Prohibition of Lex Commissoria

The lex commissoria prohibition refers to the invalidation of contractual clauses agreed upon by the parties prior to the debt becoming due, which provide that in the event of non-performance, the asset pledged as collateral—or the pledged receivable—shall pass directly to the pledgee’s ownership. This prohibition, regulated under Article 873, paragraph two, of the Turkish Civil Code, aims to prevent the creditor from unfairly benefiting from the debtor’s economic vulnerability and to protect the debtor.

The concept of lex commissoria is a term originating in Roman law. While it had limited application during the classical period, it became widespread during the economic crises of the 3rd and 4th centuries AD. The prohibition introduced by Emperor Constantine in 326 AD sought to prevent debtors from being driven into bankruptcy and to block unilateral transfers of ownership. This historical context laid the foundation for the prohibition to evolve into a universal principle of pledge law.

Purpose and Scope of the Prohibition

The primary purpose of the lex commissoria prohibition is to protect the debtor who provides collateral as security. Pledge agreements are typically concluded between a creditor in a strong position and a debtor in a weaker position. Therefore, the law renders invalid any contractual provisions that stipulate the transfer of ownership of the pledged asset to the creditor in the event of non-payment, even before the debt becomes due, thereby establishing a legal safeguard mechanism.

The prohibition applies equally to both immovable and movable pledges. Movable security rights such as pledge over receivables are also covered by this prohibition. Any contractual provisions granting the pledgee direct ownership of the pledged receivable upon default are invalid. The pledgee may satisfy the debt only through the conversion of the pledged asset into cash; direct transfer of ownership is prohibited.

Pledge over Receivables and the Lex Commissoria Prohibition

Pledge over receivables is one of the voluntary movable security interests where the subject matter is a receivable right. This security relationship, regulated under Articles 954 and following of the Turkish Civil Code, is shaped by special rules concerning the assignment of receivable rights. The pledged receivable may consist of ordinary receivables not evidenced by a document, ordinary receivables evidenced by a document, or receivables attached to negotiable instruments. A pledge over receivables is established through a pledge agreement and the assignment or delivery of the instrument.

In pledge over receivables relationships, the lex commissoria prohibition invalidates any contractual clauses designed to benefit the secured creditor by granting it direct ownership of the receivable upon default. For example, a clause in a pledge agreement providing for the automatic transfer of the receivable to the pledgee upon default violates the lex commissoria prohibition. Such clauses are null and void and produce no legal consequences. The pledgee may be satisfied only through compulsory enforcement and conversion of the receivable into cash.

Commercial Practice and Exceptions

Law No. 6750 on Movable Pledge in Commercial Transactions (TİTRK) introduces special provisions addressing the widespread need for security in commercial practice. While this law expands the rights granted to the pledgee, the lex commissoria prohibition remains in force under this special legislation. TİTRK permits the pledgee to be satisfied only through sale or conversion into cash following default, not through direct transfer of ownership. However, in practice, some contracts are structured to produce effects similar to transfer of ownership, and the legal validity of such arrangements remains controversial.

As one of the fundamental protective principles of pledge law, the lex commissoria prohibition serves as a safeguard against the potential exploitation of debtors due to their economic weakness. This prohibition applies equally to both movable and immovable pledges and is also strictly enforced in the context of pledge over receivables. Contractual clauses granting the creditor direct ownership upon default are invalid. Since the pledgee may be satisfied only through conversion into cash and compulsory enforcement, the lex commissoria prohibition constitutes a fundamental limitation in private law designed to protect the debtor.