Turkish Law Blog

Impact of Interruption of Limitation Period on Joint and Several Debtors

Barış Ülker Barış Ülker/ Paksoy
19 February, 2019
862

Summary

Although joint and several indebtedness exists in different legal systems, there is not a consensus regarding its character. According to “principle of plurality of obligatio” taken as basis under Turkish Law, debtors who are jointly and severally liable for an obligation, may be subject to different provisions. Notwithstanding, pursuant to Article 155/1 of Turkish Code of Obligations, if the statute of limitation is interrupted against one joint and several debtor, it would be automatically interrupted against the remaining joint and several debtors. The exceptional character of above article had led to controversies in the doctrine since Article 165 of Turkish Code of Obligations which is developed in accordance with the principle of plurality of obligatio is as follows: “no debtor can aggravate the status of another debtor by its own acts”.

I. Introduction

Joint and several indebtedness is an obligatory relationship wherein multiple debtors are liable for the performance as a whole against one or more creditors due to the same reason or for different reasons, and all debtors may be discharged when and to the extent such obligation is fulfilled[1].

Notwithstanding the existence of various theories as to the legal characteristics of this obligatory relationship, joint and several indebtedness is a concept which has subsisted under different legal systems. According to the concept of correal obligation and the “principle of singularity of obligatio” prevalent particularly in the Law of Pandect period, a single obligatory relationship wherein the debtor side consists of multiple persons exists in joint and several indebtedness. Under systems based on such view, the same provisions need to be applicable to all debtors, since joint and several debtors take part in a single obligatory relationship.

Currently however, the “principle of singularity of obligatio” has lost ground and given way to the “principle of plurality of obligatio”. According to such principle, there exist as many obligatory relationships - in the strict sense - within joint and several indebtedness as there are debtors, and each debtor may be liable under different provisions, despite taking part within the same joint and several obligatory relationship. Nevertheless, the plurality of obligatio approach still does not render the debt of each joint and several debtor wholly independent of the others, and the legislator interconnects the fate of such debts by virtue of certain provisions. In light of the foregoing, it would not be a misstatement to assert that there is relative independence among debtors in joint and several indebtedness. [2]

Upon examining the provisions of the Turkish Code of Obligations (“TCO”) on joint and several indebtedness, it is observed that the legislator has taken as basis the principle of plurality of obligatio. [3] Thereby it has been made possible for joint and several debtors to be subject to different provisions in our legal system. On the other hand, Article 155/1 of the TCO, which constitutes an exception to such rule, provides “In the event the statute of limitations is interrupted against one of the joint and several debtors, it shall automatically be interrupted against the other joint and several debtors as well”, thus interconnecting the fates of the joint and several debtors in terms of the interruption of the statute of limitations, while also putting forth an exception to the principle “no debtor may aggravate the status of other debtors through its own acts”, which is one of the fundamental principles of joint and several indebtedness embodied in TCO art.165. As will be addressed below however, there also exists a view in the doctrine which argues that such two provisions may be reconciled with each other.

II. Interruption of the Statute of Limitations

Interruption of the statute of limitations implies that upon the occurrence of one of the specific reasons provided under the law, the time elapsed until such moment is not taken into account at all after the interruption. [4]

The reasons for the interruption of the statute of limitations are limited in number under the law, and have been divided into two categories under TCO art. 154, namely the acts of the debtor (particularly the acknowledgement of debt) and the acts of the creditor. In the next article, the impact of the reasons interrupting the statute of limitations on co-debtors have been set forth, and the interruption of the statute of limitations in joint and several indebtedness has also been addressed in this context. It should be noted that TCO 155/1 is only applicable to the interruption of the statute of limitations in joint and several indebtedness, and not applicable to the termination of the statute of limitations[5].

We will primarily elucidate the reasons causing interruption of the statute of limitations, and then analyze the impact of such reasons on joint and several debtors.

A. Interruption of the Statute of Limitations Within the Scope of TCO art.154

In Article 154 of the Code of Obligations, the legislator has gathered the reasons interrupting the statute of limitations under two groups, by providing:

“The statute of limitations shall be interrupted under the following circumstances:

1. In the event the debtor has acknowledged the debt, particularly paid interest, made partial performance or provided a pledge or a guarantor.

