Paid a deposit to purchase a vessel in Turkey but the sale failed? Learn how foreign buyers can recover ship sale deposits, advance payments and purchase instalments from Turkish sellers through lawsuits, enforcement and provisional measures.

Purchasing a vessel frequently requires the foreign buyer to transfer a substantial deposit or advance payment before delivery and transfer of ownership. Depending on the transaction, the payment may represent 10%, 20% or another agreed percentage of the purchase price and can amount to hundreds of thousands or even millions of dollars.

The transaction can then collapse.

The Turkish seller may refuse to deliver the vessel, fail to provide clean title, disclose an undisclosed mortgage, attempt to sell the vessel to another buyer, fail to satisfy contractual conditions precedent or simply refuse to return the deposit.

For the foreign buyer, the dispute immediately becomes an asset-recovery problem:

Is the deposit refundable? Can the buyer terminate the ship sale agreement? Can the buyer recover twice the deposit? Can the seller keep the money? Can the vessel or seller’s assets be secured while proceedings continue?

The answer depends primarily on the Ship Sale and Purchase Agreement (SPA/MOA), characterization of the payment, reason the transaction failed, applicable law and dispute-resolution provisions.

Turkish law makes an important distinction between money paid merely as evidence of conclusion of a contract and money expressly agreed as consideration for a right to withdraw. Under Articles 177 and 178 of the Turkish Code of Obligations, those two categories produce very different consequences.

Ship Sale Disputes Are Maritime Claims in Turkey

A fundamental procedural point should be identified first.

Disputes arising from contracts for the sale of vessels are classified as maritime claims under Article 1352 of the Turkish Commercial Code. Current Turkish shipping guidance likewise lists disputes arising from contracts for the sale of vessels among maritime claims. (Global Practice Guides)

This classification can affect jurisdiction and available maritime procedures.

Foreign buyers should therefore avoid treating a multimillion-dollar ship sale deposit dispute as an ordinary debt claim without first analyzing its maritime-law characteristics.

What Is a Ship Sale Deposit?

A deposit is generally paid shortly after execution of the sale agreement to demonstrate the buyer’s commitment and secure performance of the transaction.

For example, a vessel may be sold for USD 8 million.

The contract requires:

USD 800,000 deposit after signing

and

USD 7.2 million balance on delivery.

If the transaction completes normally, the deposit is credited toward the purchase price.

Problems arise when delivery never occurs.

Deposit, Advance Payment and Cancellation Money Are Not Necessarily the Same

The terminology used by commercial parties can be misleading.

A document may call a payment:

deposit, advance payment, down payment, earnest money or security deposit.

The legal consequences cannot necessarily be determined from the label alone.

The contractual wording and purpose of the payment must be examined.

Binding Money Under Turkish Law

Article 177 of the Turkish Code of Obligations provides that money given when concluding a contract is presumed to constitute evidence that the contract was concluded rather than money granting a right to withdraw, unless otherwise agreed or indicated by local custom.

Unless otherwise agreed or understood from custom, that amount is deducted from the principal obligation.

This rule is highly relevant where the contract merely says that the buyer paid a “deposit” without clearly defining what happens if the transaction fails.

Cancellation Money

Article 178 creates a very different regime.

Where the parties have expressly agreed cancellation money, either party is considered entitled to withdraw. If the party who paid the cancellation money withdraws, that party leaves the payment behind. If the recipient withdraws, the recipient must return twice the amount.

This distinction can dramatically affect a foreign buyer’s recovery.

A USD 500,000 payment potentially characterized under Article 178 can therefore have very different consequences from an ordinary advance payment.

Can the Foreign Buyer Recover Twice the Deposit?

Not automatically.

Foreign buyers sometimes assume:

“The seller cancelled, so I automatically receive double my deposit.”

Turkish law does not support such a general rule for every advance payment.

The double-payment consequence in Article 178 relates specifically to cancellation money agreed between the parties.

If the payment instead falls under Article 177 or constitutes an ordinary advance against the purchase price, the analysis is different.

The contract must therefore be reviewed before demanding double repayment.

