Legal Framework and Procedures for Collection of Import Receivables in Türkiye

Abstract

This article provides a comprehensive examination of the legal framework governing the collection of payment for goods imported into the Republic of Türkiye. It addresses the critical legal procedures and practical considerations that foreign exporters and international trading companies must be aware of when seeking to recover outstanding receivables from Turkish importers. The discussion includes an in-depth analysis of Türkiye’’s adherence to international conventions such as the United Nations Convention on Contracts for the International Sale of Goods (CISG), as well as the relevant provisions of domestic legislation including the Turkish Code of Obligations (Law No. 6098), the Turkish Commercial Code (Law No. 6102), and the Enforcement and Bankruptcy Law (Law No. 2004).

Special emphasis is placed on the importance of contractual safeguards—such as clear payment terms, choice of law clauses, dispute resolution provisions, and retention of title clauses—and how these can influence the outcome of a debt recovery process. The article further evaluates the procedural steps involved in both amicable and judicial collection of debts, including the role of Turkish enforcement offices and commercial courts, as well as mechanisms for contesting or securing debts through interim relief.

Additionally, the study explores the viability of alternative dispute resolution methods such as arbitration (particularly under the Istanbul Arbitration Centre and ICC rules), and examines the enforcement of foreign arbitral awards and judgments in Türkiye under the New York Convention and Turkish Private International Law. Through a legal and procedural lens, the article aims to equip foreign stakeholders with the necessary tools and insights to manage financial risks and enforce cross-border claims effectively in the Turkish legal environment.

1. Introduction

Türkiye, located at the crossroads of Europe and Asia, stands as a strategic hub for international trade and economic activities. As an emerging market, Türkiye boasts a rapidly growing manufacturing sector alongside an increasing demand for imported goods, significantly expanding its foreign trade volume. This economic dynamism presents attractive opportunities for foreign exporters seeking to establish or expand their presence in the Turkish market.

However, conducting cross-border trade with Turkish importers involves navigating a complex legal and regulatory framework shaped by the interaction of international trade agreements, national commercial laws, customs regulations, and financial practices unique to Türkiye. While this framework aims to facilitate commerce, it also presents particular challenges, especially for foreign exporters, in securing the timely collection of payment for imported goods.

Payment delays and defaults are common risks in international trade and may be exacerbated in Turkey due to economic fluctuations, currency volatility, and differing business cultures. Failure to receive timely payment can result in significant financial losses and disrupt supply chain operations for foreign exporters.

Therefore, a thorough understanding of the applicable legal provisions and procedural mechanisms is crucial. This encompasses knowledge of contractual terms, international and Turkish substantive laws, as well as judicial and alternative dispute resolution processes. Exporters equipped with this knowledge can better mitigate financial risks, enforce their payment claims effectively, and foster more reliable commercial relationships with Turkish importers.

This article aims to provide a comprehensive overview of the legal and practical considerations involved in the collection of payment for goods imported into Türkiye, serving as a guide for foreign businesses and their legal advisors navigating this complex environment.

2. Legal Basis for Import Transactions in Turkey

The legal framework governing import transactions in Türkiye is a combination of international treaties and domestic legislation designed to regulate the sale, delivery, and payment of goods between foreign exporters and Turkish importers. Understanding this framework is essential for both exporters and importers to ensure contractual compliance and effective enforcement of rights and obligations.

At the international level, Turkey is a signatory to the United Nations Convention on Contracts for the International Sale of Goods (CISG), which came into effect in Türkiye on January 1, 2011. The CISG provides a comprehensive legal regime governing contracts for the sale of goods between parties whose places of business are in different contracting states. It aims to create uniform rules to reduce legal barriers and uncertainties in cross-border sales, including aspects such as contract formation, obligations of the seller and buyer, remedies for breach of contract, and risk transfer.

In cases where the CISG is applicable, it automatically governs the contract unless the parties explicitly exclude its application in their agreement. The Convention’s provisions supersede any conflicting national law provisions related to international sales, thereby providing predictability and consistency in cross-border trade involving Turkish importers.

