Critical Decision Concerning Currency Control Laws

12th Civil Chamber of Court of Cassation, in its decision dated 6.10.2022 and numbered E. 2022/6469, K. 2022/9954, has found a “violation of public order” with respect to a lease agreement where the rent was agreed to be paid in a foreign currency

Pursuant to the Decree No. 32, which was adopted for the purpose of protecting the value of the Turkish Lira, the contract value and other secondary payment obligations arising from the movable and immovable property sales and lease agreements (including vehicle and financial leasing), employment agreements, service and contractor agreements etc. which entered into force between Turkish residents, cannot be determined in foreign currency or indexed to foreign currency.

Article 63 of the Enforcement and Bankruptcy Law stipulates that the debtor who objects to a payment order, is not entitled to expand or change the grounds and objections raised against a debt before the enforcement office, during the proceedings. Furthermore, pursuant to Article 27/1 of the Turkish Code of Obligations, the contracts whose subject matter is against the mandatory provisions of the law, morality, public order, personal rights or whose subject matter is impossible, must be deemed invalid.

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