Law No. 7445, Known as the 7th Judicial Package and Its Implications
Introduction
The "Law No. 7445 on the Amendment of the Execution and Bankruptcy Law and Certain Laws", a kind of "omnibus law" known as the 7th Judicial Package, entered into force after being published in the Official Gazette dated 05.04.2023.
As its name suggests, the Law provides for a number of amendments to the Execution and Bankruptcy Law No. 2004 ("EBL"). Together with these amendments, nearly 20 amendments have been made to the Execution and Bankruptcy Law to date. While some of these amendments aim to adapt to the developing technology, others aim to prevent possible loss of rights, and some aim to speed up the execution processes. Apart from the EBL, amendments are also envisaged in other laws. The mandatory mediation process for disputes arising from rental law and Law of Property Ownership are some of them. Changes have been made to the Attorney's Act specifically in favor of lawyers who are at the beginning of their careers.
Law No. 7445 introduced various amendments to the Turkish Criminal Code and the Code of Criminal Procedure regarding offences such as migrant smuggling, drug and similar substance abuse.
This article discusses the amendments concerning execution and bankruptcy law, commercial law and mediation processes.
Amendments to the Execution and Bankruptcy Law
The most important innovation introduced by Law No. 7445 is related to the attachment to be made at the residence. Accordingly, if the execution manager determines that the place where the attachment is requested to be made is a residence, the decision to be taken regarding the attachment to be made in this place will be approved by the execution court. Pursuant to the approval to be given by the execution court as a result of the examination to be made through the file, it will be possible to attach the place determined as a residence, and if the approval is not given, the attachment cannot be made in the residence in question.
With the section added to Article 82 of the EBL titled "Goods and rights that can be attached", the attachment of personal belongings belonging to the debtor and family members living under the same roof and all household goods that serve the common use of the family is prohibited.
With the section added to Article 85 of the EBL, a clear and mandatory provision was added to the relevant article and it was emphasized that no attachment can be made in excess of the amount sufficient for all receivables of the creditor.
The procedures and principles regarding the disposal of the goods held in trusteeship, which caused many disputes during and after the seizure, have been determined. Article 88 of the EBL was abrogated and a completely new provision, Article 88/a, entered into force. The Article stipulates a very detailed disposal process for the goods that no longer need to be preserved. Accordingly, the goods that are in the custody of the trustee even if the attachment, which is the basis of the custody procedure, has been lifted, shall be disposed of ex officio by the execution office in the place where the proceedings are carried out in accordance with this article. The execution office notifies the debtor and warns that the debtor may take delivery of the goods within ten days from the date of notification, provided that he pays the trustee fee determined according to the tariff, otherwise the goods will be disposed of. For pledged goods, a similar notice shall be sent to the pledgee. In the case of goods registered in the registry, the sale is made through auction in electronic environment. If the property has not yet been disposed of, the trustee is entitled to take ownership of the property under certain conditions.
Regulations on Commercial Lawsuits
The case value was increased from five hundred thousand Turkish Liras to one million Turkish Liras for disputes whose subject matter can be measured in money and commercial cases to be heard by a single judge in the commercial courts of first instance, and it was regulated that the monetary limit in question will be increased every year at the revaluation rate.
Article 5/A of the Turkish Commercial Code No. 6102 ("TCC") has also made an explanatory regulation and regulated that the application to a mediator before filing a lawsuit is a condition for litigation in commercial lawsuits; receivables, cancellation of objection, negative assessment and reclamation lawsuits, the subject matter of which is money. This provision will apply to the lawsuits to be filed on and after 01.09.2023.
Regulations on Mediation Processes and Other Disputes in which Mediation Became Mandatory
Law No. 7445 introduces some regulatory and explanatory amendments to the mediation processes, while disputes arising from the lease law and disputes arising from the Condominium Law are also included within the scope of mediation as a condition for litigation.
In addition to the above-mentioned regulation in Article 5/A of the TCC, which determines and expands the scope of mediation as a condition of litigation, the addition made in paragraph 1 of Article 3 of the Labor Courts Law No. 7036 states that the cancellation of objection, negative assessment and recovery lawsuits regarding the employee or employer receivables and compensation based on individual or collective labor agreements are also within the scope of mediation as a condition for litigation and aims to prevent a controversial issue. On the other hand, execution proceedings may be initiated against the applicant for the same receivable.
With Law No. 7445, for the first time, disputes arising from rental agreements (except for the eviction of immovable property through execution without writ); disputes regarding the division of movables and immovables and the elimination of partnership; disputes arising from the Law No. 634 of Property Ownership; disputes arising from neighboring rights were also included within the scope of mediation as a condition for litigation. These provisions will enter into force on 01.09.2023.
It is ruled that the mediator shall inform the parties who are not present about the minutes and results issued at the end of the mediation activity by using all means of communication.
In order to harmonize the domestic law with the United Nations Convention on International Settlement Agreements Concluded as a Result of Mediation ("Singapore Convention"), which entered into force on 11.04.2022, it has been regulated that the enforceability annotation must be obtained from the commercial court of first instance for the execution of the settlement agreement documents issued as a result of mediation within the scope of the Convention, and that the court will conduct the examination regarding the issuance of the enforceability annotation through the file and, if necessary, may hold a hearing by showing its justification.
The possibility to apply for voluntary mediation in disputes regarding the transfer of immovable property or the establishment of limited real rights on immovable property and the possibility to annotate the land registry that the power of disposition is restricted, limited to the mediation process and not exceeding three months from the date of the annotation, if the parties agree in writing.
It is regulated that the agreement document signed by the parties and their lawyers and the mediator, and the agreement document signed by the lawyers and the mediator for commercial disputes, will be deemed as a document in the nature of a writ without requiring an enforceability annotation, except in cases where a it is required by law.
It was ruled that the mediator is obliged to inform the main party about the mediation process, even if their lawyer is present.
Amendments to the Law on Attorneys
With the paragraph added to Article 45 titled "Obligation to Obtain an Office" of the Attorney’s Act (Law No. 1136), it is stipulated that financing support will be provided under favorable conditions by credit and financial institutions and lending public institutions and organizations to cover the expenses of lawyers to establish an office, and the procedures and principles regarding the provision of this support will be determined by the Ministry of Justice in consultation with the Banking Regulation and Supervision Agency and the Ministry of Treasury and Finance.
With the addition made to Article 65 of the Law, it was stipulated that lawyers will not be charged bar association fees for the first 5 years of their practice. Article 180 was amended to increase the income of the Legal Aid Office.
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