Turkish Law Blog

Assignment and Attachment of Future Receivables Under Turkish Law

Yudum Uğur Yudum Uğur/
23 December, 2020
1059

As a rule, receivables based upon a legal relationship (foundation) existing between two persons, and which, despite not yet accrued, are likely to accrue in the future, are called future receivables. In order to talk about a future (expected) receivable, it is sufficient for a legal relationship (foundation) to exist and for the type and obligor of the receivable to accrue from this legal relationship is identified (or identifiable).  Whether or not the amount of receivable is identified, or the existence of the possibility of non-accrual of such a receivable, is not important.[1] Receivables that are conditional upon a dilatory time period and receivables that are conditional upon a dilatory condition due to absence of one of the conditions of accrual are also deemed as future receivables. Future receivables can become the subject of legal transactions and arrangements.

Assignment

As a rule, all receivables can be assigned. Thus, just like an already-acquired (gained) receivable, a receivable which will be acquired in the future can also be assigned, and likewise, just like a receivable which is due and payable, receivables that are conditional upon a due date or condition can also be assigned. In fact, whether the receivable has accrued from a legal conduct, tort, unjust enrichment, or directly from law, is also not important.[2] In addition, it is not compulsory for a receivable to have become “due and payable” for Assignment, either. As a matter of fact, the Supreme Court of Appeals accepts that assignment of a future receivable which does not exist yet is also possible. However, an opinion in the doctrine argues that an assignment shall not be valid for those receivables which have no ground and which are not based upon a legal relationship existing at the time of Assignment (for example, a receivable which might accrue from a future lease of an immovable property which has not been leased out yet), because the subject of the assignment transaction does not exist at the time of the disposition. However, it is accepted that making “a promise for assignment” thereof is possible, because in that case, it shall bring about an obligation for the promiser to make an assignment contract when they actually accrue in the future.

The following can be given as examples of future receivables that are based upon a legal relationship existing at the time of assignment: rental receivables to accrue from a lease contract existing at the time of assignment; consideration receivables to accrue in the future upon conclusion of a sales contract based upon seller’s promise to sell an immovable; receivables to accrue in the future upon establishment of a sale relationship by exercise of a purchase option, right of pre-emption or right of repurchase, based upon a contract of pre-emption or repurchase; and retirement bonus that an obligor will receive from the organization he/she works at, in the case that he/she retires in the future.[3] The Supreme Court of Appeals accepts that a contractor of a construction in return for flat can assign its receivables pertaining to an independent section also before completion of the construction.

Attachment

Ability to send an attachment notice or attachment letter for future receivables or receivables that are yet to accrue is conditional upon the existence of an ongoing legal relationship between the third party and the obligor. In the case of existence of a legal relationship and in the case of existence of an ongoing receivable that is to be paid to the obligor due to such relationship, an attachment letter can be sent to the third party.  Wage receivables of employees and public officers to accrue from their employer can be shown as an example of future receivables (Baki Kuru, Enforcement and Bankruptcy Law Guidebook - page 428 ff.). The Law explicitly accepts that, in wage attachments, future receivables within this meaning can be attached (Enforcement and Bankruptcy Law 83,355,356.)[4].  

On the other hand, it is not possible to consider those receivables that are not based upon a legal relationship existing between the obligor and third party (at the time of service of the first attachment notice), and are based merely upon an expectation and possibility, as future receivables (Kuru, page 491,492). In fact, pursuant to article 89 of the Enforcement and Bankruptcy Law, in the case that the third party is served an attachment notice regarding the attachment of rights and receivables of the obligor that have accrued and will accrue from such third party, liability of the third party is limited to the (actual) circumstance existing at the time of its receipt of the writ of attachment (for example: current account balance). Since it is not possible for a third party to clearly know at this stage about a right which will accrue or likely to accrue in the future, except for routine payments (rental receivables, remuneration, wages etc.), an attachment notice bears no consequence with regard to future receivables.[5]

In other words, in order for an attachment notice to be sent for future receivables (which are expected or which will accrue), the existence of an ongoing legal relationship between the obligor of the enforcement proceedings and the third party, and the existence of an ongoing receivable to be paid to the obligor due to this relationship, are required. The decision under file no. 2017-12-369 E., 2019/130 K., dated 12.02.2019, of the General Assembly of Civil Chambers of the Supreme Court of Appeals, also follows the opinion that the expression “and will accrue”, written in the notices of attachment imposed upon “... any and all rights and receivables which have accrued and will accrue...”, without mentioning any legal relationship, should be corrected by being cancelled.[6]  However, in practice, this issue is circumvented by merely adding in the attachment notice the expressions “attachment of the portion of those rights and receivables of the obligor that have accrued or will accrue from you, which will be sufficient to cover the amount of the obligation”, without mentioning the subject of the attachment.  

