Interest on Unpaid Euro and Dollar Debts in Turkey: Article 4/a and Public-Bank Deposit Rates

Identify a foreign-currency debt before selecting its interest rule

Article 4/a of the Law on Legal Interest and Default Interest No. 3095 addresses interest on foreign-currency debts. The obligation’s currency must be established from the agreement and applicable law. A payment arriving from an overseas bank or a claimant living abroad does not, by itself, establish a foreign-currency debt. The legal denomination of the outstanding obligation is the starting point.

Identify the contract, amount, currency and legal basis of the claim. An unpaid purchase price, loan and damages award can require different analysis of when interest becomes payable. Article 4/a supplies a rate framework for the situation it regulates; it does not prove the principal debt, establish contractual performance or resolve every issue about maturity.

Cross-border agreements also need a governing-law assessment under Article 24 of Law No. 5718. A claim involving Turkey should not automatically be calculated under Turkish substantive law without examining that issue. Once the applicable interest framework is identified, the calculation can be prepared using the relevant contractual and statutory inputs.

Article 4/a uses a specific bank, currency and deposit-term benchmark

The statutory wording refers to the highest interest paid by state banks on a one-year deposit account opened in the foreign currency concerned. Each element matters. The inquiry is not the highest rate offered by any financial institution worldwide, the rate charged on a business loan or the return on an investment product. The evidence must correspond to the category the legislature selected.

The currency must also match. A Turkish-lira deposit rate does not become the Article 4/a benchmark for a euro obligation because the litigation takes place in Turkey. The same applies to rates for another foreign currency. Keep the currency identifier attached to every rate document and calculation period so that data cannot be mixed during translation or spreadsheet preparation.

The one-year term describes the deposit used as the benchmark. It does not mean that a creditor must wait one year after default before claiming interest, or that only debts with a one-year contractual term qualify. The period for which interest is legally owed is determined separately from the maturity of the reference deposit.

Review the agreed interest before relying on the statutory fallback

Article 4/a applies its benchmark where the parties have not agreed a higher contractual or late-payment interest rate. Obtain the complete executed contract, incorporated terms and valid amendments. Identify whether the clause concerns ordinary interest during the agreed term, late-payment interest after default, a penalty or a different charge. A heading stating interest does not resolve that classification.

The existence of a rate in a document is not the same as an enforceable agreement to pay it. Signature, authority, incorporation and applicable mandatory rules require review. Articles 88 and 120 of the Code of Obligations regulate interest within their scope, and special commercial or other regimes must be considered where relevant. Article 4/a should not be used as a blanket validation of every contractual percentage.

Keep the contractual comparison explicit. State the provision relied upon and whether the claim uses a valid agreed rate or the statutory benchmark. An invoice issued after the transaction should not silently replace the parties’ interest agreement. A later settlement may affect the claim, but the accepted wording and its legal effect must be established before recalculating the debt.

Prove the date from which default interest is claimed

Article 117 generally places the debtor of a due obligation in default through the creditor’s notice, while identifying circumstances where a further notice is unnecessary, including the expiry of an agreed performance day. The interest schedule should explain which rule supplies its starting point. The invoice date, delivery date and due date are not automatically interchangeable.

Preserve the agreement establishing maturity and the notice where one is required. Delivery evidence should show what reached the debtor and when. An internal collection reminder that was never sent does not establish a notice. A genuine contractual extension or payment arrangement must also appear in the chronology so that interest is not calculated as though the original timetable remained unchanged.

Ordinary interest and default interest should be separated. The rate benchmark alone does not determine entitlement to interest for a period before default. The calculation should identify the legal basis for each period rather than begin at the earliest available date. This is particularly important where several invoices have different maturities or only part of the principal became due.

Obtain rate evidence covering the actual claim period

A current deposit advertisement does not establish the rate paid during an earlier period. The file needs historical information identifying the relevant state bank, currency, one-year deposit category and period of application. The evidence should answer the statutory question, including whether the figure concerns interest actually paid within that category rather than an unrelated lending or investment rate.

Request records that permit the rate history to be reconstructed. A response containing one percentage without an effective date or currency can leave a material gap. Where a bank gives several figures, their scope and conditions must be explained before selecting the figure used. Preserve the bank’s response and attachments in their original form, including any qualifications affecting interpretation.

The required coverage extends to the periods for which interest is claimed. A rate established for one interval should not be carried across the entire dispute without a basis. Equally, a missing response should not be filled with an invented estimate. Identify the gap and obtain the information needed for a supported calculation.

