Lex Commissoria under Turkish Law – Prohibition, Exceptions, and Diverging Doctrines

1. Introduction

The principle of Lex Commissoria, originating in Roman law, permitted a creditor to acquire ownership of pledged property automatically upon the debtor’s default. While originally intended as a mechanism to enhance trust in credit transactions, the practice often led to significant hardship for debtors—especially when the value of the pledged property far exceeded the outstanding debt. In response, legal systems, including Turkish law, have developed a strong prohibition against such arrangements to safeguard the interests of economically weaker parties.

2. Scope of the Lex Commissoria Prohibition under Turkish Law

Turkish law prohibits Lex Commissoria arrangements through both statutory provisions and general legal principles. The prohibition is aimed at preventing contractual clauses that automatically transfer ownership of pledged assets to creditors upon default.

For a contractual arrangement to fall under this prohibition, three cumulative elements must be present:

• Pre-default Clause: The contract must include a provision made before the debt’s maturity, stating that the creditor will acquire ownership upon non-payment.

• Contractual Basis: The transfer must arise from the parties’ private agreement, not from statute.

• Creditor Satisfaction: The clause must aim to satisfy the creditor by transferring the collateral in lieu of payment.

Article 873/2 of the Turkish Civil Code (TMK) formalizes this principle for immovable property, declaring such clauses null and void. It mandates liquidation through enforcement proceedings, ensuring creditor satisfaction from sale proceeds rather than asset acquisition.

3. Statutory Exceptions to the Prohibition

A. Article 14/1-a of the TITRK – Movable Pledges

For movable property, Article 949 TMK adopts a similar stance, though exceptions are recognized under specific statutes, notably TITRK (Law No. 6750).

Article 14/1-a of the Law on Movable Pledge in Commercial Transactions allows creditors to acquire ownership of pledged movable property following default, without initiating foreclosure. The provision aligns with the Execution and Bankruptcy Law No. 2004, and its compatibility with the Lex Commissoria prohibition is subject to doctrinal debate:

• First View – Statutory Exception: Argues that the transfer is lawful since it derives from statute rather than contract. Return of any surplus to the debtor ensures fairness.

• Second View – Outside Scope: Holds that since ownership arises post-default and not by agreement, the prohibition does not apply. Mandatory valuation mechanisms under Article 31/5 of the applicable Regulation further protect the debtor.

• Third View – Violation of Prohibition: Criticizes the provision as inconsistent with debtor protections, citing inadequate valuation safeguards and potential for unjust enrichment.

B. Article 47 of the Capital Markets Law (SPK No. 6362)

This article introduces specific rules for pledges involving capital market instruments, allowing creditors to assume ownership or sell pledged assets upon debtor default—without requiring judicial oversight.

The provision is tempered by important safeguards:

• Creditors must return any surplus to the debtor (Article 47/4(c)).

• Instruments must be sold at or above market value, with valuation procedures explicitly defined in the agreement (Article 47/4(b)).

• Parties can determine whether ownership of the collateral remains with the pledgor or passes to the creditor, subject to proper documentation and fair dealing.

This framework balances creditor efficiency and debtor protection, and is widely regarded as consistent with the objectives of the Prohibition.

4. Penal Clauses and Indirect Circumvention

There are concerns in legal doctrine that contractual penalties—where any excess value is retained by the creditor—may be used to circumvent the Lex Commissoria prohibition. Such arrangements are considered invalid if they effectively bypass the obligation to return surplus value, thus undermining the protective rationale behind the Prohibition.

5. Conclusion

In Turkish law, Lex Commissoria clauses—contractual provisions allowing creditors to unilaterally acquire pledged property upon default—are generally prohibited to prevent the exploitation of debtors and to maintain fairness in credit relations.

Nevertheless, statutory exceptions have been introduced under the TITRK and SPK to address practical concerns in commercial and financial markets. These exceptions are permissible only within narrowly defined conditions and include mandatory safeguards (such as asset valuation and the return of surplus value) designed to uphold the core purpose of the prohibition: the protection of the debtor.

Accordingly, while the default rule is invalidity, certain legislatively sanctioned exceptions are valid, provided they do not distort the equitable balance between debtor and creditor or compromise the integrity of the legal system.

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