Enforcement of Foreign Currency Receivables in Türkiye

What is the legal process for collecting receivables denominated in foreign currency?

The development of international commercial relations has led to an increase in contracts and payment obligations denominated in different currencies. Today, many commercial transactions between companies are determined in dollars, euros, pounds sterling, or other foreign currencies; this raises the question of how to collect foreign currency receivables.

It is quite common for debts to be denominated in foreign currency, particularly in receivables arising from export transactions, international service contracts, commercial agreements with foreign companies, credit relationships, and investment contracts.

However, collecting a debt denominated in foreign currency in Türkiye is not simply a matter of demanding the amount of foreign currency. There are many legal details involved, such as how the debt will be pursued, which exchange rate will be used, how the payment request will be prepared, and how the debtor can make the payment.

In Turkish enforcement law, it is possible to pursue claims for foreign currency debts. However, these pursuits require attention to specific procedural rules, such as accurately stating the Turkish lira equivalent and the applicable exchange rate. Under the Enforcement and Bankruptcy Law, for claims for foreign currency debts, the application must indicate the exchange rate used for the claim on a specific date.

What is a foreign currency receivable?

A foreign currency receivable is a type of receivable where the subject of the debt is specified in a currency other than Turkish Lira. For example, if the price is agreed upon as 100,000 Euros in a contract, or if a debt is specified in US dollars, it is considered a foreign currency receivable.

Foreign currency receivables arise particularly in the following relationships:

• International sales contracts,
• Export and import transactions,
• Service contracts with foreign companies,
• Credit and financing agreements,
• License and technology transfer agreements,
• Rental or commercial contracts denominated in foreign currency.

In foreign currency debts, the crucial point is the currency in which the parties agree on the payment obligation. In some cases, the parties may agree that the debt must be paid in foreign currency, while in other cases, payment in Turkish lira may be possible.

This distinction directly affects what claims a creditor can make during the enforcement phase.

Can enforcement proceedings be initiated in Türkiye for a foreign currency debt?

It is possible to initiate enforcement proceedings in Türkiye for foreign currency receivables. If the conditions are met, the creditor can initiate enforcement proceedings for their foreign currency-denominated receivables.

However, when pursuing a debt related to foreign currency, the request for enforcement must be carefully prepared. This is because simply stating, for example, "50,000 Euros owed" in the enforcement file may not always be sufficient.

According to the Enforcement and Bankruptcy Law, regarding foreign currency receivables;

• the amount of the debt
• foreign currency
• In Turkish lira equivalent,
• which exchange rate date was used

This should be stated in the follow-up request.

The aim of this regulation is to ensure that enforcement proceedings are conducted in a clear and understandable manner, and to enable the necessary calculations for fees and follow-up procedures.

Are foreign currency receivables tracked in Turkish Lira?

One of the most frequently asked questions regarding foreign currency receivables is whether the receivable must necessarily be converted to Turkish lira for collection purposes.

With regard to foreign currency receivables, it is possible for the creditor to pursue collection in foreign currency under certain conditions. However, the Turkish lira equivalent of the foreign currency receivable must be indicated in the collection request.

In some cases, the creditor may request full payment of the foreign currency debt. Alternatively, where permitted by law, the creditor may request the equivalent in Turkish lira at the exchange rate prevailing on the payment date.

The crucial factor here is the content of the contract between the parties and the nature of the obligation.

For example;

• If payment in foreign currency is explicitly agreed upon in the contract,
• if there is a payment condition in place,
• if the nature of the debt requires payment in foreign currency

Different legal consequences may arise.

Therefore, the collection strategy for foreign currency receivables must be determined according to the legal relationship from which the receivable originated.

Exchange Rate Difference Problems in Foreign Currency Receivables

One of the most significant issues with foreign currency receivables is exchange rate fluctuation. Especially during periods of high exchange rate volatility, determining the exchange rate to be used for calculating the receivable is crucial.

With regard to a foreign currency receivable;

• exchange rate on the follow-up date,
• exchange rate on the payment date,
• exchange rate on maturity date

This can lead to different results.

In Turkish Code of Obligations, the intention of the parties and the content of the contract are important in foreign currency debts. The parties may make a specific arrangement regarding payment in foreign currency.

During the enforcement phase, the creditor must clearly state the exchange rate at which they are making the claim. Otherwise, procedural problems may arise in the collection process.

Interest Claim on Foreign Currency Receivables

Interest on foreign currency receivables is another area requiring special consideration. The currency in which the receivable is denominated can be important in determining the type of interest to be applied.

For example, if a receivable denominated in dollars or euros is being pursued, interest provisions relating to foreign currency receivables may come into play.

The interest commencement date is:

• the due date specified in the contract,
• default date
• warning date,
• tracking date

It can vary depending on factors such as these.

Therefore, in foreign currency receivables, it is necessary to correctly formulate not only the principal amount but also the interest claim.

Collection of Foreign Currency Receivables from Foreign Companies in Türkiye

With the increase in international trade relations, the receivables of Turkish companies from companies operating in foreign countries have also increased significantly. Many receivables arising from export contracts, international service relationships, consultancy activities, and investment agreements are determined in foreign currency.

