The Third-Party Garnishment Notice And The Negative Declaratory Action Under Turkish Enforcement And Bankruptcy Law

I. Introduction

Under the Turkish enforcement and bankruptcy system, the satisfaction of the creditor is not limited to the debtor's assets in its possession; it also extends to the debtor's rights and receivables held by third parties. The procedure for the attachment of receivables held by third parties, regulated under Article 89 of the Enforcement and Bankruptcy Law (the "EBL"), is a mechanism that may produce particularly severe consequences for the third party, especially at the stage of the third garnishment notice (Article 89 paragraph 3). At this stage, the third party's inaction may trigger a statutory presumption whereby the debt is deemed to be "held" by the third party, thereby potentially turning the third party into the direct obligor of a debt relationship to which it was never a party.

This article examines the operation of the Article 89 paragraph 3 procedure, the impact of defective service of process on procedural time limits, the decision of the Court of Cassation 11th Civil Chamber dated 2023 resolving conflicts as to jurisdiction in negative declaratory actions, the current status of mandatory mediation, and the Constitutional Court's 2025 decision concerning the burden of proof.

II. Conceptual Framework

1. The Garnishment Notice as a Protective Measure

As a rule, the debtor's receivable held with a third party is deemed to have been legally attached once the enforcement officer levies attachment over that receivable and records it in the attachment report. However, for such attachment to produce effects vis à vis the third party and to operate as a prohibition preventing the third party from paying the debtor, a notice must be served within the meaning of Article 89. This notice, namely the garnishment notice, is, in substance, a protective measure. In order to prevent the third party from suffering a loss of rights in this process, the legislator has designed a three-stage system. The principal purpose of this system is to secure the third party's right of defense and to prevent the third party from being treated as a debtor by mistake.

2. The Rationale of the Three Stage Chain of Notices

The Article 89 mechanism is structured on a presumption that, where the third party fails to object, it is deemed to have accepted the existence of the debt. Prior to the comprehensive amendments introduced in 2003 by Law No. 4949, this system operated more harshly; however, in line with modern legal principles, the system was re–balanced.

At the stage of the first garnishment notice (89/1), the third party is notified that the amount allegedly owed by the third party to the debtor has been attached. The third party is instructed not to pay the debtor, failing which it may face the risk of double payment. If the third party does not object within seven days, the debt is deemed to be held by the third party.

At the stage of the second garnishment notice (89/2), the third party that did not object to the first notice is informed that, as a result of its failure to object, the debt has been deemed to be held by it, and that it has a further seven-day opportunity to object. This stage functions, in practice, as a second chance in cases of forgetfulness or negligence.

The third garnishment notice (89/3) is the final notice served on the third party that has objected to neither of the first two notices. By this notice, the third party is warned that the debt is definitively deemed to be held by it, that it must either pay the amount within fifteen days or file a negative declaratory action, and that, failing this, it will be exposed to compulsory enforcement.

III. Legal Preconditions and Operation of the Third Garnishment Notice

The third garnishment notice is a dependent procedural act that presupposes the proper completion of the prior stages (89/1 and 89/2).If there is an irregularity at the earlier stages, the notice of 89/3 will lack a proper legal basis.

1. The Service of Process Regime and the Effects of Defective Service

In enforcement proceedings, time limits run from service. The service of garnishment notices is strictly governed by the Service of Process Law No. 7201. In particular, when serving legal entities such as banks and companies, due compliance is required with Article 7/a, Articles 12 and 13 of the Service of Process Law, Articles 12, 20 and 21 of the Regulation on the Implementation of the Service of Process Law, as well as the provisions of the Regulation on Electronic Service of Process.

In practice, defective service is frequently encountered and may paralyse the 89/3 mechanism. Where the third party alleges that the notices were not duly served, for example due to the absence of stamp or signature, or due to a failure to conduct the necessary inquiries where the addressee was not present at the address, the third party must raise this by way of complaint before the Enforcement Court within seven days from the date it became aware of the notice. If the court determines that service was defective, the date of service is corrected to the date of awareness, and the time limits start to run anew from that date.

