Protection of Creditors Against Inflation: Consequential Losses and Recent Case Law

Prolonged court proceedings in Türkiye, enforcement proceedings that take years to conclude, and the impact of high inflation on monetary claims have led to the concept of “additional loss” (munzam zarar) regaining central importance, particularly over the last five years.

Many creditors realise that even if they win their lawsuit, the amount they collect years later has eroded significantly against inflation, the difference is not covered by default interest, and the debtor even makes a “profit from the delay”.

It is precisely at this point Turkish Code of Obligations Under Article 122, the additional damage lawsuit has become an extremely powerful legal remedy through the case law of both the Constitutional Court and the Court of Cassation.

In this article;

• The legal nature of supplementary damage,
• The conditions,
• Calculation methods,
• the Constitutional Court's critical decision dated 21.12.2017,
• 2024–2025 Court of Cassation practices,
• During periods of inflation, the distinction between tangible and intangible proof,
• and what rights creditors have in protracted proceedings
  it has been discussed in detail.

What is Compensatory Damage? Legal Basis (Turkish Code of Obligations Art. 122)

Article 122 of the Turkish Code of Obligations (TBK):

“If the creditor has suffered a loss exceeding the default interest, the debtor is obliged to compensate for this loss as well, unless they prove that they are entirely without fault.”

According to this provision, the supplementary damage:

• It applies only to monetary debts.
• It covers damages exceeding the default interest.
• The debtor is liable unless they prove they are not at fault (presumption of fault).
• If the damage is provable, a judgement can be rendered when deciding on the merits.

Conditions of Compensatory Damages

Must be owed money

The subject can only be material, financial loss; increased loss is not possible in non-monetary performances or claims for non-pecuniary damage.

Default of the Debtor

• Duly given notice,
• Enforcement proceedings,
• The filing of a lawsuit is sufficient for default (Turkish Code of Obligations Article 117).

Element of Damage

There must be excess damage that cannot be covered by default interest.

Adequate Causation

There must be a causal link between the damage and the default that is “consistent with the ordinary course of life”.

Fault

Unless the debtor can prove that they are without fault, they are liable for the exceeding damage.

Proof of Supplementary Damage: Concrete vs. Abstract Method

View in Doctrine — Concrete Proof

According to the doctrine, if the creditor can substantiate the following losses, a surplus damage arises:

• Having to take out a loan,
• Payment of default interest or liquidated damages to third parties,
• the accumulation of penalties due to late payment of rent, tax, and social security (SGK) premiums,
• If there is a foreign exchange debt, the foreign exchange difference loss,
• Missing out on the investment opportunity.

The predominant view in the doctrine is that there is no presumption that “by virtue of life experience, every creditor invests the money”; the creditor must prove their actual loss.

Judgment of the Constitutional Court Dated 21.12.2017 and Numbered 2014/2267 — A Turning Point 

In this ruling, the Constitutional Court has fundamentally transformed the law of additional damages by determining a violation of the right to property.

AYM's Critical Findings:

1. Inflation and market interest rates, exchange rates and bond yields are running well above the statutory default interest rate.
2. This means that the debtor benefits from the delay, whilst the creditor suffers a loss.
3. The lengthy duration of proceedings causes a noticeable erosion in the creditor's assets.
4. Making it difficult for the creditor to produce concrete evidence for this reason upsets the fair balance.
5. Seeking tangible proof in every single case violates the right to property.
   
   

The CC's Decision:

Insisting on concrete proof is unfair.
If inflation + market interest rates > default interest, a presumption of compound damage arises.
Trial courts are obliged to accept the method of abstract proof.

This decision has changed the Court of Cassation's entire approach.

The Court of Cassation's New Method After 2017 (Especially 2023–2025 Case Law)

Supplementary Loss as Damages

The Court of Cassation now accepts the method of abstract proof based on the following criteria:

• High inflation,
• The increase in exchange rates,
• Market interest rates,
• Government bonds, Treasury bill yields,
• Increase in gold and deposits.

Therefore, the creditor can no longer:

“They don't have to say, ”If I had received the money, I would have put it into that investment.".

