The Constitutional Court Annuls the Regulation on Statutory Interest with Respect to Non-Contractual Obligations

The Constitutional Court of Türkiye (“Constitutional Court”) ruled that the interest rate applied under Law No. 3095 on Statutory and Default Interest (“Law”), in the context of non-contractual debt relations, is unconstitutional because it does not compensate for the erosion of the value of money, and annulled Article 1 of the Law.

The Kahramanmaraş 3rd Administrative Court, in a case concerning the compensation of damages arising from a property destroyed in the earthquake, referred the dispute to the Constitutional Court with the allegation that the provision determining the statutory interest rate under Article 1 of the Law is unconstitutional.

The challenged provision was examined by the Constitutional Court in light of Article 35 of the Constitution, which guarantees the right to property, and Article 40, which guarantees the right to an effective remedy.

Pursuant to the first paragraph of Article 1 of the Law, in cases where statutory interest is payable, such interest shall be calculated at an annual rate of twelve percent; the second paragraph of the same Article provides that the President is authorized to increase the statutory interest rate, but such authority is limited to a maximum of onefold. Accordingly, the statutory interest rate prescribed by the provision may be increased by the President to a maximum of twenty-four percent per annum.

In this context, the Constitutional Court held that the law must include safeguards to ensure that the loss of value of monetary claims due to inflation is compensated, at least to some extent. It further found that the authority granted to the President to increase the interest rate is insufficient, as the law does not establish mechanisms to prevent significant erosion of the claim’s value against inflation. Consequently, the Constitutional Court concluded that the provision is contrary to Articles 35 and 40 of the Constitution.

Accordingly, the Constitutional Court examined the unconstitutionality of the provision solely in the context of non-contractual debt relations and found the provision unconstitutional in this respect, annulling it accordingly.

The Constitutional Court decided that the ruling shall enter into force nine months after its publication in the Official Gazette, dated 1 December 2025.

You can access the full text of the Constitutional Court’s decision through this link. (Only available in Turkish)