2. The Fifteen Day Peremptory Time Limit and the Suspension Mechanism

Following receipt of the third garnishment notice, the third party must file a negative declaratory action within fifteen days. This is a peremptory time limit, and the court must take it into consideration ex officio.

The filing of the action does not automatically stay the enforcement proceeding. Pursuant to the fourth sentence of Article 89 paragraph 3, the third party must submit to the enforcement office, within twenty days from the date of the notice, documentary evidence demonstrating that the action has been filed. Upon such submission, the enforcement proceeding is suspended as against the third party. This suspension is not subject to the provision of security, unlike the regime under Article 72 of the EBL; the legislator has provided for an automatic suspension in this context. The suspension, however, applies only with respect to the third party and does not prevent enforcement against the principal debtor.

IV. The Negative Declaratory Action

The negative declaratory action filed under Article 89 paragraph 3 is, in essence, the third party's effort to have the assertion "I owe no debt to the debtor" confirmed by a judicial decision. The principal distinction from the general negative declaratory action under Article 72 of the EBL lies in the fact that the claimant is not the principal debtor, but the third party that is presumed to be indebted.

1. Parties to the Action and Proper Defendant

The claimant is the third party to whom the garnishment notice is addressed. The defendant is the enforcement creditor. The status of the debtor is among the most debated issues in practice, namely whether the principal debtor must be named as a defendant. According to the prevailing approach in the case law of the Court of Cassation, the defendant in an Article 89 paragraph 3 action is the creditor that initiated the enforcement proceeding; the debtor is not a mandatory defendant. Nevertheless, since the debtor's legal position may be affected, it is common practice to notify the debtor of the action or to allow the debtor to participate as an auxiliary intervenor.

2. The Burden of Proof Debate and the Constitutional Court Decision of 06.03.2025

The sixth sentence of Article 89 paragraph 3 provides that, in this action, the third party must prove that it is not indebted to the enforcement debtor or that the attached asset does not belong to the enforcement debtor, thereby placing the burden of proof directly on the claimant. This rule has been challenged on the grounds that it allegedly conflicts with the general principle that the party asserting a fact bears the burden of proof (Article 190 of the Code of Civil Procedure), and on the argument that proving a negative fact may be impossible and was brought before the Constitutional Court.

The Constitutional Court, in its decision dated 06.03.2025 and numbered E.2024/53, K.2025/73, has conclusively addressed this debate. The Court found the allocation of the burden of proof to the third party to be constitutional for the following reasons. First, as a matter of balancing of interests, the third party is afforded two opportunities at earlier stages (89/1 and 889/2) to halt the process simply by stating, without paying any fees or charges, that it has no debt; by failing to exercise this straightforward right, the third party, through its own negligence, causes the procedure to progress to the stage of 89/3. Second, the creditor is an outsider to the internal relationship between the debtor and the third party; requiring the creditor to prove the existence of a debt between two parties with whom the creditor has no legal relationship would be more onerous than requiring the third party to prove that it is not indebted. Third, the third party may rely on all forms of evidence, including commercial books and records, bank records, witness testimony, and oath; since evidentiary means are not restricted, the right to be heard and access to justice is not infringed.

V. Jurisdiction Debates and the 2023 Decision Resolving the Conflict

The question of which court has subject matter jurisdiction over the negative declaratory action filed by third parties has led to deep divergences among Regional Courts of Appeal, particularly where one of the parties is a bank or a company. While certain chambers have taken the view that the Commercial Court of First Instance has jurisdiction where the parties are merchants, others have argued that this is an enforcement law dispute and therefore falls within the jurisdiction of the Civil Court of First Instance.

1. The Court of Cassation 11th Civil Chamber Decision dated 06.11.2023 (E.2023/5228, K.2023/6468)

The Court of Cassation 11th Civil Chamber, by its decision dated 06.11.2023 and numbered E.2023/5228, K.2023/6468, issued for the purpose of resolving the serious divergences among the Regional Courts of Appeal, has definitively eliminated uncertainty regarding subject matter jurisdiction.

In its reasoning, the Court first underlined that there is no direct contractual relationship, commercial relationship, or tortious nexus between the enforcement creditor and the third party. It stated that the basis of the action is not a commercial dispute, but rather the third party's attempt to escape the statutory presumption created by the EBL, namely the presumption that the debt is deemed to be held by the third party, and that, accordingly, the essence of the dispute arises entirely from enforcement law.