Seller Refuses to Deliver the Vessel

One of the clearest disputes arises where the buyer performs its obligations but the seller refuses delivery.

For example:

A foreign buyer signs the SPA.

The buyer transfers USD 1 million.

The delivery date arrives.

The seller announces that it no longer wishes to sell because vessel values have increased.

The buyer may potentially pursue contractual remedies including recovery of money paid and damages, depending on the agreement and applicable law.

The seller cannot necessarily transform an ordinary purchase-price advance into a non-refundable payment merely because it has changed its mind.

Seller Sells the Vessel to Someone Else

A particularly serious situation arises where the seller enters into a second sale.

Suppose a foreign buyer pays a 10% deposit.

Before delivery, the seller receives a higher offer and transfers the vessel to another purchaser.

The first buyer should act immediately.

The claim may concern:

deposit repayment,

contractual damages,

additional losses,

and potentially urgent provisional measures depending on the status of the vessel and transaction.

Speed becomes critical before ownership and money move beyond effective recovery.

Seller Cannot Provide Clean Title

The seller may be willing to deliver but unable to provide the vessel free from undisclosed encumbrances.

Due diligence may reveal:

a mortgage,

ship arrest,

maritime lien exposure,

ownership dispute,

enforcement measure,

or another third-party right.

Whether the buyer can terminate depends on the contract and seriousness of the title problem.

A well-drafted vessel SPA should clearly regulate the seller’s obligation to deliver clean title and specify which encumbrances must be discharged before closing.

Undisclosed Mortgage

Consider a vessel sold for USD 12 million.

The foreign buyer pays USD 1.2 million.

Before closing, registry searches reveal a USD 5 million mortgage that the seller never disclosed.

The seller cannot obtain discharge.

The buyer should not simply transfer the remaining USD 10.8 million and hope the mortgage disappears later.

The closing conditions and buyer’s termination rights should be analyzed immediately.

Vessel Is Arrested Before Delivery

A vessel may become subject to judicial arrest after the sale agreement is signed but before delivery.

This does not automatically determine which party bears the risk.

The contract should regulate:

when risk passes,

seller’s obligation to deliver free of arrest,

cancellation rights,

and the consequences if delivery cannot occur by the cancelling date.

If the seller cannot satisfy the required delivery conditions, refund of the deposit may become a central remedy.

Vessel Suffers Casualty Before Closing

Another problem arises where the vessel is damaged, grounded, involved in collision or becomes a constructive or actual total loss before delivery.

Sophisticated ship sale contracts normally allocate this risk expressly.

The buyer should determine whether the casualty triggers:

repair obligations,

delivery postponement,

price adjustment,

or termination and deposit repayment.

The seller should not automatically retain the buyer’s advance simply because an unexpected casualty occurred.

Conditions Precedent Are Not Satisfied

Some vessel sales depend on conditions that must be fulfilled before closing.

Examples include:

board approval,

financing,

registry documentation,

mortgage discharge,

classification documentation,

sanctions clearance,

or delivery documentation.

The contract should state what happens if a condition precedent is not fulfilled.

The answer may depend on which party was responsible for satisfying the condition.

Buyer Discovers Serious Misrepresentation

A deposit dispute can also arise because the buyer discovers that information provided before signing was false.

The seller may have misrepresented:

ownership,

classification status,

vessel condition,

engine history,

casualty history,

mortgages,

charter commitments,

or regulatory compliance.

The buyer should preserve the pre-contractual representations carefully.

Email correspondence, vessel questionnaires, inspection documents and broker communications may become critical evidence.

Defective Vessel Discovered Before Closing

A pre-purchase inspection may reveal defects far more serious than represented.

Whether the buyer can terminate depends heavily on the sale contract.

Some second-hand vessel contracts provide buyers with limited inspection rights and allocate vessel-condition risk through “as is” structures.

Therefore, discovering an expensive defect does not automatically create a right to cancel every vessel sale.

The precise inspection and condition provisions must be reviewed.

Buyer Refuses to Complete

The opposite scenario also occurs.

The seller is ready to perform, but the foreign buyer refuses to pay the balance.

