Introduction

Imagine your company is in a legal dispute in Turkey. You are a foreign business suing a Turkish company, confident you will win. Suddenly, the court requires you to deposit a security payment just to proceed. What is this? Why does it apply only to foreigners? And how can you prepare?

This situation arises from the concept of foreign security deposits in international civil procedure. Many countries, including Turkey, may require foreigners to provide financial security before pursuing claims in court. This ensures that if the case is lost, the local party can recover legal costs. While logical, in practice it creates barriers and risks for foreign investors and businesses.

This guide breaks down the practical aspects of foreign security deposits in Turkish courts, drawing from case law of the Court of Cassation (Yargıtay).

1. What Is a Foreign Security Deposit?

• In Turkey, if a foreign plaintiff (individual or company) files a lawsuit, the court may require a deposit (teminat) to cover potential legal costs.

• The purpose: Protect the Turkish defendant against non-payment of litigation expenses if the foreign plaintiff loses.

• Exemptions may apply under bilateral treaties or reciprocity principles.

Practical Tip: Before filing, always check whether a treaty exists between Turkey and your country that waives security deposits for nationals.

2. Key Rules Under Turkish Law

• Code of Civil Procedure (HMK) and Private International Law Act (PILA No. 5718) regulate when security is required.

• Yargıtay precedents show that Turkish courts interpret security strictly: if you are foreign and no treaty exempts you, you will likely need to pay.

• The amount depends on the nature and value of the claim.

Example: In several decisions, Yargıtay confirmed that a U.S.-based company suing in Turkey must deposit security, since no reciprocity agreement exists.

3. Steps to Manage Security Deposit Risks

1. Check Reciprocity and Treaties

   • If your home country has a judicial assistance treaty with Turkey, you may be exempt.

   • EU nationals benefit from agreements covering civil litigation.

2. Budget for Potential Deposits

   • Security deposits can be significant (often a percentage of the claim).

   • Factor this into your litigation costs.

3. Seek Waivers Where Possible

   • In some cases, courts may reduce or waive deposits if hardship is proven.

   • Local counsel can argue exceptions.

4. Plan Enforcement Strategy

   • If you win, ensure the judgment covers recovery of your deposit.

   • Track refund procedures carefully.

4. Common Pitfalls in Cross-Border Cases

• Ignoring Security Deposit Rules: Filing without preparing funds can delay or even halt your case.

• Assuming Equality: Foreigners often assume they are treated the same as locals, but Turkish courts apply stricter rules.

• Late Deposits: Missing deadlines to pay the deposit can lead to dismissal.

• No Treaty Check: Many businesses fail to check reciprocity treaties before initiating litigation.

Pro Tip: Always verify whether a mutual legal assistance treaty exists before litigation—this can save thousands in unnecessary deposits.

5. Real-World Scenarios

• Case Example – European Investor
  An Austrian company filed a lawsuit in Turkey. Thanks to EU-Turkey agreements, the court waived the deposit requirement.

• Case Example – U.S. Company
  A U.S. exporter sued a Turkish buyer. With no reciprocity treaty, the court ordered a deposit equal to 10% of the claim value.

• Case Example – Middle Eastern Company
  A UAE firm faced a deposit order but successfully argued partial exemption by showing hardship, based on Yargıtay precedent.

6. Checklist for Foreign Businesses Suing in Turkey

• Confirm if your country has a treaty with Turkey.

• Calculate potential deposit amounts in advance.

• Prepare to pay promptly if ordered.

• Consult local counsel on waiver or reduction strategies.

• Track refund claims after litigation ends.

Conclusion

Foreign security deposits may feel like an obstacle, but with the right preparation, they can be managed effectively. The key is to know the applicable law, check treaty protections, and plan financially before starting a case.

At Tenha Law Firm, we assist international clients in navigating Turkish litigation, including minimizing risks from foreign security deposit requirements. If you are planning to file a lawsuit in Turkey, contact us for tailored advice.