On this basis, with reference to Article 2 of the Code of Civil Procedure, which designates the Civil Court of First Instance as the court of general jurisdiction for disputes concerning proprietary rights absent a specific statutory rule to the contrary, the competent forum was determined.

As a result, it has been conclusively established that the court with subject matter jurisdiction over negative declaratory actions filed under Article 89 paragraph 3 is the Civil Court of First Instance, even where the parties are merchants, the underlying relationship is commercial, or the debt is based on a negotiable instrument.

2. Venue

Pursuant to the explicit wording of Article 89 paragraph 3, the claimant is granted an optional choice as to venue. The action may be filed either before the court of the place where the enforcement proceeding is carried out or before the court of the claimant third party's domicile. This rule is not a matter of public order; it may be modified by a jurisdiction agreement and will not be considered ex officio by the court unless the defendant raises a timely venue objection.

VI. The Mediation Issue: Mandatory or Not

Whether mediation constitutes a precondition to suit for negative declaratory actions filed under Article 89 paragraph 3 has produced a marked dilemma and practical uncertainty among Regional Court of Appeal decisions. At the heart of the dispute lies the question of whether the action qualifies as a commercial action and how the inclusion of negative declaratory actions within the scope of mandatory mediation as of 01.09.2023 by virtue of Law No. 7445 should be reconciled with the special nature of the Article 89 paragraph 3 remedy.

1. Divergent Approaches in Regional Court of Appeal Decisions: Adana versus İzmir

Two opposing approaches have emerged in practice. The Adana Regional Court of Appeal 9th Civil Chamber, in its decision numbered 2019/274 E. and 2019/605 K., held that, in a negative declaratory action based on Article 89 paragraph 1 and following, applying to a mediator prior to filing the action is a mandatory precondition to suit, reasoning that mediation is a prerequisite given the commercial character of the dispute.

By contrast, the İzmir Regional Court of Appeal 22nd Civil Chamber, in its recent decision dated 26.04.2024, held that mediation is not a precondition to suit, reasoning that there is no direct commercial nexus between the parties to the action and that the dispute arises entirely from enforcement law. The 2023 decision of the Court of Cassation 11th Civil Chamber on subject matter jurisdiction, confirming that the dispute is an enforcement law dispute rather than a commercial dispute, has further strengthened the İzmir approach that mandatory mediation is not required.

2. Voluntary Mediation and the Risk Regarding the Suspension of Time Limits

Since the matter has not yet been fully unified through a binding harmonization of case law, applying to mediation may be considered as a risk management measure. However, a critical risk arises from the difference between mandatory and voluntary mediation in terms of when time limits are suspended.

Under Article 18/A-15 of the Law on Mediation in Civil Disputes No. 6325, in mandatory mediation, time limits are suspended as of the date of application to the mediation bureau. Under Article 16 of the same Law, in voluntary mediation, time limits are suspended only upon the commencement of the process, namely when the parties are invited to the first meeting and the continuation of the process is agreed and recorded in minutes.

Given the narrowness of the fifteen-day peremptory period under Article 89 paragraph 3, if the action is treated as not subject to mandatory mediation, merely applying to the bureau and waiting for the other party to engage may not suspend the period. If the other party does not sit at the table within the fifteen-day period, the right to file the action may be lost entirely. Accordingly, practitioners must manage the mediation process with particular care so as not to jeopardize the peremptory period in this environment of uncertainty.

VII. Compensation under Article 89 paragraph 4 of the EBL and Other Sanctions

The most significant harm caused by the third party within this mechanism is the slowing of enforcement through objections contrary to the truth. The sanction for this is regulated under Article 89 paragraph 4.

1. Requirements and Procedure of the Compensation Claim

Where the third-party objects at the stage of 89/1 or 89/2 by stating that it has no debt, the creditor may seek compensation by proving the contrary before the Enforcement Court.

The competent court is the Enforcement Court. The burden of proof lies with the creditor. The creditor must prove, by all means of evidence including commercial records, that the third party in fact owed a debt to the enforcement debtor at the time of the objection.

