The Court of Cassation Decision of the Unification of Judgments holding that Receivables based on a Verdict may not be put into Enforcement Proceedings without a Verdict
The Court of Cassation General Assembly on the Unification of Judgments (“General Assembly”) decision (“Decision”) dated 26.05.2017 and numbered 2017/2 E. and 2017/3 K. which was given to eliminate the discrepancy among the jurisprudence of the General Assembly of the Court of Cassation, the 4th Civil Chamber, the 8th Civil Chamber, the 12th Civil Chamber and 13th Civil Chamber, was published in the Official Gazette dated 21.07. 2017 and numbered 30130. This Decision, the justifications of the Decision, as well as the dissenting opinions shall be examined in this article.
A General Overview on Enforcement Proceedings
Before examining the decision and its justifications, it is beneficial to clarify the general principles of enforcement proceedings.
Enforcements with attachment proceedings for collecting the pecuniary receivables are divided according to the basis of each enforcement, as follows: An enforcement proceeding that is based on a verdict; or an enforcement proceeding without a verdict. Creditors do not have to produce a document regarding the debt in order to pursue an enforcement proceeding with attachment, without a verdict. As a matter of fact, even though a creditor does not produce any document, or even if he/she is not a creditor, in reality, it is possible to follow this line of this proceeding[1]. Enforcement proceedings based on a verdict, however, may only be conducted with a verdict. The issue as to whether a document qualifies as a verdict is determined by law. Signed and sealed court decisions, arbitral awards, and those documents that qualify as a verdict pursuant to Article 38 of Bankruptcy and Enforcement Law numbered 2004 (“Law”) may be used as examples for this concept.
A request to issue enforcement proceedings in the same format is required for all enforcement proceedings. The enforcement proceeding chosen by the creditor shall be stated in this request. The enforcement agent who receives the request for enforcement proceedings, upon his/her ex officio evaluation, shall issue a payment or an enforcement order. The enforcement proceeding determined by the creditor is not binding upon the enforcement agent.
It is possible to stop the enforcement proceeding without a verdict by objection to the payment order. This objection must be nullified in an action for annulment of objection, or an action for removal of objection, in order for the creditor to pursue enforcement proceedings. The creditor may only obtain its receivables through this method.
Enforcement proceedings based on a verdict may only be stopped by suspension of enforcement, which is stipulated in Article 36 of the Law. The debtor may obtain the suspension of enforcement from the regional courts of justice, or from Court of Cassation, on the condition that he/she provides a security deposit. This is very beneficial for the debtor who is of the opinion that the decision, which is given against the debtor, is unlawful, and that it will be abolished through examination of the Court of Appeal or Court of Cassation.
Summary of Different Courts of Cassation Jurisprudence
The Civil Chambers of the Court of Cassation created two jurisprudences on this subject. The jurisprudence holding that verdicts may not be subjected to enforcement proceedings without a verdict argues that the enforcement agent must issue an “enforcement order,” if a verdict is submitted in the request for enforcement, and issuing a payment order in its place would not be in conformity with the law. This jurisprudence holds that if the opposite situation is accepted, the debtor’s right to apply the suspension of enforcement will be taken away and, in the event that the “objection” procedure, which is the only remaining procedure to prevent the continuation of the enforcement, is used, the obligation related to compensation for enforcement denial, which is stipulated under Articles 67 and 68 of the Law shall arise, and that enforcement proceedings without a verdict shall not be applicable, if there is a verdict as to the issue of pecuniary receivables, as this issue goes against good faith principles.
The jurisprudence holding that verdicts may be subjected to enforcement proceedings without a verdict argues that there is no legal provision that prevents the creditor, who possesses a verdict, or a document that qualifies as a verdict, to pursue enforcement proceedings without a verdict. It further argues that it may not be assumed that creditors apply to the non-advantageous procedure of “enforcement proceedings without a verdict” just to obtain compensation for enforcement denial, instead of applying to the more advantageous “enforcement proceedings based on a verdict.” The jurisprudence holds that the debtor, whose objection to the debt is undoubtedly unjust, is also in a position to know that the compensation of denial may be awarded upon the creditor’s request.
Justification of the Decision
Phase of Issuing Request for Enforcement Proceedings
According to Articles 24 and 32 of the Law that regulates the enforcement of verdicts, when a verdict is submitted to the enforcement office, the enforcement agent notifies the debtor through an enforcement order. Therefore, even if the creditor, who holds a verdict, is willing to pursue enforcement proceedings without a verdict, the enforcement agent is obliged to issue an enforcement order, and to commence enforcement proceedings with a verdict under the aforementioned legislative regulation. In the Decision, it is underlined that the enforcement agent has no discretionary power regarding this matter, and a creditor who holds a verdict cannot pursue enforcement proceedings without a verdict.