The seller then claims entitlement to retain the deposit.

Whether this is legally justified depends on the contract and applicable law.

If the buyer is itself in default, recovery of the deposit may become substantially harder.

Was the Buyer Actually in Default?

This question should not be assumed.

The seller may claim:

“You failed to close.”

But perhaps the buyer refused payment because the seller had not produced mandatory closing documents.

If the seller had not satisfied its own conditions for delivery, the buyer’s refusal to transfer millions of dollars may not constitute wrongful default.

The entire closing sequence must be reconstructed.

Memorandum of Agreement

The MOA or SPA is normally the most important document.

It should be reviewed for:

deposit provisions,

payment mechanics,

inspection rights,

delivery place,

delivery window,

cancelling date,

notices,

seller default,

buyer default,

encumbrances,

documentation,

governing law,

and arbitration or jurisdiction.

A deposit claim should never be evaluated in isolation from the rest of the agreement.

Escrow Account

For substantial vessel transactions, the deposit may be held by an independent escrow agent rather than transferred directly to the seller.

This significantly reduces recovery risk.

Modern ship sale practice uses dedicated escrow arrangements precisely because disputes can arise between signing and closing regarding seller default, buyer default, documentation or other conditions. (Law Firm)

The escrow agreement should clearly state when the money can be released.

Deposit Still in Escrow

If the sale collapses while the money remains in escrow, the foreign buyer may be in a substantially stronger position.

Immediately notify the escrow agent that the deposit is disputed.

Do not allow release to the seller while contractual entitlement remains contested.

The buyer should provide the relevant contractual notices and request that funds remain frozen pending resolution.

Deposit Already Transferred to Seller

Recovery becomes more difficult where money has already entered the seller’s operating account.

The seller may:

transfer it abroad,

pay creditors,

distribute it to related companies,

or become insolvent.

The dispute then becomes not merely a contractual question but an asset-preservation problem.

Precautionary Attachment

Where a monetary claim exists against a Turkish seller, the buyer should examine whether Turkish provisional debt-security mechanisms, including precautionary attachment where its statutory conditions are satisfied, can protect recovery.

Potential assets may include:

bank accounts,

receivables,

real estate,

company interests,

and other attachable property.

The objective is to avoid obtaining a favorable judgment after the seller has become assetless.

Can the Vessel Itself Be Arrested?

This requires careful analysis.

The fact that a ship sale dispute constitutes a maritime claim does not automatically mean that the buyer can arrest any vessel belonging to anyone.

The statutory requirements concerning the maritime claim, debtor, ownership and arrest must be examined individually.

Current Turkish shipping guidance confirms that disputes arising from ship sale contracts fall within the maritime-claim framework. (Global Practice Guides)

Where the vessel remains owned by the seller and is still within Turkish jurisdiction, urgent maritime-security options should therefore be assessed immediately.

Do Not Wait Until the Vessel Leaves Turkey

This is especially important.

Suppose the foreign buyer pays USD 2 million.

The seller refuses closing.

The vessel is scheduled to depart Turkish waters tomorrow.

Waiting several weeks to exchange demand letters can materially reduce practical options.

Counsel should immediately determine:

whether the vessel remains owned by the seller,

where it is located,

whether a qualifying maritime claim exists,

and what provisional remedies are legally available.

Seller’s Other Vessels

Shipping companies often operate fleets through separate single-ship companies.

The commercial group may own ten vessels, but each ship may belong to a different legal entity.

A buyer cannot assume that a claim against Seller Company A automatically permits measures against vessels owned by Companies B, C and D.

Registered ownership and debtor identity must be investigated carefully.

Corporate Guarantee

A foreign buyer may have negotiated a parent-company guarantee.

This can become extremely valuable where the selling entity is a thinly capitalized single-purpose company.

The guarantee should be reviewed immediately to determine:

what obligations are secured,

whether deposit repayment is included,

how demand must be made,

and whether any deadline applies.

Bank Guarantee

Some transactions provide bank-backed security for advance payments.

If the seller becomes obliged to refund the deposit, the buyer may potentially make a demand under the guarantee.

