The Turkish Code of Civil Procedure (CCP) generally regulates the granting of a preliminary injunction in return for a guarantee. The focus of this article is on the fate of a guarantee provided for a preliminary injunction in the event that a compensation action is filed after the finalisation of the action in which a guarantee is given. There is neither a specific provision in the CCP on this issue nor concrete, established practice on how this important matter is to be resolved.
Legal framework
Pursuant to Article 392 of the CCP, “The party requesting a preliminary injunction shall be obliged to grant a guarantee for the possible damages to be incurred by the counterparty and third parties in the event that he/she is found to be unjustified." Therefore, a court that accepts a request for a preliminary injunction may award a guarantee by considering the possibility that the requesting party may be unjustified at the end of the lawsuit and the possible damages to be incurred by the counterparty and third parties.
According to Article 87 with reference to Article 395 of the CCP, in the event of a change in the circumstances and conditions requiring the guarantee, the judge may decide to reduce, increase, change, or remove the guarantee.
The CCP also partially regulates when the guarantee amount deposited for a preliminary injunction shall be returned. According to Article 392(2) of the CCP, “the guarantee shall be returned upon non-filing of a compensation action within one month following the finalisation of the judgment on the main action or the removal of the preliminary injunction”. Therefore, if there is a compensation action filed within the time limit, the guarantee shall not be returned.
Pursuant to Article 399/2 of the CCP, the competent court for a compensation case arising from an unfair preliminary injunction is the court that decided the preliminary injunction. The legislator has introduced this provision considering that the court that first decided on the preliminary injunction and then rendered the judgment on the merits can best adjudicate the compensation action. The fact that the court deciding the action on the merits and the court deciding the compensation action are the same court is based on there being an organic connection between the two cases.
However, the legislator that established this connection has kept silent with respect to the assignment of the guarantee provided for the preliminary injunction in the main action of the compensation lawsuit. Therefore, the fate of the guarantee in the main case, which remains in the finalised and closed file, remains uncertain.
Analysis of the issues
Although there are opinions in the doctrine (Arslan, Ramazan/Yılmaz, Ejder/Taşpınar Ayvaz, Sema/Hanağası, Emel, Medenî Usul Hukuku, 4th Edition, Ankara 2018, p. 576) that in the event that the party in whose favour the unfair preliminary injunction is decided is obliged to pay compensation to the plaintiff as a result of the compensation action arising from the unfair preliminary injunction, the plaintiff will first receive this compensation from the guarantee provided by the defendant in return for the preliminary injunction, it is not clear how this connection will be established in practice.
Another important difficulty arises in the event that the party in whose favour the preliminary injunction is granted is obliged to pay compensation and the creditor party enforces this judgment.
If the court accepts a damages action arising from an unfair interim injunction, the plaintiff will be able to enforce the judgment through judicial means. According to the procedure specified in Article 36 of the Execution and Bankruptcy Law, it is possible to stop the execution of the court decision that is subject to enforcement proceedings before it is finalised, if the decision is appealed. In this case, the defendant will be required to deposit a guarantee for a stay of execution to stop the enforcement of the judgment when the judgment is appealed. In other words, the defendant, who is the debtor of the enforcement proceedings, must deposit the amount of the debt as a guarantee.
In practice, the enforcement offices determine the amount of the guarantee by calculating the outstanding debt of the file three months later (the amount of debt and the three-month interest amount). Therefore, the party in favour of whom an injunction has been decided, who has already provided a guarantee to pay the same possible debt in the main case, is faced with the obligation to provide a guarantee once again for the same debt. In fact, this guarantee includes the debt and the interest amount. On the other hand, the guarantee provided for the preliminary injunction remains in another finalised file of the same court. In other words, the original file in which the guarantee was provided is not considered an ‘accessory’ of the ongoing compensation file.
In this case, the guarantee provided to ensure the possible damages of the defendant and third parties that may arise from the preliminary injunction and the even larger amount of guarantee provided for the second time to stop the execution of the decision given in the compensation action inevitably causes an unfair situation.
The fact that the guarantee provided in the main action in which the preliminary injunction was granted and the guarantee filed in the compensation action remain in the file for a very long time to ensure the same possible damage will lead to a result that is not in line with the purpose of the law, such as the right to property in the first place, as well as the almost punitive nature of the preliminary injunction.
On the other hand, in this process, the problem arises as to which court will evaluate and decide on requests such as reducing the amount or changing the type of guarantee provided pursuant to the preliminary injunction. This is because, in the event that the main case involving the guarantee is finalised, requests regarding the guarantee may be rejected on this ground since the file is closed. Can the judge of the compensation action adjudicate the claims regarding the guarantee?
In the authors’ opinion, considering the intense cause-effect relationship between the action in which the guarantee is filed and the compensation action, the claims regarding the guarantee should be adjudicated by the court that hears the compensation claims.
Recap
This article has identified the issues regarding claims and problems within the scope of a guarantee between a compensation action filed based on an unfair preliminary injunction and the main file containing the preliminary injunction granted in return for a guarantee, the competent court, and the fate of the guarantee during the execution phase, and to point out the issues that need to be resolved.
