In accordance with the Law No. 3095 on Lawful Interest and Default Interest (“Law”) in instances where no contractual interest rate exists between parties, lawful interest should be applied. From January 1, 2006, the lawful interest applied as 9% per annum.
According to the Presidential Decree No. 8485 issued on May 20, 2024 (“Decree”), the annual legal interest rate has been revised 24%, effective from June 1, 2024.
Following the Decree, there is no controversy regarding the legal interest rate to be applied for legal proceedings initiated after June 1, 2024. However, a question arises regarding the determination and calculation of the legal interest rate for legal processes initiated before this date. The answer to this question can be elucidated by examining the decisions of the Court of Cassation concerning disputes arising after changes in legal interest rates in previous years1
Upon analyzing the relevant decisions, it becomes necessary to conduct progressive interest calculations within the framework of ongoing legal processes. Consequently, the legal interest rate will be computed at 9% until June 1, 2024, and subsequently at 24% thereafter. While this calculation may appear straightforward, its accurate application is paramount. Failure to do so may lead to adverse outcomes such as (i) judgments against the creditor due to over-calculated interest in enforcement proceedings, and (ii) complete reversal of relevant judgments in litigation processes. Hence, it is imperative that this calculation be verified by attorneys overseeing the legal proceedings.
Conclusion
Considering the economic conditions of our country, although the new statutory interest rate may be perceived as a positive development, its implementation may induce confusion in practice, particularly concerning ongoing legal processes initiated before June 1, 2024, potentially leading to their prolongation.
Moreover, while 24% is regarded as a relatively low rate compared to the prevailing inflation rate, any adjustment beyond this threshold would necessitate an amendment to the Law, as it represents the maximum legal limitation recognized under the current legislation.
Footnote
1 The decision of the 10th Civil Chamber of the Court of Cassation dated 12.05.2011 and numbered 2010/41 E., 2011/7172 K., the decision of the 12th Civil Chamber of the Court of Cassation dated 14.11.2006 and numbered 2006/18196 E., 2006/21249 K. and the decision of the 12th Civil Chamber of the Court of Cassation dated 12.02.2007 and numbered 2006/24458 E., 2007/1995 K.
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