If a Turkish company has a receivable from a foreign company in euros, dollars, or another currency, the creditor can pursue collection proceedings in Türkiye. However, the most important point to consider here is that the debtor must have a connection that allows for collection proceedings in Türkiye.

If the debtor has a place of residence, branch, commercial activity, or attachable assets in Türkiye, then enforcement proceedings may be initiated in Türkiye.

In international commercial relations, it may not be sufficient for a creditor to simply possess a court judgment or contract. The main goal is to be able to actually collect the debt. Therefore, the country where the collection will take place should be strategically chosen in terms of the debtor's assets and enforcement capabilities.

Execution Proceedings Without a Court Judgment in Foreign Currency Receivables

One of the most common methods used in Türkiye for collecting foreign currency debts is summary enforcement proceedings. In cases where the creditor does not have a court order, enforcement can be carried out through general attachment under certain conditions.

In enforcement proceedings without a court order, the creditor;

• the source of your receivables,
• the amount of debt
• foreign currency,
• interest claim if any

This should be stated in the follow-up request.

The debtor may object to the payment order sent to them within the prescribed time limit. If an objection is filed, the proceedings are suspended, and the creditor may need to pursue legal avenues such as lifting or canceling the objection in order to collect the debt.

At this point, whether the foreign currency receivable actually exists, whether it is due, and the content of the contract between the parties become important.

Enforcement Proceedings Based on Court Judgments in Foreign Currency Receivables

If the creditor has a final court decision regarding a foreign currency debt, they can resort to enforcement proceedings based on that decision.

For example;

• A court ruling in Türkiye,
• A foreign court judgment that has been recognized or enforced in Türkiye,
• an enforceable arbitration award

This can enable the collection of a foreign currency debt through enforcement proceedings based on a court judgment.

In international disputes in particular, the recognition or enforcement process may need to be completed before foreign court judgments can be implemented in Türkiye.

Making a decision obtained in one country enforceable in another is one of the most important steps in the collection of international debts.

Enforcement Proceedings for Negotiable Instruments Denominated in Foreign Currency

Foreign currency receivables can arise not only from contracts but also from negotiable instruments. If a check, promissory note, or bill of exchange is denominated in foreign currency, the specific enforcement procedures for negotiable instruments may apply.

For example, if a promissory note specifies a debt amount of $50,000, the creditor can initiate collection proceedings through attachment specific to negotiable instruments if the conditions are met.

However, formal requirements are of great importance with regard to negotiable instruments. The validity of the instrument, whether the mandatory elements are present, and the payment terms must be carefully evaluated.

In negotiable instruments denominated in foreign currency, issues such as exchange rate differences, payment method, and interest can also be important in the follow-up process.

Debtor's Objection to Foreign Currency Claim

In foreign currency debt collection cases, the debtor's objections are a crucial stage in the collection process.

Debtor;

• that no such debt exists,
• that the debt has been paid
• that it has expired due to the statute of limitations
• that he objected to the amount of the debt,
• the payment terms in the contract are different

He can claim.

Especially in foreign currency receivables, objections often focus on exchange rate calculations, maturity dates, and payment methods.

For example, the debtor may claim that a foreign currency debt was paid in Turkish lira, or that there is a different payment agreement between the parties.

Therefore, it is important for the creditor to have strong documentation, for the contract terms to be clearly defined, and for payment records to be maintained.

Attachment Procedures After Collection of Foreign Currency Receivables

Once enforcement proceedings have become final or the debtor's objections have been overcome, the creditor's goal is to collect the debt.

At this stage, the debtor;

• bank accounts,
• movable goods,
• immovable properties,
• commercial rights
• receivables held by third parties

attachable.

The provisions regarding seizure and sale in Turkish enforcement law also apply to the collection of foreign currency debts.

However, particularly in international commercial relationships, the fact that the debtor's assets are located in different countries may necessitate additional legal procedures. An enforcement proceeding initiated in Türkiye can only be effective on assets located within Türkiye's borders.

If access is sought to a debtor's assets located in another country, the relevant country's legal system and international cooperation mechanisms must be evaluated.

The Issue of Statute of Limitations in Foreign Currency Receivables

The statute of limitations for foreign currency receivables can vary depending on the legal relationship from which the receivable arises.

For example;

• receivables arising from sales contracts,
• fees arising from service contracts
• credit relationships
• rental relationships

They may be subject to different statute of limitations assessments.

While the expiration of the statute of limitations does not completely extinguish the right to claim a debt, it can make collection more difficult if the debtor invokes it.

Therefore, in foreign currency receivables, not only the collection procedures but also the statute of limitations periods must be carefully monitored.

Points to Consider in Practice Regarding Foreign Currency Receivables

For successful debt collection in cases involving receivables denominated in foreign currency, the legal basis of the receivable must first be accurately analyzed.

Especially;

• which country's laws the contract is subject to
• where the payment location is
• the location of the debtor's assets,
• the follow-up method to be applied,
• interest and exchange rate calculation

It should be evaluated beforehand.