However, there are situations where the CISG either does not apply or parties expressly opt out of it. In such cases, Turkish domestic law becomes the primary legal framework regulating the transaction. The two main statutory laws applicable are:

Turkish Code of Obligations (Law No. 6098): This is the principal legislation governing contractual relationships in Turkey, including sales contracts. It outlines general principles of contract formation, performance, breach, liability, and remedies. The Code of Obligations covers the fundamental rules on offer and acceptance, delivery, payment obligations, warranties, and damages, which are critical for import transactions.
Turkish Commercial Code (Law No. 6102): This law complements the Code of Obligations by regulating commercial practices, trade customs, and business entities. It contains specific provisions relevant to commercial sales contracts, including rules on merchants, commercial agents, commercial representation, and specific contractual forms such as bills of exchange and letters of credit commonly used in international trade.

In addition to these laws, import transactions are also subject to Türkiye ’s customs legislation and foreign exchange regulations, which regulate the importation process and payment flows, respectively. These laws impact the timing and mechanisms through which payments for imported goods are made and collected.

The interplay between international conventions and Turkish national laws creates a multifaceted legal environment. Exporters engaging with Turkish importers must carefully draft their contracts to specify the applicable law and dispute resolution mechanisms to avoid ambiguity and reduce risks related to payment enforcement.

In summary, the legal basis for import transactions in Türkiye is anchored in international treaties like the CISG, supplemented by robust domestic laws including the Turkish Code of Obligations and the Turkish Commercial Code. Awareness of this legal framework and strategic contractual planning are key to successfully navigating import payment collections in 2. Legal Basis for Import Transactions in Türkiye

The legal framework governing import transactions in Turkey is a combination of international treaties and domestic legislation designed to regulate the sale, delivery, and payment of goods between foreign exporters and Turkish importers. Understanding this framework is essential for both exporters and importers to ensure contractual compliance and effective enforcement of rights and obligations.

At the international level, Türkiye is a signatory to the United Nations Convention on Contracts for the International Sale of Goods (CISG), which came into effect in Türkiye on January 1, 2011. The CISG provides a comprehensive legal regime governing contracts for the sale of goods between parties whose places of business are in different contracting states. It aims to create uniform rules to reduce legal barriers and uncertainties in cross-border sales, including aspects such as contract formation, obligations of the seller and buyer, remedies for breach of contract, and risk transfer.

Turkish Code of Obligations (Law No. 6098): This is the principal legislation governing contractual relationships in Turkey, including sales contracts. It outlines general principles of contract formation, performance, breach, liability, and remedies. The Code of Obligations covers the fundamental rules on offer and acceptance, delivery, payment obligations, warranties, and damages, which are critical for import transactions.
Turkish Commercial Code (Law No. 6102): This law complements the Code of Obligations by regulating commercial practices, trade customs, and business entities. It contains specific provisions relevant to commercial sales contracts, including rules on merchants, commercial agents, commercial representation, and specific contractual forms such as bills of exchange and letters of credit commonly used in international trade.

3. Import Payment Structures

In the context of international trade with Turkish importers, a variety of payment methods and structures are commonly employed to facilitate the settlement of debts arising from the import of goods. The choice of payment structure significantly influences the risk exposure of both the exporter and the importer, particularly regarding the timing of payment and the mechanisms for dispute resolution or enforcement of payment claims.

The primary payment methods used in Turkey’s import transactions include the following:

a) Cash in Advance

Under this payment structure, the importer pays the full amount of the invoice before the goods are shipped or delivered. This method offers the highest level of security to the exporter, as payment is guaranteed prior to shipment. However, it is less favored by importers due to the high risk and liquidity burden it places on them. Cash in advance is generally used when there is a lack of established trust between parties or when the exporter holds significant bargaining power.

b) Open Account

Open account transactions are among the most common payment structures in Turkish import trade, especially in long-term or repeat business relationships. Here, the exporter ships the goods and grants the importer a credit period, allowing payment after delivery, usually within 30, 60, or 90 days. While this structure supports the importer’s cash flow and encourages sales, it exposes the exporter to substantial credit risk, including delayed payments or outright defaults.

Because payment occurs after delivery without immediate collateral or guarantees, open account transactions are prone to disputes and collection difficulties. Exporters must therefore adopt diligent credit management practices and employ legal safeguards, such as clear contractual terms and prompt demand letters, to mitigate these risks.

c) Letter of Credit (L/C)

A Letter of Credit is a widely accepted secure payment method in international trade, providing a bank guarantee of payment to the exporter, subject to the fulfillment of documentary requirements stipulated in the credit. In Turkish imports, L/Cs issued by reputable banks are commonly used to bridge the trust gap between parties.