Check the unit in which the bank expresses the figure. An annual percentage, an amount of interest credited to one account and a return for a shorter period are not interchangeable inputs. The calculation should explain how the source figure is used for the relevant elapsed period. Preserve the bank’s explanation of the figure rather than deleting it from a translated summary; that explanation can determine whether the information is suitable for the claim.

Use procedural document requests for evidence that is unavailable directly

Article 194 of the Code of Civil Procedure requires parties to identify the facts relied upon and the evidence supporting them. A request for bank information should therefore state the currency, deposit term, relevant dates and legal purpose. A general request for interest rates risks producing data that does not answer Article 4/a’s narrower question.

Article 221 allows the court to order production of a document held by a third party or institution where it determines that the document is necessary to prove the matter asserted. Article 219 separately addresses documents held by the parties. These provisions provide a procedural framework for obtaining relevant evidence; the court determines the appropriate order in the case.

The claimant should identify the information sought clearly enough for the institution to respond. The debtor can likewise point to a mismatch between the evidence and the statutory benchmark. A dispute over the rate should be framed as a specific evidentiary issue, such as the wrong currency or missing period, rather than an unexplained assertion that the total feels excessive.

Prepare a calculation that another person can reproduce

The working schedule should state each principal amount, currency, maturity, default date, applicable interest basis and calculation endpoint. Separate periods where the supported rate or outstanding principal changes. Attach references connecting each rate to the bank evidence. The resulting total should be capable of being checked without asking the author to reconstruct hidden assumptions.

State the day-count method and treatment of partial periods explicitly. Those technical inputs must be consistent with the legal basis and evidence used. Avoid rounding each intermediate entry in a way that accumulates an unexplained difference. Preserve the source amounts and show how the displayed total was derived.

Article 3 of Law No. 3095 prohibits compound interest in calculating statutory and default interest while reserving the relevant Commercial Code provisions. Article 121 of the Code of Obligations also states that default interest does not itself bear further default interest. A spreadsheet must not capitalise accumulated interest automatically merely because a year has ended. Any asserted special regime requires a separate legal basis.

Apply partial payments before finalising the interest balance

Every payment potentially reducing the debt must be recorded with its date, amount, currency and allocation instructions. Articles 100–102 of the Code of Obligations address allocation within an obligation and among several debts. The payment allocation guide explains those distinctions. A payment should not simply be ignored because the parties disagree about its legal allocation.

The legal allocation affects the principal on which later interest is calculated. Record the debtor’s designation, the creditor’s receipt and any relevant objection. Where the payment currency differs from the debt currency, preserve the actual bank records and identify the legally justified conversion approach. Do not use the deposit-interest benchmark as an exchange rate; they measure different things.

Keep disputed deductions visible. Returns, credits, set-off assertions and settlement payments may affect the amount claimed, but their legal basis must be assessed. A calculation should distinguish an admitted payment from a contested deduction rather than hide both inside a single unexplained adjustment. This allows the court to see how each disputed item changes the proposed balance.

Currency election and interest rate are separate decisions

Article 99 of the Code of Obligations regulates performance of money debts and the alternatives for the foreign-currency obligations it describes. The contract’s wording on payment in the currency itself and the creditor’s available choice after non-payment require review. The foreign-currency debt guide addresses denomination, conversion and proof.

A claim maintained in foreign currency should not be calculated by combining that principal with an unrelated Turkish-lira interest rate. Conversely, a legally effective conversion or election must be examined for its consequences rather than treated as a cosmetic change to the spreadsheet. The principal, currency basis and interest claim should be consistent throughout the demand and proceedings.

Exchange-rate movement and interest serve different functions. A change in the lira value of a euro balance is not itself an interest payment. The file should retain the original foreign-currency amounts and identify every lira equivalent by its purpose and date. This prevents a presentation amount from being mistaken for the substantive election made in the claim.

State the interest request in the lawsuit or enforcement application

Article 26 of the Civil Procedure Code generally binds the court to the relief requested, subject to statutory exceptions. The claimant should therefore state the interest basis, starting point and requested continuing treatment accurately. A detailed calculation kept privately does not replace a properly expressed claim in the procedural document.

Article 58 of the Enforcement and Bankruptcy Law No. 2004 requires the enforcement request to identify the relevant amount and interest information and, for foreign-currency claims, the exchange-date basis and interest. Drafting must reconcile those procedural requirements with the substantive currency position. The lira amount used in the application should not be inserted without explaining its role.

Separate accrued interest from the request for interest continuing after the calculation date. Check the agreement, demand, petition and enforcement request against the same chronology. A mismatch between documents can create a dispute independent of the arithmetic. The claimed rate should be legally identified without inventing a fixed percentage where the applicable benchmark requires historical evidence.

