Articles 950–953 of the Turkish Civil Code No. 4721, under the heading “Pledge of Movables,” regulate the general right of retention. The right of retention constitutes a limited real right arising directly from law. Pursuant to the relevant provisions, the creditor may retain a movable or negotiable instrument belonging to the debtor, which is in the creditor’s possession with the debtor’s consent, provided that the debt is due and payable and that the nature of the movable or negotiable instrument bears a connection with the claim. Based on this fundamental rule, the right of retention is established upon two essential pillars: the right to withhold and the right to enforce by sale.
According to the regulation, the subject matter of the right of retention may only consist of movables or negotiable instruments. Furthermore, the right arises automatically upon fulfillment of the statutory conditions, without the need for registration.
SUBJECT MATTER
Pursuant to Article 950 of the Turkish Civil Code, the subject matter of the right of retention consists of movables and negotiable instruments. The movables over which the right of retention is exercised must have a realizable economic value, i.e., be capable of conversion into money. Accordingly, movables that cannot be converted into money, as well as documents serving solely as means of proof, cannot be subject to the right of retention.
It must be noted that immovables cannot be subjected to a right of retention within the meaning of Article 950. Indeed, the right of retention is considered a type of pledge over movables. However, pursuant to Article 994 of the Turkish Civil Code, a bona fide possessor, upon returning the property, may claim necessary and useful expenses incurred and may refuse to return the property until such expenses are reimbursed by the party demanding restitution. In this context, there is no right of retention in the sense of Article 950; rather, there exists only a “right to withhold.” In other words, Article 994 grants the possessor merely a right to withhold, without conferring the power of enforcement through sale.
condıtıons
The conditions for the establishment and existence of the right of retention, as set forth under Articles 950 and 951 of the Turkish Civil Code, may be categorized as positive and negative conditions.
Positive conditions under Article 950 are as follows:
- The creditor must be in possession, with the debtor’s consent, of movables capable of realization or negotiable instruments belonging to the debtor;
- The existence of a due and payable claim;
- A natural connection between the creditor’s claim and the movable or negotiable instrument in the creditor’s possession.
Negative conditions under Article 951/II are as follows:
- The exercise of the right of retention must not be incompatible with an obligation assumed by the creditor or with the debtor’s instructions;
- The exercise of the right of retention must not contravene public order.
REFUSAL TO RETURN OBJECTS SUBJECT TO THE RIGHT OF RETENTION
Pursuant to Article 950/I of the Turkish Civil Code, the creditor may refuse to return the object subject to the right of retention to the debtor. In other words, the creditor is not obliged to initiate enforcement by sale of the relevant movables or negotiable instruments; it is sufficient for the creditor merely to exercise the right of retention by withholding them. Indeed, this withholding power constitutes an effective means of pressure compelling the debtor to perform. The creditor exercises this right of retention by raising a defense (def’i) based on the right of retention, and the court, in this context, examines whether such right actually exists.
If the debt giving rise to the right of retention is not discharged or the debtor fails to provide adequate security, the creditor may exercise the right of retention only over as many movables or negotiable instruments as are sufficient to secure the claim. Any excess must be returned to the debtor. Otherwise, the creditor, by withholding without entitlement, would be unlawfully detaining the debtor’s property or negotiable instruments and would be liable for any damages thereby caused. However, if the object retained is indivisible, the creditor is not obliged to return it until the debt has been satisfied in full.
While retaining the movable property or negotiable instruments subject to the right of retention, the creditor is under a duty of care to preserve them, just as in the case of a possessory pledge.
REALIZATION OF RETAINED PROPERTY
According to Article 953/I of the Turkish Civil Code: “If the debt is not discharged and adequate security is not provided, the creditor, after prior notification to the debtor, may request the realization of the retained objects pursuant to the provisions governing possessory pledges.” It follows that, in the event of non-payment of the debt, the provisions on possessory pledge of movables apply to the realization of the retained property.
For the creditor to be entitled to convert into cash the retained movables or negotiable instruments, the following conditions must be met:
- The creditor’s claim remains unsatisfied.
- The debtor has not furnished adequate security.
The debtor may provide either real security or personal security; however, the security offered must be sufficient.
- Prior notice must have been given to the debtor.
Before proceeding with the conversion into cash, the creditor must notify the debtor. The purpose of such notification is to afford the debtor the opportunity to prevent the conversion into cash of the retained movable or negotiable instrument by furnishing security. This notice is not subject to any formal requirement.
PROVISION OF SECURITY BY THE DEBTOR
Pursuant to Article 953/I of the Turkish Civil Code, the debtor may prevent the exercise of the right of retention by providing adequate security. If the debtor furnishes sufficient security, the creditor may no longer realize the retained property. In fact, the creditor will also lose the right to withhold the property subject to retention. In such a case, the creditor cannot refuse to return the movable or negotiable instrument to the debtor. The security must be actually provided by the debtor; a mere offer of security is not sufficient. The adequacy of the security is to be determined by the court.
