Ulgener

-Gül Alpay

The incorporation of the Convention on Limitation of Liability for Maritime Claims, 1976 (“LLMC”) into Turkish domestic law was realised through the Turkish Commercial Code of 2012, which still remains in effect;

(1) The liability arising from maritime claims may be limited in accordance with international conventions accepted by the Republic of Turkey, including the Convention on Limitation of Liability for Maritime Claims dated 19/11/1976, as amended by the Protocol of 2/5/1996, or any subsequent conventions replacing it.

(2) Any amendments to be made in accordance with Articles 20 and 21 of the 1976 Convention on Limitation of Liability for Maritime Claims and Article 8 of the 1996 Protocol shall be applied from the date they enter into force for the Republic of Turkey.

(3) The term “1976 Convention” as used in this Section shall collectively refer to the Convention on Limitation of Liability for Maritime Claims dated 19/11/1976, the Protocol of 2/5/1996, and any amendments thereto that have entered into force for the Republic of Turkey.

Although Turkey has not undergone a formal approval process for the increased 1996 limits (“the 2012 Amendment”), it is accepted that the 2012 Amendment took effect in Turkey through the “tacit acceptance” procedure outlined in the 1996 Protocol.
As a matter of fact, in 2019, the Turkish Admiralty Court decided the limitation fund to be constituted as per the increased limits.

Application Procedure and Timing

As it is known, according to Article 11(2) of the Convention, the limitation fund can be constituted, either by depositing the sum in cash, or by producing a guarantee acceptable under the legislation of the State Party.

Although there are no specific provisions in the Turkish Commercial Code regarding the acceptable form of guarantees, prevailing practice shows that the courts exclusively recognise bank letters of guarantee issued by Turkish banks. (letters of guarantee issued by a Turkish bank and counter-guaranteed by a foreign bank are usually used in practice.)

If a bank letter of guarantee will not be issued, the fund can also be established through cash deposit. Accordingly, the sum will be deposited into the court's designated account for the fund. Turkish Commercial Code also stipulates that the fund must be maintained in an interest-bearing account until the completion of distribution.

The proceedings at the court of first instance for the establishment of fund will take approximately one year; however this judgement can be appealed. The appeal proceedings will also take approximately 1-1.5 years.

Would The Turkish Courts Recognise A Fund Constituted In A Foreign Jurisdiction As Per LLMC?

In the 2010s, we experienced this situation where a loss occurred in Turkey and the clients set up the fund in a foreign jurisdiction. Despite this, a few claimants pursued legal action against the clients in Turkish Courts.

Ultimately, the Turkish Courts decided that the claims should be addressed to the fund. However, it's important to note that these cases were thoroughly examined on the merits as well and the initial court proceedings lasted around 2-3 years.

Thus, the establishment of the fund in a foreign jurisdiction does not guarantee a quick resolution in the Turkish legal system.