Balance of Interests
Enforcement proceedings based on a verdict may only be stopped through a court decision to suspend the enforcement that is issued upon reimbursement of the debt as a security deposit. Whereas, suspension of enforcement protects the debtor from the pressure of attachment, and a security deposit protects the creditor in terms of collection of his receivable. Thus, an enforcement proceeding based on a verdict is the preferable option for a creditor, both in terms of convenience in the proceedings, and in collection of the receivable. As a verdict on the subject is already present, this does not burden the debtor with the danger of unjustified payment, and balances the interests in an efficient manner.
Legal Interest
Legal interest is a condition that is called for in every area in which a right of claim may be asserted. In the event that the preferred type of claim is unnecessary, costly, and requires considerable effort and time, it is accepted that the claimant has no legal interest. If there is an easier, faster and less expensive way, there is no legal interest of the right owner in preferring another way.
In this respect, an enforcement proceeding that is based on a verdict is a special way that leads to the collection of receivables in an easier, faster and economic manner. There is no legal interest of the creditor whose receivable is bound to a verdict to prefer an enforcement proceeding without a verdict that is costlier, subject to objection, and takes longer[2]. There is also no need to justify a creditor who changes his/her opinion while holding a verdict, and to pursue enforcement proceedings without a verdict, which he/she could already pursue without needing to produce any supporting documents.
Legal Proceedings
The creditor may nullify an objection to the enforcement proceeding without a verdict via filing a lawsuit. However, it does not comply with the principle of legal interest and good faith when a creditor files a lawsuit once again, when he already holds a verdict. Preferring such a way would be unnecessary and would occupy the courts, repetitively.
Article 68 of the Law that regulates the other manner to request an annulment of the objection, and counts the documents that are the basis for removal of the objection in a restrictive way (numerus clausus), does not include verdicts and documents that qualify as verdicts. This attitude of the legislator demonstrates the will to prevent pursuing enforcement proceedings without a verdict, if there is a verdict present[3].
Issues in Practice
The only way that a debtor, who is willing to postpone the payment, and be freed from the pressure of attachment during enforcement proceedings without a verdict, is to object to a payment order. The practical shortcomings of objection to a payment order are that the debtor cannot benefit from the opportunity of suspension of enforcement, and the injustice of the compensation for enforcement denial that shall be awarded as the result of removal or annulment of the objection.
At this point, it could be claimed that indebtedness is made certain with a verdict, and one should not object to enforcement proceedings. In that case, the debtor shall be obliged to pay the debt, and therefore, shall be subject to enforcement proceedings, such as attachment, and shall be burdened with additional enforcement costs. On the other hand, if it appears that the court decision was in err, and the person who was regarded as the debtor is not actually in debt, or not in debt in the amount demonstrated by the court, following the reviews of the Court of Appeal or the Court of Cassation, then the debtor shall make an effort towards reimbursement of the paid amount, and the enforcement offices shall be occupied with reimbursement of monies from the creditor whose claims are found to be unjustified.
A sense of injustice is created when the debtor, who is willing to protect himself from the pressure of attachment during the finalization process of the verdict and prevent the difficulty of reimbursement of the possible payment, is held liable with compensation for enforcement denial in the amount of 20%, as a result of his/her objection to enforcement without a verdict, at the end of the trial of annulment or removal of objection. Therefore, a creditor’s pursuit of enforcement proceedings without a verdict while holding a verdict is against the principle of good faith, and falls under the scope of abuse of right.
Dissenting Opinions
Two dissenting opinions are present in the Decision. In summary, these opinions defend that the law of enforcement is a procedural branch of law. There is no provision in the Law that explicitly forbids one to pursue enforcement proceedings without a verdict while holding a verdict. While Article 32 of the Law regulates that the enforcement agent shall issue an enforcement order in the event the creditor submits a verdict is not mandatory, it is possible to halt the enforcement proceedings by way of objection, and the debtor that can request suspension of enforcement may also make a payment under reserve to the file of enforcement without a verdict. The debtor who wrongfully objects despite the presence of a finalized verdict regarding the presence of the debt must bear the consequences, and the balance of interest is established in favor of the creditor under the Law.
Conclusion
The General Assembly has decided to unify decisions as “the receivable based on a verdict may not be put into enforcement proceedings without a verdict,” because pursuing enforcement proceedings without a verdict while holding a verdict is not in conformity with the enforcement law. Further, in this way, the creditor has no legal interest, the condition of the debtor is aggravated, and the balance of interest between the parties is disrupted.
[1] PEKCANITEZ, Hakan; ATALAY, Oğuz; SUNGURTEKİN ÖZKAN, Meral; ÖZEKES, Muhammed, İcra ve İflas Hukuku, Yetkin Yayınları, Ankara, 2015, p. 128.
[2] ASLAN, Kudret/AKYOL; ASLAN, Leyla, İlama Bağlı Para Alacağı İçin İlamsız İcra Takibi Yapılması, Dürüstlük Kuralına ve Hayatın Olağan Akışına Aykırı mıdır?, Prof. Dr. Ramazan Arslan"a Armağan, C.I, Yetkin Yayınları, Ankara, 2015, p.206.
[3] ASLAN; AKYOL ASLAN, p. 207.
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