In international debt collection, seemingly minor procedural errors can prolong the collection process or prevent the creditor from achieving the desired outcome.

Therefore, in the enforcement of foreign currency receivables, it is important not only to initiate enforcement proceedings but also to have proper legal planning from beginning to end of the process.

The Collection of Foreign Currency Receivables in Supreme Court Practice

Regarding the enforcement of foreign currency receivables in Türkiye, Supreme Court rulings contain important assessments, particularly concerning exchange rate differences, payment dates, and the scope of the creditor's right to claim.

In debt relationships denominated in foreign currency, the primary objective is to protect the economic value agreed upon by the parties in the contract. Therefore, when converting a foreign currency receivable into Turkish lira or determining the payment method, the nature of the debt and the intentions of the parties are taken into consideration.

The Supreme Court's practice also accepts that in foreign currency debts, the contractual provisions between the parties should be examined first. In cases where the parties have explicitly agreed that payment will be made in foreign currency, preserving this intention is crucial.

However, when pursuing a debt in foreign currency, the claim must include clear and accurate calculations. Failure to accurately state the amount of the debt, the currency, its equivalent in Turkish lira, and the type of interest requested can lead to disputes during the collection process.

Payment Date and Exchange Rate Calculation for Foreign Currency Receivables

One of the most debated issues regarding foreign currency receivables is the exchange rate at which the debt should be repaid.

Particularly due to fluctuations in exchange rates, significant differences can arise between the date the receivable is due and the date it is collected.

For example, if a debt specified in a contract as €100,000 is not paid on time, changes in the exchange rate during the intervening period may cause an economic loss for the creditor.

Because;

• how the payment method is determined in the contract,
• the maturity date of the debt
• default date
• tracking date,
• payment date

Factors such as these are important.

The aim in foreign currency receivables is to protect the value the creditor is entitled to. Therefore, incorrect exchange rate calculations can lead to an underpayment or incorrect claim for the amount owed.

Demand for Exact Payment of Foreign Currency Receivables

One of the important issues in foreign currency debts is the demand for payment in kind. In some cases, the creditor may request that the foreign currency debt be paid directly in foreign currency.

For example, if the contract between the parties explicitly stipulates that payment will be made in dollars or euros, the creditor can make the claim in that currency.

However, the same outcome does not occur with every foreign currency debt. The nature of the debt, the terms of the contract, and relevant legal regulations must be considered before taking any action.

In commercial contracts in particular, clearly specifying the currency of payment is of great importance in preventing future disputes.

Interest and Default Issues in Foreign Currency Receivables

In foreign currency receivables, interest is just as important as the principal amount. This is because in lengthy collection and litigation processes, the interest amount can constitute a significant portion of the debt.

From what date will the interest begin?

• payment date stated in the contract,
• The date the debtor was put in default,
• whether a warning notice was sent or not,
• date of initiation of enforcement proceedings

This can vary depending on factors such as those mentioned.

In international commercial contracts in particular, clearly defining interest rates and payment terms helps reduce disputes between the parties.

The Importance of Drafting Contracts for Foreign Currency Receivables

A significant portion of disputes in transactions involving foreign currency stem from contracts not being sufficiently clear.

In a commercial contract, it is not enough to simply specify the amount of debt. It is also necessary to:

• payment currency,
• payment time,
• provisions to be applied in case of delay,
• competent court,
• applicable law,
• dispute resolution method

Issues such as these also need to be regulated.

The international nature of the contract should be considered, especially for companies operating in different countries.

In agreements made in foreign currency, proper legal planning beforehand can prevent collection problems that may arise later.

The Importance of a Professional Legal Approach in the Enforcement of Foreign Currency Receivables in Türkiye

The collection of foreign currency receivables may have different characteristics than a classic debt collection process. The legal relationship from which the receivable arises, the applicable collection method, the exchange rate, and the payment method must all be considered together.

Especially in cases involving receivables arising from international commercial relationships, not only the existence of the receivable but also how to collect it in the fastest and most effective way is important.

Choosing the wrong collection method, making incomplete calculations, or failing to comply with procedural rules may result in the creditor losing their rights.

Therefore, careful evaluation is necessary in foreign currency receivables, from the beginning of the legal process to the collection stage.

Conclusion: Collection of Foreign Currency Receivables in Türkiye

The enforcement of foreign currency receivables in Türkiye is one of the legal areas that has gained increasing importance with the development of international commercial relations.

In debt relationships established in dollars, euros, or other foreign currencies, determining the correct collection method, performing accurate exchange rate calculations, and conducting the enforcement process in accordance with the law are necessary for the creditor to obtain their due.

It is possible to pursue foreign currency receivables in Türkiye. However, in this process, the nature of the receivable, the contractual provisions, the payment terms, and the rules of enforcement law must be evaluated together.

For companies engaged in international trade, businesses with legal relationships with foreign individuals, and those with receivables denominated in foreign currency, determining the right legal strategy is of paramount importance.

The goal should be not merely for foreign currency receivables to exist on paper, but for them to become truly collectible. Therefore, the enforcement of foreign currency receivables in Türkiye is crucial for both the protection of economic value and the secure conduct of international legal relations.