Debt Collection in Turkey for Foreign Companies

Debt Collection in Turkey for Foreign Companies: A Practical Guide to Recovering Commercial Debts

International trade creates valuable business opportunities, but it also exposes companies to the risk of unpaid invoices, breached contracts and defaulting business partners. Foreign companies conducting business in Türkiye frequently encounter difficulties when attempting to recover outstanding debts from Turkish debtors.

Whether the claim arises from an unpaid invoice, supply agreement, distribution contract, transportation service, insurance subrogation claim or other commercial transaction, Turkish law provides effective legal mechanisms for recovering debts and protecting creditors.

At Guldali Law Office, we assist foreign companies, insurers, exporters, logistics providers and international investors in recovering receivables and enforcing their legal rights throughout Türkiye.

Can Foreign Companies Collect Debts in Turkey?

Yes.

Foreign individuals and foreign companies have the same legal rights as Turkish creditors to pursue debt recovery in Türkiye. A foreign creditor may initiate legal proceedings against a Turkish debtor regardless of whether the creditor has a registered branch, subsidiary or representative office in Türkiye.

Depending on the circumstances of the case, debt recovery may be pursued through:

• Enforcement proceedings before Turkish Enforcement Offices; • Commercial litigation before Turkish Courts; • Recognition and enforcement of foreign judgments; • Recognition and enforcement of foreign arbitral awards; • Settlement negotiations and mediation procedures.

The most suitable strategy depends on the available evidence, the debtor's financial condition and the urgency of recovery.

Debt Collection Through Turkish Enforcement Proceedings

One of the most effective debt recovery mechanisms in Türkiye is enforcement proceedings.

Unlike many jurisdictions, Turkish law allows creditors to initiate enforcement proceedings without first obtaining a court judgment.

The creditor may file an application before the Enforcement Office and request the issuance of a payment order against the debtor.

If the debtor does not object within the statutory period, the proceedings become final and enforcement measures may be initiated, including:

• Bank account seizures; • Vehicle seizures; • Real estate attachments; • Third-party garnishments; • Commercial asset seizures.

This procedure often provides significant leverage and may encourage voluntary payment before lengthy litigation becomes necessary.

What Happens if the Debtor Objects?

In practice, debtors frequently file objections in an attempt to delay payment.

An objection temporarily suspends enforcement proceedings. However, this does not prevent recovery. Depending on the nature of the claim and supporting documents, the creditor may initiate:

• An action for annulment of objection; • An action for removal of objection; • A commercial debt recovery lawsuit.

Where the debt is supported by invoices, contracts, correspondence, delivery notes, account statements or signed acknowledgements, Turkish courts generally provide effective remedies for legitimate creditors.

In addition, debtors acting in bad faith may be ordered to pay compensation in addition to the principal debt.

Recognition and Enforcement of Foreign Judgments

Many foreign companies first obtain a court judgment in their home jurisdiction and later discover that the debtor's assets are located in Türkiye.

In such cases, the foreign judgment cannot be directly enforced.

The judgment must first be recognized and enforced by Turkish courts through a separate legal proceeding.

Once enforcement is granted, the foreign judgment becomes enforceable in Türkiye and may be executed against the debtor's assets in the same manner as a Turkish court judgment.

Our office regularly assists foreign creditors with recognition and enforcement proceedings involving judgments issued in Europe, North America, the Middle East and other jurisdictions.

Enforcement of Foreign Arbitral Awards

International commercial contracts frequently contain arbitration clauses.

Türkiye is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which enables foreign arbitral awards to be enforced in Türkiye under certain conditions.

Following recognition by Turkish courts, creditors may pursue enforcement proceedings against the debtor's assets located in Türkiye.

This mechanism is particularly valuable for international suppliers, manufacturers, logistics companies and multinational corporations engaged in cross-border transactions.

Asset Investigation and Pre-Enforcement Strategy

One of the most important aspects of successful debt recovery is determining whether the debtor possesses recoverable assets.

Before initiating proceedings, it is often advisable to conduct a legal assessment regarding:

• Real estate ownership; • Commercial activities; • Corporate structure; • Existing enforcement proceedings; • Bankruptcy risks; • Potential asset transfers.

A properly planned recovery strategy can significantly improve collection prospects and reduce unnecessary legal costs.

Mandatory Mediation in Commercial Disputes

Under Turkish law, mediation is a mandatory pre-condition for many commercial disputes involving monetary claims.

Before commencing a commercial lawsuit, parties are generally required to participate in mediation proceedings. Although mediation does not always result in settlement, it often provides an opportunity for foreign creditors to recover their receivables quickly and cost-effectively without prolonged litigation.

If no settlement is reached, the creditor retains the right to pursue court proceedings.

Why Foreign Creditors Need Local Counsel in Türkiye

Debt recovery in a foreign jurisdiction presents legal, procedural and practical challenges.

Language barriers, procedural deadlines, service requirements and enforcement formalities can significantly affect the outcome of a case.

Working with experienced Turkish legal counsel enables foreign creditors to:

• Develop an efficient recovery strategy; • Preserve evidence; • Conduct negotiations with debtors; • Initiate enforcement proceedings promptly; • Monitor assets and enforcement measures; • Represent their interests before Turkish courts and authorities.

Early legal intervention frequently increases the likelihood of successful recovery.

Granting Power of Attorney to a Turkish Lawyer Foreign companies and foreign nationals may appoint a Turkish attorney to conduct debt collection proceedings on their behalf. A Power of Attorney may generally be issued in one of the following ways: Before a Turkish Consulate

The authorized representative may execute the Power of Attorney before a Turkish Consulate located in the country of residence or incorporation. Documents executed before Turkish Consulates are generally accepted in Turkey without additional legalization requirements. Before a Local Notary Public

A Power of Attorney may also be executed before a local notary public. In such cases: • An Apostille certificate may be required if the country is a party to the Hague Apostille Convention; • Consular legalization may be required in non-member countries; • The document may need to be translated into Turkish and notarized in Turkey before use. Documents Commonly Required

The following documents are commonly requested: • Company registration documents or certificate of incorporation; • Documents evidencing the authority of the signatory; • Passport or identification document of the authorized representative; • Corporate registration and tax information where applicable. Once duly issued, the attorney may represent the creditor before Turkish courts, enforcement offices, public institutions, and other authorities for the purpose of debt recovery.

Debt Collection Services by Guldali Law Office

Guldali Law Office provides comprehensive debt recovery and enforcement services for foreign businesses and international creditors throughout Türkiye.

Our services include:

• Commercial debt collection; • Recovery of unpaid invoices; • Enforcement proceedings; • Commercial litigation; • Recognition and enforcement of foreign judgments; • Recognition and enforcement of arbitral awards; • Asset tracing and debtor investigations; • Settlement negotiations and mediation representation; • Bankruptcy and insolvency related proceedings.

We represent foreign companies from a wide range of sectors, including international trade, logistics, insurance, manufacturing, construction and professional services.

If your company is facing difficulties recovering a debt in Türkiye, our team is ready to assist you in evaluating the available legal options and implementing an effective recovery strategy.

For further information regarding debt collection and commercial dispute resolution in Türkiye, please contact Guldali Law Office.