A foreign-flagged ship arrives at your shipyard, you complete the repairs, but the invoice is not paid. You have the ship in your possession — what if you don’t deliver it? Then two questions arise: does this ship you are holding belong to your debtor, or is your debtor merely a charterer? And which country’s law will apply to your right of lien over a foreign-flagged ship?

For shipyards along the Tuzla and Yalova line, this is not a theoretical discussion but a direct matter of collection. In this article, we compare the two tools available to shipyards — the right to demand a mortgage under Article 1013 of the Turkish Commercial Code and the right of lien under Article 950 of the Turkish Civil Code — and address the gaps that arise concerning foreign-flagged ships and their position in the ranking order.

1. The Shipyard’s Two Tools

Turkish law grants shipyards that build or repair vessels two distinct security possibilities, and their functioning is entirely different:

2. Turkish Commercial Code (TTK) Art. 1013: Right to Demand Mortgage/Hypothec and Its Limits

The provision is as follows: the shipyard owner has the right to demand the registration of a mortgage/hypothec on that structure or vessel for claims arising from its construction and repair. Any prior waiver of this right is not valid. Articles 895 to 897 of the Turkish Civil Code apply to the establishment of the mortgage/hypothec; an annotation can be made in the vessel or structure registry to secure the right of demand. If the construction or repair is not yet completed, a security mortgage/hypothec may be requested for the portion of the cost covering the completed work and for expenses not included in the cost.

Two points need to be emphasized.

Firstly, this is a “right to claim”. It is not a mortgage that arises from law and exists automatically, but a right whose registration you can demand — although Article 1393 of the TCC refers to this right as a “statutory mortgage” in the priority list, registration is required for the mortgage to come into existence. The mortgage does not come into existence without registration; therefore, the possibility of annotation has also been specifically regulated. Obtaining an annotation as soon as the repair is completed ensures the protection of the right even if the ship changes hands.

Secondly, the provision falls under the heading “pledge of ships registered in the registry”. Therefore, it cannot be applied to a ship that is not registered in the Turkish Ship Registry or the Turkish International Ship Registry. Since a significant portion of the work of shipyards in Tuzla and its vicinity consists of foreign-flagged ships, this instrument is practically rendered inoperative in most cases.

In the seminar, Lawyer M. Hakan Tüfekçi drew attention to precisely this gap; he stated that according to Article 1013 of the TCC in the current law, there is a right to a statutory mortgage, but it can only be applied to ships registered in the Turkish registry and not to foreign vessels (Istanbul Bar Association – DTO Seminar, 1.11.2025).

3. Article 950 of the Turkish Civil Code (TMK): Right of Retention and the Condition of “Belonging to the Debtor”

The right of retention is the most powerful de facto tool in the shipyard’s hands. The shipyard’s refusal to deliver the ship after repairs are completed, if it cannot collect its receivables, creates a very effective security, though unregistered.

However, Article 950 of the Turkish Civil Code (TMK) subjects the right of retention to three conditions: the creditor must possess a movable property that belongs to the debtor and is in the creditor’s possession with the debtor’s consent, the debt must be due and payable, and there must be a connection between the item and the claim by its nature.

4. The Main Pitfall: Counterparty is Not the Owner, but the Charterer

The most common scenario in practice is this: a foreign-flagged ship undergoes repairs at a Turkish shipyard; however, the shipyard’s counterparty is not the ship’s owner, but a bareboat charterer or a charterer. If the debt is not paid, the shipyard cannot rely on either Article 1013 of the Turkish Commercial Code (TTK) (the ship is not registered in the Turkish registry) or Article 950 of the Turkish Civil Code (TMK) (the ship does not belong to the debtor) and remains unsecured.

During the seminar, Tüfekçi explicitly explained this situation and stated that shipyards can remain unsecured for this reason (Istanbul Bar Association – DTO Seminar, 1.11.2025).

The problem here has the same root as the tenant issue in the precautionary attachment of ships. Since repair and maintenance claims are not included in the list of maritime lien rights under Article 1320 of the TCC (Turkish Commercial Code), a privileged right also does not arise on the owner’s ship for the tenant’s debt. For a detailed evaluation on this matter, you can refer to our article on the conditions of TCC Art. 1369 in the precautionary attachment of ships.

5. Which Law Will Be Applied? The Issue of Flag State

On foreign-flagged vessels, a second and more insidious problem arises: the right of retention is a real right, and the determination of the law applicable to real rights is subject to conflict of laws rules.

In the seminar, Assoc. Prof. Dr. Cüneyt Süzel explicitly stated this: today, the right of retention that a Turkish shipyard will apply to a foreign-flagged vessel is subject to the law of the ship’s registry location (Istanbul Bar Association – DTO Seminar, 1.11.2025).

The result is as follows: whether a Turkish shipyard’s right of lien arises on a vessel flying the flag of Panama, Liberia, or the Marshall Islands will be determined according to the law of that country. The nullification of a right recognized by Turkish law, based on the vessel’s flag, creates an unforeseeable risk for the shipyard.

