Ulgener
Yağızalp Kırca
Associate Lawyer
to the fact that maritime trade is a global sector, companies have commercial relations with almost every country. Naturally, legal disputes arise from these commercial relations. In this article, we will examine the obligation to provide security, which is an obligation that comes before foreign companies that want to file a lawsuit in Turkey.
According to Article 48 of the International Civil Law and Procedure Code No. 5718, foreign real persons or legal entities who file a lawsuit, participate in a lawsuit or start executive proceeding in a Turkish court are obliged to provide security.
ARTICLE 48 – (1) Foreign real persons and legal entities who file a lawsuit, participate in a lawsuit or start executive proceedings in a Turkish court are obliged to provide a security to be determined by the court in order to cover the costs of litigation and execution and the loss and damage of the other party.
The form of security is not specified in the article. In practice, the court accepts the deposit of cash or the presentation of a letter of guarantee of the specified amount of security. The amount of security to be provided also is not specified in the article, only provisions regarding the need to provide security are included and the judge is given discretion in determining the amount of security.
It is stated in the Article that the purpose of the security is to secure the compensation of the damage of the other party. In that case, is it possible to exempt the foreigner from the security by mutual agreement of the parties?
The obligation of foreigners to provide security, in addition to protecting the defendant or the person against whom executive proceedings have been initiated; It is also a regulation brought in order to provide security for the costs to be incurred by the court or execution office. This issue is included in the established jurisprudence of the Supreme Court.
11th Civil Chamber of Supreme Court E. 2005/4947 K. 2006/4639 dated 18.04.2006
“Because, the guarantee on the basis of foreignness aims to cover the damages that will be incurred not only by the defendant but also by the court.”
In established jurisprudence of the Supreme Court, the obligation of the foreigner to provide a security is considered as a issue to be observed ex officio by the court and it is stated that it is not possible to waive the security.
EXCEPTION OF OBLIGATION OF FOREIGN LEGAL ENTITIES TO PROVIDE SECURITY
In the second paragraph of the same article, it is regulated that the foreigner can be exempted from to provide security on the basis of mutuality.
ARTICLE 48 – (2) The court exempts the plaintiff, the participant or person who starts executive proceedings to provide security on the basis of mutuality.
In this article, the principle of mutuality contains bilateral or multilateral international treaties to which Turkey is a party. Under these treaties, contracting countries may exempt each other's nationals from the obligation of security. The most important treaty that Turkey is a party to in this regard is the 1954 Hague Convention on Civil Procedure. Article 17 of this convention regulates that nationals of contracting states will be exempt from to provide security.
1954 HAGUE CONVENTION ON CIVIL PROCEDURE
III. SECURITY FOR COSTS - Article 17
“No security, bond or deposit of any kind, may be imposed by reason of their foreign nationality, or of lack of domicile or residence in the country, upon nationals of one of the Contracting States, having their domicile in one of these States, who are plaintiffs or parties intervening before the courts of another of those States.
The same rule shall apply to any payment required of plaintiffs or intervening parties as security for court fees.
All conventions under which Contracting States have agreed that their nationals will be exempt from providing security for costs or for payment of court fees regardless of domicile shall continue to apply.”
Obviously, the contracting states will not seek to provide security from each other's nationals under any name.
There is a debate as to whether the word national in the provision includes legal entities. In the letter dated 17.01.2005 and numbered 904.30/2005/KOPR/20078 received from the Ministry of Foreign Affairs of Turkey; It has been stated that the provision of Article 17 of the 1954 Hague Convention on Civil Procedure was interpreted by J.H.A.Van Loon, Secretary General of the Hague International Civil Law Conference, and Legal Expert Christophe Bernasconi, to include legal entities as well. For this reason, the Court must also accept that this convention contains legal entities.
Current List of Contracting States of 1954 Hague Convention on Civil Procedure:
| · Albania · Argentina · Armenia · Austria · Belarus · Belgium · Bosnia and Herzegovina · China · Croatia · Cyprus · Czec · Denmark · Germany · Israel · Egypt · Holy See · Italy |
· France · Hungary · Japan · Finland · Iceland · Kazakhstan · Kyrgyzstan · Luxembourg · Netherlands · Latvia · Mongolia · North Macedonia · Lebanon · Montenegro · Norway · Lithuania |
· Morocco · Poland · Portugal · Russian Federation · Spain · Republic of Moldova · Serbia · Slovakia · Suriname · Sweden · Romania · Slovenia · Switzerland · Turkey · Ukraine · Uzbekistan |
As can be seen, although there are many countries that are party to the convention, countries such as the United Kingdom, where P&I clubs are most registered, or USA, which is of great importance in the world economy or the Marshall Islands, Liberia and Panama etc., which companies prefer as flag states or for offshore companies are not parties to the convention. For this reason, legal entities that are not registered in one of the contracting states are obliged to provide a security when filing a lawsuit or taking part in it.
REJECTION OF THE LAWSUIT IN CASE OF NOT TO PROVIDE SECURITY
Article 114 of Civil Procedure Code, fulfilling the decision of the court regarding the providing security is regulated as a condition of litigation. If the court finds that there is a lack of condition of litigation, it decides to reject the case on a procedural basis. However, if it is possible to fix the lack in the condition of litigation, the court is given a definite time to fix the lack. Since the condition of to provide security is one of the lacks that can be fixed, the judge gives a definite time for to provide security. The company, which does not to provide security in definite time, will not be able to use its rights to file a lawsuit, to participate and to start executive proceedings.