DIFFERENCES AND SIMILARITIES BETWEEN THE RIGHT OF RETENTION AND THE POSSESSORY PLEDGE OF MOVABLES
Unlike the possessory pledge of movables, the right of retention is not a voluntary form of pledge. In the case of retention, the debtor does not voluntarily deliver his movable property or negotiable instruments to the creditor as collateral for the debt. Another distinction is that, for the exercise of the right of retention, no real agreement (dinglicher Vertrag / ayni sözleşme) is required. By contrast, in the case of a possessory pledge of movables, the existence of a pledge agreement, i.e., a real agreement, is essential. In the right of retention, the pledge arises automatically by operation of law, once the statutory requirements are fulfilled. While the possessory pledge finds its source in the concordant intention of the pledgor and the pledgee, the right of retention constitutes a “statutory pledge over movables,” which does not require any intent of the pledgor to provide security.
Finally, with respect to the possessory pledge of movables, the pledged property may be returned only upon full satisfaction of the secured claim, in accordance with Article 944/2 of the Turkish Civil Code. Here, the principle of indivisibility of pledge applies. By contrast, under the right of retention, the creditor may exercise retention only over as many of the retained movables as are necessary to secure the claim, and the excess must be returned to the debtor.
In contrast to these differences, the right of retention and the possessory pledge of movables share two essential similarities: both constitute rights in rem, and in both cases, possession of the pledged property is required.
PRIORITY OF THE RIGHT OF RETENTION
The priority among pledge rights over movables is determined according to the “principle of priority.” This principle establishes the ranking of pledge rights based on their date of creation. The same principle also applies to the determination of the priority of the right of retention. The relevant date to be considered in determining the priority of the right of retention is the moment when the right arises, i.e., the time at which all of its statutory conditions are fulfilled.
Where the right of retention competes with other limited rights in rem, pledge rights, or other rights of retention, various scenarios may arise. Accordingly, if there exists a prior pledge right or another limited right in rem over the movable subject to retention, such right will, in principle, prevail over the right of retention. However, if the holder of the right of retention was unaware of and not required to be aware of such prior right, i.e., acted in good faith, then the good-faith creditor’s right of retention takes precedence over the previously established pledge or other limited right in rem. Finally, in the case of multiple rights of retention, the one established earlier ranks before the later one. Nevertheless, if a subsequently arising right of retention has been acquired in good faith, it will take precedence even over the earlier right of retention.
SPECIAL TYPES OF RIGHT OF RETENTION
In addition to the provisions regulating the general right of retention, Turkish Civil Code, Turkish Code of Obligations, Turkish Commercial Code, and other special laws also contain provisions granting the creditor a right of retention.
A. Special Types of Right of Retention under the Code of Obligations
- The right of retention of a warehouse keeper (Art. 476/3 TCO).
- The right of retention of the lessor in ordinary lease and agricultural lease contracts (Arts. 267–269, 281 TCO), and the right of retention of hotel keepers, innkeepers, and owners of public stables and garages (Art. 482 TCO).
B. Special Types of Right of Retention under the Turkish Commercial Code
- The right of retention of a commercial agent (Art. 132 Turkish Commercial Code).
- The right of retention of a carrier (Arts. 794, 805 Turkish Commercial Code).
- The right of retention of a freight forwarder (Arts. 811, 812 Turkish Commercial Code).
- The creditor’s right of retention for claims arising from salvage and rescue expenses and remuneration (Art. 1232 Turkish Commercial Code).
C. Right of Retention under the Attorneys’ Act
The right of retention of the attorney over the client’s property as security for the attorney’s fee (Art. 166 Attorneys’ Act).
D. Special Types of Right of Retention under the Civil Code
- The right of retention of a possessor in good faith over the property for expenses incurred on the property to be returned (Art. 994 TCC).
- The right of retention of a landowner, who permits the search for an object or animal fallen onto or entered into his land, over such object or animal to secure compensation for the damage suffered (Art. 752/2 TCC; Art. 57 TCO).
TERMINATION
The grounds for termination of a possessory pledge of movables likewise constitute grounds for termination of the right of retention. Similar to a possessory pledge, the right of retention terminates in the following cases:
- Extinction of the secured claim;
- Waiver of the pledge right;
- Destruction or loss of the pledged property;
- Occurrence of a resolutive condition or expiration of the agreed term;
- Merger of ownership and the pledge right in the same person.
In addition to these fundamental grounds, the right of retention also terminates in cases of “loss of pledge possession.” The loss of pledge possession, and thereby the loss of the right to actions protecting possession and the right to demand restitution, leads to the termination of the right of retention.