How to Investigate a Debtor's Assets Abroad? Recognition, Enforcement, and International Debt Collection Process

The most common mistake in international debt collection is focusing the process solely on filing a lawsuit and obtaining a court decision. However, the creditor's primary goal is not merely to have their case proven, but to actually recover their debt. Therefore, international debt collection should be considered a single chain comprising litigation, arbitration, recognition, enforcement, and execution procedures.

The fact that a debtor is located in Türkiye does not automatically mean that their assets are also located in Türkiye. Similarly, the fact that a debtor has a company, bank account, real estate, or subsidiary registered abroad does not automatically mean that these assets can be directly seized. As a rule, each state exercises its power of compulsory enforcement over assets within its own territory through its own authorities.

Therefore, in international debt collection, the fundamental question is not simply "Where can we file a lawsuit?" . The following questions need to be answered together:

• In which country are the debtor's attachable assets located?
• Will the decision be recognized and enforceable in that country?
• Can a temporary protection order be issued for assets while the case is ongoing?
• Is there an economic balance between the costs of recognition and enforcement and the expected revenue?
• Is there a possibility of the debtor going bankrupt, being liquidated, or concealing assets?

Do winning a lawsuit and collecting a debt mean the same thing?

No. Winning a lawsuit is not the same as collecting a debt.

A court decision establishes that the debt legally exists and that the debtor has an obligation to pay. However, the issuance of the decision does not automatically transfer the money to the creditor's account. If the debtor fails to pay, the decision must be enforced through compulsory execution.

The following steps may be encountered, especially if the debtor's assets are located in another country:

1. The debt is settled through litigation or arbitration
2. The decision becomes final or enforceable,
3. The decision must be recognized and, if necessary, enforced in the country where the assets are located
4. Seizure of bank accounts, real estate, vehicles, shares, or receivables held by third parties through local enforcement authorities,
5. Converting seized assets into cash,
6. The amount received is paid to the creditor.

Therefore, a court decision worth millions of liras won against an uncollectible debtor may remain merely a "receivable on paper" in economic terms. In contrast, a timely provisional attachment order or an enforceable restructuring agreement can yield faster and more effective results than a lengthy lawsuit.

Stage One: Academic Ability Assessment

In international debt collection, the first step is often not to file a lawsuit, but to investigate the debtor's ability to collect.

This study is not an intelligence operation; it is a legal and financial feasibility study to determine whether the costs of litigation, arbitration, and enforcement are worthwhile.

1. The debtor's legal identity must be verified

First, it must be definitively determined whether the debtor is a natural person or a legal entity. For company debts, the trade name, company registration number, registered office, branches, and company type should be checked.

Making a mistake between companies with similar names, group companies, or different legal entities using the same brand can lead to a decision being made against the wrong company and subsequently becoming unenforceable.

2. The trade registry and company records should be examined

The following aspects can be investigated regarding the debtor company:

• Whether the company is operational or in liquidation,
• Registered headquarters and business addresses,
• Board members and executives,
• Company partners and capital structure,
• Recent capital increases or share transfers,
• Mergers, divisions, transformations, or liquidations,
• Its subsidiaries, affiliates and branches,
• Financial statements and annual activity reports, if any.

However, the assets of a group of companies cannot be seized for the debt of another group of companies simply on the grounds of economic unity. Since each company has a separate legal personality, a special legal basis such as suretyship, guarantee, joint liability, collusion, lifting of the corporate veil, or similar circumstances must exist in order to target the assets of the parent company or sister companies.

3. Bankruptcy and liquidation records should be checked

It should be investigated whether the debtor is subject to bankruptcy, composition with creditors, restructuring, liquidation, or similar collective collection proceedings.

For example, in many European Union member states, it is possible to investigate a company's activities and ongoing financial difficulties through trade and bankruptcy registers. However, the information accessible, search criteria, and the scope of records vary from country to country.

The fact that a debtor has gone bankrupt does not mean that the debt is extinguished. However, in this case, instead of pursuing individual debt collection, it may be necessary to register the debt with the bankruptcy estate in the relevant country within the prescribed time limit. Failure to notify within the time limit can seriously affect the creditor's ability to receive a share of the distribution.

4. Real estate, vehicles, and other registered assets should be investigated

Depending on the country's laws and the transparency of the records, the following entities may be investigated:

• Real estate,
• Motor vehicles,
• Ships and yachts,
• Aircraft,
• Company shares,
• Trademark, patent and design rights,
• License and franchise rights,
• Securities,
• Commercial establishments and branches.

