The Monetary Penalty on Dismissal of Auction Annulment Applications: An Assessment under the Right of Access to a Court
Introduction
The imposition of a monetary penalty on an applicant whose application for annulment of an auction is dismissed on the merits is a measure intended to prevent enforcement proceedings from being unduly prolonged and to ensure that the auction becomes final without delay. However, such a sanction may substantially impede access to judicial remedies for persons alleging that an auction was unlawful. Accordingly, not only the purpose of the sanction but also the way it is applied in the circumstances of the particular case is significant, particularly whether the nature of the applicant’s claims and the applicant’s financial circumstances are considered when determining the amount of the penalty.
This article examines, in light of the Constitutional Court’s decision dated 20.05.2026 in Application No. 2022/49505, published in Official Gazette No. 33373 dated 17.09.2026[1] (“Decision”), the safeguards that must accompany a monetary penalty imposed following the dismissal of an application for annulment of an auction in order to comply with the right of access to a court. The Decision is significant in establishing that the reasoned and case-specific exercise of the discretion conferred on courts under Article 134 of the Enforcement and Bankruptcy Law No. 2004 (“EBL”) is a constitutional requirement.
Decisions of the Court of First Instance, the Regional Court of Appeal and the Court of Cassation
In the case at hand, a mortgage was created over an immovable property owned by a third party to secure a loan obtained by the applicant company from a bank. The immovable property was subsequently sold at auction during mortgage enforcement proceedings.
The applicant brought an action against the defendant bank, seeking annulment of the auction. In its statement of claim, the applicant asserted that copies of the documents forming the basis of the enforcement proceedings had not been served on it together with the payment order; that the payment order had not been duly served; and that the amount stated in the payment order was twice the amount actually owed. The applicant therefore argued that the enforcement office had failed to notify it correctly of the outstanding debt and that, consequently, both the finalization of the enforcement proceedings and the sale were manifestly unlawful. The applicant further stated that it had brought a separate action seeking suspension of the sale and annulment of the enforcement proceedings on the ground that the notice of acceleration had not been duly served, and that this action was pending before the Regional Court of Appeal. It maintained that the sale of mortgaged property while the underlying enforcement proceedings remained subject to an unresolved dispute was manifestly unlawful. The applicant also emphasized that the material characteristics of the immovable property had not been specified in the sale notice or the auction specifications.
Having examined the case, the Court of First Instance dismissed the action on 02.12.2021. The Court held that the payment order had been served electronically on the applicant’s counsel and that the alleged failure to serve the documents underlying the enforcement proceedings did not fall within the scope of an action for annulment of an auction. It further found that the notice of acceleration had been served on the applicant company; that the amount of the debt had been stated as TRY 3,996,294.46 in both the request for enforcement and the signed hard copy of the enforcement order; and that the amount of TRY 7,992,588.92 displayed in the National Judiciary Informatics System (UYAP) resulted from the same items having been entered into the system twice. The Court concluded that this discrepancy did not constitute grounds for annulment of the auction.
The Court also found that the allegation that the material characteristics of the immovable property had not been included in the sale notice and the auction specifications had not been raised by way of a timely complaint, and that an earlier action concerning the preparatory steps for the auction had been dismissed by a final judgment. On these grounds, it concluded that the auction proceedings had been conducted lawfully and that the applicant’s allegations did not warrant annulment of the auction.
The Regional Court of Appeal dismissed the appeal on the merits, holding that the alleged irregularities concerning the enforcement order and its service could not be examined in an action for annulment of an auction, that the decision in the earlier complaint proceedings had become final and that there were no grounds for annulment to be considered by the court of its own motion. Having regard to the grounds for annulment asserted in the case, the value of the immovable property and the auction price, the Regional Court of Appeal also found that the Court of First Instance had correctly imposed a monetary penalty equal to ten per cent of the auction price.
The Court of Cassation upheld the judgment, whereupon the monetary penalty imposed on the applicant became final.
The Constitutional Court’s Assessment
At the heart of the application lies the monetary penalty imposed under Article 134 of the EBL following the dismissal of an application for annulment of an auction. Under the provision in force when the applicant brought the action, if the court dismissed the application, it was required to impose on the applicant a monetary penalty equal to ten per cent of the auction price. In other words, the court had no discretion to impose a lower penalty by considering the particular circumstances of the case.
However, while the proceedings were pending, the provision was amended by Law No. 7343 dated 24.11.2021 to provide that, where an application was dismissed on the merits, the court could impose a monetary penalty of up to ten per cent of the auction price. The amendment thus replaced the fixed-rate penalty with a system under which the court was empowered to determine the applicable rate considering the particular circumstances of the case[2]. Pursuant to Provisional Article 18 of EBL, the amendment would apply to cases in which no judgment had yet been rendered. In cases pending before the Court of Cassation, however, the change in the applicable penalty rate could not constitute grounds for quashing the judgment, although the Court of Cassation could apply the amended provision and revise the judgment accordingly[3].
The applicant argued that the monetary penalty imposed at a rate of ten per cent of the auction price lacked sufficient reasoning and that the imposition of the statutory maximum without regard to its ability to pay had violated its right of access to a court. The Constitutional Court observed that the complaint concerned the imposition of an additional financial burden on the applicant following the dismissal of its action and therefore examined the complaint under the right of access to a court guaranteed by Article 36 of the Constitution.
