What does the action resolve?
In enforcement proceedings without a judgment, if the debtor objects to the payment order in time, the proceedings stop. To continue, the creditor must have that objection set aside.
The Enforcement and Bankruptcy Law provides two routes: removal of the objection before the enforcement court (art. 68) and an action to annul the objection before the ordinary courts (art. 67). This article deals with the second.
The action to annul is a full trial in which the existence of the debt is tested on all the evidence. If it succeeds, the objection is annulled and the stopped proceedings resume where they left off.
For the time limit and form of an objection to a payment order, see our article on objecting to a payment order.
The one-year period
Under article 67(1), a creditor whose enforcement request has met an objection may sue to annul the objection within one year of service of the objection.
Time runs not from the date the objection was made but from the date it was served on the creditor, so the service record in the enforcement file must be checked.
Where mediation is a condition precedent, under article 18/A of Law no. 6325 time limits do not run between the application to the mediation office and the date of the final minutes.
If the one-year period is missed, no action to annul can be brought, but the claim itself does not lapse, as explained below.
Mediation before proceedings
In many actions to annul, applying to a mediator is a condition precedent. Which rule applies depends on the relationship from which the debt arises.
For commercial debts, article 5/A of the Turkish Commercial Code makes prior mediation a condition precedent in claims for payment of a sum of money, compensation, annulment of an objection, negative declaratory relief and restitution.
For employment claims article 3 of Law no. 7036 applies; for disputes arising from tenancy, condominium ownership and neighbour law, article 18/B of Law no. 6325; and for disputes heard by the consumer courts, article 73/A of Law no. 6502. Disputes within the jurisdiction of consumer arbitration committees fall outside that rule.
A claim brought without prior mediation is dismissed on procedural grounds for want of a condition precedent. On mediation in commercial disputes, see our article on commercial mediation.
Which court, and what must be proved?
The action is heard not by the enforcement court but by the ordinary courts. The competent court depends on the underlying relationship: the commercial court of first instance for commercial debts, the labour court for employment claims, the consumer court for consumer transactions, and the civil court of first instance otherwise.
The article provides that the action proceeds by proving the existence of the debt under the general rules. Whereas the types of document are limited in removal proceedings before the enforcement court, here all evidence may be relied on, including witnesses, expert evidence, commercial books and correspondence.
The creditor must prove the existence and amount of the debt; the debtor must prove defences such as payment, set-off or limitation.
The objection may be annulled in part, in which case the proceedings continue for the part annulled.
Enforcement denial compensation: at least twenty per cent
For the creditor, the most significant consequence of the action is enforcement denial compensation. Under article 67(2), where the debtor's objection is found unjustified, the debtor is ordered, on the creditor's request, to pay compensation.
The Law sets a floor: an appropriate sum not less than twenty per cent of the amount awarded, having regard to the position of both parties and the nature of the claim and award.
The compensation is not awarded automatically; the creditor must request it, so the request should appear expressly in the statement of claim.
A paragraph added in 2012 sets the basis of calculation: enforcement denial compensation, bad faith compensation and similar awards are calculated on the amount claimed in the enforcement request or in the action.
In practice, enforcement denial compensation requires the debt to be liquidated or ascertainable. Where the amount can only be established at the end of the trial through expert examination, the request may be refused.
The special rule for parents, guardians and heirs
The Law treats differently those who object not for their own debt but on behalf of another or for another's debt.
Where the objecting party is a parent, guardian or heir, compensation may be awarded against the debtor only on proof of bad faith.
The reasoning is clear: an heir may not know the full extent of the deceased's debts, and a parent or guardian may not be aware of the dealings of the person they represent. An objection by them is not in itself treated as unjustified.
In actions against heirs, therefore, evidence should be prepared showing not only the existence of the debt but that the objection was made knowingly and in bad faith.
Bad faith compensation against the creditor
Enforcement denial compensation is not one-sided. The same paragraph also sanctions the creditor.
If it emerges that the creditor was unjustified and in bad faith in bringing the proceedings, the creditor is ordered, on the debtor's request, to pay compensation of not less than twenty per cent of the amount dismissed.
Losing the case is not enough; the creditor must be both unjustified and in bad faith. A creditor who genuinely believed in the debt but loses does not face this compensation.
The debtor must also request it, expressly in the statement of defence.
If the period is missed: an ordinary claim
A creditor who misses the one-year period does not lose the right altogether. The Law states expressly that such a creditor retains the right to sue for the debt under the general rules.
That claim is not an action to annul, however, and it has two important consequences. First, even if it succeeds, the old enforcement proceedings do not revive; the creditor starts new enforcement proceedings on the judgment obtained.
Second, the enforcement denial compensation under article 67 cannot be claimed in an ordinary claim. Missing the one-year period therefore costs the creditor both time and the twenty per cent compensation.
The general limitation periods apply to the debt itself and must also not have expired.
A checklist for creditors and debtors
For creditors: establish the date of service of the objection from the file and calculate the one-year period. Determine whether mediation is a condition precedent for this type of debt. Prepare invoices, contracts and statements showing the debt is liquidated, and request enforcement denial compensation expressly.
If the proceedings rest on an instrument containing an acknowledgement of debt whose signature is admitted or notarised, or on a document duly issued by a public authority, consider whether removal of the objection before the enforcement court within six months of service would be quicker.
For debtors: keep payment receipts and correspondence supporting the objection. If you believe the proceedings were brought in bad faith, request bad faith compensation in your defence.
For general information on how enforcement proceedings and litigation fit together, see our enforcement and bankruptcy law page.
Resources
- Enforcement and Bankruptcy Law no. 2004, arts. 67 and 68
- Turkish Commercial Code no. 6102, art. 5/A (mediation as a condition precedent)
- Law no. 6325 on Mediation in Civil Disputes, arts. 18/A and 18/B
- Labour Courts Act no. 7036, art. 3 · Consumer Protection Law no. 6502, art. 73/A
You can access the current versions of legal texts via mevzuat.gov.tr.