Under Turkish law, the majority of court judgments may be made the subject of enforcement proceedings without waiting for them to become final. Even where the party against whom judgment has been given has lodged an appeal or an appeal on points of law, the creditor may take the reasoned judgment in its hands to the enforcement office. This creates considerable pressure for the debtor: measures taken against their assets while review by the higher court is still pending may cause losses that are difficult to make good afterwards.
The legislature has not removed that pressure altogether, but it has allowed the proceedings to be held in abeyance in return for specified safeguards. The institution known in practice as stay of enforcement or postponement of enforcement enables a debtor who has resorted to an appellate remedy to freeze proceedings temporarily by depositing security in the enforcement file.
Below we consider, in turn, the judgments in respect of which this mechanism may be invoked, the procedure to be followed, the function of the certificate of respite, and the point at which the proceedings will halt once a decision has been obtained.
The Concept of Stay of Enforcement and Its Legal Basis
Enforcement based on a judgment is the route in which a judicial decision is itself used as the basis of the proceedings. As a rule, such decisions need not have become final before they may be taken to the enforcement office. Nor does the lodging of an appellate remedy of itself halt the proceedings; the debtor may therefore face the pressure of attachment while the judgment against them is still under review. It is at this stage that the protection afforded by the postponement of enforcement comes into play.
The institution rests on Article 36 of the Enforcement and Bankruptcy Act No. 2004. Under that provision, a debtor may request that enforcement steps be held in abeyance until the higher court has determined the dispute, provided that they document having lodged an appeal or an appeal on points of law against the judgment and provide the prescribed security. The power to rule on the request lies with the Enforcement Court.
It must be emphasised that the protection here is temporary in nature. A stay of enforcement is not an institution that reopens the substance of the claim for argument; it merely defers the use of compulsory enforcement measures until the review process has been completed.
Which Judgments May Be Stayed?
A request for postponement arises only in respect of court decisions that may be enforced before becoming final. Put differently, the scope covers judgments whose enforceability is not conditional upon finality but against which an appellate remedy has been sought. The following three groups fall within that definition:
- Judgments ordering performance that may be executed without any requirement of finality. Decisions ordering the payment of a sum, the vacation of immovable property or the delivery of a thing are examples of this group.
- Judgments that are plainly capable of execution but have not been made subject to a requirement of finality. Decisions concerning delivery and eviction, together with judgments on maintenance claims in certain circumstances, are considered under this heading.
- Interim legal protection decisions, where the conditions are met. A request may in particular be advanced in respect of interim protection provisions that contain an express rule on the postponement of enforcement.
Two elements must be present together before the request can succeed: the decision must be of a kind that may be enforced before becoming final, and an appellate remedy must have been sought against it. In addition, the debtor is expected to provide security; the extent of that security is as a rule shaped by the size of the sum awarded. Which decisions may not be enforced before becoming final is a separate subject of examination.
How the Postponement of Enforcement Procedure Works
The process is set in motion when the creditor commences proceedings on the basis of the judgment obtained and the writ of execution reaches the debtor. From that point onwards, what the debtor must do consists of placing certain documents on the file within the statutory period and satisfying the security requirement. The stages are set out below.
Obtaining the Court Endorsement Note
The debtor’s first step is to establish formally that an appeal or an appeal on points of law has been lodged against the judgment. For that purpose, an endorsement note is obtained from the court that gave the decision.
The endorsement note is an official document confirming that an appellate remedy has been pursued and showing that the application was made in time and in due form. Once this document is placed on the enforcement file, the first link in the chain leading to a stay of the proceedings is complete.
Depositing the Security and Determining the Amount
Submitting the endorsement note alone is not enough to halt the proceedings. The debtor must also deposit security in the enforcement file. The size of the security is determined by reference to the total enforcement claim, arrived at by adding three months’ interest to the debt on the file. That safeguard may be provided in cash or alternatively met by furnishing a bank guarantee letter.
Once the security is on the file, the enforcement office allows the debtor a reasonable period in which to apply to the enforcement court. That period is evidenced by the certificate of respite issued to the debtor.
The Certificate of Respite and the Ninety-Day Period
The certificate of respite is an official document drawn up by the enforcement office upon production of the requisite documents and deposit of the security. The certificate records two matters: that the enforcement steps have been temporarily suspended, and that the debtor has been allowed a specified period in which to bring a decision from the enforcement court.
Issue of the certificate depends on the debtor discharging the following two obligations:
- having deposited in the enforcement file security covering the debt on the file together with three months’ interest, and
- producing on the enforcement file the endorsement note showing that an appeal or an appeal on points of law has been lodged against the judgment.
Where these conditions are satisfied, the certificate of respite issued allows the debtor a period of 90 (ninety) days in which to bring the request for a stay of enforcement before the competent authority, namely the enforcement court of the place where the proceedings are being conducted. Throughout that period the proceedings are halted and the creditor may not carry out any enforcement step, including attachment.
