This was an appeal from a judgment of the 5th Izmir Commercial Court of First Instance (2014/400-2015/235).

The plaintiff claimed that it had lawfully purchased the Syrian-flagged vessel Louay-k for dismantling, free of encumbrances, after completing all legal sale procedures. The port authority issued a berthing permit on 21 July 2012, and the vessel was moored at the plaintiff’s ship-breaking site. The defendant, a creditor of the vessel's former owner, Louay Shipping & Trading Co, applied for the arrest of the vessel. The Karşıyaka Commercial Court of First Instance granted an arrest order against Louay Shipping & Trading Co, stipulating that the arrest would only be enforced if the company still owned the vessel. However, the enforcement office imposed the arrest of the plaintiff's vessel without verifying ownership, despite objections. The plaintiff lodged a claim of ownership, but the enforcement office failed to take appropriate action. Ultimately, no proceedings were initiated to complete the arrest process, rendering the arrest automatically void. Due to the 52-day delay in dismantling, the plaintiff claimed that it suffered significant financial loss and sought TRY 337,821.48 in damages from the defendants.

The defendants denied liability and requested the dismissal of the case.

The Commercial Court of First Instance partially upheld the claim, finding that the plaintiff acquired ownership of Louay-k on 16 July 2012 under a valid sale contract, and by 21 July 2012, legal title had transferred. Since the arrest order was issued on 27 July 2012, at which point Louay Shipping & Trading Co no longer owned the vessel, the Court held that the defendant creditor should have verified ownership before requesting the arrest. The Court based its decision on arts 1369.1.a and 1369.1.b of the Turkish Commercial Code (No 6102 TCC) [based on arts 3.1.a and 3.1.b of the Arrest Convention 1999], which requires creditors to assess ownership when seeking the arrest of a vessel to secure a maritime claim.

The court also acknowledged that under art 22 of the Turkish Private International Law (No 5718 MÖHUK), the governing law for determining vessel ownership is the law of the vessel’s flag State, which in this case was Syrian law. However, as Syria was not a party to the 1968 European Convention on Information on Foreign Law, the Court required the parties to provide information on Syrian law. The parties failed to do so despite a formal notice, leading the court to apply Turkish law instead.

The defendants appealed to the Supreme Court of Appeal.

Held: Appeal upheld.

The Supreme Court ruled that while the lower Court correctly identified the foreign element in the case, it wrongly applied Turkish law solely because the parties did not provide information on Syrian law. Under art 2.1 of the MÖHUK, the court must apply private international law rules and ascertain the content of foreign law ex officio, seeking assistance from relevant authorities when necessary. Only if the applicable foreign law cannot be determined after all efforts should Turkish law be applied. The failure to conduct this inquiry rendered the lower Court's decision incorrect.

The Supreme Court accepted the defendant's request for rectification and ordered further examination in line with its reasoning.