Interest Claims Under the CISG Against Turkish Buyers and Sellers

Under the CISG, a party owed a sum by a Turkish buyer or seller is entitled to interest on that sum from the time it fell due, without needing to prove any additional loss, but the CISG does not fix the interest rate itself, so the applicable rate is generally determined by domestic law, which can materially affect the amount ultimately recovered.

Interest claims arise whenever payment, whether the price, a refund, or damages, is not made on time. The CISG gives an automatic right to interest independent of proving loss, but because it is silent on the rate, disputes often turn on which country's law fills that gap, and Turkish, foreign or an internationally recognised benchmark rate may each be argued for depending on the circumstances.

The CISG provides that if a party fails to pay the price or any other sum in arrears, the other party is entitled to interest on it, without prejudice to any claim for damages. Because the CISG does not specify the rate, Turkish courts and tribunals typically apply the interest rate under the law that governs the contract or the forum's own conflict-of-laws rules, which in many cases with a Turkish nexus leads back to Turkish statutory default or commercial interest rates under the Turkish Code of Obligations No. 6098.

In practice, when a Turkish court hears a CISG dispute and Turkish law fills the interest-rate gap, it commonly applies the statutory default interest rate applicable to commercial obligations, adjusted periodically by the competent authorities. Arbitral tribunals seated outside Türkiye may instead apply a different rate depending on the law they consider applicable to fill the CISG's gap, such as the currency of the debt or the seat of arbitration.

There is significant academic and practical debate over the correct method for filling the CISG's interest-rate gap: some tribunals apply the rate of the creditor's country, others the debtor's country, others the currency of payment, and others a general principle drawn from the CISG's own structure. This uncertainty makes an express contractual interest clause valuable in cross-border contracts with Turkish parties.

To claim interest, the claimant needs to establish that a sum was due and unpaid by its due date, and that no valid excuse for delay exists. No separate proof of loss is required for the interest claim itself, distinguishing it from a broader damages claim, though both can be pursued together.

Interest generally begins to accrue automatically from the date the underlying sum fell due, without needing a separate demand, though practical enforcement usually requires the amount to be quantified and claimed formally. As with other CISG claims, the applicable limitation period for bringing the claim itself is determined by domestic law under the forum's conflict-of-laws rules rather than by the CISG.

Interest claims are decided by whichever court or arbitral tribunal has jurisdiction over the underlying payment dispute, typically the same forum hearing the price or damages claim against the Turkish counterparty.

Evidence should include the invoice or contract establishing the sum due, its due date, proof of non-payment or late payment, and, where relevant, evidence supporting the applicable rate, such as the contract's chosen governing law or the currency and place of payment.

A common mistake is assuming a single universal interest rate applies to all CISG claims; in reality the rate depends on which domestic law fills the CISG's gap, and this can vary significantly between fora. Parties also frequently omit an express interest clause from their contract, leaving this important commercial term to uncertain gap-filling analysis at the dispute stage.

Does the CISG set the interest rate for late payment? No. The CISG confirms the right to interest but leaves the applicable rate to be determined under domestic law.

Is proof of actual loss required to claim interest? No, the right to interest on a sum in arrears generally arises automatically once the sum is overdue, independent of proving additional loss.

Can interest and damages both be claimed? Yes, interest on the overdue sum can be claimed together with damages for any further loss caused by the delay.

Should contracts with Turkish parties include an interest clause? Yes, an express interest rate clause avoids uncertainty about which domestic law fills the CISG's silence on this point.

We advise clients to include a clear interest clause in contracts with Turkish counterparties from the outset, and where none exists, we assess which domestic law is most likely to apply to fill the CISG's gap before framing an interest claim.