Turkish Guarantors in English-Law Financings: Suretyship Formalities, Spousal Consent and Enforcement

Lenders in London finance Turkish groups in several ways. A bank or credit fund may lend to a Turkish company directly, or to an English or Dutch holding company that owns Turkish operating subsidiaries, or join a syndicate that lends to a Turkish borrower. The facility agreement is usually governed by English law. The credit support comes from Türkiye: a guarantee from the Turkish parent or operating companies, and often a personal guarantee from the founder who controls the group.

English lawyers draft these guarantees as they would draft any other. The document is called a guarantee and indemnity. The guarantor is described as a primary obligor and answers for all sums due under the finance documents. The parties often sign electronically on the day of closing. Under English law that works. In Türkiye the same document can fail, in whole or in part, for reasons that have no English counterpart. The guarantor may not have written the maximum amount by hand, or the guarantor's spouse may not have consented in writing beforehand. The guarantee may have been signed electronically. A Turkish subsidiary may have guaranteed a debt in a way that Turkish company law does not allow.

These points matter when the borrower defaults. The guarantor's assets are usually in Türkiye, so a London judgment has to be enforced through the Turkish courts, and the guarantor will raise every Turkish-law objection available. This article explains those objections and how far a choice of English law answers them. It also explains how to take guarantees from Turkish guarantors so that they hold in both systems. It builds on our articles on English-law debt in Turkish restructurings and on parallel proceedings between Istanbul and London.

1. One guarantee, two legal systems

English law and Turkish law both recognise a promise to answer for another person's debt, and both distinguish it from a promise that stands on its own. The vocabulary differs. English law contrasts a guarantee, under which the guarantor's liability is secondary and follows the borrower's, with an indemnity, under which the promisor takes on a primary liability of its own.

Turkish law draws the line between the suretyship contract (kefalet), governed by Articles 581 to 603 of the Turkish Code of Obligations No. 6098 (TBK), and the contract of guarantee (garanti sözleşmesi). The latter rests on Article 128 TBK, under which a person who promises the act of a third party must make good the loss if the act does not happen. A suretyship is accessory to the main debt. A guarantee in the Turkish sense is independent of it.

The parties to an English-law facility can choose English law for the guarantee, and a Turkish court will respect that choice. Article 24 of Law No. 5718 on International Private and Procedural Law (MÖHUK) subjects contractual obligations to the law chosen by the parties. The choice does not end the analysis. The same statute preserves Turkish rules of direct application whatever the governing law (Article 6) and deals with the form of legal acts separately (Article 7). It refers capacity and the general effects of marriage to the law of nationality (Articles 9 and 13). When a foreign judgment is enforced in Türkiye, Article 54 adds a public policy control. A Turkish guarantor sued on an English-law guarantee will use all of them.

Real security is a separate matter. A mortgage over land in Türkiye or a pledge over movables located there is governed by Turkish law as the law of the place where the asset is, under Article 21 MÖHUK, whatever law governs the facility. This article deals with personal guarantees, which the parties can subject to English law, and not with the Turkish security package that often sits beside them.

2. What English law asks of a guarantee

English law asks little. Section 4 of the Statute of Frauds 1677 still applies to guarantees, although it has been repealed for the other contracts it once covered. It prevents an action on a promise to answer for the debt, default or miscarriage of another person unless the agreement, or a note or memorandum of it, is in writing and signed by the guarantor or by someone it has authorised. In Actionstrength in 2003, Lord Hoffmann explained that the aim is to protect people from liability based on oral statements that were ill-considered, ambiguous or invented.

The requirement is easy to meet. In Golden Ocean Group Ltd v Salgaocar Mining Industries in 2012, the Court of Appeal held that a guarantee could be contained in a chain of emails. A first name typed at the end of the last email could be a signature. It was common ground in that case that an electronic signature is sufficient.

An indemnity is outside section 4. In Associated British Ports v Ferryways NV in 2009, the Court of Appeal observed that the question whether a document is a guarantee or an indemnity arises mostly because the law treats the two differently on formality. Which one a document creates depends on the words of the particular promise.

English drafting reflects this. A typical guarantee in a facility agreement is called a guarantee and indemnity and describes the guarantor as a primary obligor as well as a guarantor. It covers all sums due under the finance documents without a cap and is often executed as a deed. It also contains a waiver of defences clause. Under that clause, amendments to the facility, time given to the borrower and releases of other security do not discharge the guarantor. None of this causes difficulty in England. The difficulties start when the same document is read in Türkiye.

