cover the debt, the minute is accepted as a temporary certificate of insolvency.
The enforcement office notifies the creditor and debtor who were not present during the precautionary attachment of a copy of the precautionary attachment minute within three days. This notification is important to determine the starting date of the periods for the completion of precautionary attachment procedures and the objection period to the precautionary attachment decision.
The debtor whose assets are seized within the scope of a precautionary attachment decision is not subject to punishment for failure to make a statement of property.
According to Article 268/III of the Enforcement and Bankruptcy Law, the creditor does not have a preference right (priority) on the assets seized by precautionary attachment. However, the second paragraph of the same article introduces an exception to this rule. Accordingly, the creditor has a preference right over the sale price of the property for the expenses of the precautionary attachment.
Conversion of Precautionary Attachment into Definitive Attachment
During the general attachment process, if the debtor does not object to the payment order and does not pay the debt (including all its accessories) at the end of the seventh day, the precautionary attachment is converted into a definitive attachment.
If the debtor files a lawsuit for the annulment of the debt within seven days, the precautionary attachment can be prevented from converting into definitive attachment until the outcome of this lawsuit; in other words, the precautionary attachment continues in this way. If the lawsuit for the annulment of the debt results against the creditor, the precautionary attachment becomes null and void.
Unlike the general attachment process, in the follow-up specific to bills of exchange, the objection and payment periods are specially determined. If the debtor does not object to the debt specified in the bill of exchange or the signature under the bill within five days from the notification of the payment order, the follow-up becomes definitive.
However, this does not convert the precautionary attachment into definitive attachment. Because the debtor is granted a payment period of ten days, and only at the end of this period without payment is the creditor authorized to request definitive attachment, and the precautionary attachment also converts into definitive attachment at the end of this period.
In actions for annulment of disposal, it is not necessary to have a certificate of insolvency to issue a precautionary attachment decision. However, the precautionary attachment granted in this context is a complementary measure. Because these actions are based on the existence of a finalized enforcement proceeding. Therefore, the precautionary attachment decision granted during the action for annulment of disposal will convert into definitive attachment with the judgment.
The creditor must file an action for debt against the debtor within seven days from the date of the execution of the attachment or, if the attachment is made without seizure, from the notification of the attachment minute (Article 264/I of the Enforcement and Bankruptcy Law). In this case, the outcome of the precautionary attachment is determined by the decision in the lawsuit. If the court decides in favor of the creditor, and the creditor initiates a follow-up based on the judgment within one month, the precautionary attachment converts into definitive attachment.
Conversion of Precautionary Attachment into Definitive Attachment and Order of Distribution in Actions for Annulment of Disposal
In cases where multiple creditors are justified in actions for annulment of disposal, since the forced execution and attachment authority regarding the asset subject to annulment is granted to each creditor, if the sales proceeds are insufficient to cover all claims, the distribution will be made among the creditors according to the order of distribution and the principles of participation in the attachment if the conditions are met.
When the property subject to disposal is sold through forced execution following the decision and finalization of an action for annulment of disposal filed by one creditor, it does not affect the action for annulment of disposal filed by another creditor.
If a precautionary attachment decision is issued in the other case, since the enforcement office will also allocate a share for that debt, the court must rule on the merits. Thus, the precautionary attachment granted in the action for annulment of disposal will convert into definitive attachment, and the deposited money’s rightful owner will be determined.
”(…) The attorney for the plaintiff claimed that although the precautionary attachment of the defendant, which was placed on the independent section belonging to the debtor outside the case and converted into definitive attachment on 25.04.2006, was erroneously included in the distribution list with its attachments, and requested and filed a lawsuit for the annulment of the distribution list (…) 6th Civil Chamber, 11.11.2021, 1493-1401.