According to the Constitutional Court, the right of access to a court guarantees the ability to bring a dispute before a court and to seek its effective determination. However, this right is not absolute. Although the imposition of court fees, costs or a monetary penalty on a claimant at the conclusion of proceedings may constitute an interference with the right of access to a court, such interference may be constitutionally permissible where it has a legal basis, pursues a legitimate aim and is proportionate.
The Constitutional Court found that the interference in the present case was based on Article 134 of EBL and therefore satisfied the requirement of lawfulness. It was further found that the provision was sufficiently clear and foreseeable[4]. The Court also accepted that ensuring the prompt finalization of auctions, preventing unnecessary applications, enabling creditors to recover their claims without delay and protecting the rights of successful bidders constituted legitimate aims. Its examination therefore focused on whether the monetary penalty imposed on the applicant was proportionate.
The Constitutional Court assessed proportionality by reference to the sub-principles of suitability, necessity and proportionality stricto sensu. According to the Court, the imposition of a monetary penalty following the dismissal on the merits of an application for annulment of an auction may constitute a suitable and necessary means of preventing auction proceedings from being unduly prolonged. Nevertheless, the sanction must not be so onerous as to substantially restrict access to a court for persons alleging that an auction was unlawful.
The Decision explained that a fair balance had to be struck between the interest in the prompt finalization of the auction and the applicant’s interest in exercising its right of access to a court. As the Constitutional Court observed, the amendment to Article 134 of the EBL addressed, at the legislative level, the problem arising from the application of a fixed penalty rate irrespective of the particular circumstances of the case by conferring on courts discretion to impose a penalty of up to ten per cent of the auction price. Nevertheless, that discretion must be exercised based on specific and reviewable reasons.
The Constitutional Court placed particular emphasis on the fact that, although the Court of First Instance rendered its judgment two days after the amendment had entered into force, it failed to explain why the monetary penalty had been imposed at the statutory maximum. In this regard, the Constitutional Court also found inadequate the Regional Court of Appeal’s conclusion that the ten per cent penalty was appropriate, as that conclusion was based solely on the value of the immovable property and the auction price. It further noted that the Court of Cassation had upheld the judgment without examining either the legislative amendment in the applicant’s favor or the Regional Court of Appeal’s failure to provide sufficient reasons.
Accordingly, the Constitutional Court concluded that imposing a monetary penalty equal to ten per cent of the auction price without providing specific reasons placed an excessive burden on the applicant. Since no fair balance had been struck between the interest in protecting the creditor’s rights and the applicant’s interest in seeking annulment of the auction, the interference with the right of access to a court was found to be disproportionate. The Constitutional Court therefore held that the applicant’s right to access a court, as guaranteed by Article 36 of the Constitution, had been violated.
The Constitutional Court found that the violation had arisen from the court judgment and ordered a retrial to eliminate its consequences. It also ordered that a copy of the Decision be transmitted to the Court of First Instance. However, it dismissed the applicant’s claim for compensation on the ground that a retrial would afford sufficient redress.
Assessment and Conclusion
The Decision under review clearly establishes that a monetary penalty imposed following the dismissal on the merits of an application for annulment of an auction cannot automatically be set at the statutory maximum. The wording “up to ten per cent” in Article 134 of the EBL requires courts to conduct a reasoned proportionality assessment considering the particular circumstances of each case. In this respect, the Decision is also significant in terms of the courts’ obligation to provide reasons for their judgments.
Within this framework, the court must first assess the nature of the application for annulment of the auction. When determining the applicable penalty rate, the court should consider whether the application was brought solely to prolong the enforcement proceedings, whether the allegations relied upon were manifestly unfounded, whether the applicant had an opportunity to challenge the alleged irregularities prior to the sale, and the seriousness of those allegations. The amount of the penalty must also be assessed in conjunction with the applicant’s financial circumstances, and the court must determine whether the sanction is so onerous as to deter or render ineffective the exercise of the right to bring proceedings.
The Constitutional Court’s conclusion is significant in clarifying the balance that must be struck between the prompt finalization of an auction and the right of access to a court. The Decision establishes that the imposition of a monetary penalty following the dismissal of an application for annulment of an auction is not contrary to the Constitution. It nevertheless concludes that imposing the penalty directly at the statutory maximum without assessing the particular circumstances of the case is incompatible with the right of access to a court.
- Constitutional Court, Application No. 2022/49505, dated 20.05.2026, published in Official Gazette No. 33373 dated 17.09.2026. https://www.resmigazete.gov.tr/eskiler/2026/09/20260917-14.pdf (last accessed: 20.09.2026)
- Yıldırım, Mehmet Kâmil/ Deren-Yıldırım, Nevhis: İcra ve İflas Hukuku, 9th ed., İstanbul, Beta, 2025, p. 328; Görgün, L. Şanal/Börü, Levent/Kodakoğlu, Mehmet: İcra ve İflâs Hukuku, 6th ed., Ankara, Yetkin, 2025, pp. 335-336.
- The Constitutional Court referred in this regard to the decision of the 12th Civil Chamber of the Court of Cassation numbered File 2022/12645 and Decision 2023/66, dated 10.01.2023, and the decision of the 12th Civil Chamber of the Court of Cassation numbered File 2023/2251 and Decision 2023/5637, dated 04.10.2023.
- In its decision numbered File 2012/68 and Decision 2012/182, dated 22.11.2012, the Constitutional Court did not find unconstitutional the provision requiring the imposition of a monetary penalty following the dismissal of an application for annulment of an auction. For further information, see Yıldırım/Deren-Yıldırım, p. 328.
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