How Can a Foreign Company Recover a Debt in Turkey?

When a Turkish company fails to pay an invoice, fulfil a contractual payment obligation or repay a commercial debt, foreign creditors may face practical and legal challenges in recovering the money owed to them.

The creditor may be based in the United Kingdom, the United States, the Netherlands, Germany or another country, while the debtor, its assets and its business operations are located in Turkey.

Foreign companies can pursue debt recovery in Turkey through the available enforcement and judicial procedures. The most appropriate strategy depends on the evidence supporting the claim, the debtor’s response, the availability of assets and whether court proceedings have already taken place.

This guide explains the main options available to foreign companies seeking to recover commercial debts from Turkish debtors.

1. Can a Foreign Company Recover a Debt from a Turkish Company?

Yes. A foreign company can generally pursue a debt claim against a Turkish debtor, subject to the applicable procedural and substantive legal requirements.

The creditor does not necessarily need to establish a Turkish company or maintain a physical office in Turkey simply to pursue a debt claim.

Depending on the circumstances, a foreign creditor may seek recovery of:

• Unpaid invoices for goods or services.
• Outstanding payments under commercial contracts.
• Unpaid purchase prices.
• Debts arising from international trade.
• Loans and other contractual payment obligations.
• Amounts due under settlement agreements.
• Debts supported by negotiable instruments, such as cheques or promissory notes.

The first step is to assess the legal basis of the claim and determine the appropriate recovery procedure.

2. What Documents Are Needed to Recover a Commercial Debt?

Before commencing proceedings, a foreign creditor should assemble the available evidence supporting the claim.

Relevant documents may include:

• Commercial contracts and purchase orders.
• Invoices and account statements.
• Delivery notes and transport documents.
• Correspondence between the parties.
• Written acknowledgements of the debt.
• Payment records and bank statements.
• Settlement agreements.
• Cheques, promissory notes or other negotiable instruments, where applicable.

The evidence should establish the legal basis of the debt, the amount claimed and whether payment has become due.

Where the creditor and debtor have disputed the quality, quantity or delivery of goods, or whether contractual obligations were fulfilled, these issues should be examined before selecting a recovery strategy.

Documents issued abroad may also require appropriate translation, certification or other formalities if they are to be submitted to Turkish authorities or courts.

3. Can a Foreign Company Start Enforcement Proceedings Without a Court Judgment?

In certain circumstances, yes.

Turkish enforcement law provides procedures under which a creditor may initiate enforcement proceedings without first obtaining a court judgment.

For example, an ordinary enforcement proceeding for the collection of a monetary debt may be available where the creditor has a contractual claim or unpaid invoices. The exact procedure depends on the nature of the claim and any applicable special rules.

Broadly, the process may involve:

1. Filing an enforcement request with the competent Enforcement Office.
2. Service of a payment order on the debtor.
3. Allowing the debtor the applicable statutory period to pay or object.
4. Determining the appropriate next step if the debtor objects or fails to pay.
5. Pursuing enforcement against assets where the legal requirements are satisfied.

A creditor should not assume that an invoice automatically guarantees successful recovery. The debtor may dispute the claim, and the creditor may need to take further legal action.

Where the claim is based on a negotiable instrument, such as a qualifying cheque or promissory note, a different enforcement procedure may be available.

4. What Happens If the Turkish Debtor Objects to the Debt?

A debtor may object to an enforcement proceeding, potentially preventing the ordinary enforcement process from continuing until the objection is addressed through the applicable legal procedure.

The appropriate response depends on the type of enforcement proceeding, the grounds of the objection and the supporting evidence.

Depending on the circumstances, the creditor may need to consider proceedings for the removal or annulment of the objection, or another appropriate legal action.

The creditor should assess:

• Whether the debtor disputes the existence of the debt.
• Whether the amount claimed is contested.
• Whether the debtor alleges defective goods or incomplete performance.
• Whether the debtor relies on set-off, counterclaims or prior payments.
• Whether the contract contains relevant dispute-resolution provisions.
• Whether mandatory mediation applies before court proceedings.

The evidence and the legal grounds for the claim should be reviewed before choosing the next step.

5. Is Mediation Required Before Filing a Commercial Debt Claim in Turkey?

Mandatory mediation applies to certain commercial disputes involving monetary claims under Turkish law.

Where a dispute falls within the scope of mandatory commercial mediation, the parties generally need to complete the required mediation process before the relevant court action can be filed.

This requirement may be relevant when a foreign company seeks to recover an unpaid commercial invoice or another monetary claim from a Turkish business.

However, mediation requirements should not be confused with the separate rules governing the commencement of enforcement proceedings.

The applicable procedural route should be determined according to the nature of the claim and the relief being sought.

6. Can a Foreign Creditor Freeze the Turkish Debtor’s Assets?

In appropriate cases, a creditor may seek a precautionary attachment (ihtiyati haciz) to protect its ability to recover a monetary claim.

This is a legal measure intended to secure a claim where the statutory requirements are satisfied. It is not an automatic consequence of an unpaid invoice.

The availability of precautionary attachment depends on factors such as the nature of the claim, the supporting evidence and the applicable legal conditions. The court may require security from the creditor.

Depending on the circumstances, the measure may help preserve the effectiveness of later enforcement proceedings.

A creditor considering this option should obtain legal advice promptly, particularly where there are indications that the debtor may dispose of assets or become unable to pay its debts.

