ENFORCEMENT PROCEEDINGS THROUGH ATTACHMENT SPECIFIC TO NEGOTIABLE INSTRUMENTS

  ENFORCEMENT PROCEEDINGS THROUGH ATTACHMENT SPECIFIC TO NEGOTIABLE INSTRUMENTS

In Turkish law, enforcement proceedings based on negotiable instruments are a method available to a creditor who a promissory note, bill of exchange, or check . A creditor holding a negotiable instrument can also pursue enforcement through general attachment proceedings. However, enforcement proceedings based on negotiable instruments are a much faster and more effective method of debt collection than general attachment.

ATTENTION! While the stages leading up to the finalization of the enforcement proceedings are fundamentally the same as those in general attachment proceedings , there are some differences (such as timeframes, outcomes, and application procedures). However, the stages after the finalization of the enforcement proceedings are exactly the same as in general attachment proceedings.

The key features and operational process that distinguish this monitoring method from others can be summarized under the following headings:

1. Prerequisites for Initiating Monitoring

Not every document can be used to initiate this procedure. The promissory note in the creditor's possession must qualify as a negotiable instrument according to the provisions of the Turkish Commercial Code (TTK). In order to initiate the proceedings, the creditor must, in addition to the general conditions in Article 58 of the Enforcement and Bankruptcy Law (İİK), specify the type, date, and number of the note in the request for enforcement. The most critical procedural rule is that the original note and as many certified copies as there are debtors must be submitted to the enforcement office along with the request for enforcement (İİK Article 167/II). Failure of the creditor to submit the note or its retrieval before the process is completed constitutes grounds for complaint for the cancellation of the payment order.

• Original Promissory Note: The original promissory note must be submitted to the enforcement office along with the request for enforcement (this process cannot be initiated with a photocopy).
• Maturity Control: The promissory note must have reached its maturity date.
• Presentation of Checks: If it is a check, it is mandatory that it be presented to the bank within the stipulated time and marked "insufficient funds".

2. Payment Order and Deadlines

Unlike the general enforcement procedure, in the Code of Civil Procedure, the enforcement officer does not only conduct a formal check; he is also obliged to examine certain elements relating to substantive law ex officio. After examining the negotiability and maturity of the promissory note, the enforcement officer sends a payment order . According to Article 168 of the Enforcement and Bankruptcy Law, the officer;

• Whether the instrument qualifies as a negotiable instrument,

• whether the creditor has the authority to pursue the claim in this way,

• He checks whether the promissory note has matured or not.

The timeframes are quite tight on this tracking route:

• Payment Period: 10 days.
• Appeal and Complaint Period: 5 days.

3. Debtor's Defense Mechanisms

When the debtor receives the payment order, they can pursue two options:

• Objection to Debt: These are claims that the debt has been paid, is time-barred, or that the debt did not actually exist (e.g., a promissory note).
• Objection to Signature: This is when someone claims that the signature on the document is not their own.
• Complaint: This is an application alleging that the promissory note does not possess the characteristics of a negotiable instrument (for example, that it lacks essential elements).

Important Note: In this type of enforcement proceeding, an objection does not automatically stop the enforcement proceedings. To halt the sale, a preliminary injunction order to "suspend the proceedings" is usually required from the Enforcement Court.

4. Why Choose This Path? (Advantages)

1. Speed: While the objection period in the general enforcement procedure is 7 days, it is 5 days here.
2. Effect of Objection: In general enforcement proceedings, the enforcement stops the moment the debtor says "I do not owe the debt." However, in bill of exchange enforcement proceedings, even if the debtor objects, the creditor can continue with the enforcement proceedings (excluding sale).
3. Appeals Authority: Appeals are made directly to the Enforcement Court , not to the enforcement office . This ensures a more technical and legal oversight of the process.

5. Current Supreme Court Practices and Critical Details

• Promissory Notes as Guarantees: If the note bears the inscription "this is a promissory note as a guarantee," or if it is clearly understood that the note serves as security for a contract, the Supreme Court may rule that this method cannot be used.
• Statute of limitations: While the method of seizure specific to negotiable instruments (promissory notes, checks, bills of exchange) offers significant advantages to the creditor, these advantages are determined according to the type of instrument 3 years (As a general rule for the principal debtor) the claim is limited by the statute of limitations. If this period expires, the negotiable instrument ceases to be valid under enforcement law, and the creditor can only resort to general attachment procedures or a lawsuit in general courts. Therefore, both the creditor's diligent pursuit of the claim and the debtor's timely exercise of their unlimited right to complain determine the outcome of the process.

  Regime of Objection and Defense (Defense) in Collection Proceedings Specific to Negotiable Instruments

     In enforcement proceedings based on negotiable instruments (checks, promissory notes, bills of exchange), the debtor groups all substantive and procedural objections, excluding objections regarding the signature, under the heading "objection to the debt." According to Articles 168/5 and 169 of the Enforcement and Bankruptcy Law (EBL), these objections must be submitted to the Enforcement Court within 5 days of the notification of the payment order.

  1. Five Basic Reasons for Disputing a Debt

  The debtor may rely on one or more of the following five reasons in their petition to the court:

  • Redemption (Termination of Debt): This is the defense that the debt has been paid, released (a "no debt" certificate has been obtained from the creditor), or offset.

  • Deferment (Postponement): This is the claim by which a creditor grants a debtor a new due date or postpones the debt.

