Overview
This article provides a practical overview of foreign insurance companies’ recourse rights in Türkiye. It examines the legal basis of statutory subrogation under Turkish law, the distinction between subrogation and assignment of receivables, and the limitation issues that may affect recovery claims.
I. Introduction
Although the right of recourse of foreign insurance companies in Türkiye is, in practice, often assessed solely under the heading of "recourse", its legal nature is intrinsically connected with several distinct legal institutions that must be examined separately. Chief among these are statutory subrogation, assignment of receivables, and limitation periods. In particular, where a foreign insurance company indemnifies a loss in Türkiye, pays the insurance indemnity, and subsequently seeks recovery from the party liable for the loss, the legal basis of such claim; whether the insurance company possesses a direct right of recourse by virtue of its capacity as insurer; whether such right may be asserted independently of an assignment; and the rules governing the applicable limitation period are all issues that directly affect the outcome of the dispute.
Under Turkish law, the insurer's mechanism of recourse is, as a rule, governed by the statutory subrogation regime. Within this framework, once the insurance company has paid the insurance indemnity, it is subrogated, to the extent of the indemnity paid, to the rights that the insured possesses against the parties responsible for the loss. Accordingly, the insurance company steps into the shoes of the insured and pursues the claim not in an independent legal capacity or on its own behalf, but through the legal position to which it has succeeded by way of subrogation to the rights of the insured.
This framework is of particular importance with respect to foreign insurance companies. The mere fact that an insurance company is foreign does not, in itself, mean that its claim in Türkiye is contingent upon an assignment of receivables. Rather, the decisive consideration is whether the statutory conditions for subrogation have been satisfied within the scope of the insurance relationship.
II. Legal Basis of the Right of Recourse in Türkiye
The provisions of the Turkish Commercial Code concerning the insurer’s subrogation expressly recognize that, upon payment of the indemnity by the insurance company, the rights held by the insured against the parties responsible for the loss pass to the insurance company by operation of law. Articles 1472 and 1481 of the Turkish Commercial Code expressly provide that, upon payment of the insurance indemnity, the insurance company is, by operation of law, subrogated to the legal position of the insured. This regulation establishes the insurance company’s right of recourse not as a contractual right, but as a right arising directly from the law. In practice, this also forms the basis of recourse claims in Türkiye for foreign insurance companies. Accordingly, if a foreign insurance company has made payment within the framework of a valid insurance relationship, and if the insured has a right of action that may be asserted against the party responsible for the loss, such right passes to the insurance company to the extent of the indemnity paid.
The authority of the insurance company in this context is to assert the insured's right of claim against the party responsible for the loss. Therefore, the insurance company may proceed directly against the party responsible for the loss; it is not required to rely on a separate deed of transfer or assignment. The source of subrogation is not the constitutive will underlying the insurance contract, but the direct effect of the law.
The fact that the insurance company is foreign does not, in itself, extinguish this right. What matters is whether, in the concrete case, the insurance indemnity has actually been paid, whether the injured party or the insured has a right of action against the party responsible for the loss, and whether such right may pass to the insurance company, limited to the amount of the insurance indemnity. Where these conditions are satisfied, the foreign insurance company may exercise its right of recourse on the basis of statutory subrogation as provided under Turkish law.
III. The Distinction Between Statutory Subrogation and Assignment of Receivables
Although statutory subrogation and the assignment of receivables may, at first glance, appear to produce similar legal consequences, they are fundamentally different in terms of their legal nature. Under statutory subrogation, the right passes automatically by operation of law, and no separate transfer agreement between the parties is required. By contrast, in the case of an assignment of receivables, an existing claim is transferred through a transaction concluded between the assignor and the assignee, which is subject to the written form requirement.
The most significant consequence of this distinction lies in the legal source of the right of claim. In statutory subrogation, the insurance company steps into the shoes of the insured, and the insured's right of action passes to the insurance company to the extent of the indemnity paid. In an assignment, however, the claim is transferred to the assignee through the voluntary act of the assignor.