The process involves the importer’s bank issuing an irrevocable letter of credit that assures payment to the exporter once the required shipping and commercial documents are presented and verified. This method reduces payment risk for the exporter and ensures that the importer’s payment obligation is backed by a financial institution.

However, L/C transactions involve strict documentary compliance, higher administrative costs, and procedural complexity. Disputes may arise if documents do not conform precisely to the terms of the L/C, potentially delaying payment.

d) Documentary Collection

In this method, the exporter ships the goods and entrusts the documents (such as bills of lading and invoices) to a bank, which then forwards them to the importer’s bank with instructions to release the documents only upon payment (Documents against Payment – D/P) or acceptance of a draft (Documents against Acceptance – D/A).

Documentary collection offers less security than an L/C, as payment depends on the importer’s willingness and ability to pay. It serves as a middle ground between open account and L/C transactions, balancing cost and risk. In Türkiye, documentary collections are frequently used in transactions where moderate trust exists between parties.

4. Contractual Protections

In international trade, especially when dealing with cross-border transactions such as imports into Turkey, carefully drafted contracts are fundamental to minimizing risks and ensuring enforceability of the parties’ rights and obligations. For foreign exporters, incorporating comprehensive contractual protections is a critical step toward safeguarding payment and addressing potential disputes effectively.

The following contractual clauses are particularly important in export sales contracts involving Turkish importers:

a) Choice of Law and Jurisdiction Clauses

One of the most significant contractual protections is specifying the applicable law and jurisdiction that will govern the contract and any disputes arising from it. Including a choice of law clause clarifies whether the contract will be governed by Turkish law, the law of the exporter’s country, or an alternative neutral legal system. Similarly, a choice of jurisdiction clause designates the competent courts or arbitration institutions for resolving disputes.

Such clauses reduce uncertainty, prevent forum shopping, and provide predictability. While Turkish courts generally respect parties’ autonomy in these matters, certain mandatory provisions of Turkish law may apply regardless of the chosen law. Exporters often prefer international arbitration (e.g., ICC or ISTAC arbitration) to avoid the sometimes lengthy and formalistic Turkish court procedures.

b) Payment Terms

Explicit payment terms are essential to avoid ambiguity and strengthen the exporter’s position in enforcing payment claims. These terms should clearly specify:

The currency of payment, considering fluctuations in exchange rates.
Payment deadlines and due dates.
Late payment penalties and interest rates applicable to overdue amounts, aligned with Turkish statutory provisions or international commercial practices.
Accepted payment methods (e.g., wire transfer, letter of credit).

Clear payment terms help prevent disputes regarding amounts owed or timing and provide a contractual basis for claims in case of default.

c) Dispute Resolution Mechanisms

Including robust dispute resolution provisions is another key protection. Commonly used mechanisms include:

Arbitration clauses, which designate arbitration as the exclusive means to resolve disputes, specifying the seat, rules (e.g., ICC, UNCITRAL, ISTAC), and number of arbitrators.
Mediation clauses as a preliminary step before litigation or arbitration.
Provisions that regulate the language of proceedings, interim measures, and enforcement.

Arbitration is often favored by foreign exporters due to the neutrality, confidentiality, flexibility, and international enforceability of arbitral awards under the New York Convention, to which Turkey is a party.

d) Retention of Title Clauses

A retention of title (ROT) clause allows the exporter to retain ownership of the goods until full payment is received. This contractual mechanism offers significant protection by preventing the importer from reselling or using the goods as collateral before paying.

In Turkey, ROT clauses are generally enforceable under the Turkish Code of Obligations. However, to be effective against third parties, such as subsequent purchasers or creditors of the importer, registration of the clause with the relevant Turkish registry (e.g., movable property registry) may be required. Failure to register could limit the exporter’s ability to reclaim goods or assert ownership rights in insolvency or enforcement proceedings.

Additional Contractual Safeguards

Beyond these core clauses, exporters may also consider:

Guarantees or bank guarantees, requiring the importer or a third party to secure payment.
Force majeure clauses, which excuse performance under extraordinary circumstances.
Confidentiality provisions, protecting sensitive commercial information.
Warranty and liability clauses, clarifying responsibilities for defective goods.