2. In the event the creditor has filed for an action or exception before a court or arbitrator, commenced enforcement proceedings or applied to the bankruptcy estate.”

1. Interruption of the Statute of Limitations due to the Acts of the Debtor

The acts of the debtor to which the legislator has made interruption of the statute of limitations consequential are declarations of intent which imply that the debtor acknowledges itself as being indebted. This has been expressed under the law as “the debtor’s acknowledgement of the debt”, and certain acts which may be deemed to constitute acknowledgement of debt have been listed afterwards. However, by saying “particularly”, the law has clearly stated that the acts resulting in the interruption of the statute of limitations have not been exhaustively listed. Therefore, all acts of the debtor which constitutes an acknowledgement of its debt, such as requesting a discharge or raising a defense of non-performance, will result in the interruption of the statute of limitations.

The debtor’s acknowledgement of its debt is an act similar to an act in law, and the debtor being aware, at the time of such declaration, whether or not it will interrupt the statute of limitations has no significance. [6]

2. Interruption of the statute of limitations due to the acts of the creditor

As clearly understood from Article 154, sub-clause 2 of the Code of Obligations, certain acts of the creditor will also result in the interruption of the statute of limitations against the debtor. When such provision is closely examined, it is observed that the legislator, who has not exhaustively listed the acts of the debtor and confined itself to only provide examples in the first sub-clause of the same article, has taken a contrary approach in the second sub-clause. Therefore, in order to interrupt the statute of limitations, the creditor must file for an action or exception before a court or arbitrator, commence enforcement proceedings or apply to the bankruptcy estate. The creditor’s raising a claim for the receivables by any other means, such as giving a notice, will not result in the interruption of the statute of limitations.

B. The Impact of Interruption of the Statute of Limitations on Joint and Several Debtors in Terms of the Principal Receivables

Article 165 of the TCO provides that none of the joint and several debtors may aggravate the status of other debtors through its own acts. Article 155/1 of the law which we have addressed above, on the other hand, provides that the statute of limitations interrupted against one of the joint and several debtors shall be interrupted against the others as well. [7] Meanwhile, “the debtor’s acknowledgement of the debt” has been specified as one of the reasons interrupting the statute of limitations under Article 154. When said provisions are analyzed as a whole, the debtor’s acknowledgement of the debt interrupts the statute of limitations, and if joint and several indebtedness is present, this affects all debtors. The issue of whether or not this would contradict TCO art.165 is subject to debate. On one hand, the law states that none of the debtors may aggravate the status of the others, while on the other hand it provides that the statute of limitations interrupted upon the act of such debtor shall also affect the others. [8]

A view in the doctrine argues that such arrangement provided under TCO art.155/1 is of an exceptional nature and that it would not constitute a contradiction with the principle set forth under Article 165 of the same law. According to such view, TCO art.155/1 has been implemented as a provision pertaining to joint and several indebtedness and only in the event of absolute solidarity[9] should it be accepted.[10] On the other hand, there also exists another view[11] which supports the application of such provision to events of partial solidarity as well.

Even though there was an explicit distinction in the law between partial - absolute solidarity during the period of the old Code of Obligations no.818 (“oCO”), the Court of Appeals considered partial solidarity and absolute solidarity equal in terms of the statute of limitations in some of its old-dated decisions and expressed that even in case of partial solidarity, the statute of limitations interrupted against one of the debtors would also be interrupted with respect to the other debtors.[12] However, the interruption, with respect also to the other debtors, of the statute of limitations interrupted against one of the joint and several debtors is only accepted in cases of absolute solidarity in both the Swiss doctrine[13] and the decisions of the Federal Court[14]. In some of its decisions[15], the Court of Appeals still concurs with the Federal Court and expresses that TCO art.155/1 will only be applicable in the event of absolute solidarity. In a certain decision, it has been expressed “In the present case, apart from the respondents … and the company … who have pleaded lapse of time, the other respondents have not raised an objection on the statute of limitations. The relationship among the respondents being based on partial solidarity, the defense of the statute of limitations is only effective with respect to the respondent who has exercised such right within the prescribed period”, taking into account the partial - absolute solidarity distinction. While in certain other decisions, such distinction no longer being based on the law has been construed as a conscious preference of the legislator and it has been resolved “As per the provision of Article 155 of the Law no.6098, whether multiple persons have jointly caused certain damages or they are liable for the same damages due to different reasons, provisions pertaining to joint and several liability shall be applicable for such persons, and the statute of limitations interrupted against one of the joint and several debtors shall be deemed interrupted against the other one as well. Therefore, in contrast to the Law no.818, the Law no. 6098 has not accepted partial solidarity and only addressed absolute solidarity”, adopting the view that the statute of limitations interrupted against one of the debtors would in any event be interrupted against the other debtors as well. In fact, since the partial - absolute solidarity distinction is no longer included within the current Code of Obligations, the issue has been taken to a theoretic level.