7. What If the Turkish Company Has No Money or Assets?

Debt recovery can become more difficult when the debtor lacks sufficient assets or is experiencing financial distress.

Before incurring substantial litigation or enforcement costs, the creditor should consider whether there are identifiable assets against which enforcement may be pursued.

Depending on the case, this may involve examining available information about the debtor’s business, property, receivables and financial position through lawful means and appropriate legal procedures.

If the debtor is insolvent or subject to bankruptcy or restructuring proceedings, the creditor may need to assess the available options under Turkish insolvency law.

These may include filing or registering a claim in the relevant insolvency process, subject to the applicable requirements and deadlines.

A favourable court judgment or enforcement order does not, by itself, guarantee that the creditor will receive payment if the debtor has insufficient assets.

8. Can a Foreign Company Enforce a Court Judgment in Turkey?

Yes, a foreign company may be able to enforce a foreign court judgment in Turkey, but the judgment generally cannot be treated as automatically enforceable merely because it was issued abroad.

Depending on the applicable international treaty, statutory rules and the nature of the judgment, the creditor may need to obtain recognition and/or enforcement (tanıma ve tenfiz) from a competent Turkish court.

The legal assessment may involve:

• Whether the judgment is final and enforceable under the applicable rules.
• Whether the relevant jurisdictional requirements are satisfied.
• Whether the necessary service and procedural requirements have been met.
• Whether an applicable international treaty affects the procedure.
• Whether the judgment satisfies the relevant recognition and enforcement conditions under Turkish law.

Once the necessary enforcement requirements have been satisfied, the creditor may pursue the available Turkish enforcement procedures.

A foreign creditor should have the judgment and supporting documents reviewed before deciding whether to pursue enforcement directly in Turkey or first obtain a judgment in the appropriate jurisdiction.

9. What If the Contract Is Governed by Foreign Law?

International commercial contracts may contain clauses specifying the governing law and the courts or arbitral tribunal responsible for resolving disputes.

These clauses should be reviewed before commencing proceedings.

A foreign governing-law clause does not necessarily mean that enforcement against assets located in Turkey can be completed without Turkish procedures.

Similarly, a jurisdiction clause or arbitration agreement may affect where the underlying dispute should be resolved, while the enforcement of a judgment or arbitral award in Turkey may raise separate legal questions.

The creditor should consider the contract, the dispute-resolution provisions, the evidence and the location of the debtor’s assets together.

10. How Long Does Debt Recovery in Turkey Take?

There is no single timeframe for commercial debt recovery in Turkey.

A claim that is undisputed and supported by adequate documentation may follow a different path from a contested claim requiring extensive litigation.

The duration may depend on:

• Whether the debtor objects to the enforcement proceeding.
• Whether mandatory mediation or court proceedings are required.
• The complexity of the commercial dispute.
• The availability and service of documents.
• Any appeal proceedings.
• The debtor’s financial position and identifiable assets.
• Whether a foreign judgment must first be recognised or enforced.

A realistic assessment should distinguish between establishing the legal claim and actually collecting the money.

11. Can a Foreign Creditor Handle the Process Without Travelling to Turkey?

In many cases, a foreign company can appoint a Turkish lawyer to manage the necessary legal procedures.

Depending on the matter, representation may cover demand letters, enforcement proceedings, court litigation, precautionary attachment applications, settlement negotiations and insolvency-related claims.

The required corporate documents, authorisations and Powers of Attorney should be prepared in accordance with the applicable Turkish procedural requirements.

The precise documentation will depend on the creditor’s country of incorporation, the identity of the authorised signatory and the procedure to be followed.

This can make it possible for a foreign creditor to pursue a claim in Turkey without having to manage every step personally.

12. What Should a Foreign Company Do Before Starting Debt Recovery?

Before initiating proceedings, a foreign creditor should consider the following steps:

1. Review the contract: Confirm the payment obligation, due date and dispute-resolution clauses.
2. Calculate the claim: Identify the outstanding principal and assess any contractual or statutory interest that may be recoverable.
3. Organise the evidence: Collect invoices, delivery documents, correspondence and payment records.
4. Assess the debtor: Consider available information concerning the debtor’s business and assets.
5. Select the appropriate procedure: Determine whether ordinary enforcement, a special enforcement procedure, court proceedings or another route is appropriate.
6. Check procedural requirements: Identify any applicable mediation, limitation period, security or documentation requirements.
7. Consider settlement: Evaluate whether a negotiated settlement would be commercially sensible, without unnecessarily compromising the claim.

Taking these steps early can help the creditor choose a proportionate strategy and avoid unnecessary procedural costs.

How E&G International Law Firm Can Help

E&G International Law Firm assists foreign companies and other international creditors with debt recovery and commercial disputes in Turkey.

Our services include:

• Legal assessment of unpaid commercial debts.
• Preparation and service of formal demand letters.
• Turkish enforcement proceedings.
• Representation in commercial debt litigation.
• Responses to debtor objections.
• Precautionary attachment applications, where appropriate.
• Recognition and enforcement of foreign court judgments.
• Settlement negotiations.
• Creditor representation in bankruptcy and insolvency proceedings.

Based in Izmir, our firm assists international clients with Turkish legal proceedings and commercial recovery matters throughout Turkey.

If your company is owed money by a Turkish business, we can review the available documents, assess the potential recovery routes and advise on the appropriate next steps.

Contact E&G International Law Firm to discuss your commercial debt recovery matter in Turkey with an English-speaking Turkish lawyer.