1. Introduction

The long-debated issue of the impact of inflation on creditors in Türkiye gained a new dimension with the decision (“Decision”) rendered by the Plenary of the Constitutional Court (“the Court”) on 08.07.2025 in relation to the individual application numbered 2024/41763. The Court held that the loss of value of monetary receivables arising from private law relationships due to inflation constitutes a violation of the right to property, as well as the right to an effective remedy.

2. The Case: Collection of the Receivable After a Ten-Year Enforcement Process

In the case at hand, the applicant initiated enforcement proceedings in 2010 and, after nearly ten years, collected the receivable together with interest in 2020. However, the accrued interest was insufficient to compensate for the depreciation of the money during this period. The applicant therefore filed a claim for additional (excess) damages, but both the first instance court and the Court of Cassation rejected the claim.

In the reasoning of the Court of Cassation, it was stated that general economic conditions (such as inflation, currency depreciation, or exchange rate fluctuations) alone are not sufficient to establish the existence of damage and that such damage must be proven by concrete evidence.

3. Findings of the Constitutional Court: The Current Legal Framework Fails to Protect Creditors

In its assessment, the Constitutional Court concluded that the inability of the creditor to recover losses caused by the depreciation of money imposed an excessive and extraordinary burden on the creditor. The Court ruled that this situation constituted a violation of the right to property guaranteed under Article 35 of the Constitution and the right to an effective remedy under Article 40.

The Court further determined that the source of the violation stemmed not from an individual error but from a structural deficiency. Although Article 122 of the Turkish Code of Obligations numbered 6098 (“TCO”) theoretically allows for the recovery of losses through a claim for additional (excess) damages, the current judicial interpretation prevents the realization of this purpose.

4. Why Are the Existing Legal Mechanisms Ineffective in Protecting Creditors?

In its decision, the Court emphasized that the existing jurisprudence of the Court of Cassation and the current evidentiary standards hinder the protection of creditors during inflationary periods, based on the following grounds:

• The existence of additional (excess) damages can only be proven through concrete evidence.
• General economic indicators such as high inflation or currency fluctuations do not constitute sufficient proof of loss.
• The creditor bears the burden of proving and calculating the loss exceeding the interest compensation, based on specific facts of the case.

The Court considered that this strict evidentiary burden effectively transforms the predictable yet unavoidable effects of inflation into an individual responsibility of the creditor, thereby creating a significant gap in the protection of property rights. Consequently, the Court concluded that the existing system no longer functions as an “effective legal mechanism.”

5. Pilot Judgment Procedure: Notification to the Grand National Assembly of Türkiye

Given the structural nature of the violation, the Court applied the pilot judgment procedure. Accordingly, the examination of similar applications was suspended for four months following the publication of the Decision in the Official Gazette, and the Grand National Assembly of Türkiye (“TBMM”) was notified of the necessity to enact legislative amendments.

The Court underlined the need to establish an effective system to prevent the loss of value of receivables against inflation. It was indicated that such a system could be implemented through mechanisms such as inflation-indexed interest rates, revised compensation calculation methods, or a relaxation of the evidentiary burden for additional damage claims.

6. Expected Judicial and Legislative Implications

This Decision not only resolved an individual application but also brought to light a longstanding gap in judicial practice. Following this assessment, it is anticipated that the Court of Cassation’s well-established precedent—stating that “inflation alone does not constitute sufficient proof of loss”—may be reconsidered in future cases.

Potential legislative amendments by the TBMM are expected to introduce a predictable and equitable compensation mechanism that prevents the erosion of receivables’ value against inflation.

7. Conclusion

The Constitutional Court’s Decision dated 08.07.2025 marks a turning point in the protection of receivables in Türkiye. The Court not only identified an individual violation but also revealed a structural deficiency in the legal system, calling upon the legislature to provide a solution.

This landmark decision is expected to have significant implications in the coming period, particularly in protecting creditors’ rights during high-inflation periods, ensuring economic fairness, and reshaping judicial practice.

Best regards,

DT Law