3. What the Turkish Code of Obligations requires of a suretyship

Article 583 TBK makes a suretyship invalid unless it is made in writing and states the maximum amount of the surety's liability and the date of the suretyship. The surety must also write some of it in his or her own hand: the maximum amount, the date and, where the surety assumes joint and several liability, words to that effect. In practice the guarantor writes the amount, the date and the words "müteselsil kefil" (joint and several surety) next to the signature.

The same form applies to a special authority to stand surety on someone else's behalf, and to a promise to give a suretyship in the future, under Article 583(2). A power of attorney under which an agent signs a guarantee for a Turkish individual must itself contain the handwritten elements. Later changes that increase the surety's liability have no effect unless they are made in the same form, under Article 583(3).

The sanction is invalidity. A suretyship with no stated cap does not meet Article 583, and a guarantee of "all sums due" under a revolving facility is the obvious example. Where a cap is stated, Article 589 limits the surety's liability to it in every case. The cap should therefore cover interest, default interest and enforcement costs as well as principal.

Article 589 also contains default rules that an English drafter would not expect. Unless the contract provides otherwise, the surety answers only for debts that arise after the suretyship is concluded. By default, the surety also answers only for contractual interest of the past year and the current one. Some clauses are void whatever the parties agree. Under Article 589, an undertaking by the surety to answer for loss caused by the invalidity of the main obligation, or for a contractual penalty, has no effect. An English indemnity against the invalidity of the guaranteed obligations sits uneasily with that rule.

These requirements apply to a company that gives a suretyship as well as to an individual, because the statute does not distinguish between them. A 2022 study of Article 583 takes the view that where a representative signs for the surety, the representative must write the required elements by hand. For a Turkish company, that means the person who signs for it under its registered signature authority.

4. A Turkish guarantee cannot be signed electronically

The electronic signing that Golden Ocean accepts in England is not available for most guarantees in Türkiye. Article 5 of the Electronic Signature Law No. 5070 gives a secure electronic signature the same legal effect as a handwritten one. It then excludes legal acts that the law subjects to official form or a special ceremony. It also excludes security agreements (teminat sözleşmeleri), other than bank letters of guarantee and surety bonds issued by insurers established in Türkiye. Those two exceptions were added in 2016 and 2021. A suretyship given by an individual or a company to a lender falls outside both.

The handwriting requirement in Article 583 points the same way, since a typed name on a PDF is not the surety's own handwriting. A guarantee that may have to be enforced in Türkiye should be signed on paper in wet ink, with the handwritten elements completed by the guarantor at signing. The lender or its agent should keep the original. A scanned copy will serve in London. It may not be enough before an Istanbul enforcement office or court.

5. Spousal consent

Article 584 TBK adds a requirement that surprises most foreign lenders. A married person may stand surety only with the written consent of his or her spouse. The rule does not apply where a court has ordered the spouses' separation or where one of them has a legal right to live apart. The consent must be given before the suretyship is concluded or, at the latest, at the same time, and consent given afterwards does not cure the defect. Under Article 584(2), fresh consent is needed for later changes that increase the amount or turn an ordinary suretyship into a joint and several one. The same applies to changes that substantially reduce the protections available to the surety.

The rule protects the family, and it applies only to individuals. A company that gives a suretyship needs no spousal consent.

In 2013, Law No. 6455 added a third paragraph to Article 584 that removes the requirement in several cases. The one that matters in finance transactions covers suretyships given in connection with a registered commercial enterprise or a commercial company. The surety must be the owner of the enterprise or a partner or manager of the company. A founder who guarantees a loan to the Turkish company he or she owns or manages may well fall within it.

The limits of the exception are not settled. Turkish authors disagree on whether the guarantor must appear in the trade registry as a partner or manager. They also disagree on whether the exception covers only the debts of the guarantor's own company, or also suretyships that concern the company indirectly, such as a guarantee for a supplier or for another business whose credit helps the guarantor's company. The usual structure of a London financing sits on that line. The borrower is often a foreign holding company, not the Turkish company that the founder manages. A shareholder of a Turkish joint stock company who is not on its board will not usually appear in the trade registry as a shareholder at all. We have not found a Court of Cassation decision that settles how the exception applies to a guarantee of a foreign group company's debt. The safe course is to obtain the spouse's consent whenever the guarantor is married, even where the exception arguably applies.