Süzel’s proposed solution is to extend the model adopted for maritime liens under Article 1320 of the TCC to the right of lien. The said article contains a specific conflict of laws rule stating that whether a claim asserted before Turkish courts constitutes a maritime lien shall be determined according to Turkish law. Süzel has suggested explicitly stating that Turkish law shall also apply to the right of lien (Istanbul Bar Association – DTO Seminar, 1.11.2025).

In the same seminar, Lawyer M. Hakan Tüfekçi also put forward a similar proposal; he stated that if a special regulation similar to the conflict of laws rule governing which law applies to real rights over means of transport were introduced for ships, it might be possible for Turkish shipyards to exercise a right of lien on foreign vessels (Istanbul Bar Association – DTO Seminar, 1.11.2025).

The rule in question is Article 22 of Law No. 5718 on International Private and Procedural Law. Indeed, the explanatory memorandum for Article 1320 of the TCC explicitly addresses this situation: According to the aforementioned provision, which was adopted after the draft was submitted to the Grand National Assembly of Turkey, all real rights over ships, including maritime liens, are subject to the law of the state where the ships are registered.

In contrast, Article 1320/last of the TCC introduces a special conflict of laws rule stating that whether a claim asserted before Turkish courts constitutes a maritime lien (ship creditor’s right) shall be determined according to Turkish law. The relationship between the two provisions is debated in doctrine, and the absence of a similar special rule regarding the right of retention (lien) is the source of uncertainty for the shipyard.

6. The Debate on the Right of Retention (Lien) on Registered Ships

Another issue long debated in Turkish maritime law is whether a right of retention (lien) can be exercised over registered ships.

The source of the debate is as follows: while the registration mechanism grants ships a status similar to immovable property, the right of retention (lien) is based on the principle of actual possession. This tension between the principle of numerus clausus (limited number) for real rights that can be established over registered ships and the nature of the right of retention is debated in doctrine.

However, in Turkish law, there is a clear provision that largely resolves this debate: Article 1393 of the TCC specifically lists the shipyard owner’s right of retention (lien) in the order of priority (distribution list). This is a strong indication that the legislator recognizes the shipyard’s right of retention (lien) even on registered ships.

7. Position in the Order of Priority (Distribution List): TCC Article 1393

According to Article 1393 of the TCC, if the ship is in the possession of a shipyard during the forced sale, the shipyard owner’s receivables secured by a statutory mortgage according to Article 1013 of the TCC or by a right of retention according to Article 950 of the Turkish Civil Code are registered in the fourth rank of the priority list.

The fourth rank is a very valuable position in practice: it comes after the rights of maritime creditors but ranks before contractual and statutory lien rights, i.e., ship mortgages. Indeed, Article 1395 of the TCC places other receivables secured by contractual or statutory lien rights in the sixth rank; while Article 1394 places customs duties and other taxes in the fifth rank.

From the shipyard’s perspective, this means: a shipyard that continues to hold the ship can collect its receivables from the sale price of the ship before the banks’ mortgages.

8. What Does the 1993 Geneva Convention Say?

The international regulation also points in the same direction. Article 7 of the International Convention on Maritime Liens and Mortgages of 1993 refers to a right of retention that can be exercised by the shipbuilder or repairer as long as possession is maintained. Article 12, paragraph 4 of the same Convention states that this right comes after the right of a maritime claimant but before the claim of a mortgagee.

An important note: This provision of the Convention is not mandatory; it offers the right to contracting states as optional. Each state can express its preference through its domestic law. Turkish law’s preference has been to legally secure the right to demand a mortgage with TCC Art. 1013, to leave the right of lien to the provisions of TCC Art. 950 et seq., and to recognize both in the order of priority table with TCC Art. 1393.

9. What Happens If You Relinquish Possession?

This is the most costly mistake for shipyards. The right of lien is dependent on possession; the right ceases as soon as the vessel leaves the shipyard. Since the fourth rank of TCC Art. 1393 also requires possession at the time of sale, that privileged position is also lost.

In practice, shipyards release the vessel to avoid disrupting commercial relations or with the expectation that “they will pay,” subsequently becoming unable to collect their receivables. After the vessel is released, the only recourse left is a request for provisional attachment based on the nature of the claim as a maritime claim — and that too depends on the vessel returning to Turkey.

Therefore, before the vessel is released, it is imperative to: either collect the receivable, or obtain a bank letter of guarantee or a P&I club undertaking, or ensure the registration of a mortgage under TCC Art. 1013, or have a cautionary notice recorded in the registry.

10. Alternative of Provisional Attachment

Repair and maintenance claims are maritime claims within the meaning of TCC Art. 1352 and form the basis for the provisional attachment of the vessel. This is a tool that can be used in parallel with the right of lien.

However, here too, the debtor’s status is crucial. If the debtor is the owner of the ship, there is no problem according to Article 1369/1-(a) of the Turkish Commercial Code. If the debtor is the charterer, the repair claim cannot be based on sub-paragraph (e) since it is not included in the list of maritime claims in Article 1320; in this case, the ships owned by the debtor must be considered according to Article 1369/2.