DIFFERENCES BETWEEN PRECAUTIONARY ATTACHMENT AND PRECAUTIONARY MEASURE
In practice, it is sometimes seen that precautionary measure decisions are mistakenly issued in situations where a precautionary attachment decision should be made. The differences between precautionary attachment and precautionary measure can be listed as follows:
a) Precautionary attachment is only applicable in cases related to monetary and collateral claims, while the scope of precautionary measure is broader. Because the subject of precautionary measure includes movables, immovables, and requests related to the doing or not doing of something or the delivery of something.
b) In precautionary attachment, the assets and rights seized are not the subject of the lawsuit or enforcement proceeding initiated or considered by the creditor. In contrast, in precautionary measure, the subject matter of the measure is the subject of the main lawsuit.
c) After the precautionary attachment decision, the creditor is not obliged to file a lawsuit against the debtor. They can also initiate enforcement proceedings. However, the person who receives a precautionary measure decision must file their lawsuit within the specified period.
d) There are also differences between precautionary attachment and precautionary measure regarding the actions for the return of property to be filed. The actions for the return of seized assets will be handled by the enforcement court, while the actions for the return of the subject matter of the precautionary measure will be handled by the general courts according to the general provisions.
e) When a precautionary measure is placed on immovable properties, the court can also prohibit the transfer of the immovable. However, the property subject to precautionary attachment can be transferred to another person.
f) In precautionary attachment, the seized property is sold, and the creditor’s claim is secured from this amount. In contrast, in precautionary measure, the property subject to the measure is given as it is because it is the subject of the lawsuit.
g) With the amendment made by Law No. 4949, the possibility of appealing against the precautionary attachment decision has been introduced in Article 265. In contrast, such an appeal route is not provided for precautionary measure decisions. The law only provides an objection route against precautionary measure decisions.
Example Supreme Court Decision on Precautionary Attachment
- Civil Chamber 2014/16266 E., 2015/4472 K.
“Text of the Decision”
COURT: Commercial Court
The examination of the request for objection to the precautionary attachment between the parties was concluded, and the decision to accept the objection was appealed by the attorney requesting the precautionary attachment within the specified period. The file was reviewed, and the necessary deliberation was made.
DECISION –
The attorney requesting the precautionary attachment applied for precautionary attachment to collect the debt based on invoices and delivery notes.
The court accepted the request for precautionary attachment, and the attorney for the objecting debtor claimed that the creditor …. İnş.Ltd.Şti. sold goods to the non-party …. Yapı Ltd.Şti. and issued invoices, and that …. Yapı accepted the invoice, and that …. İnş.Ltd.Şti. issued false invoices to make double collections and obtained a precautionary attachment decision by claiming that the delivery notes included the name of a …. Yapı Ltd.Şti. employee, and requested the annulment of the precautionary attachment decision.
As a result of the trial conducted by the court, it was decided to annul the precautionary attachment decision on the grounds that the reasons for the objection to the precautionary attachment were justified, the persons to whom the goods were delivered were not employees of the company against whom the precautionary attachment was requested, but employees of …. Ltd.Şti., the goods subject to the invoice were not delivered to the objecting plaintiff company, and the claim for debt required trial. The decision was appealed by the attorney requesting the precautionary attachment.
For a precautionary attachment decision to be issued, it is sufficient for the court to be convinced of the creditor’s claim according to the approximate proof rule as stipulated in Article 258/1 of the Enforcement and Bankruptcy Law.
In other words, the court examining the request for precautionary attachment is not obliged to investigate and examine whether the debt actually exists.
This issue should be resolved in the lawsuit regarding the merits of the case.
Indeed, in the concrete case, the court issued a precautionary attachment decision by evaluating the invoices and delivery notes attached to the request for precautionary attachment, taking into account the approximate proof rule, and being convinced of the existence of the debt. Therefore, since there is no procedural or legal violation in issuing the precautionary attachment decision, and since the reasons for objection stipulated in Article 265 of the Enforcement and Bankruptcy Law do not exist in the concrete case, the objection should have been rejected instead of establishing a written decision based on incorrect reasons.
CONCLUSION: For the reasons explained above, the decision is REVERSED in favor of the party requesting the precautionary attachment, and it was unanimously decided on 30.03.2015 that the advance fee be refunded upon request.
Precautionary Attachment in Turkish Law