The consent should be a separate signed document, dated no later than the guarantee, that identifies the guarantee and its maximum amount. The lender should also record how it checked the guarantor's marital status, since the guarantor may later argue that consent came from the wrong person or came too late. A Turkish population register extract (nüfus kayıt örneği) shows marital status and is the document usually requested.

English law has its own protection for spouses, and it applies at signing. In Royal Bank of Scotland v Etridge (No 2) in 2001, the House of Lords held that a lender is put on inquiry whenever the relationship between the surety and the debtor is non-commercial, as where a wife stands surety for her husband's debts. The same applies where she guarantees the debts of a company whose shares she and her husband hold, even if she is a director. The lender must then communicate with her directly and obtain written confirmation from a solicitor acting for her that the nature and practical implications of the transaction have been explained to her. If it does not, it is treated as having notice of any claim that her agreement was procured by undue influence or misrepresentation. In Waller-Edwards v One Savings Bank in 2025, the Supreme Court applied the same approach to a non-commercial loan made partly for a couple's joint purposes and partly for one of them: the lender is put on inquiry whenever, on the face of the transaction, one party stands surety for the other to more than a minimal extent. None of this applies to commercial guarantees, such as a guarantee given for a fee or by one group company for another.

The two systems meet when a lender asks the spouse to sign a guarantee instead of a consent. Under Turkish law the spouse then becomes a surety in his or her own right, subject to Article 583, and as a married surety needs the other spouse's written consent under Article 584 unless the 2013 exception applies to the spouse. Under English law the lender is put on inquiry and should follow the Etridge steps. A consent under Article 584 is usually the simpler document.

6. A different label does not help an individual guarantor

English drafters reach for the indemnity when a guarantee looks vulnerable, and Turkish law anticipated that. Article 603 TBK applies the rules on form, on capacity to stand surety and on spousal consent to contracts by which an individual gives personal security under another name. If Turkish law applies, an individual's guarantee and indemnity, primary obligor undertaking or Turkish garanti will be tested against Articles 583 and 584.

There is one recognised exception. In 2018 the Grand General Assembly of the Court of Cassation on the Unification of Judgments decided, by a majority, that Article 584 does not apply to an aval despite Article 603. An aval is the guarantee written on a bill of exchange or a promissory note. The majority relied on the different purpose of the aval and on the negotiability of the instrument. A note could not carry evidence of each avalist's marital status and the spouse's consent without losing its ability to circulate. A promissory note with an aval is sometimes used in Turkish practice alongside a suretyship. It is a Turkish instrument with its own formal requirements and its own enforcement route, and it does not replace a properly executed guarantee.

A company is in a different position. Article 603 is limited to individuals, so a Turkish company can give an independent guarantee under Article 128 TBK without the formalities of Article 583. The undertaking must be independent of the borrower's debt in substance. Under Article 19 TBK, the type and content of a contract are determined by the parties' real common intention, not by the words they used. A document that refers to the borrower's obligations and makes the company's liability depend on them is likely to be treated as a suretyship, whatever it is called.

7. An individual's suretyship ends after ten years

Article 598 TBK contains a rule with no English parallel. Every suretyship given by an individual ends automatically ten years after it was concluded. A guarantee expressed to last longer can be enforced only for the ten-year period, unless it has been extended or replaced by a new one. The surety can extend it for a further period of up to ten years by a written declaration in the form required for the suretyship. That declaration cannot be made earlier than one year before the guarantee expires.

Many bank facilities are shorter than ten years. Infrastructure, real estate and shipping financings often are not, and guarantees are carried from one facility to the next through amendments and refinancings. A lender that relies on an individual's guarantee should note the ten-year date from the original signing, not from the latest amendment.

8. How far a choice of English law helps

A lender can argue that none of these Turkish rules applies to a guarantee governed by English law. Part of that argument is strong. The rest depends on how a Turkish court characterises each rule, and there is little authority.

Form comes first. Article 7 MÖHUK allows a legal act to take the form required by the law of the country where it is made or by the law that governs its substance. An English-law guarantee that satisfies section 4 of the Statute of Frauds meets the second alternative, wherever it was signed. On that reasoning, a missing handwritten cap and an electronic signature do not invalidate it. The counter-argument is that Article 583 TBK and Article 5 of Law No. 5070 are rules of direct application, which Article 6 MÖHUK preserves whatever the governing law. Their protective purpose supports that view, while the open wording of Article 7 points the other way.