Review the expert’s inputs as well as the final total

Article 266 permits expert assistance for issues requiring specialised or technical knowledge outside law, while reserving legal determination to the court. A financial calculation can require technical work, but the expert’s spreadsheet does not decide the governing law or validate an unsupported interest clause. The report should show the legal instructions and factual inputs on which it proceeds.

Review whether it uses the correct currency, one-year deposit category, relevant bank evidence, default dates and payment allocation. Check the start and end of each interval and whether interest was compounded. An objection should identify the disputed input and its consequence for the calculation. A reasoned alternative schedule is more informative than a request to reduce the amount without explanation.

Keep every version of the report and the supporting responses. Revised evidence can require a revised calculation, and the changes should be traceable. Procedural deadlines for responding to a report must be taken from the current rules and the case order; correspondence with the opposing party does not itself file an objection.

Follow the operative judgment through to actual collection

Once a judgment exists, read its operative wording on principal, currency, interest type and starting date. Enforcement should be based on the enforceable decision and applicable procedure rather than silently replacing the awarded interest with a preferred calculation. Any ambiguity or challenge must be addressed through the legally available route.

Update the payment record as money is received and reconcile the remaining balance. The final account should distinguish principal, interest and costs and preserve the evidence supporting each. A reproducible Article 4/a calculation remains useful at collection because it shows precisely which period has been satisfied and which amount is still claimed.

Frequently asked questions

What is the Article 4/a benchmark?

Where a higher contractual or late-payment interest rate has not been agreed, Article 4/a uses the highest rate paid by state banks on a one-year deposit in the relevant foreign currency. Currency, deposit term, bank category and historical period must match the statutory inquiry.

Can the Turkish-lira statutory rate be applied automatically to a euro debt?

No automatic substitution follows from litigating in Turkey. The claim’s currency, applicable law and Article 4/a framework must be examined. A euro principal and an unrelated lira interest benchmark should not be combined without a legally established basis.

Does one-year deposit mean interest starts after one year?

No. One year describes the benchmark deposit’s term. The date from which interest is owed depends on the contract and applicable maturity and default rules. Article 117 is relevant to debtor default where Turkish law governs.

Is a current bank advertisement enough to calculate several past years?

A current advertisement does not establish historical rates for earlier periods. Obtain evidence identifying the relevant currency, one-year deposit category and dates. Any gap in the history should be addressed rather than filled with an assumed percentage.

Does Article 4/a override an agreed higher interest rate?

Its wording applies the benchmark where a higher contractual or late-payment rate has not been agreed. The alleged agreement must still be established and reviewed for validity under the applicable legal regime. The statute does not validate every rate appearing on an invoice.

Can the court obtain historical rate documents from a bank?

Article 221 permits a court to order production of documents held by third parties or institutions where necessary to prove the asserted matter. The request should specify the currency, deposit term and relevant dates so that the evidence answers the statutory question.

Can unpaid interest be added to principal every year?

Law No. 3095 Article 3 prohibits compounding for statutory and default interest, while preserving relevant Commercial Code rules. Code of Obligations Article 121 also prohibits further default interest on default interest. Any different treatment requires a specific applicable legal basis.

How do partial payments affect the calculation?

The payments must be recorded and legally allocated under the relevant rules, including Articles 100–102. That allocation affects the remaining principal and later interest. Preserve payment instructions, receipts, currency and dates instead of applying an unsupported automatic spreadsheet rule.

Does the exchange rate determine the interest percentage?

No. An exchange rate converts currency values, while Article 4/a identifies an interest benchmark. Currency election under Article 99 and the procedural lira equivalent require separate analysis. Each figure should be labelled by its purpose and legal basis.

Should the petition state interest even when a calculation is attached?

The requested relief must be expressed accurately in the procedural document. Article 26 generally binds the court to the claim, and Enforcement Law Article 58 specifies interest information for enforcement requests. An attachment does not cure every ambiguity in the requested relief.

Official legal sources

• Law on Legal and Default Interest No. 3095 — Articles 3, 4/a
• Code of Obligations No. 6098 — Articles 88, 99, 100-102, 117, 120, 121
• Civil Procedure Code No. 6100 — Articles 26, 194, 219, 221, 266
• Enforcement and Bankruptcy Law No. 2004 — Articles 58
• Private International and Procedural Law No. 5718 — Articles 24

The official Turkish legislation controls. The governing law, deadlines and procedural requirements must be assessed for the individual case.