Not all land registry records are publicly accessible. In some countries, it may be possible to inquire about the ownership information of only a specific property, while a court order, enforcement proceedings, or proof of legal interest may be required to search for all properties registered in a person's name collectively.

5. How are bank relationships investigated?

Commercial contracts, invoices, money transfers, past payments, credit documents, and financial statements regarding which banks the debtor worked with can provide important clues. However, in most countries, a debtor's bank accounts and account balances are not directly publicly available.

This information is usually only available in:

• A final or enforceable decision,
• Local enforcement proceedings,
• Court order to disclose assets,
• A seizure or information order directed at a third party,
• The bankruptcy administrator's authority to conduct investigations,

This can be achieved through means provided for in local law, such as those mentioned above.

Therefore, there is no general and universal system that can "find all of a debtor's bank accounts worldwide with a single query." The scope of the investigation is determined by the banking secrecy, personal data protection, and enforcement regulations of the country where the account is located.

6. The debtor's receivables from third parties should be examined

In some cases, collecting debts from customers or business partners is faster than collecting them from the debtor's real estate.

The debtor's;

• Regular customers,
• Distributors,
• E-commerce platforms,
• Rent receivables,
• Rights arising from insurance companies,
• Receivables from group companies,
• Ongoing progress payments and contract fees,

These items should be identified and examined to determine whether they can be seized under local law.

7. Asset concealment operations should be investigated

It is possible for a debtor to transfer their assets to relatives, related companies, or apparent third parties before or during a lawsuit. In this case, simply initiating enforcement proceedings may not be sufficient.

According to the laws of the country where the transfer took place;

• Cancellation of savings,
• Collusion,
• Fraudulent transfer,
• Concealing assets from creditors
• Lifting the corporate veil,
• Appointment of a trustee or receiver,

Legal avenues such as these may come into play.

However, not every transfer of property constitutes concealment of assets. The transfer date, whether payment was made, the relationship between the parties, the date the debt arose, and the debtor's financial situation after the transfer should all be considered together.

Second Stage: Warning and Negotiation

After assessing the debtor's ability to collect the debt, it may be helpful to send a formal warning notice to the debtor, depending on the specifics of the case.

By means of a warning letter;

• The legal basis of the debt,
• Principal and accrued interest,
• Payment term,
• The account to which the payment will be made,
• The consequences of default,
• Court, arbitration and enforcement costs,
• A precautionary attachment or injunction will be requested
• Court and legal expenses will be borne by the debtor

It must be clearly stated.

For corporate borrowers, especially those using regular financing, participating in public tenders, working with investors, or seeking to protect their commercial reputation, formal warnings can be more effective than anticipated.

However, giving the debtor excessive time during the warning phase is also risky. If there is a possibility of asset concealment or emptying of accounts, requesting temporary legal protection should be considered before or simultaneously with sending the warning letter.

How should a restructuring agreement be drafted?

If the parties agree on installment payments or a discount, the agreement must be in writing and enforceable.

The agreement should include at least the following points:

• A clear admission of debt,
• Total debt amount and currency,
• Interest and expenses,
• Installment dates,
• Payment accounts,
• If an installment is not paid, the remaining debt becomes due and payable
• Guarantees,
• The competent court or arbitration venue,
• The applicable law,
• Waiver and release terms,
• Enforceability method.

Verbal agreements or vague discussions conducted solely via email can become a new form of delay rather than a resolution to the dispute.

Third Stage: Litigation, Arbitration, and Provisional Legal Protection

If the claim has not yet been settled by a court or arbitration decision, the competent authority must first be determined.

How is the competent court determined?

If the contract contains a valid authorization clause, that provision is usually examined first. If there is no authorization clause;

• Defendant's place of residence,
• Place of performance of the contract,
• The place where the goods are delivered,
• The place where the payment will be made,
• The location where the damage occurred,
• The location of the debtor's branch,
• The country where the assets are located,

Connections such as these are evaluated.

Winning a case in one country does not automatically guarantee that the judgment will be easily enforceable in other countries. When determining where to file the lawsuit, the likelihood of the judgment being recognized and enforceable in the country where the assets are located should be investigated from the outset.

What happens if there is an arbitration clause?

If a contract contains a valid arbitration clause, the dispute may be brought before an arbitration tribunal instead of a state court. The 1958 New York Convention plays an important role in the international circulation of foreign arbitral awards.

Türkiye is a party to the New York Convention; however, it has reservations regarding its application, limiting it to reciprocity and disputes considered commercial under Turkish law.

While the ability to enforce arbitration awards in different countries is a significant advantage, it is important to remember that arbitration awards do not automatically guarantee payment. The award must be enforced in the country where the debtor's assets are located and implemented through local enforcement authorities.