Spousal consent is harder. A Turkish court could see it in one of four ways. As a limit on a married person's capacity to stand surety, which is how one recent study presents it, it would be governed by the guarantor's national law under Article 9 MÖHUK. As one of the general effects of marriage, it would be governed by the spouses' common national law under Article 13(3). As a rule of direct application, it would apply under Article 6. Only if it were treated as part of the substance of the contract would English law, as the chosen law, exclude it.

For a Turkish guarantor married to a Turkish national, the routes through Articles 6 and 13 lead back to Article 584. The capacity route does too, with one qualification. Article 9(2) MÖHUK binds a person who lacks capacity under his or her national law if the act was done in a country under whose law the person had capacity. The rule excludes acts of family and succession law and rights in rem over immovables abroad. A guarantee signed in London is a commercial act, so the place of signing may matter.

The ten-year limit in Article 598 is easier for the lender. It concerns the duration of the surety's obligation, which is part of the substance of the contract and governed by English law as the chosen law, unless a court treats it as a rule of direct application.

We have not found a reported decision of the Court of Cassation that applies these rules to an English-law guarantee. The questions are open, and a guarantor sued in Türkiye will raise them. Each one adds time and cost to enforcement, even where the lender eventually wins.

The same uncertainty returns when an English judgment on the guarantee is enforced. Article 54(1)(c) MÖHUK requires that the judgment is not clearly contrary to Turkish public policy. In our view, a judgment that holds a guarantor liable under English law without spousal consent should not fail that test merely because Turkish law would have decided differently. The guarantor will argue that it does, and the outcome is not certain.

The practical lesson is simple. Complying with Articles 583 and 584 costs a lender a meeting, some paper and a signature from the guarantor's spouse. Relying on English law to escape them can cost years.

9. Guarantees from Turkish companies

A Turkish company that guarantees an English-law facility raises different questions. The first is execution. The Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009 adapt the Companies Act 2006 for this case. Under English law, an overseas company can execute a document in any manner permitted by the law of its place of incorporation. For a Turkish joint stock or limited company, that means signature by the persons whose authority is registered in the trade registry and shown in its signature circular, usually supported by a board resolution approving the guarantee. If the company's undertaking is a suretyship, the signatory completes the handwritten elements required by Article 583.

The second question is whether the company may give the guarantee at all. Article 395(3) of the Turkish Commercial Code No. 6102 (TTK) allows companies in a group to stand surety for and give guarantees to one another, subject to Article 202. Article 202 forbids a dominant company from using its control to make a subsidiary give a suretyship, guarantee or aval that causes it a loss. The exception is where the loss is actually compensated within the same financial year. It also applies where, by the end of that year, the subsidiary receives an equivalent claim that states how and when the loss will be compensated. If neither happens, each shareholder of the subsidiary can claim compensation for the subsidiary's loss from the dominant company and from those of its directors who caused it. Creditors can ask for the loss to be paid to the subsidiary even if it is not bankrupt. Where the dominant company is based abroad, the claim is brought before the commercial court where the subsidiary has its seat.

Article 202 does not make an upstream guarantee void. It allocates liability, and it gives minority shareholders and creditors of the Turkish subsidiary a claim that a lender would rather not see. No compensation is due if it is shown that the board of an independent company, acting in good faith and with prudent care, could also have entered into the transaction in the same or similar circumstances. A guarantee given for no benefit to the subsidiary will struggle to pass that test. A guarantee fee, a share of the loan proceeds or another documented benefit makes it easier. Where a fee is charged between related companies, Article 13 of the Corporate Tax Law No. 5520 requires it to be set at arm's length, and the calculations behind it must be kept as evidence.

Article 380 TTK is stricter. A joint stock company may not give an advance, a loan or security to another person for the purpose of acquiring its own shares, and a transaction of that kind is void. There are narrow exceptions for transactions within the business of credit and financial institutions and for the acquisition of shares by employees. In an acquisition financing, a guarantee from the Turkish target for the debt that paid for its own shares falls within the prohibition. A lender that wants credit support from the target after the acquisition needs advice on how the rule applies to the specific structure before relying on it.

Article 395(2) TTK adds that a company may not give a suretyship, guarantee or security for those of its board members who are not shareholders. The same applies to their relatives listed in Article 393 who are not shareholders. A personal loan to a director that the company guarantees is the case to watch.

These rules belong to the law that governs the Turkish company itself. Article 9(4) MÖHUK subjects a legal person's capacity to the law of its statutory seat, and Article 6 preserves Turkish rules of direct application. A lender should assume that a Turkish court will apply them to a Turkish guarantor whatever law governs the guarantee.