Another issue which should be noted at this point is the requirement that, in order for the attachment notices that are sent to the third party, as specified in paragraphs 1 and 2 of article 89 of the Enforcement and Bankruptcy Law, to bear a legal consequence, they should possess the elements written in article 89 of the Enforcement and Bankruptcy Law and article 42 of the Regulation on Enforcement and Bankruptcy Law. In accordance with article 42 of the Regulation on Enforcement and Bankruptcy Law, the amount of receivable and the interests and accessories thereof, and the subject and amount of attachment, should be written. Otherwise, it is not possible to regard the obligation as having been debited to the third party who has made no objection. Since the obligee of the enforcement proceedings is a stranger to the legal relationship between the obligor of the enforcement proceedings and the third party; even if the subject and amount of attachment is not specified, it is sufficient, as a rule, for the receivable that is the subject of the enforcement proceedings to be shown in the attachment notice. However, if those rights and receivables that cannot be attached by way of an attachment notice are specified in the attachment notice; even if the third party has made an objection to the attachment notices, it may request, by filing a complaint, the cancellation of the unlawful act of the bailiff. The reason of this is that the third party has a legal interest in requesting the cancellation of the act of the bailiff’s office which is basically wrongful, in order to prevent any claim for damages against it and any demand for its punishment, pursuant to paragraph 4 of article 89, and article 338 of the Enforcement and Bankruptcy Law. On the other hand, in the case that the third party does not make any objection to the attachment notice, the receivable written in the notice shall be deemed to have been debited to the third party, and since it will be forced to perform the obligation which is deemed to have been debited to it if it fails to timely file a negative declaratory action upon the attachment notice issued pursuant to paragraph 3 of article 89 of the Enforcement and Bankruptcy Law, it may request, by way of filing a complaint, the cancellation or correction of those attachment notices that are in breach of procedure and law.[7]

Receivables of an obligor from a third party which are likely to accrue in the future can only be attached with an attachment letter to be sent under article 78 of the Enforcement and Bankruptcy Law.[8] In other words, since it is possible to attach receivables that will accrue, by establishing an attachment on any and all rights and receivables of the obligor that will accrue, by way of a writ of attachment sent to the bank pursuant to article 78 of the Enforcement and Bankruptcy Law, there will be no breach of law.


[1] 12th Civil Chamber of the Supreme Court of Appeals of the Republic of Turkey, File No.: 2018/ 12447, Decision No.: 2019 / 5556, Date of Decision: 04.04.2019

[2] Assembly of Civil Chambers of the Supreme Court of Appeals, File No. E. 2010/11-333, K. 2010/406, Date: 22.9.2010

[3] Nomer, page 108.

[4] 12th Civil Chamber of the Supreme Court of Appeals of the Republic of Turkey, File No.: 2018/ 12447, Decision No.: 2019 / 5556, Date of Decision: 04.04.2019

[5] 12TH CIVIL CHAMBER OF THE SUPREME COURT OF APPEALS, FILE NO. E. 2012/5507 K. 2012/22694, Date: 27.6.2012

[6] General Assembly of Civil Chambers of the Supreme Court of Appeals, File No.: 2017/ 725, Decision No.: 2019 / 470, Date of Decision: 17.04.2019

[7] General Assembly of Civil Chambers of the Supreme Court of Appeals, File No.: 2017/ 725, Decision No.: 2019 / 470, Date of Decision: 17.04.2019

[8] 12TH CIVIL CHAMBER OF THE SUPREME COURT OF APPEALS OF THE REPUBLIC OF TURKEY, FILE NO. E.  2012/5507 K. 2012/22694, Date: 27.6.2012

 

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