Another important distinction concerns the fate of ancillary rights and available defences. In the case of statutory subrogation, the insurance company acquires the insured's rights together with all defences, objections, and limitations attached to those rights. In the case of an assignment, however, the assignee succeeds to the assignor's claim, but the legal basis and scope of such succession are governed by the rules specific to the law of assignment. Accordingly, although recourse and assignment may appear to produce similar practical outcomes, they differ in terms of their legal foundations and the legal rules applicable to them.
This distinction is equally decisive with respect to third parties outside the insurance context. Where a person is not an insurance company but merely seeks to recover a claim arising from a loss or connected with such loss, that person cannot, as a rule, assert the claim under the heading of "recourse". In such circumstances, no direct right to commence enforcement proceedings or legal action arises unless there is a valid assignment demonstrating that the claim has been lawfully transferred to that person.
IV. Cases Where an Assignment Is Required
Whether an assignment is required essentially depends on the legal status of the claimant. If the claimant is an insurance company and the conditions for statutory subrogation under the Turkish Commercial Code have been satisfied, no separate assignment is required. This is because the right of claim passes to the insurance company by operation of law. Conversely, if the claimant is not an insurance company, or if the circumstances of the case do not permit reliance on the insurance company's statutory subrogation, that person cannot directly assert a right of recourse against the party responsible for the loss; a valid assignment is required in order to exercise the claim.
In this context, particular caution should be exercised with respect to third parties outside the insurance relationship and foreign entities that do not have the status of an insurance company. Where recovery of a claim is sought, it must first be determined whether the claim has passed to the claimant by operation of law. In the absence of such statutory transfer, and unless there is a clear and written assignment evidencing the intention to transfer the claim, a person does not acquire the status of creditor merely because it has made payment in fact or because its interests have been affected.
V. Issues to Be Considered with Respect to Limitation Periods
As a rule, the right to which the insurance company is subrogated is of the same legal nature as the right held by the insured against the party responsible for the loss and is therefore subject to the same limitation regime. In other words, where the insurance company steps into the shoes of the insured, the commencement and duration of the applicable limitation period are determined in accordance with the rules governing the insured's underlying right.
Accordingly, in a recourse action brought by an insurance company, it must first be determined from which legal relationship the claim arises. In practice, recourse claims are most commonly based on tort, and therefore the applicable limitation period is generally assessed in accordance with the rules governing tort claims. However, this alone is not sufficient; it must also be examined whether the circumstances of the particular case are subject to any special statutory limitation regime.
The same principle applies to foreign insurance companies. A right acquired by a foreign insurance company through statutory subrogation is not independent, for limitation purposes, from the legal position of the insured. Accordingly, the date on which the insurance company made payment, the date on which the damage and the identity of the party responsible became known, the legal nature of the underlying event, and any applicable special limitation rules must all be considered together.
Furthermore, regard must be had not only to the duration of the limitation period, but also to the rules governing its interruption and suspension. Circumstances such as the filing of a lawsuit, the initiation of enforcement proceedings, or the debtor’s acknowledgment of the debt may be determinative for limitation purposes. In a claim transferred by way of subrogation, against whom and when such acts were performed determines whether the insurance company has suffered a loss of rights. Therefore, in recourse files of insurance companies, not only the period between the payment date and the filing date, but also the accrual and maturity of the claim must be carefully analysed.
VI. Conclusion
In conclusion, foreign insurance companies are, as a rule, entitled to exercise a right of recourse in Türkiye. However, this right arises on the basis of statutory subrogation, provided that the insurance company has paid the insurance indemnity and that the insured possesses a valid right of claim against the party responsible for the loss. Where these conditions are satisfied, the foreign insurance company may pursue the party responsible for the loss without the need for a separate assignment of the claim. By contrast, third parties that are not insurance companies, or persons who cannot rely on the statutory subrogation regime, cannot assert a direct right of recourse. In such cases, the transfer of the claim by way of a valid assignment becomes a legal necessity.
In order to avoid the loss of rights by insurance companies and third parties alike, the issues of the right of recourse, statutory subrogation, assignment of receivables, and limitation periods must be examined separately in each case and assessed within the legal framework applicable to the particular circumstances of the dispute.