| Mehmet Ali ÇAKI Lawyer | Müjde ÜNAL Trainee Lawyer |
ABSTRACT
In this article, the Constitutional Court’s annulment decision regarding Article 1 of Law No. 3095 is evaluated in terms of private law relations and the decision is examined with a critical perspective. While the sensitivity towards protecting the real value of receivables under high inflation conditions is deemed appropriate, it is emphasized that Article 1 of Law No. 3095 constitutes a general and supplementary norm based on the criterion of whether the interest rate has been agreed upon by the parties, rather than the source of the debt. In this context, it is our view that finding statutory interest unconstitutional only with respect to “debt relations not arising from contract” is incompatible with the wording and systematics of the norm, and that this approach leads to a partial annulment result through an interpretation exceeding the principle of severability of the norm.
Keywords: Statutory Interest, Default Interest, Principal Interest, Constitutional Court, Property Right, Norm Control, Partial Annulment, Interest Rate, Civil Transactions, Commercial Transactions.
INTRODUCTION
In our legal system, interest sometimes appears as the cost of using money, sometimes as a sanction linked to the debtor’s default, and sometimes as a supplementary instrument serving to compensate the creditor’s damage at a minimum level. For instance, while Article 1 of Law No. 3095 on Statutory Interest and Default Interest (“Interest Law”) regulates the statutory interest rate to be applied in cases where the interest rate has not been agreed upon by the parties, Article 2 of the Interest Law regulates the principles regarding default interest. This regulation bears a general and supplementary nature for the determination of interest rates and is applied together with the provisions of Turkish Code of Obligations No. 6098 (“TCO”) and Turkish Commercial Code No. 6102 (“TCC”). The position of the interest institution within the private law systematics is essentially shaped within the framework of the Interest Law provisions through the references made by the TCO and relevant provisions. In the TCO, interest is addressed within the scope of general provisions regarding monetary debts, particularly with Article 88 of the TCO concerning the interest rate, Article 120 concerning default interest, and Article 122 providing for the institution of excess (additional) damage that enables the compensation of damages not covered by default interest. With respect to commercial relations, interest presents a different appearance within the framework of TCC provisions. In commercial transactions, interest is evaluated considering elements such as the parties’ merchant status, the transaction’s relation to the parties’ commercial enterprises, and market conditions. In commercial law, interest is accepted as a natural consequence of economic risk and professional activity. Therefore, the commercial interest regime exhibits a structure that is more dynamic and sensitive to market realities compared to general debt relations. As can be determined, interest does not assume a single-type and uniform function in Turkish law, but undertakes different functions depending on the source of the debt relation, the scope of party will, and the nature of the relevant legal relation. Interest sometimes appears as a consideration determined by the parties, sometimes as the legal consequence of default, and sometimes as a supplementary element of the damage compensation system. In the face of this multi-layered normative structure, while subjecting interest to constitutional review and particularly evaluating the adequacy of statutory interest in terms of protecting the value of the receivable constitutes a positive approach in judicial terms, it is an undeniable reality that the position of the interest institution within the private law systematics and its relationship with other compensation mechanisms must be taken into consideration together.
I. Subject, Scope, and Reasoning of the Constitutional Court Decision
The decision of the Constitutional Court (“CC”) dated 22.07.2025 and numbered E.2024/24, K.2025/164 concerns the constitutionality of Article 1 of the Interest Law with respect to the Constitution of the Republic of Turkey No. 2709 (“Constitution”). The review was conducted within the scope of concrete norm control brought before it through the objection procedure, and the application was made by Kahramanmaraş 3rd Administrative Court. The dispute at issue concentrates on whether the statutory interest rule to be applied due to late payment of a compensation receivable arising from the use of public power protects the value of the receivable or not. The rule subject to objection regulates the statutory interest rate to be applied in cases where the interest rate has not been agreed upon by the parties and determines the minimum interest yield that the creditor may request in case of default in monetary debts. The CC conducted its review essentially within the framework of the property right secured under Article 35 of the Constitution and evaluated whether the economic value of the receivable was protected. In the decision, Turkey’s current high inflationist economic conditions were particularly emphasized, and it was stated that the loss of value suffered by money over time has a direct effect on the creditor’s property right. The CC expressed that a person who cannot collect their receivable on time is deprived not only of a right of claim against the debtor but also of the economic opportunities provided by the money, and accepted that this situation may lead to a serious decrease in the real value of the receivable. In this context, the Court characterized interest as “the price of money” and drew attention to its importance in terms of the function of compensating the value loss of the receivable. In light of these evaluations, the CC concluded that the statutory interest rate stipulated in Article 1 of the Interest Law is not suitable for protecting the value of the receivable with respect to debt relations not arising from contract. In this framework, the court ruled that the rule violates the property right with respect to the aforementioned debt relations and issued an annulment decision. However, no constitutional violation was determined regarding the application of the rule with respect to debt relations arising from contract, and the annulment decision was limited to this field. On the other hand, the CC decided that the annulment provision shall enter into force nine months after the date of 01/12/2025 when it was published in the Official Gazette, on the grounds that the immediate entry into force of the annulment decision may create a legal vacuum. In this framework, Article 1 of the Interest Law will remain in force until 01/09/2026, and during this period, the application of the current regulation regarding the statutory interest rate will continue.