It should not be forgotten that the certificate produces no lasting effect of itself; the document merely shows that the process has been put on hold temporarily and that the debtor is under an obligation to bring a court decision. If no decision is obtained within ninety days, or if the request is dismissed, the suspension attaching to the certificate lapses of its own accord and the proceedings resume from the point at which they were left off.
Obtaining a Decision from the Enforcement Court
Once the certificate of respite has been issued, the initiative rests entirely with the debtor. Within the ninety days allowed, the debtor must apply to the Enforcement Court in order to obtain a stay of enforcement decision. That decision constitutes a form of legal protection which temporarily halts enforcement based on a judgment and holds compulsory enforcement steps in abeyance until the higher court has completed its review.
Subject-Matter and Territorial Jurisdiction
Following the amendment introduced by Act No. 7343, the power to rule on postponement requests has been taken from the appellate court and conferred on the Enforcement Court of the place where the proceedings are conducted.
On that basis, the request must be directed to the Enforcement Court to which the enforcement office conducting the proceedings is attached. In the application submitted to that court, the debtor is expected to establish that the security has been deposited on the file, that the certificate of respite has been obtained, and that the judgment remains under appellate review.
Contents of the Application
The application to be submitted to the court is framed so as to set out the three elements listed above together with their supporting documents. The number of the enforcement file, the date and amount of the security deposited, the date on which the certificate of respite was issued, and the details of the endorsement note relating to the appellate application must all be stated expressly in the application. In the section setting out the relief sought, the request that the proceedings be postponed until the higher court has given its decision is expressed in terms that leave no room for doubt.
Effects of the Decision on the Enforcement Proceedings
A stay of enforcement decision enables a debtor who has pursued an appellate remedy against a judgment enforceable before it becomes final to freeze the enforcement steps. From the moment the decision is obtained, enforcement based on the judgment is put on hold and the creditor cannot advance the file until the review process has been completed. Certain practical consequences frequently raised in practice nevertheless call for separate explanation.
The Position of Existing Attachments
When the decision is given, the proceedings against the debtor are halted; that suspension does not, however, of itself set aside attachments already levied. The result is that no new attachment may be levied and the steps on the file cannot be advanced, but the existing restrictions remain in place.
- An attachment levied on movable or immovable property before the decision is not automatically released by reason of the stay of enforcement.
- The attachment can be lifted only if the debtor makes a separate request for the lifting of the attachment.
- Where the sale stage has not yet been reached, by contrast, steps directed towards sale are halted upon the stay of enforcement decision.
Consequences for Eviction Judgments
The execution of judgments ordering the vacation of immovable property is likewise affected by this protection; a stay of enforcement decision temporarily halts the eviction.
- Where an appeal or an appeal on points of law has been brought against an eviction judgment and the conditions for postponement have been completed, the vacation steps are put on hold.
- For a debtor who has deposited the security, submitted the endorsement note and obtained a decision from the enforcement court on the strength of the certificate of respite, the eviction cannot be carried out.
- If no decision is obtained in time, or if the court dismisses the request, the vacation proceeds from where it was left off.
When the Protection Comes to an End
Because a stay of enforcement is a form of interim legal protection, its life is limited to the point at which the higher court determines the dispute.
- Where the appellate court upholds the judgment and it thereby becomes final, the protection falls away and the proceedings resume.
- If the judgment is quashed or set aside in the debtor’s favour, the basis of the proceedings disappears; the annulment of steps taken against the debtor may then arise.
- Likewise, if the debtor fails to bring a decision from the enforcement court within the period allowed, or the application is dismissed, the proceedings continue from where they were left off.
As will be seen, this protection has effect only for the duration of the appellate review. At the end of the process either the debtor has secured a temporary safeguard, or the way is opened for the creditor to continue the proceedings.
The Independent Legal Assessment
A stay of enforcement is an area that appears straightforward in theory but in which procedural errors prove very costly. A significant proportion of the losses encountered in practice stem from miscalculating the security, from failing to obtain the endorsement note in time, or from mistracking the ninety-day period. Once the period has been missed, the only course left to the debtor is to await the outcome of the appellate review under attachment.
Nor should the creditor follow this process passively. The extent of the security, whether the certificate of respite was issued in due form, and whether the period has expired should all be kept under regular review. In a given file, the following matters should be addressed as a priority:
- establishing at the outset whether the judgment is genuinely of a kind that may be enforced before becoming final
- calculating the amount of the security correctly, by adding three months’ interest to the debt on the file
- obtaining an endorsement note whose contents show that the application was made in time
- recording the date on which the certificate of respite was issued and the final day of the ninety-day period
- directing the request to the enforcement court of the place where the proceedings are being conducted
- considering whether a separate request for the lifting of attachments already levied should be made
Independent Legal advises on and conducts the entire process in enforcement proceedings based on a judgment, from the preparation of postponement of enforcement requests through the management of the security process to the conduct of the appellate stage.