Turkish foreign exchange rules are less of an obstacle than lenders sometimes expect. Under Article 18 of Decree No. 32 on the Protection of the Value of the Turkish Currency, residents of Türkiye are free to give guarantees and suretyships to persons abroad, whether the debtor is in Türkiye or abroad, so the guarantee itself needs no approval. The restrictions fall on borrowing. Under Article 17, a resident of Türkiye without foreign currency income may not borrow in foreign currency from abroad unless an exception applies, such as an outstanding loan balance of at least USD 15 million, and the loan must be used through a bank. These rules concern a Turkish company that borrows directly, not an English holding company that borrows and takes guarantees from Türkiye.

10. When Turkish law governs the guarantee

A lender may prefer a guarantee governed by Turkish law, or a Turkish-law guarantee alongside the English one, so that it can be pursued in Türkiye without first obtaining a judgment abroad. Turkish law then governs the whole relationship, and several default rules apply.

Under Article 7 TTK, a surety for a commercial debt is jointly and severally liable with the debtor, but default interest does not run against the surety until the surety has been notified of the non-payment. Under Article 586 TBK, the creditor can pursue a joint and several surety before the debtor, but only if the debtor is in default and a demand has failed, or the debtor is clearly insolvent. If the debt is also secured by a possessory pledge or a pledge of receivables, the creditor must realise that pledge first. That step can be skipped if a court has found in advance that the pledge will not fully cover the debt, or if the debtor is bankrupt or has been granted a concordat moratorium.

Article 594 requires the creditor to notify the surety when the debtor is six months late with principal or with interest for a half-year period. If the debtor goes bankrupt or applies for concordat, the creditor must register its claim and inform the surety. A creditor that fails to do so loses its rights against the surety to the extent of the surety's resulting loss. Under Article 590, the surety cannot be pursued before the agreed maturity date, even where the debtor's bankruptcy has accelerated the main debt.

An English facility has its own default interest clause and notice provisions. A lender with a Turkish-law guarantee should build these Turkish steps into its default procedure, because notices sent to the borrower do not necessarily satisfy them.

Currency needs attention as well. If a Turkish-law guarantee is expressed in euros, Article 99 TBK allows the surety to pay in Turkish lira at the rate on the day of payment, unless the contract requires payment in the foreign currency itself. If the debt is not paid when due, the creditor may demand payment in that currency or in lira at the rate on either the due date or the actual payment date. A lender that wants to be paid in euros should say so expressly.

11. Amendments, refinancing and the guarantor

Facilities change during their life. They are increased, extended, repriced and replaced. English law deals with this through the guarantee's wording. In Triodos Bank NV v Dobbs in 2005, the guarantee allowed the lender to agree amendments and variations without referring to the guarantor. The Court of Appeal held that this covered genuine variations within the general purview of the original guarantee, but not a new facility that was in substance a different obligation. The guarantor of the original loans was not liable for a later facility that lent new money for a different purpose.

Turkish law reaches a similar result by a stricter route. A later change that increases the surety's liability has no effect unless made in the form of Article 583, with a new handwritten amount if the cap rises. Under Article 584(2), it also needs the spouse's consent where it increases the amount or turns an ordinary suretyship into a joint and several one. A refinancing with a new borrower or a new facility is best treated as a new guarantee, with fresh signatures, a new handwritten cap and new spousal consent.

Both systems point to the same practice. When the facility changes materially, the guarantor should confirm the guarantee in writing for the amended facility. For a Turkish individual, that confirmation should meet the Turkish form.

12. When the Turkish borrower applies for concordat

A concordat protects the debtor, not its guarantors. During the moratorium, Article 294 of the Enforcement and Bankruptcy Law No. 2004 (İİK) bars enforcement against the debtor. It does not extend that protection to sureties. The Code of Obligations confirms the creditor's position. Under Article 585, even an ordinary surety can be pursued directly once the debtor has been granted a concordat moratorium. Under Article 586, a joint and several surety can then be pursued before a pledge is realised.

The creditor's own vote matters. Article 303 İİK preserves all the rights of a creditor that did not consent to the concordat against those jointly liable for the debt. A creditor that does consent keeps those rights only if it offered to assign its claim to the co-obligors against payment. It must also have told them of the date and place of the creditors' meeting at least ten days in advance. Suppose a London lender votes for a Turkish borrower's concordat without giving that notice to the founder and the group companies that guaranteed the loan. It then risks the argument that it has given up its claims against them. Article 594(2) TBK adds the duty to register the claim and to tell the surety about the concordat.

