Margin Debt to a Foreign Bank: Turkish Court of Cassation Ruling

In leveraged trading, an investor's loss is often assumed to be limited to the collateral deposited. Yet if the contract allows positions larger than the collateral and the market moves sharply the other way, a balance owed by the investor to the intermediary may remain when the account is closed. This time the creditor is an investment bank based abroad, and the debtor is a customer living in Türkiye who had traded currencies and commodities with that bank for years. In the dispute, which arose when Brent oil prices fell rapidly at the end of 2014, three questions were debated: is a contract signed with a foreign institution not authorised in Türkiye valid, does sending money to a margin call amount to approving the trades, and which court hears the case?

In its decision of 06.02.2024, Docket No. E.2023/1175, Decision No. K.2024/534, the 6th Civil Chamber of the Court of Cassation unanimously upheld, after a hearing, the judgment ordering the investor to pay the foreign bank USD 407,619.18, which the regional court of appeal had rejected on the merits.

🧭 The Three Questions the Decision Answers

The issues debated in the case cover almost all the most common defences an investor can raise against a debt arising from leveraged trading:

The courts below reached a result in the bank's favour on all of these questions, and the Court of Cassation found no reason that would require overturning the decision.

🛢️ From the Contract to the Account Closure

The claimant is an investment bank that provides international investment advisory services in a city abroad. A general terms agreement on the opening and operation of an investment account was signed with the defendant in 2003, and on 22.07.2014 an authorisation agreement on derivative and forward transactions was added to it. The bank asserted that over the years the defendant had made currency investments such as dollar, euro and yen and had earned substantial income from them.

The last transaction in dispute is a futures Brent oil contract. When oil prices fell rapidly, contrary to expectations, the collateral in the account became insufficient and the bank asked the customer for additional collateral (margin). In response to this call the defendant sent USD 150,000.00; the payment date appears as 15.12.2014 in the petition and as 14.12.2014 in the first-instance reasoning.

Prices continued to fall and, by the bank's calculation, the amount the defendant had to pay reached USD 407,656.18. The bank stated that it had kept the customer informed throughout and that the customer, although saying he would pay, sent no money. Finally, an account statement dated 13.01.2015 was sent by fax and the closure of the account was notified. When the defendant replied to the formal notice that he owed nothing, the bank filed a claim for receivables, seeking USD 407,656.18 with interest running from 23.03.2015 under Article 4/a of Law No. 3095.

🗂️ The Investor's Objections

The defendant argued that he had signed some documents after being persuaded by a manager of the bank and that the following framework had been explained to him: a certain collateral would be deposited, trades would be made to the extent the collateral was sufficient and on his own instruction, if the collateral fell short he would be asked to top it up, and if it was not topped up the trading would not continue. For this reason, the defendant claimed, he believed he would lose at most the collateral he had deposited.

The defendant's legal objections were as follows:

⚖️ Reasoning of the First-Instance and Appeal Courts

The first-instance court found that there was no dispute that the contracts between the parties had been signed and that the defendant had made his trades through the bank within the framework of these contracts. According to the court, the claimant has the nature of an intermediary institution; its headquarters are abroad and it has no branch in Türkiye. Since the contract was signed abroad, it falls outside the scope of the communiqué that entered into force on 01.07.2014.

According to the court, derivative instruments are inherently uncertain; because of leverage it is possible to lose more than the principal. Under the contract, orders were to be conveyed by email, fax or telegram.

At the centre of the reasoning is the margin payment: in the court's view, the defendant's deposit of USD 150,000.00 in response to the call to top up collateral means that he ratified the trades. The court noted that there was no loss in the defendant's portfolio at that date, that otherwise there would have been no reason for him to send money, and that his earlier long period of trading also confirmed the ratification. In the leveraged trade made in expectation of Brent oil, prices fell unexpectedly and the defendant stayed in the position and lost. By partially accepting the claim, the court ordered the collection of USD 407,619.18 with interest applicable to foreign currency under Article 4/a of Law No. 3095, running from 31.03.2015.

The 11th Civil Chamber of the regional court of appeal rejected the jurisdiction objection on the following grounds: given the duration and amount of the defendant's derivative trading with the bank, the jurisdiction to hear the case belongs to the commercial court of first instance. The chamber held that the contract and the trades were adopted when the call to top up collateral was answered with a USD 150,000.00 deposit, accepted that the defendant owed USD 407,619.18, and rejected the appeal on the merits.

🏛️ The Court of Cassation's Affirmation

The defendant's counsel appealed on points of law and requested a hearing. After the preliminary examination, the 6th Civil Chamber of the Court of Cassation decided to hold a hearing; after hearing the parties' counsel, it characterised the dispute as a claim for receivables arising from service contracts. Articles 369/1, 370 and 371 of the Code of Civil Procedure (HMK) were cited as the applicable law.

The chamber stated that the regional court of appeal's decision was in accordance with procedure and the law in terms of the parties' claims and defences, the documents relied on, the legal rules to be applied, the characterisation of the legal relationship, the procedural requirements and the rules of procedure and proof, and that the grounds of appeal did not require reversal. The decision was UPHELD under Article 370/1 of the HMK, and a hearing attorney's fee of TRY 17,100.00 was awarded in favour of the claimant. The decision was given unanimously on 06.02.2024.

🔎 Why Was the Margin Payment Treated as Ratification?

The defendant's strongest defence was that the bank had not closed the position while the collateral was insufficient and had given notices through channels not provided for in the contract. The courts below assessed this defence together with the expert calculation and accepted that the fact affecting the outcome was the investor's own conduct. The distinctions that emerge from the reasoning can be summarised as follows:

Another point worth noting in the decision is that the debt was set slightly lower than the amount claimed: the bank claimed USD 407,656.18, the court awarded USD 407,619.18 according to the expert calculation, and it also took the start of interest as 31.03.2015 rather than 23.03.2015. The Court of Cassation did not state a separate principle and did not treat the objections to this calculation as grounds for reversal.

📊 How It Differs from Similar Decisions

Whether a loss exceeding the collateral falls on the investor has been examined on the site from different angles. In the decision on a loss exceeding collateral in leveraged gold tradingTR and in the decision on a forex loss exceeding collateral transferred from a bankTR, the parties were dealing with institutions based in Türkiye. The importance of a written closing instruction in an oil position was discussed in Istanbul Regional Court of Appeal 12th Civil Chamber 2026/312TR.

What sets this case apart is that the creditor is a foreign investment bank with no branch in Türkiye, and that the investor's defence of invalidity based on the lack of permission did not succeed because the contract was concluded abroad. In addition, this time the case was brought not by the investor but by the institution itself; the investor remained in the position of defendant.

❓ Common Questions

For detailed information and legal support, you can contact Savun Law & Consultancy. Contact details are on the contact page; other decisions on leveraged trading and intermediary institution disputes are on the Precedent DecisionsTR page.