Tekinay, on the other hand, has not only criticized the interruption, against the other debtors as well, of the statute of limitations which has been interrupted against one of the debtors, but also suggested a solution which would synchronize two provisions of the Turkish Code of Obligations which seemingly contradict each other.

Article 165 of the Turkish Code of Obligations provides “Unless statutorily or contractually stipulated otherwise, none of the debtors may aggravate the status of other debtors through its own acts.” Such provision constitutes one of the most significant consequences of the adoption of the principle of “plurality of obligatio” in joint and several indebtedness. Accordingly, each debtor within the joint and several obligatory relationship may only aggravate its own status through their own acts, and such acts do not result in any unfavorable consequences for the other debtors. Contrary to the commonly held view that TCO art.155 constitutes an exception to such provision, Tekinay has asserted that such two provisions (oCO art.134 and 144) should be read and interpreted together. According to the author, the reasons for the interruption of the statute of limitations, which have been arranged under two categories, should be divided here into two as well, and the statute of limitations interrupted against one of the joint and several debtors should be deemed interrupted against the other debtors as well only if such statute of limitations has been interrupted due to the acts of the creditor.[16] Referring to the expression “…against one of the debtors…” in the law, the author has argued that it would make no sense for a debtor to interrupt the statute of limitations against itself, that there is no such usage in the Turkish language, and that therefore what is implied by the statute of limitations being interrupted against “one of the debtors” is the creditor interrupting the statute of limitations against one of the debtors. Such interpretation would not only allow the reasons, other than the acts of the debtor, which interrupt the statute of limitations to still affect all of the joint and several debtors, but would also enable the development of a practice compatible with the principle that none of the joint and several debtors may aggravate the status of the other debtors through its own acts, which is expressed in Article 165 of the Code of Obligations and which is based on the theory of plurality of obligatio.

Tekinay has also argued that cases in which the statute of limitations is different for each debtor should be excluded from the scope of application of oCO 134/1 (TCO 155/1), since the defense of statute of limitations would then have a personal nature. Accordingly, in cases where the statute of limitations is different for each debtor in joint and several indebtedness, neither the acts of the debtor, nor the acts of the creditor would result in the interruption of the statute of limitations for the other debtors. However, when the aforementioned restriction is also taken into account, such interpretation would drastically constrict the area of application of such provision and cause the provision to digress from its essence. Therefore, even though the provision is open to criticism, resorting to such constrictive interpretation would defeat the purpose of such provision being included in the law. Moreover, since said provision is not an imperative norm, it is possible for the parties to agree otherwise and thus avoid the unfavorable consequences of the provision.

III. Assessment and Conclusion

In this study, interruption of the statute of limitations has been examined and effort has been made to present the varying opinions on this matter. While we partially concur with Tekinay’s view, the protection of the debtor on such a scale against the creditor may result in unjust consequences.