  • Statute of limitations: A technical defense arguing that the legal time limits for a promissory note have expired.

  • Claim of Non-Debt: This can occur if the promissory note is returned unpaid, is a promissory note given out of courtesy, or the underlying relationship (delivery of goods, etc.) has not taken place.

  • Jurisdiction Objection: This is a procedural objection regarding the initiation of enforcement proceedings in an unauthorized enforcement office.

  2. Classification of Defenses

  In commercial law, the question of "against whom" a defense can be raised depends on the type of defense. This distinction is one of the most fundamental aspects of commercial law

  A. Absolute Defenses (Against Everyone)

  It can be asserted against anyone, regardless of whether the person holding the document is acting in good faith or not.

  • What is evident from the promissory note: The maturity date has not arrived, and the note lacks essential formal requirements (date, signature, etc.).

  • Reasons for invalidation: Incapacity of the signatory, lack of authority to represent, forgery or alteration of the signature.

  B. Relative (Personal) Defenses (Only to the Person Concerned)

  It arises from a direct relationship between the debtor and the creditor.

  • Defenses Arising from the Underlying Relationship: Such as, "I haven't received the goods," "This is a promissory note," or "I paid this money but haven't received the note back.".

  • Bad Faith Exception: As a rule, these defenses cannot be raised against third parties who acquire the instrument through endorsement. However, if the acquirer acquired the instrument knowing that they were acting to the detriment of the debtor (i.e., in bad faith), these defenses can be raised against them as well.

  3. Critical Details in Supreme Court Practice

  • The Strength of Payment Documents: For a receipt or bank statement presented to the court to be considered proof of "repayment," it must explicitly refer to the promissory note in question. If there is no such reference, the creditor may claim that the payment was made for another debt.

  • Torn Note Presumption: A torn note is considered presumptive proof that the debt has been paid. If the creditor repairs the torn note and initiates collection proceedings, they must prove the reason for this (e.g., that it was torn accidentally) in court.

  • The Issue of Set-Off: Although set-off can always be invoked according to the Law of Obligations, in terms of enforcement law, bringing the set-off claim to court within the 5-day period is critical to prevent loss of rights.

  Conclusion

  In negotiable instruments, the right to object to a debt is restricted due to the principles of "abstractness" and "enforceability" of the instrument. The debtor cannot use personal defenses against bona fide third parties; therefore, when making a payment, they must either retrieve the instrument or clearly print the instrument's details on the payment document.

OBJECTIONS TO SIGNATURES AND FORMAL REQUIREMENTS ON BILLS    OF EXCHANGE

Objections to signatures and formal requirements in negotiable instruments are two of the most critical factors determining the fate of an enforcement proceeding. If the instrument is formally incomplete, the proceeding is cancelled; if the signature does not belong to the debtor, the creditor may face significant compensation claims.

Here are the technical details of these two topics:

1. Formal Requirements (Validity Criteria) for Negotiable Instruments

According to the Turkish Commercial Code, for a document to be subject to enforcement proceedings through "negotiable instrument attachment," it must:

• The text of the document must clearly state "Promissory Note" or "Order Note":
• An unconditional promise to pay a specific amount: Conditions such as "I will pay if the work is completed" render the promissory note invalid.
• Due Date: This is not required (payable on demand), but if written, it must be clear and specific.
• Payment Location: If not specified, the issuer's address will be considered the payment location.
• Date and Place of Editing: The date must be clearly stated as day, month, and year. If no place of editing is specified, the location next to the editor's name will be used.
• Signature of the Author: Must be handwritten. (A seal or fingerprint, or one without notary certification, is invalid).

Important Information: If any of these elements are missing, the debtor may apply to the Enforcement Court to request the cancellation of the proceedings on the grounds that "the promissory note does not have the characteristics of a negotiable instrument." This complaint must be made within 5 days of the notification of the payment order

2. The Signature Objection Process

If the debtor claims that the signature on the promissory note in question is not theirs, they must state this objection separately and explicitly .

• Where to apply? Applications are submitted to the Enforcement Court , not the Enforcement Office
• Time limit: 5 days from the date of notification of the payment order .
• Does it stop the proceedings? No. Objecting to the signature does not automatically stop the proceedings. However, if the court finds serious doubt upon the debtor's request, it may decide to temporarily suspend the proceedings

How is a signature verification performed?

The court collects the debtor's existing signatures from public institutions (notary, bank, land registry, police) and obtains signature samples from the debtor in court. The file is then to an expert (graphologist or Forensic Medicine Institute) .

Outcomes of the Appeal:

1. If the signature turns out to belong to the debtor: The debtor an enforcement denial penalty of no less than 20% .
2. If the signature does not belong to the debtor: The proceedings are halted, and any seizures are lifted. The creditor is ordered to pay compensation and a fine equivalent to 20% of the promissory note value (if the creditor acted grossly or in bad faith).

3. The Most Common Mistake in Practice: "Guarantee Note"

The commonly used term "Guarantee Note" in the market actually invalidates the negotiability of the note.

• If the front or back of a promissory note "For security purposes" and does not specify what it is securing, this note cannot be subject to bill of exchange proceedings because it violates the "promise to pay a specific amount" rule.
• In this case, the creditor can only pursue the claim through the General Attachment Procedure (Enforcement without a court order)

In summary, if you are the creditor, you should pay close attention to the formal requirements of the promissory note; if you are the debtor, you should be mindful of the 5-day objection period.