Why are precautionary attachments and provisional measures important?

In international debt collection cases, provisional legal protection is often as important as the case itself.

In Turkish law, for unsecured and overdue monetary receivables, a precautionary attachment can be requested under Article 257 of the Enforcement and Bankruptcy Law.

If a change in the disputed right or property significantly hinders, makes impossible, or poses a serious risk of harm in obtaining the right, a precautionary measure may be sought pursuant to Articles 389 and subsequent articles of the Code of Civil Procedure. The party requesting the measure must approximately prove the existence of the right.

However, a precautionary attachment or injunction issued in Türkiye does not always have direct effect on banks or land registries abroad. A local temporary protection order may also be required in the country where the assets are located. Therefore, even if the main case is heard in Türkiye, a parallel protection application in the country where the assets are located may be considered.

Fourth Stage: Recognition, Enforcement, and Execution

What is the difference between recognition and enforcement?

Recognitionis the acceptance by another country of the final judgment or conclusive evidence of a foreign court decision.

Enforcement is the process of making a foreign judgment enforceable in that country through compulsory execution.

For example, recognition of a foreign court decision may suffice if it only demonstrates that a legal relationship does not exist or that a debt has been extinguished. However, if the foreign decision orders the debtor to pay a specific sum of money, enforcement is generally required before a lien can be placed on their bank account or real estate.

In other words:

Recognition provides the legal effect of the decision; enforcement provides the state's coercive power to execute it.

Enforcement of Foreign Court Judgments in Türkiye

According to Article 50 of Law No. 5718 on International Private Law and Procedural Law, in order for judgments rendered by foreign courts in civil cases and which have become final according to the law of the state where they were rendered to be enforced in Türkiye, an enforcement order must be obtained from the competent Turkish court.

competent and authorized court

The court responsible for enforcement requests is the district court. The competent court is the court of the place of residence or domicile of the person against whom enforcement is sought in Türkiye. If this person does not have a place of residence or domicile in Türkiye, the case can be filed in one of the courts of Ankara, Istanbul, or Izmir.

Documents to be attached to the enforcement application

In enforcement applications, generally:

• A duly certified original or copy of a foreign court decision
• The document showing that the decision is final
• Certified translations of the decision and the finalization document,
• Apostille or diplomatic authentication procedures, when required
• Documents showing the notification and representation process,

should be presented.

Article 53 of the Turkish Code of Private International Law requires that a certified copy of the foreign judgment, the certificate of finality, and their certified translations be attached to the petition.

What are the enforcement requirements?

According to Article 54 of the Private International Law Act, the basic enforcement conditions are as follows:

1. There must be an agreement, legal reciprocity, or de facto reciprocity between Türkiye and the country where the decision was made
2. The fact that the decision was not made on a matter falling within the exclusive jurisdiction of Turkish courts,
3. If the defendant objects, the foreign court must not have exercised excessive jurisdiction without a genuine connection to the dispute or the parties
4. The ruling must not be clearly contrary to Turkish public order,
5. The person against whom enforcement is sought must have been duly summoned to foreign proceedings and had the opportunity to defend himself.

The enforcement court does not revise the foreign court's assessment of the merits of the dispute. The review focuses less on whether the foreign decision is factually correct and more on whether it meets the enforcement requirements stipulated by law.

The opposing party may, as a rule, argue that the conditions for enforcement are not met, that the debt has been paid in full or in part, or that a new reason has arisen preventing the enforcement of the decision. The request for enforcement is examined through a simplified judicial procedure.

A foreign judgment that has been enforced is executed as if it were a judgment issued by a Turkish court. Following this stage, enforcement proceedings can be initiated, and seizure procedures can be carried out on the debtor's assets in Türkiye.

Recognition of Foreign Court Decisions in Türkiye

According to Article 58 of the Turkish Code of Private International Law, for a foreign court decision to be accepted as a final judgment or conclusive evidence in Türkiye, it is necessary for a Turkish court to determine that the decision meets the required recognition conditions.

In recognition, unlike enforcement, the reciprocity requirement is not sought. This is because the recognition process does not directly grant the power of compulsory enforcement; it ensures the acceptance of the legal effect of the foreign judgment.

However, mere recognition of a foreign court decision regarding a monetary debt is not sufficient to place a lien on the debtor's bank account in Türkiye. For this to happen, the decision must be enforced and made executable in Türkiye.

How are Turkish court decisions enforced abroad?

In order for a decision made in Türkiye to be enforceable abroad, the recognition and enforcement rules of the country where the assets are located must be examined.