Guarantee wording should be reviewed before serving termination notices.

A badly coordinated demand can create avoidable disputes with the guarantor.

Seller Becomes Insolvent

The worst-case scenario occurs when the buyer discovers that the deposit has been spent and the seller is insolvent.

The buyer may then have to participate in insolvency or enforcement proceedings.

This illustrates why advance-payment security should be negotiated before money is transferred.

For high-value vessel purchases, unsecured advance payments can expose foreign buyers to significant credit risk.

Deposit Paid to Broker

Sometimes the buyer transfers money to a shipbroker rather than directly to the seller.

The first question becomes:

In what legal capacity was the broker holding the money?

Was it an escrow arrangement?

Was the broker authorized to receive payment for the seller?

Was the money supposed to remain segregated?

Was it transferred onward?

The broker’s instructions and bank records should be obtained immediately.

Broker Refuses to Return Deposit

If the sale fails and the broker still controls the funds, the buyer should give immediate written notice disputing release.

The broker’s contractual role must then be examined.

A broker should not automatically decide the substantive dispute between buyer and seller unless the escrow arrangement authorizes it to do so.

Payment to Wrong Company

Fraud can also enter the transaction.

A foreign buyer may believe it is transferring the deposit to the vessel-owning company but payment instructions direct money to an unrelated entity.

This should be treated as a potential fraud and asset-recovery emergency.

The buyer should immediately contact its bank and preserve all payment instructions and correspondence.

Fake Vessel Sale

In more serious cases, the seller may not own the vessel at all.

Fraudsters can use genuine vessel details, photographs and registration information to create a convincing transaction.

The foreign buyer pays an advance and later discovers that the actual owner knows nothing about the sale.

This requires a fundamentally different strategy involving criminal investigation, bank tracing and urgent asset recovery.

Contact the Bank Immediately in Fraud Cases

Where the payment was induced by suspected fraud, hours can matter.

The buyer should immediately notify its bank and request available recall or fraud procedures.

Bank transfer records should be preserved.

The receiving bank, beneficiary account, SWIFT information and payment instructions may become important evidence.

Criminal Complaint vs Commercial Lawsuit

Not every seller who refuses to return a deposit has committed criminal fraud.

A genuine disagreement concerning interpretation of a ship sale agreement may be purely commercial.

Criminal proceedings should not be used simply as pressure in an ordinary contractual dispute.

However, where evidence shows that the seller never owned the vessel, fabricated documents or intentionally deceived the buyer to obtain money, criminal-law issues may arise separately.

Debt Recovery Proceedings

Where the buyer’s right to repayment is sufficiently clear and due, Turkish debt-recovery mechanisms may also be considered.

The appropriate procedure depends on the contractual documents, dispute-resolution clause and nature of the claim.

The buyer should avoid commencing the wrong proceeding without first determining whether the dispute falls within maritime court jurisdiction or arbitration.

Which Turkish Court Handles Ship Sale Disputes?

This can be a significant procedural issue.

Recent Turkish maritime-law commentary reports appellate and first-instance decisions treating disputes concerning ship sale prices, down payments and defective performance as disputes arising from ship sale contracts and therefore within the specialized maritime commercial jurisdiction under the TCC framework. (2M Hukuk Avukatlık Bürosu)

Correct characterization at the beginning can prevent substantial procedural delay.

Arbitration Clause

International ship sale agreements frequently contain arbitration clauses.

The merits of the deposit dispute may therefore need to be determined through arbitration rather than ordinary Turkish litigation.

The buyer should check:

seat of arbitration,

applicable rules,

governing law,

notice provisions,

and security mechanisms.

However, assets or the vessel itself may still be located in Turkey.

Urgent Turkish provisional measures should therefore be analyzed separately where appropriate.

Foreign Governing Law

The agreement may choose English law or another foreign law.

That choice can fundamentally affect whether the deposit is refundable and which party is in default.

Do not automatically apply Turkish substantive deposit rules merely because the vessel is physically located in Turkey.

Applicable law must be determined first.