Where the guarantee is governed by English law, these Turkish provisions are not the whole answer. A lender whose guarantee may have to be enforced in Türkiye should follow them anyway. Our article on English-law debt and Turkish restructurings explains how English law treats a Turkish concordat that affects English-law debt. Our concordat guide explains the Turkish procedure.

13. When a guarantor becomes insolvent

A guarantor's own insolvency raises a different question: whether the guarantee survives a challenge by the guarantor's other creditors. Turkish law allows creditors to have certain transactions set aside through an action for annulment (iptal davası). The rules matter most for upstream and cross-stream guarantees given within a group.

Under Article 278 İİK, as amended in December 2025, gratuitous transactions made in the year before a certificate of insufficient assets was issued against the debtor, or before its bankruptcy was opened, can be set aside. Transactions with close relatives, including a spouse, are treated as gifts unless they are shown to have been made for full value. A guarantee is a promise to pay, not a gift, but the guarantor's other creditors can be expected to argue that a guarantee given for nothing is a gratuitous disposition. A fee or another documented benefit received by the guarantor is the best answer.

Article 279 deals with security over assets rather than personal guarantees. A pledge given in the same one-year period to secure an existing debt is void unless the debtor had earlier undertaken to provide security. Article 280 is wider in time. A transaction made by an insolvent debtor with intent to harm its creditors can be set aside where the other party knew of that intent and of the debtor's position, or there were clear signs that it should have known. Enforcement or bankruptcy proceedings must have been started against the debtor within five years of the transaction.

A guarantor that is itself in concordat faces a separate restriction. Under Article 297 İİK, a debtor in a concordat moratorium may not stand surety, grant a pledge or make gratuitous dispositions without the court's permission, and transactions made in breach are void. Article 288 gives the provisional moratorium the same effects. A refinancing that asks a group company in concordat for a new or increased guarantee therefore needs the court's permission.

14. Where to sue the guarantor and how to collect

English-law guarantees usually give the English courts jurisdiction and require the guarantor to appoint an agent in England to receive process. That appointment is useful. Under CPR 6.11, a claim form may be served by a method or at a place specified in the contract, and service on the process agent avoids the delay of service abroad. Where the contract gives the English court jurisdiction, CPR 6.33(2B) allows a claim form to be served out of the United Kingdom without the court's permission. Without a process agent, service in Türkiye normally passes through the Turkish central authority under the 1965 Hague Service Convention, with a Turkish translation, and takes months.

A Turkish court will respect an agreement on a foreign court. Article 47 MÖHUK allows the parties to a dispute with a foreign element arising from obligations to agree that a foreign court will hear it, if the agreement is proved by written evidence. A Turkish court then hears the case only if the foreign court declines jurisdiction or the defendant does not object to the Turkish court's jurisdiction.

Winning in London is only the first step. The guarantor's assets are usually in Türkiye, and the English judgment needs a Turkish enforcement decision (tenfiz) under Articles 50 and 54 MÖHUK. The conditions include reciprocity, the absence of exclusive Turkish jurisdiction, public policy and the defendant's right to have been properly summoned and heard. Reciprocity has been argued both ways in Turkish proceedings on English judgments. Our article on enforcing foreign judgments and arbitral awards in Türkiye explains the procedure.

Arbitration avoids the reciprocity question. An award made in London is enforced in Türkiye under the New York Convention, to which both Türkiye and the United Kingdom are parties. A lender that expects to collect in Türkiye may prefer arbitration for guarantees from Turkish guarantors for that reason. Our article on arbitration clauses in Türkiye–UK contracts discusses the drafting.

Stamp duty is a further practical point. Under the Stamp Duty Law No. 488, a guarantee or security document attracts stamp duty at 0.948 per cent of the amount, subject to a ceiling per document that is revalued each year. A document signed abroad becomes taxable when it is submitted to a Turkish public office or otherwise relied on in Türkiye, and the person who submits or relies on it pays. Documents relating to loans made by banks, foreign credit institutions and international institutions, and to the security for those loans, are exempt. A guarantee of a loan from such a lender should qualify. A guarantee of another kind of debt, such as trade debt owed to a supplier, does not. Whether a particular non-bank lender counts as a foreign credit institution should be checked before signing.

