Constitutional Court Curbed Creditor's Enforcement Power

Towards the end of 2019, the Constitutional Court handed down a startling decision declaring certain articles in Law No. 42 of 1999 on Fiduciary Security ("Fiducia Law") on creditor's power to enforce security to be conditionally unconstitutional. The case in the decision involved an application for judicial review by a debtor who claimed that they have suffered losses as a result of the unscrupulous repossession of a security by a multi finance company.

The provisions in question are Articles 15(2) and (3). Articles 15(2) provides that a fiduciary certificate has enforcement powers equivalent to a final and binding court decision. Meanwhile, Article 15(3) provides that if a debtor is in default, the fiducia grantee (e.g. the creditor or security agent, as the case may be) has the right to sell the fiducia security object on its own powers.