II. Limits of the Constitutional Court’s Authority to Evaluate Statutory Interest
The CC’s norm control authority is limited to reviewing the conformity of laws with the Constitution pursuant to Article 148 of the Constitution. This authority does not grant the CC the possibility of making a new normative regulation by replacing the legislator or reinterpreting the function of an existing rule in the legal system, because by its nature the CC is not a court of cassation and conducts norm control based on fundamental rights and freedoms. In doctrine, it is clearly stated that the basic function of constitutional jurisdiction is not to substitute the legislative organ’s discretion but to control the conformity of the norm with the Constitution.
Partial annulment of a legal provision is possible only if the norm is severable. Severability means the existence of sub-regulations that can be applied independently from each other in the wording of the norm or within the framework of mandatory meaning. In cases where such a distinction is not found in the norm, limiting the annulment decision only to certain fields of application of the norm results not in a partial annulment in the classical sense but in the reconstruction of the norm by the CC. In doctrine, it is particularly emphasized that such interventions are incompatible with the negative legislator nature of constitutional jurisdiction. When Article 1 of the Interest Law is examined, it is understood that the criterion determining the field of application of statutory interest is not the source of the debt relation but whether the interest rate has been determined by contract. Indeed, the article includes the expression “In cases where interest must be paid according to the Code of Obligations and the Turkish Commercial Code, if the amount has not been determined by contract”; the application of statutory interest has been linked to whether the parties have expressed their will regarding the interest rate, not to whether the debt arises from contract. This style of regulation indicates a conscious preference of the legislator. The legislator has established a system based on the existence or absence of party will rather than differentiating the interest regime according to the source of the debt. Statutory interest has been stipulated to be applied in all cases where the interest rate has not been determined by contract. Therefore, Article 1 of Law No. 3095 is a general and abstract supplementary norm covering both debt relations arising from contract and those not arising from contract. In this respect, it is our opinion that the wording of the norm does not lead to the conclusion that there is a separate and independent field of regulation with respect to “debt relations not arising from contract”. In this framework, the CC’s annulment of Article 1 of the Interest Law only with respect to “debt relations not arising from contract” does not appear as a partial annulment in the classical sense. Because what is annulled here is not a specific phrase contained in the text of the norm or a clearly separable regulation, but a practice created by the court through interpretation. In doctrine, it is stated that annulments made through such distinctions not explicitly contained in the norm bring constitutional jurisdiction de facto closer to the position of a positive legislator. In this context, in the decision under review, the CC’s finding that statutory interest is unconstitutional with respect to “debt relations not arising from contract” while accepting that the same norm is constitutional with respect to debts arising from contract emerges as a distinction based on the Court’s economic evaluation rather than the structural features of the norm. However, the erosive effect of high inflation conditions on the real value of the receivable does not depend on whether the debt arises from contract or not. In debt relations arising from contract as well, if the interest rate has not been determined by the parties, the creditor is exposed to the same real value loss. Therefore, it is our opinion that addressing the effect of inflation on purchasing power as a constitutional problem only with respect to debt relations not arising from contract is not consistent from an economic perspective either. What is decisive in constitutional review is not only the economic consequences of the norm but also the legal structure of the norm and the relationship it establishes with the legislator’s will. In this case, the relevant decision of the CC is also open to discussion in terms of the limits of norm control authority. Particularly, resorting to partial annulment through a distinction not contained in the wording of the norm necessitates the doctrinal critique of the decision to the extent that it is incompatible with the negative legislator nature of constitutional jurisdiction.