Current Court of Cassation Judgements on Inflation, Supplementary Loss and the Right to Proof (2024–2025)

Supreme Court 6th Civil Chamber, 13.01.2025, E. 2024/3534 – K. 2025/15

The court's dismissal of the case on the grounds of “no concrete proof” has been QUASHED. Ruling:

• In periods of high inflation, abstract proof must be taken as a basis.
• The expert witness must calculate the “economic basket”.
• The remaining difference after deducting the default interest is the compound damage.

Yargıtay 15. HD, 06.12.2018, E. 2018/3765 – K. 2018/4907

• With reference to the Constitutional Court decision, the requirement for concrete proof has been removed.
• If inflation and market interest rates are high, a surrogate loss is presumed.

Court of Cassation General Assembly of Civil Chambers, 19.06.2002, E. 2001/13-569 – K. 2002/534

• The effects of inflation are a “well-known and notorious fact”; they do not require further proof.

Yargıtay 15th Civil Chamber, 12.05.2016, E. 2016/1049 – K. 2016/2737

Old approach: High inflation does not shift the burden of proof.

(Note: This case law is no longer applied; it has been abandoned following the Constitutional Court's decision.)

Method of Calculation: Economic Basket

As of 2025, the method adopted by the Court of Cassation is as follows:

1. WPI/CPI annual rates
2. 3-month fixed-term deposit interest averages
3. Government bond yields
4. Dollar/Euro annual growth rates
5. The rise in gold prices
6. minimum wage increase rate (taken into account in some expert reports)

These data are averaged. If this rate is above the default interest rate, compound damages are calculated.

Prolongation of Proceedings and the Creditor's Rights

If the trial has lasted 3, 5, or even 10 years, the creditor:

1. A claim for supplementary damage can be brought: The action may be filed after the enforcement proceedings based on a court judgment have been completed.
2. There is a 10-year limitation period: It begins from the date on which the entire receivable is collected (Court of Cassation General Assembly of Civil Chambers, 09.12.2021, E. 2017/18-2800 – K. 2021/1629)
3. The debtor is obliged to prove their lack of fault: in practice, this is not possible; the presumption of fault is effectively in favour of the creditor.
4. If the debtor has obtained a “gain without delay”, this in itself constitutes a presumption

Frequently Asked Questions (FAQ)

Here you can find the answers to the most frequently asked questions about the supplementary damage lawsuit process. If you cannot find the answer you are looking for, please contact us for detailed information and support. You can get in touch.

Who can file a lawsuit for ancillary damages?

Every creditor whose monetary claim has fallen into default.

Is this lawsuit filed during the enforcement proceedings?

No. Usually, it is opened after collection.

Is tangible proof required?

No. Following the 2017 Constitutional Court ruling, abstract proof is sufficient.

Is the debtor's fault required?

Yes, but the debtor must prove that they are blameless (which is practically very difficult).

Does inflation alone give rise to compound damage?

According to the Court of Cassation's practice, yes, it is a presumption.

Can a lawsuit be filed even if default interest has been paid?

Yes, because supplementary damage is the portion exceeding default interest.

Is a different calculation made for commercial transactions?

No, the economic basket method applies to all monetary receivables.

If rent, tax, SSI, or loan debts are delayed, does this count as a loss?

Yes; they are typical examples of concrete proof.

How long does the court case take?

An average of 8–14 months, depending on the expert's calculation.

When does the limitation period begin?

The day all receivables are collected.

Result

Supplemental damage is an effective legal remedy used to prevent loss of rights arising particularly from high inflation and protracted proceedings. Following the Constitutional Court's decision of 2017, the Court of Cassation has abandoned its previous rigid approach requiring concrete proof; under current case law, where inflation and market interest rates exceed the default interest rate, a presumption of supplemental damage is accepted.

Munzam damage lawsuit in the 2024–2025 practice:

• Strong in favour of the creditor,
• Objectively calculated,
• which puts the debtor in a difficult position due to the presumption of fault,
• Guarantees the right to property

has become a mechanism.

Azel Law Firm as, we meticulously evaluate compound damage calculations to prevent our clients from suffering a loss of rights during protracted litigation or enforcement proceedings, and we apply the economic basket method and the most up-to-date case law to each file individually.