15. A worked example

A London credit fund lends EUR 50 million to an English holding company. The holding company owns a Turkish joint stock company that runs a group of food factories in Bursa. Part of the loan pays for the holding company's purchase of the shares held by the Turkish company's minority shareholders. The Turkish company gives an English-law guarantee and indemnity of the whole facility. So does the founder, a Turkish national living in Istanbul who owns most of the holding company and chairs the Turkish company's board. Both guarantees cover all sums due and give the English courts exclusive jurisdiction, with a process agent in London. Both are signed electronically in Istanbul at closing. The founder is married, and nobody asks his wife for anything.

Three years later the borrower defaults. The fund serves the founder through the process agent and obtains judgment in London. It then applies to an Istanbul commercial court to enforce the judgment against the founder and the Turkish company, whose assets are all in Türkiye.

The founder builds his defence from the points above. He argues that Article 583 TBK and Article 5 of Law No. 5070 are rules of direct application that an electronic signature and a missing handwritten cap cannot satisfy. Spousal consent, he says, is a matter of capacity or of the effects of marriage, governed by Turkish law, and the guarantee was signed in Istanbul. Enforcing a judgment that ignores both would, he argues, be contrary to public policy. The fund answers with Articles 7 and 24 MÖHUK and the high threshold of the public policy exception. It also relies on the 2013 exception, since the founder chairs the Turkish company's board, and the founder replies that the borrower is the English holding company, not the company he manages. It may well win, but it will spend a long time in the Turkish courts doing so, while the founder's assets remain exposed to other creditors.

The Turkish company raises Article 380 TTK. The guarantee secures, among other things, the money used to buy shares in the Turkish company itself, and it is likely to be void at least to that extent. The rest of its exposure invites a claim by the company's creditors under Article 202, because the company received nothing for guaranteeing its parent's debt.

The same deal can be documented differently at little extra cost. The founder signs a paper guarantee in Istanbul and writes the maximum amount, the date and the words "müteselsil kefil" by hand. The maximum is set at EUR 65 million to cover interest and costs. His wife signs a consent that refers to the guarantee and its cap before he signs, and the fund notes the ten-year date. The Turkish company's guarantee excludes the part of the facility used to buy its shares, and its board records the benefit it receives and the fee it is paid, set at arm's length. The company signs on paper through the persons shown in its signature circular. The fund confirms that the stamp duty exemption for loans from foreign credit institutions applies to it, or budgets for the duty. If it expects to enforce in Türkiye, it considers London arbitration for the guarantees. None of these steps changes the commercial deal, and each one removes a defence.

16. Questions to settle before signing

Before a guarantee from a Turkish guarantor is signed, the lender should know whether the guarantor is an individual or a company. For an individual, it should know whether the guarantor is married, whether the 2013 exception clearly applies, and who will sign the spouse's consent and when. It should decide whether the guarantee will be signed on paper, where it will be signed and who will keep the original. It should fix the maximum amount the guarantor will write, check that it covers interest, default interest and costs, and note when the ten-year period for an individual guarantor ends.

For a Turkish company, the lender should know whether the guarantee benefits the company and whether any part of the debt financed the acquisition of the company's own shares. It should know how the parent will deal with Article 202. It should also decide where it will sue and enforce, whether arbitration suits the assets it will pursue, and whether stamp duty will be due when the document is used in Türkiye.

Two further checks apply in every case. The lender should confirm that the guarantor is solvent and not in concordat, because a guarantee given shortly before insolvency can be challenged and a guarantor in a moratorium cannot give one without the court's permission. If a Turkish company is itself the borrower, the lender should also confirm that the foreign currency borrowing rules allow the loan.

Conclusion

A guarantee from a Turkish guarantor is often an English-law document whose real test comes in Türkiye. English law decides what the guarantor promised and asks only for writing and a signature. Turkish law asks for more: a handwritten cap and date, a signature on paper and, for a married individual, the spouse's prior written consent. It also limits what a Turkish company may guarantee for its group and for the purchase of its own shares.

A choice of English law answers some of these points and leaves others open. Form can probably be satisfied under English law. Spousal consent, the rules of direct application and Turkish company law are much less certain, and a Turkish guarantor will use each of them to delay enforcement.

The answer for lenders is to meet both systems at signing. The Turkish requirements are inexpensive to satisfy when the guarantee is signed and expensive to argue about after a default. Guarantors and their advisers should know that an English-law guarantee signed without these formalities is not necessarily void in Türkiye, and that the outcome depends on how a Turkish court characterises each rule.