Practical tip: prepare the request for preliminary attachment while the ship is still in your possession. If you have to release possession, be in a position to have the attachment enforced in the execution file on the same day. For the process, you can refer to our article on how to prepare a ship preliminary attachment request petition.

11. Draft Enforcement Law and Recommendations

The prepared Draft makes an important choice in this area. According to what was conveyed at the seminar, the Draft removed the statutory mortgage originating from Article 1013 of the Turkish Commercial Code in its relevant article concerning the ranking order, and only left the right of retention to be granted to the shipbuilder and repairer under Article 950 of the Turkish Civil Code (Istanbul Bar Association – DTO Seminar, 1.11.2025).

This choice has been evaluated in two different directions:

From the perspective of the shipbuilding industry, the second opinion carries more practical weight: the coexistence of two instruments ensures that collateral remains even after the ship is released. The common point of both speakers is that which law should apply to the right of lien must be clearly stated.

12. Contract Checklist for Shipyards

• State the capacity of the addressee in the contract. It must be clearly stated whether the order was placed on behalf of the owner or the charterer; if possible, written confirmation from the owner should be obtained. This single step determines whether the right of lien will arise.
• Request the owner’s participation as a joint debtor. If working with a charterer, the owner must be ensured to participate in the contract as a joint debtor or a joint and several guarantor.
• Include a Turkish law and Turkish courts clause. This is the most effective way to preemptively resolve disputes over applicable law.
• Confirm the right of retention in the contract. A clear clause stating that the ship will not be delivered until payment is made largely prevents disputes.
• Register an annotation on a ship registered in the Turkish registry. Pursuant to Article 1013/3 of the TCC, an annotation can be registered in the ship or construction registry to secure the right to demand a mortgage. Since prior waiver of this right is not valid, contractual clauses to the contrary are void.
• Establish an interim payment and security schedule. In long-term projects, instead of waiting for the full payment upon delivery, a phased payment structure should be devised, also considering the possibility of a security mortgage granted by Article 1013 of the TCC.
• Perform a legal check before delivery. The decision to release the ship should not be made without receiving payment or security.

13. Frequently Asked Questions

Can the shipyard refuse to deliver a ship whose price has not been paid?

Yes, if the conditions are met. Pursuant to Article 950 of the Turkish Civil Code (TMK), for a right of retention, the item must belong to the debtor, the creditor must be in possession of it with the debtor’s consent, the debt must be due, and there must be a connection between the item and the claim. The connection between the construction and repair claim and the ship is clear; the critical point is whether the ship belongs to the debtor.

Does a right of retention arise if the ship belongs to the charterer?

As a rule, no. Article 950 of the Turkish Civil Code (TMK) requires that the item to be retained must belong to the debtor. If the counterparty is a bareboat charterer or a charterer, the condition is not met because the ship does not belong to the debtor. Therefore, it is of great importance that the owner is also made a party to the contract during the ordering phase.

Does TCC article 1013 apply to foreign-flagged vessels?

Since the provision is located in the section concerning the pledge of vessels registered in the registry, its application to vessels not registered in the Turkish registry does not seem possible. For foreign-flagged vessels, the fundamental tool a shipyard can rely on is the right of lien.

What is the rank of a shipyard’s claim in the priority list?

According to TCC article 1393, it ranks fourth — but only if the vessel is in the shipyard’s possession during the forced sale. This rank is very valuable as it precedes ship mortgages and other pledge rights.

Does my right continue if I deliver the vessel?

The right of lien is dependent on possession; it ceases when the vessel leaves the shipyard. Since the fourth rank under TCC article 1393 also requires possession at the time of sale, that position is also lost. Payment, a letter of guarantee, or mortgage registration must be secured before delivery.

Can a vessel be provisionally seized for a repair claim?

Yes, repair and maintenance claims are maritime claims in the sense of TCC article 1352. However, since these claims are not included in the list of ship creditor’s rights in TCC article 1320, if the debtor is not the owner of the vessel, the path under TCC article 1369/1-(e) cannot be utilized; in this case, the debtor’s own vessels should be considered under article 1369/2.

Why is Timing Crucial in Shipyard Claims?

In shipyard claims, the legal position is strongest while the vessel is at the shipyard and significantly weakens the moment the vessel departs. Therefore, claims management should be planned not after a collection problem arises, but when the contract is established and while the work is ongoing.

Our other related works: main guide to ship arrest, conditions of TCC art. 1369 in ship arrests, controversial items in the concept of maritime claim, claims for provisions and fuel supplied to a ship and where to find ship name and IMO number.

2M Hukuk Law Office, based in Tuzla, operates in the shipyard area and along the line of Pendik, Kartal, Maltepe, Ataşehir and Üsküdar, as well as Gebze, Dilovası, Çayırova, Darıca, Körfez, İzmit and Başiskele in the field of maritime commercial law.

This article is for general informational purposes only and does not constitute legal advice. Since each case has its specific circumstances, it is recommended to seek legal assistance for your particular dispute.