Primarily, it is not possible to envisage the opposite of a statutory article implemented by the Legislator and ignore such regulation. We are of the opinion that a distinction needs to be made between two aspects at this point. In our view, the statute of limitations interrupted due to an act of the creditor should enure to all debtors. Asserting the contrary would result in unjust consequences for creditors. The statute of limitations interrupted due to an act of the debtor, on the other hand, should be assessed depending on different possibilities. To elaborate this with an example; when there is one month until the expiry of the statute of limitations with respect to debtor A, if the statute of limitations is interrupted due to an act of debtor B, the creditor commences enforcement proceedings after such one-month period, B pays the debt and takes recourse against A, it is possible for A at this point to raise a defense. If the other debtor C makes the payment and takes recourse against A, A should pay the debt and subsequently take recourse against B. Finally, if the creditor commences enforcement proceedings within the aforementioned one-month period after B has interrupted the statute of limitations, the act of B no longer has any significance at this stage. However, although it is B who has caused the interruption of the statute of limitations, if the creditor collects its receivables from A after such one-month period, to what extent may A take recourse against B with respect to the amount it has paid? In our opinion, B, who has also interrupted the statute of limitations against A, should bear all of the debt in terms of A and B, and be required to pay A’s share as well.

In conclusion, we are of the opinion that interpreting the provisions of TCO art.155/1 and art.165 in unison, by assessing them separately for each substantial case, will let us arrive at the most equitable result.

This article co-authored by Galatasaray University Law Faculty Student Eylem Işık


[1]KAPANCI, Berk, Relationships Among Debtors in Co-Debtorship, İstanbul, 2014, p. 23-24; OĞUZMAN, Kemal/ÖZ, Turgut, Law of Obligations General Provisions, V. 2, İstanbul, 14th Edition, 2018, p. 466; ROMY, Isabelle, Commentaire Romand, Code des Obligations I, Art. 1-529, 2e Edition, éds. Luc Thévenoz & Franz Werro, Bâle: Helbing Lichtenhaln, 2012, Intro Art. 143-150, p. 1075.

[2]TEKİNAY, Selahattin Sulhi/AKMAN, Sermet/BURCUOĞLU Haluk/ALTOP, Atilla, Tekinay Law of Obligations General Provisions, İstanbul, 7th Edition, 1993, p. 289.

[3]However, the partial solidarity - absolute solidarity distinction has not been included in the law no.6098.

[4]ERDEM, Mehmet, Statute of Limitations in Private Law, İstanbul, 2010, p. 271.

[5]ERDEM, p. 343; TEKİNAY, Selahattin Sulhi, The Role of the Statute of Limitations in Joint and Several Indebtedness, Journal of the İstanbul Bar Association, 1964, p. 174 (Joint and Several Debt).

[6]ERDEM, p. 275; OĞUZMAN, Kemal/ÖZ, Turgut, Law of Obligations General Provisions, V.1, İstanbul, 16th Edition, 2018, p. 600.

[7]Article 751/1 of the Turkish Commercial Code has an anomalous provision.

[8]ERDEM, p. 340.

[9]Multiple persons being liable for a debt in whole due to different legal reasons implies partial solidarity, while if multiple persons are liable for the same debt for the same reason, absolute solidarity is present. However, such distinction has been removed in the Turkish Code of Obligations no.6098. 

[10]ERDEM, p. 342.

[11]İYİMAYA, Ahmet, Certain Issues Regarding Joint and Several Indebtedness, Journal of the Ankara Bar Association, 1987, V.2, Ankara, p.185-186.

[12]Decision no. 3883/3467 of the 4th Civil Chamber of the Court of Appeals dated 14.11.1944 (See: TEPECİ, Kamil, Annotated and Descriptive Code of Obligations, 2nd Edition, Ankara, 1954, p. 344-345); Decision no. 4436/5427 of the 4th Civil Chamber of the Court of Appeals dated 23.06.1967.

[13]PICHONNAZ, Pascal, Commentaire Romand, Code des Obligations I, Art. 1-529, 2e Edition, éds. Luc Thévenoz & Franz Werro, Bâle: Helbing Lichtenhaln, 2012, Art. 136, p. 1042-1043.

[14]ATF 127 III 257 c. 6a, JdT 2002 I 249 (Swisslex Swiss Juridical Databank).

[15]Decision no.4103/124 of the General Assembly of civil Chambers of the Court of Appeals dated 23.02.2000; Decisions no.18785/26666 and 9407/22810 of the 9th Civil Chamber of the Court of Appeals dated 29.9.2015 and 14.9.2009, respectively (Kazancı Case Law Databank).

[16]TEKİNAY, Selahattin Sulhi, Joint and Several Debt.

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