How Terziolu & Partners Can Assist

Terziolu & Partners advises lenders, borrowers, founders and Turkish companies on guarantees and security for cross-border financings within our corporate and commercial work. That includes the Turkish-law requirements for personal and corporate guarantees, spousal consent, group guarantees and financial assistance, and Turkish signing arrangements for English-law documents. It also covers claims against guarantors in a borrower's concordat and the enforcement of judgments and awards against Turkish guarantors through our dispute resolution work.

Many of these matters involve English-law finance documents and proceedings in London. In those cases we coordinate the Turkish and English steps between Istanbul and London through our cross-border legal coordination work, with appropriately qualified counsel in each jurisdiction. Contact us to review a guarantee before signature or to act on a default.

Selected Legislation, Authorities and Materials

Türkiye

Turkish Code of Obligations No. 6098 (TBK): Articles 19 (interpretation), 99 (payment of debts in foreign currency), 128 (undertaking for the act of a third party) and 581 to 603 (suretyship). The key provisions are Article 583 (form), Article 584 (spousal consent, including the third paragraph added by Law No. 6455 in 2013), Articles 585 and 586 (ordinary and joint and several suretyship), Articles 589 and 590 (extent of liability and pursuit of the surety), Article 594 (notices, bankruptcy and concordat), Article 598 (expiry after ten years) and Article 603 (scope).

Turkish Commercial Code No. 6102 (TTK): Articles 7 (joint liability and default interest), 202 (protection of subsidiaries in a group), 380 (financial assistance) and 395 (transactions with board members and guarantees within a group).

Law on International Private and Procedural Law No. 5718 (MÖHUK): Articles 6 (rules of direct application), 7 (form), 9 (capacity), 13 (general effects of marriage), 21 (rights in rem), 24 (contracts), 47 (jurisdiction agreements), 50 and 54 (enforcement of foreign judgments).

Enforcement and Bankruptcy Law No. 2004 (İİK): Articles 278 to 280 (annulment of gratuitous transactions, transactions in the period before insolvency and transactions intended to harm creditors; Article 278 as amended by Law No. 7571 in 2025), 288 and 297 (effects of the provisional and definitive moratorium), 294 (enforcement during the moratorium) and 303 (rights against co-obligors).

Electronic Signature Law No. 5070: Article 5, as amended by Law No. 6728 (2016) and Law No. 7349 (2021).

Stamp Duty Law No. 488: Articles 1, 3 and 14; Table 1, section I(A)(3) (suretyship, security and pledge instruments); Table 2, section IV, item 23 (loans from banks, foreign credit institutions and international institutions).

Corporate Tax Law No. 5520: Article 13 (transfer pricing and the arm's length principle).

Decree No. 32 on the Protection of the Value of the Turkish Currency: Article 17 (foreign currency borrowing from abroad) and Article 18 (guarantees and suretyships).

Court of Cassation, Grand General Assembly on the Unification of Judgments, 20 April 2018, E. 2017/4, K. 2018/5: Article 584 does not apply to an aval.

Banu Bilge Sarıhan, "Kefalet Sözleşmesinde Şekil ve Eşin Rızası", Selçuk Üniversitesi Hukuk Fakültesi Dergisi 30(1), 2022: form, the handwritten elements, signature by a representative and the scope of the 2013 exceptions to spousal consent.

New York Convention, status of Contracting States (UNCITRAL) and Hague Conference on Private International Law, status table of the 1965 Service Convention.

United Kingdom

Statute of Frauds 1677, section 4: guarantees must be evidenced in writing and signed.

Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009, regulation 4: execution of documents by overseas companies under English law.

Civil Procedure Rules, Part 6: rule 6.11 (service by a contractually agreed method) and rule 6.33(2B) (service out of the United Kingdom without permission where a contract confers jurisdiction).

Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd [2012] EWCA Civ 265: a guarantee concluded by an exchange of emails and an electronic signature, with the discussion of Actionstrength Ltd v International Glass Engineering SpA [2003] UKHL 17.

Associated British Ports v Ferryways NV [2009] EWCA Civ 189: guarantee or indemnity as a question of construction, applying Moschi v Lep Air Services Ltd [1973] AC 331.

Triodos Bank NV v Dobbs [2005] EWCA Civ 630: variations and new facilities under an existing guarantee.

Waller-Edwards v One Savings Bank Plc [2025] UKSC 22: when a lender is put on inquiry in a non-commercial surety transaction, restating Royal Bank of Scotland plc v Etridge (No 2) [2001] UKHL 44 and the steps the lender must take.