Although not explicitly regulated under the Turkish legal system, fiduciary assignment is one of the legal institutions frequently encountered in practice. This transaction typically takes the form of an assignment of a claim or transfer of ownership and is based on a trust relationship established between the parties. Within this framework, the transferee undertakes to use the assigned right in a limited manner for a specific purpose and to return it to the transferor upon the fulfillment of that purpose. However, the binding nature of this relationship, whether ownership is genuinely transferred, and the implications for third parties remain subjects of debate in both practice and legal doctrine.
When examining the elements of fiduciary assignment, the existence of a valid assignment, the presence of a fiduciary agreement between the parties, and the undertaking by the transferee based on that agreement are required. Accordingly, the transaction appears to be a valid assignment to third parties but is contractually restricted by the fiduciary arrangement between the parties. As such, while it formally constitutes a transfer of ownership, the actual intention between the parties may reflect a different underlying purpose.
In practice, fiduciary assignment is frequently used as a means of securing a debt. In cases where there is doubt as to whether the debtor will duly perform their obligation, the creditor may request the temporary transfer of ownership as collateral and, upon repayment of the debt, undertakes to reassign the relevant right to the debtor. However, this structure gives rise to concerns that it may be used as a means of circumventing the formal requirements of pledge law, thus leading to debates in the doctrine regarding whether it constitutes an abuse of legal form.
Indeed, differing views exist in the doctrine concerning the legal nature of fiduciary assignment. One view asserts that fiduciary assignment, particularly when used as security, functions as a de facto pledge based on a trust relationship between the parties. According to this approach, fiduciary assignment constitutes a conditional and temporary transfer of ownership that is ancillary to the principal debt relationship. Conversely, another view holds that fiduciary assignment is a full transfer of ownership and that the fiduciary agreement merely gives rise to an independent obligation. According to this view, once ownership has been transferred, the transferee holds full disposition rights over the asset, and any breach of the obligation to retransfer must be assessed within the framework of the law of obligations.
The Court of Cassation has recognized fiduciary assignment as a valid legal institution and has, in certain cases, treated security-based assignments as fiduciary in nature. However, particularly in relation to immovable property, the validity of such transactions is contingent upon the existence of a written fiduciary agreement between the parties. The General Assembly of Civil Chambers of the Court of Cassation has also emphasized that although the fiduciary agreement is not subject to a formal requirement, its validity depends on being proven by written evidence.
One of the most common issues in practice is the failure to conclude the fiduciary agreement in writing, which renders proof of the agreement difficult or impossible. Another significant risk arises when the transferee abuses their position by refusing to return the right, which can lead to serious consequences, particularly in cases involving real estate. Additionally, whether the good faith acquisition of third parties is protected remains another area of concern.
For these reasons, parties who intend to enter into a fiduciary assignment should take appropriate legal precautions to ensure the validity and security of the transaction. These may include concluding a written fiduciary agreement, explicitly setting out the purpose and conditions for retransfer, and where appropriate certifying the agreement before a notary or registering a notice with the land registry.
In conclusion, although fiduciary assignment is not explicitly regulated under Turkish law, it is a legal institution whose framework has been shaped through doctrinal debate and judicial decisions, particularly those of the Court of Cassation. Nonetheless, it continues to involve significant uncertainties in practice. Its use as a security mechanism, in particular, raises concerns regarding circumvention of the formal requirements of pledge law and the security of legal transactions. Therefore, the adoption of a clear and systematic statutory regulation to define the scope, legal nature, and effects of fiduciary assignment on third parties is of vital importance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