First, it is investigated whether there is a bilateral or multilateral agreement on judicial assistance or recognition and enforcement between Turkey and the country in question. If there is no applicable international agreement, the provisions on the recognition and enforcement of foreign judgments in the domestic law of the country in question are applied.

Generally, the following documents need to be prepared:

• Certified copy of the Turkish court decision
• The endorsement of finality or enforceability,
• Documents showing that the defendant was duly served with the notice,
• Apostille or diplomatic certification,
• Translation performed by a sworn or authorized translator
• Current account balance,
• Interest and expense breakdown.

The court of the enforcement state usually assesses the jurisdiction of the Turkish court, the finality of the decision, whether the defendant's right to defense was respected, and whether the decision is contrary to its own public order. The exact conditions vary according to the law of the relevant country.

If a debtor has assets in Germany, France, and the United Arab Emirates, even if a single court decision is issued in Türkiye, separate recognition, enforcement, and execution procedures may be required for each country.

Furthermore, it should not be assumed that the simplified circulation of judgments regimes valid between European Union member states will automatically apply to judgments rendered in Türkiye. Agreements between the relevant state and Turkey, as well as that state's national law, must be examined separately with regard to the implementation of a Turkish judgment.

Four-Step Roadmap for International Debt Collection

International debt collection procedures are best handled through the following four stages.

Stage one: Aptitude test

The debtor's activity status, trade registry records, ownership structure, known banking relationships, real estate and vehicle registrations, receivables from third parties, ongoing lawsuits, and enforcement or bankruptcy proceedings against them are investigated.

The aim at this stage is not to fully uncover all of the debtor's assets, but to determine whether legal action is economically and practically worthwhile.

Second stage: Warning and negotiation

A formal notice is sent to the debtor, explaining the basis of the debt, its amount, and the payment deadline. In suitable cases, negotiations for installment payments, collateral, or discounted lump-sum payments may be conducted.

However, the agreement must be in writing, clear, and, if possible, directly enforceable. Contracts that do not acknowledge the debt, do not clearly specify the installments, or do not regulate the consequences of default may create new disputes.

Third stage: Legal action

If the claim has not been settled, a lawsuit is filed in the competent court, or arbitration is pursued if a valid arbitration clause exists.

When determining the venue for a trial, consideration should be given not only to the ease of the proceedings but also to the enforceability of the decision in the country where the assets are located.

In cases where there is a possibility of asset concealment, precautionary attachment, provisional measures, bank account freezing, asset disclosure orders, or similar temporary protections available under local law should be considered.

Fourth stage: Recognition, enforcement, and execution

The decision is enforceable in the country where the debtor's assets are located.

If a decision was made in Türkiye and is to be enforced abroad, the recognition and enforcement rules of the country where the assets are located shall apply. If a foreign decision is to be enforced in Türkiye, an enforcement action shall be filed under Articles 50 and subsequent articles of the Private International Law Act.

Following enforcement, local enforcement authorities carry out seizure procedures on bank accounts, real estate, vehicles, company shares, and receivables held by third parties.

Questions to Ask When Determining a Collection Strategy

Before initiating legal proceedings in an international debt case, the following questions must be answered:

• What is the debtor's correct legal title and registration number?
• Is the debtor still active?
• In which countries are the debtor's assets located?
• Are the assets registered in the debtor's own name or in the name of related companies?
• Are there any liens, mortgages, or prior attachments on the property?
• Is the debtor currently subject to bankruptcy or liquidation proceedings?
• Does the contract include a choice of law clause, jurisdiction clause, or arbitration clause?
• What is the statute of limitations for claiming a debt?
• Is it possible to obtain temporary legal protection while the case is ongoing?
• Can the decision be recognized and enforced in the target country?
• What are the estimated court and enforcement costs?
• Is the expected revenue sufficient to cover these expenses?
• Could a secured debt restructuring agreement with the debtor yield faster results?

Conclusion

Investigating a debtor's assets abroad and pursuing international debt collection is not merely a matter of filing a lawsuit. A successful process requires asset investigation, selection of the correct court, timely provision of provisional legal protections, recognition and enforcement of the judgment, and coordinated execution of local enforcement procedures.

Winning the case provides the creditor with a strong legal document; however, it is not sufficient on its own for collection. The court decision may not be practically enforceable if the debtor has no attachable assets, if their assets are located in other countries, if there are priority liens on the assets, or if the debtor is bankrupt.

Therefore, the most appropriate approach in international debt cases is to first investigate the possibility of collection, and then determine the litigation and enforcement strategy. Sometimes a timely provisional attachment order, sometimes an enforceable agreement securing the debt, and sometimes the simultaneous enforcement of the order in multiple countries will be the most effective solution.