III. Evaluation of the Concept of “Debt Relations Not Arising from Contract” in Light of the Statutory Interest – Voluntary Interest Distinction
Interest is subject to various distinctions according to different criteria in Turkish law. One of these distinctions is the voluntary (contractual) interest – statutory interest distinction, which is made according to the source of interest and accepted as established in doctrine. Voluntary interest refers to the interest agreed upon by the parties with their free will within the scope of the legal transaction, while statutory interest refers to cases where the interest debt arises not from party will but directly from the law. Indeed, as emphasized in doctrine, the fact that the interest debt arises from the law does not necessarily require that the debt itself be based on a non-contractual debt relation. On the contrary, in monetary debts arising from contract as well, the parties may not have agreed upon the interest rate. In this case, the interest debt is based not on the contract but on the supplementary provisions of the law. In this context, statutory interest emerges as a type of interest that can also be applied in debt relations arising from contract and replaces contractual interest when it has not been agreed upon. At this point, it should be particularly noted that in Turkish law, the term “statutory interest” is not always used in doctrine to correspond to principal or default interest. Kaya addresses statutory interest in terms of the source of the interest debt and explicitly states that within this scope, statutory interest is also used in the sense of principal interest. Similarly, Demir also distinguishes interest types as principal interest and default interest, and in this distinction, draws attention to the fact that the term “statutory interest” is used in the sense of principal interest (Demir, Interest, p. 504–505). This approach shows that the concepts of statutory interest and principal interest are intertwined in doctrine and that both concepts cannot be absolutely distinguished. This framework is also determinative for evaluating the legal nature of Article 1 of the Interest Law. The aforementioned provision, with the expression “in cases where interest must be paid according to the Code of Obligations and the Turkish Commercial Code”, primarily presupposes the existence of an existing interest debt and regulates the rate to be applied in cases where the interest rate has not been agreed upon by the parties. In this respect, Article 1 regulates not a sanction interest specific to the state of default but the statutory interest running on the principal in monetary debts where the interest rate has not been agreed upon, that is, principal interest. Therefore, it is not dogmatically possible to link the interest debt arising based on Article 1 of the Interest Law, which essentially bears the nature of a regulation regarding principal interest, to a debt relation “not arising from contract” in terms of the source of the debt. Because principal interest can only be in question if there is an existing principal debt. It is also common for this debt to be based on a contractual relation in most cases. The fact that the interest rate has not been agreed upon by the parties does not eliminate the contractual character of the debt, nor does it turn this debt into a non-contractual debt. At this point, it is seen that the criterion of “debt relations not arising from contract” taken as basis in the CC’s annulment decision also ignores the conceptual structure used to explain interest in law. Treating statutory interest as a type of interest specific only to non-contractual debt relations and establishing an annulment provision by making such a distinction triggers a conceptual debate. Therefore, the CC’s essentially addressing statutory interest as a limited constitutional problem with respect to “debt relations not arising from contract” is not consistent with either the distinctions regarding interest types or the systematics of the Interest Law.
IV. Effect of the Annulment Decision on Principal and Default Interest in Civil and Commercial Transactions
The evaluation of the practical effects of the CC’s decision annulling Article 1 of the Interest Law with respect to “debt relations not arising from contract” requires that the distinctions accepted in private law among interest types be taken as basis first. Because interest is not a single-type institution for either the law of obligations or commercial law, but is subject to different legal regimes depending on the nature of the debt, the status of the parties, and the period in which the interest is applied.
A. Principal and Default Interest Regime in Civil Transactions
1. Principal (Statutory) Interest in Civil Transactions
According to Article 88 of the TCO, in civil transactions, the principal interest rate can generally be freely agreed upon by the parties. However, this freedom is not absolute and has been limited by a clear upper limit by the legislator. According to the aforementioned provision, the principal interest rate agreed upon by contract cannot exceed fifty percent of the current statutory interest rate. This regulation is of mandatory nature and aims to prevent the debtor from being placed under an excessive interest burden. If it has not been agreed upon, Article 1 of the Interest Law comes into play. According to the aforementioned provision, in cases where interest must be paid according to the TCO, if the interest rate has not been determined by contract, statutory interest is applied. In this context, it should be particularly noted that with the Presidential Decision dated 20/5/2024 and numbered 8485, the statutory interest rate to be applied pursuant to Article 1 of the Interest Law has been determined as 24% per annum as of 1/6/2024. Therefore, at the date the annulment decision was given, the statutory principal interest rate applied in monetary debts arising from contract in civil transactions where the interest rate has not been agreed upon by contract is 24%. Based on this rate, the maximum principal interest rate that can be agreed upon by contract in civil transactions pursuant to Article 88 of the TCO is 36%. Interest conditions exceeding this limit are invalid due to the mandatory nature of Article 88 of the TCO, and the legal limit is applied instead of the exceeding part.
2. Default Interest in Civil Transactions
Default interest in civil transactions is a type of interest that comes into play when the debtor does not perform a due debt on time and where the sanction nature is predominant. Default interest is regulated within the framework of Article 120 of the TCO and Article 2 of the Interest Law. According to Article 120 of the TCO, the default interest rate that can be agreed upon by contract is also not unlimited. Accordingly, the default interest rate cannot exceed one hundred percent of the current statutory interest rate. In this framework, given that the statutory interest rate is 24% at present, the maximum default interest rate that can be agreed upon by contract in civil transactions is 48%. In cases where the default interest rate has not been agreed upon in the contract, according to Article 2 of the Interest Law, default interest is calculated based on the statutory interest rate (24%) as a rule.