Turkish maritime guidance also notes that limitation issues concerning maritime claims depend on the law applicable to the underlying legal relationship rather than a single universal limitation period for all maritime claims. (Global Practice Guides)

Demand Letter

Where immediate provisional action is not required, a formal demand can be useful.

The notice should identify:

the agreement,

deposit amount,

payment date,

seller default,

termination basis,

repayment obligation,

deadline for refund,

and reservation of damages.

The notice should comply with any contractual communications provision.

Sending notice to the wrong email address can create unnecessary procedural arguments.

Interest on the Deposit

If the seller becomes obliged to return the deposit but fails to pay, interest may also become relevant.

The applicable rate and commencement date depend on the governing law, contract and default rules.

The buyer should therefore state its interest claim clearly rather than demanding only the principal.

Currency of Recovery

Ship transactions are commonly denominated in USD or EUR.

Where the deposit was paid in foreign currency, the buyer should examine whether recovery should be demanded in the original currency or its applicable equivalent under the governing rules.

Currency treatment can materially affect a large claim during exchange-rate volatility.

Additional Damages

The buyer’s loss may exceed the deposit.

Potential losses can include:

inspection expenses,

survey fees,

financing costs,

legal expenses recoverable under applicable rules,

replacement-vessel costs,

and certain lost commercial opportunities.

Whether these losses can be recovered depends on causation, foreseeability, contractual limitations and governing law.

Lost Alternative Vessel

Consider a buyer negotiating two vessels simultaneously.

It chooses Vessel A, pays the deposit and abandons negotiations for Vessel B.

Seller A then wrongfully refuses delivery.

Vessel B has meanwhile been sold.

The buyer may claim that it suffered additional loss.

Such claims require strong evidence and careful analysis of causation and recoverability.

Duty to Mitigate Loss

Once seller default becomes clear, the buyer should act commercially reasonably to limit further losses.

If a comparable replacement vessel becomes available, the buyer should evaluate it.

Failure to take reasonable mitigation steps can affect subsequent damages claims.

Preserve the Vessel Sale File

Foreign buyers should preserve the entire transaction record:

signed MOA or SPA,

deposit agreement,

escrow agreement,

bank transfer confirmation,

broker correspondence,

inspection reports,

registry searches,

closing documents,

seller notices,

buyer notices,

and evidence of seller default.

Do not rely solely on screenshots.

Original emails and attachments should be retained.

Practical Example: Seller Refuses Delivery After Price Increase

A foreign buyer agrees to purchase a vessel for USD 10 million and pays a USD 1 million deposit.

Before closing, the market value rises to USD 12 million.

The seller announces that it will not complete the transaction unless the buyer pays another USD 1 million.

The buyer should immediately preserve the seller’s communication, serve the required contractual notice and assess both deposit recovery and damages.

If the vessel remains in Turkey, provisional maritime remedies should also be considered urgently.

Practical Example: Undisclosed Mortgage

A buyer pays EUR 700,000 as a deposit.

Before closing, due diligence reveals a mortgage that the seller cannot discharge.

The contract requires delivery free from mortgages.

The buyer terminates under the relevant contractual provision.

The buyer should demand immediate repayment and consider security measures if there is concern that the seller will dissipate assets.

Practical Example: Buyer Wrongfully Cancels

A foreign buyer pays a USD 500,000 deposit but later finds another vessel at a better price.

The original seller is fully ready to deliver according to the contract.

The buyer simply refuses closing.

In this situation, the seller may have substantial contractual rights against the buyer, potentially including rights relating to the deposit.

Foreign buyers should therefore never assume that changing their commercial preference automatically entitles them to a refund.

Practical Example: Deposit Paid to Fake Seller

A buyer transfers USD 900,000 to a company claiming to own a tanker.

The actual registered owner later confirms that the company had no authority to sell the vessel.

This should immediately be treated as suspected fraud.

The buyer should contact its bank, preserve communications, investigate the receiving account and consider criminal and civil asset-recovery proceedings.

First 24 Hours After a Ship Sale Deposit Dispute

The foreign buyer should immediately collect the signed SPA or MOA, escrow agreement, deposit invoice, bank transfer records, vessel registry information, broker communications and all notices exchanged with the seller.

