The Turkish Constitutional Court Finds Violation of Property and Effective Remedy Rights Due to Failure to Compensate Inflation-Induced Loss in Receivable.

Subject of the Application

In the application numbered 2024/41763 and dated 08.07.2025, decided by the Turkish Constitutional Court (“TCC”), the subject matter was a monetary claim arising from a contract concluded between private entities, due to the long term proceedings and high inflation in economic conditions. The claim suffered a loss in value, but this loss in value could not be compensated through existing legal remedies, thereby violating the right to property enshrined by Article 35 of the Constitution and the right to an effective remedy regulated by Article 40 of the Constitution.

Inadequate Protection of Additional Damages under Article 122 of the Turkish Code of Obligations ("TCO")

The applicant initiated enforcement proceedings to collect the monetary claim; upon the debtor's objection, a lawsuit was filed to nullify the objection, and the court decided to continue the proceedings based on the principal claim and default interest. The debtor paid the principal amount and default interest in accordance with the dijudication.

Subsequently, the applicant filed a new lawsuit and claimed additional damages based on Article 122 of the TCO, justifying that the value of his claim had been lost due to inflation. However, the court of first instance and the court of appeal rejected this claim on the grounds that the conditions for additional damages had not been provided and that additional damages must be proven by specific facts peculiar to the applicant, beyond general economic adversity. Yargıtay upheld these decisions.

After exhausting all other judicial remedies, the applicant filed an individual application with the TCC, claiming that the failure to compensate for inflation-related additional damages violated his right to property and his right to an effective remedy.

The TCC's Evaluations and the “Pilot Judgement”

The TCC, which reviewed the application, underlined that Law No. 3095 on Statutory Interest and Default Interest (“Law No. 3095”) contains provisions on statutory and default interest in order to compensate for the loss in value of overdue receivables due to inflation. However, upon comparing the statutory interest, default interest, and commercial default interest rates set out in Law No. 3095 with the inflation rates issued by the Turkish Statistical Institute, the TCC found that these legal provisions are not sufficient to compensate for the loss of value suffered by the claim due to inflation. Furthermore, the decision emphasized that the claim for additional damages provided for in Article 122 of the Turkish Code of Obligations does not enshrine compensation for the loss in value of receivables due to inflation.

In this context, in its decision numbered 2024/41763, the TCC determined that the ineffective application of interest rates and additional damages claims did not protect creditors against inflation. Accordingly, the TCC ruled that the property rights and effective remedy rights enshrined by the Constitution had been violated.

On the other hand, the TCC also applied the pilot decision procedure in this ruling. As is known, pursuant to Article 75 of the Turkish Constitutional Court Internal Regulations, divisions may apply the pilot decision procedure if they determine that an application stems from a structural problem and that this problem has given rise to other applications, or if they foresee that this situation will give rise to new applications. In this decision, the TCC applied the pilot decision procedure, emphasizing that the issue had become a structural problem and that there were numerous similar applications. For these reasons, the TCC decided to apply the pilot decision procedure and notified the Grand National Assembly of Turkey of the situation for the purpose of enacting relevant legislation.