3. Effect of the Annulment Decision on Civil Transactions
It is our determination that the CC’s decision annulling Article 1 of the Interest Law with respect to “debt relations not arising from contract” is apt to produce controversial results in civil transactions, particularly with respect to the principal interest regime. Because Article 1 is also applied in cases where the interest rate has not been agreed upon in monetary debts arising from contract in civil transactions. Therefore, the annulment decision gives rise to the debate of whether it will be interpreted to include statutory principal interest under debts not arising from contract in civil transactions if the parties have not agreed upon an interest rate in the contract. However, with respect to the default interest regime, it is our opinion that it is not possible to speak of a direct effect of the annulled provision since default interest has been separately regulated both under Article 120 of the TCO and Article 2 of the Interest Law.
CONCLUSION
The CC’s annulment decision regarding Article 1 of the Interest Law is based on a justified sensitivity in terms of protecting the real value of the receivable and the effective guarantee of the property right. Under high inflation conditions, the determinations that merely protecting monetary receivables that cannot be collected for a long time in nominal terms is not sufficient and that the interest institution is a supplementary instrument preserving the value of the receivable constitute an economic reality. However, what is decisive in terms of the legitimacy and limits of constitutional review is not only the economic effects of the norm but also the legal structure of the norm, its function within the system, and the relationship it establishes with the legislator’s will. From this perspective, it is seen that Article 1 of the Interest Law is a clear and general regulation that links its field of application not to the source of the debt but to the criterion of whether the interest rate has been agreed upon by the parties. There is no distinction in the wording of the norm or within the framework of mandatory meaning between debt relations “arising from contract” and “not arising from contract”. Therefore, the CC’s resorting to partial annulment by finding statutory interest unconstitutional only with respect to “debt relations not arising from contract” can be characterized as an interpretive activity exceeding the principle of severability of the norm. The annulled field is not a specific regulation contained in the norm text but an abstract field of application created by the court in light of economic evaluations. This situation points to a result incompatible with the negative legislator nature of constitutional jurisdiction. On the other hand, given the established views in doctrine that statutory interest, particularly in the context of Article 1 of the Interest Law, bears the nature of principal interest, it is also not appropriate dogmatically to place the debts arising based on this interest in a debt category “not arising from contract”. Because principal interest, in most cases, indicates the existence of a contractual monetary debt, and the fact that the interest rate has been determined by the law does not eliminate the contractual character of the debt.
1 Constitutional Court, decision dated 22.07.2025, E.2024/24, K.2025/164, Official Gazette, dated 01.12.2025 and numbered 33094.
2 Gözler, Kemal; General Theory of Constitutional Law, Ekin Publishing, Bursa, 2019, Volume II, p. 1540 et seq.; Kaboğlu, İbrahim Ö.; Constitutional Jurisdiction, İmge Bookstore, Ankara, 2018, p. 233 et seq.
3 Gözler, Kemal; General Theory of Constitutional Law, Ekin Publishing, Bursa, 2019, Volume II, p. 1555; Kaboğlu, İbrahim Ö.; Constitutional Jurisdiction, İmge Bookstore, Ankara, 2018, p. 245 et seq.
4 Yılmaz, Safiye; Limits of the Constitutional Court’s Norm Control Authority, Istanbul University Institute of Social Sciences, Department of Public Law, Doctoral Thesis, Istanbul, 2016.
5 Gözler, Kemal; General Theory of Constitutional Law, Ekin Publishing, Bursa, 2019, Volume II, p. 1560 et seq.
6 Kaboğlu, İbrahim Ö.; Constitutional Jurisdiction, İmge Bookstore, Ankara, 2018, p. 255 et seq.
7 Gözler, Kemal; General Theory of Constitutional Law, Ekin Publishing, Bursa, 2019, Volume II, p. 1570 et seq.
8 Arslan, Kaya; Interest in Civil and Commercial Transactions, My Articles I, Istanbul, 2012, p. 10.
9 Demir Nevin; “Application Field and Critique of Law No. 3095 on Statutory Interest and Default Interest” İBD, Vol. 60 No. 6-8-9, July August September 1986, p. 500-508.
10 Ülgen, Hüseyin-Helvacı Mehmet- Kaya, Arslan-Nomer Ertan, N. Füsun, Commercial Enterprise Law, Vedat Publishing, November, 2022, p. 27.
11 Central Bank of the Republic of Turkey. (2025). Rediscount and advance interest rates. https://www.tcmb.gov.tr/wps/wcm/connect/TR/TCMB+TR/Main+Menu/Temel+Faaliyetler/Para+Politikasi/Reeskont+ve+Avans+Faiz+O ranlari, (Access date: 14 December 2025).