As to the amount of compensation, the case law of the Court of Cassation 12th Civil Chamber, including its decision dated 28.11.2006 and numbered 2006/19147 K., 2006/22468 T., characterizes compensation under Article 89 paragraph 4 as a claim arising from the third party's untrue statement and grounded in tort liability. A key limitation is that the compensation awarded may not exceed the amount claimed in the first garnishment notice. If, following the proceedings, it is determined that the third party's actual debt to the enforcement debtor is lower than the amount stated in the notice, the court must award compensation on the basis of that lower amount. Awarding compensation exceeding the limit requested in the notice constitutes a ground for reversal.

2. Criminal Liability (Article 338 paragraph 1 of the EBL)

If the third party, or the authorized representative making the statement on behalf of a legal entity, intentionally makes a statement contrary to the truth, it may, upon the creditor's complaint, be sentenced to imprisonment from three months to one year. In practice, the compensation claims and the criminal proceedings may be pursued together or separately.

VIII. Practice Notes and Strategic Recommendations

This section addresses practical details of vital importance for practitioners and enforcement departments in the Article 89 paragraph 3 process.

1. Strategic Notes on Litigation Costs

The allocation of litigation costs in Article 89 paragraph 3 negative declaratory actions has been clarified by the decision of the Court of Cassation General Assembly of Civil Chambers dated 17.05.2023 and numbered E.2022/11-62, K.2023/464, within the framework of the principle that the unsuccessful party bears the costs.

It is true that the third party, by failing to object to the notices of 89/1 and 89/2, causes the process to reach the 89/3 stage; however, this fact alone is not sufficient to impose absolute liability for litigation costs on the third party. As emphasized in the decision, if the creditor accepts the action at the first hearing without submitting any defense, it may, pursuant to Article 312 of the Code of Civil Procedure, avoid liability for costs. Conversely, if the creditor submits a statement of defense, argues that the debt relationship exists, and seeks dismissal, it ceases to be a mere party to a simple enforcement proceeding and becomes the unsuccessful party in contentious litigation if the court ultimately declares that the third party is not indebted. In that event, the creditor is personally liable for all litigation costs and the proportional attorney fee under the general rule of "the loser pays" (Article 326 of the Code of Civil Procedure).

2. Preserving the Distinction between Articles 72 and 89 paragraph 3 of the EBL

In practice, certain enforcement offices request that the entire amount be deposited as cash security in order for the proceeding to be suspended when an action under Article 89 paragraph 3 is filed. This is a legal error arising from a conflation of Article 72 and Article 89.

In negative declaratory actions filed after enforcement has commenced under Article 72, security is required in order to prevent payment of monies held at the enforcement cashier to the creditor. By contrast, in actions filed under Article 89 paragraph 3, the law provides for a suspension without security by expressly stating that enforcement acts are suspended. If the enforcement officer refuses to apply this suspension, the appropriate remedy is a complaint against the act of the enforcement officer.

3. Transformation into a Restitution Action

If the third party misses the fifteen-day period and is compelled to pay the amount to the enforcement office, it must then file not a negative declaratory action but a restitution action seeking recovery of the paid amount. Such action must be filed within one year from the date of payment, as recognized in the case law, including the decision of the Court of Cassation General Assembly of Civil Chambers dated 05.06.2015 and numbered 2059/1488.

IX. Conclusion and Legal Assessment

The procedure under Article 89 paragraph 3 of the EBL, while protecting the creditor's rights, also grants the third party the opportunity to halt the process by a simple and timely objection; however, if that opportunity is missed, it imposes a heavy litigation and evidentiary burden.

With the Constitutional Court's 2025 decision, it has been definitively established that the burden of proof remains with the third party, and with the 2023 conflict resolution decision of the Court of Cassation, it has been clarified that the court with subject matter jurisdiction is the Civil Court of First Instance. This clarification will prevent loss of time in practice due to dismissals for lack of jurisdiction.

For third parties, the safest course is to submit a timely and duly framed objection at the 89/1 stage. Once the process evolves into the 89/3 stage, filing the fixed fee negative declaratory action within fifteen days and documenting the filing before the enforcement office within twenty days are crucial for the protection of property rights.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.