5. Collection of Import Receivables

The collection of payment for goods imported into Turkey can be a complex and sensitive process. Foreign exporters should be aware of both amicable and judicial avenues available under Turkish law to recover outstanding receivables. Employing a structured approach that begins with amicable collection and progresses to legal enforcement if necessary often yields the best results.

A. Amicable Collection

The initial and preferred step in recovering overdue payments is to attempt an amicable resolution. This generally involves sending a formal payment demand letter through a Turkish attorney or a legal representative familiar with Turkish commercial practices.

Key elements of an effective payment demand letter include:

Clear summary of the debt: The letter should explicitly state the total outstanding amount, referencing the specific invoices or deliveries for which payment is overdue.
Reference to contractual provisions: It is important to cite relevant clauses of the sales contract, such as payment terms, penalties for late payment, and any agreed dispute resolution mechanisms. This reinforces the legal basis for the claim.
Deadline for payment: Typically, a reasonable deadline of 7 to 15 days from the date of the letter is provided for the importer to settle the debt. This deadline serves as a final opportunity to resolve the matter amicably before further action.
Consequences of non-payment: The letter should clearly state the intended next steps if payment is not received within the specified time, such as initiating legal proceedings or enforcement measures.

The amicable collection stage is not only cost-effective but also helps preserve business relationships. It also demonstrates to courts or arbitrators that the creditor has made reasonable efforts to resolve the dispute prior to litigation.

B. Judicial Enforcement

If amicable efforts fail or the importer refuses to pay, foreign exporters have recourse to formal legal proceedings under Turkish law. There are two primary judicial mechanisms for debt collection:

i. Lawsuit (Litigation)

A creditor may file a lawsuit at the Commercial Court of First Instance with jurisdiction over the debtor’s location. The lawsuit seeks a court judgment confirming the debt and ordering payment.

If the creditor possesses written evidence of the debt—such as signed contracts, invoices, promissory notes, or a written acknowledgment of debt by the importer—the court procedure is often expedited.
The litigation process involves the exchange of pleadings, evidence submission, hearings, and ultimately a judgment. While effective, litigation can be time-consuming and may require several months or longer depending on the court’s caseload and the complexity of the case.
A favorable court decision provides a legal basis for enforcement but does not itself compel payment until enforced through execution proceedings.

ii. Execution Proceedings (İcra Takibi)

Under the Turkish Enforcement and Bankruptcy Law (Law No. 2004), creditors may initiate enforcement proceedings through enforcement offices (İcra Müdürlükleri) without first obtaining a court judgment, significantly speeding up the debt recovery process.

There are two main types of enforcement proceedings:

Non-judicial enforcement (General Prosecution): This process is applicable to monetary claims supported by enforceable documents such as promissory notes, bills of exchange, court decisions, or certain contracts expressly providing for enforcement. The creditor files an enforcement petition at the relevant enforcement office, which then notifies the debtor to fulfill the payment obligation within a statutory period (usually seven days).
If the debtor fails to pay or object, the creditor can request measures such as asset seizure, bank account garnishment, or property liens to satisfy the debt.
Judicial enforcement: In cases where the debt is disputed or the claim is complex and not supported by enforceable documents, the creditor may need to first obtain a court judgment through litigation before initiating enforcement.

Objections and Conversion to Lawsuit

If the debtor files a formal objection (itiraz) during non-judicial enforcement, the enforcement proceeding typically transforms into a lawsuit, requiring the creditor to pursue the claim through regular court litigation. This process may prolong collection but provides due process for contested claims.

Practical Considerations

Choice of procedure: Creditors should carefully evaluate the nature of their claims, available evidence, and contractual terms to determine the most efficient collection route.
Use of Turkish legal counsel: Engaging experienced local attorneys is essential to navigating procedural requirements, drafting enforceable petitions, and liaising with enforcement offices or courts.
Timing and costs: Judicial and enforcement proceedings in Turkey may involve legal fees, court costs, and time delays. Early amicable settlement is often financially and strategically preferable.
Cross-border enforcement: For foreign exporters, recognizing the enforcement process for foreign judgments or arbitral awards in Turkey (under the New York Convention and Turkish Private International Law) is also critical for successful debt recovery.