Constitutional Court Issues Pilot Decision: Excess Damage Provision Deemed Inadequate Against Inflation

Regarding excess damage claims, which have frequently come before the courts in recent years and have sometimes resulted in conflicting decisions, the Constitutional Court, in its pilot decision dated 8 July 2025, with application number 2024/41763, published on 29 September 2025 (“Decision”); stated that there is no effective legal remedy to compensate for the loss in value of receivables due to inflation and ruled that the applicant’s right to property and right to an effective remedy had been violated.

In the individual application subject to the Decision, the applicant claimed that, although the principal receivable was accepted in the action for recovery of debt he had filed, the loss in the real value of the receivable due to the increase in foreign exchange and gold prices and inflation was not compensated. As a result of the proceedings, the 3rd Civil Chamber of the Court of Appeal ruled that the excess damage must be supported by concrete facts beyond general economic adversities (the current inflation rate in the country, high and volatile exchange rates, deposit interest rates, and the decline in the purchasing power of money). However, it found that such proof had not been submitted in the present case and therefore upheld the first-instance and regional courts’ decisions rejecting the claim for excess damages. Following this Decision, the applicant filed an individual application with the Constitutional Court, claiming that his right to property and his right to an effective remedy had been violated.

Following its review of this application, the Constitutional Court stated in its Decision that the legislature had established a legal remedy in Law No. 3095 on Legal Interest and Default Interest (“Law No. 3095”) for the compensation and indemnification of the loss in value suffered by late payments due to the effects of inflation. However, it noted that the interest rates specified in Law No. 3095 were below the inflation rates and that, therefore, the applicant’s receivable had also suffered a loss of value due to inflation. Based on this, the Constitutional Court determined that the provisions of Law No. 3095 were not sufficient to prevent the loss of value of the receivable due to inflation.

With these assessments, the Constitutional Court reached the highly significant conclusion that the provisions on excess damages under the repealed Code of Obligations No. 818 and the current Turkish Code of Obligations No. 6098 do not ensure compensation for the loss in value of claims caused by inflation. Consequently, the Constitutional Court concluded that there is no effective legal remedy in our legal system to compensate creditors for the real loss of their claim. In this context, it ruled that the applicant’s property right, protected by Article 35 of the Constitution, and his right to an effective remedy, as set out in Article 40 of the Constitution, had been violated.

In addition to these findings, the Constitutional Court noted that applications alleging violations of property rights due to the loss in value of receivables against inflation have been steadily increasing and that numerous individual applications have been filed on this ground. Consequently, the Constitutional Court decided to apply the pilot decision procedure regulated in Article 75 of the Internal Regulations of the Constitutional Court. By postponing the review of similar applications concerning the structural problems addressed in this Decision for six months, it decided to notify the Grand National Assembly of Türkiye of the Decision for the resolution of the structural problem.

This pilot Decision of the Constitutional Court is important not only not only for establishing that claims for receivables suffer real losses when the interest rates under Law No. 3095 are applied, but also for revealing the absence of legal provisions or effective legal remedies to address this problem. With the Decision having been transmitted to the Grand National Assembly of Türkiye, it is anticipated that the legislature will enact new provisions in the coming period to safeguard receivables against inflation. Whether this legislative gap will be remedied in the near future is a matter that must be closely monitored.