Determine why the transaction failed and which party is contractually responsible.

Verify whether the deposit remains in escrow or has already been transferred.

Check the vessel’s current ownership and location.

If the vessel or seller’s assets remain in Turkey, determine immediately whether provisional measures are available.

If fraud is suspected, contact the bank without delay.

Finally, review the governing-law and dispute-resolution provisions before commencing proceedings.

The objective is not merely to prove that the buyer deserves repayment.

It is to ensure that money or assets still exist from which the judgment or award can ultimately be recovered.

Frequently Asked Questions

Can a foreign buyer recover a ship purchase deposit paid in Turkey?

Potentially yes. Recovery depends on the sale agreement, characterization of the payment, reason the transaction failed and governing law.

Is every ship sale deposit non-refundable?

No. The contractual and legal nature of the payment must be determined. Under Turkish law, Article 177 generally treats money paid upon contract formation as evidence of conclusion of the contract rather than cancellation money unless otherwise agreed.

Can I recover twice the deposit?

Only in appropriate circumstances. Under TCO Article 178, where cancellation money has actually been agreed, the recipient who withdraws must return twice the amount. This rule should not be applied automatically to every advance payment.

What if the seller refuses to deliver the vessel?

The buyer may potentially terminate and pursue repayment and damages depending on the agreement and applicable law.

What if the seller sold the vessel to another buyer?

Urgent action may be necessary. The buyer should assess deposit recovery, damages and available provisional measures immediately.

Can I arrest the vessel to secure my deposit claim?

Potentially, subject to the statutory requirements. A dispute arising from a contract for the sale of a vessel is recognized as a maritime claim under Turkish law. (Global Practice Guides)

What if my deposit is still held in escrow?

Immediately notify the escrow holder of the dispute and examine the release conditions. The money should not be released contrary to the escrow agreement.

Can I recover the deposit if the vessel has an undisclosed mortgage?

Potentially, particularly where the seller was contractually required to provide clean title and cannot satisfy that obligation. The precise termination provisions should be reviewed.

What if the SPA contains an arbitration clause?

The underlying dispute may need to be resolved through arbitration. Potential provisional measures concerning assets or a vessel located in Turkey should be considered separately.

What should I do if I believe the vessel sale was fraudulent?

Contact the bank immediately, preserve all transaction evidence and obtain advice regarding criminal proceedings and civil asset recovery. Do not treat a fraudulent vessel sale as merely an ordinary deposit disagreement.

Ship Sale Deposit Recovery Lawyer in Turkey

A foreign buyer facing a ship sale deposit dispute should focus on two questions simultaneously:

Do we have the legal right to recover the money, and where are the assets from which that money can actually be recovered?

The first question requires analysis of the MOA or SPA, deposit clause, escrow terms, seller and buyer default provisions, governing law and termination procedure.

The second requires immediate investigation of the seller’s assets, the vessel’s ownership and location, bank payments and available provisional remedies.

Turkish law makes the characterization of the deposit particularly important. Under TCO Article 177, money paid upon conclusion of a contract is presumed to evidence the contract rather than constitute cancellation money unless otherwise agreed; Article 178 provides a separate regime where cancellation money has actually been agreed.

Ship sale disputes also have a specific maritime dimension because disputes arising from vessel sale contracts are classified as maritime claims under the Turkish Commercial Code. (Global Practice Guides)

For high-value transactions, foreign buyers should therefore avoid spending weeks exchanging informal emails while the seller transfers funds or the vessel leaves the jurisdiction. Early legal action can be decisive.

Fırat Fesih Kaya Law Office assists foreign shipowners, shipping companies, vessel investors and international buyers with ship sale deposit disputes in Turkey, recovery of advance payments, vessel sale contract termination, escrow disputes, seller default, ship arrest and provisional measures, fraudulent vessel sales, maritime litigation, debt recovery and international ship sale arbitration.

Phone: +90 312 434 22 22
Mobile: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No: 221, Yıldırım Tower, Balgat, Çankaya, Ankara, Turkey