The Turkish Supreme Court (Yargıtay) (“Supreme Court“) ruled that obtaining spousal consent is not required for avals. The Grand General Assembly of Case Law Unification’s decision dated April 20, 2018 was published in the Official Gazette dated October 16, 2018 and numbered 30567 (the “Supreme Court Unification Decision”).
What does the law say?
Pursuant to the Turkish Code of Obligations No. 6098 (the “TCO”), a married person can provide a surety (kefalet – a kind of Turkish personal security) only upon his/her spouse’s consent unless the surety is issued for the issuer’s commercial enterprise’s obligations or the obligations of a company where the issuer is a director or shareholder.
Under Article 603 of the TCO, provisions regarding the formal requirements, the legal capacity for being a surety and spousal consent are also applicable to other agreements in which individuals assume liability for third parties’ liability (e.g., guarantees).
An aval is a special type of suretyship, regulated under the Turkish Commercial Code No. 6102 (“TCC”), securing, wholly or partly, the payment of a bill of exchange (poliçe) or a bond (bono). However, there are certain differences between an aval and a suretyship, making it uncertain whether spousal consent is required for avals as per Article 603 of the TCO. Accordingly, both legal doctrine and Supreme Court decisions have differing opinions.
Supreme Court Decision
The Supreme Court Unification Decision states that due to the following reasons, spousal consent will not be applicable to avals:
- Suretyship imposes a dependent ancillary obligation, whereas an aval imposes a primary and independent obligation.
- Under the TCO, spousal consent is a formal requirement for the validity of a suretyship, except for certain exemptions. However, the TCC, which sets forth the formal requirements for aval, does not require such consent.
- Aval is not an “agreement”, but a unilateral undertaking and thusly does not fall in the scope of Article 608 of the TCO.
- If spousal consent is required for an aval, the marital status of the aval provider must be provided in the bill itself, which is not possible unless the aval provider’s civil registry extract is attached to the bill. Attaching such information is neither functional nor practical in commercial life.
- If the spouse of the aval provider signs the face of the bill, they might be considered an aval provider themselves, as any signature on the face of the bill is considered a valid aval under Turkish law. Hence, spousal signature on the face of the bill could cause unintended issues.
- Requiring spousal consent for an aval does not comply with the circulatory power of commercial bills.
The Supreme Court Unification Decision clarifies the problematic question of spousal consent for avals and ends the ongoing debates and uncertainties in both legal doctrine and Supreme Court decisions.