Forex Transfer Ratified Later: Court of Cassation 2024/8521

A private banking customer's foreign-currency account is debited for USD 500,000, sent to a bank in Switzerland in the name of a forex company established in Southern Cyprus. The instruction letter was signed not by the account holder but by his son. Before sending the money, the bank telephones the account holder, who tells the bank to carry out the transfer. In the lawsuit filed later, the account holder claims he never wanted this transfer and that the bank was grossly at fault. The central question in the case is whether the bank can be held liable, given that an instruction signed by someone else was confirmed by telephone and the signed receipt was collected months later.

By its decision of 02.12.2024, Docket No. (E.) 2024/594, Decision No. (K.) 2024/8521, the 11th Civil Chamber of the Court of Cassation upheld unanimously and as final the decision of the 13th Civil Chamber of the Istanbul Regional Court of Appeal, which had rejected on the merits the appeal against the judgment of the Istanbul Anadolu 4th Consumer Court dismissing the claim.

📞 The son who signed the instruction, the account holder who confirmed it

The claimant was a customer holding a USD demand account at the private wealth management branch of the defendant bank. According to the petition, on 05.02.2007 USD 500,000.00 was transferred from this account to a forex company established in Limassol (the Greek Cypriot part of Southern Cyprus) without any written or oral instruction from the claimant. The claimant argued that the transaction took place against his will and that the bank was therefore grossly at fault; reserving his further rights, he sought material compensation of USD 500,000.00 with advance (statutory) interest from the date of the transfer.

The bank, for its part, argued that the claimant's signature appeared on the transaction and on the SWIFT receipt, and that on the day of the transaction the claimant had also spoken by telephone with bank officials and given the instruction for the transaction to be carried out.

According to the documents in the case, the instruction letter and the attached document containing the bank, SWIFT code, beneficiary and IBAN details were signed by the claimant's son. The money was sent through Citibank to the account of the beneficiary forex company at Basler Kantonalbank Zurich. A further USD 3,250.00 was deposited so that the amount in the account would be completed to USD 500,000.00. After the claimant's death, the appeal review was carried out on the application of his heirs.

🧾 Consumer court: two panel reports

After a decision of lack of jurisdiction, the case concluded before the Istanbul Anadolu 4th Consumer Court (2018/304 E., 2020/797 K.). The court obtained reports from two separate expert panels, one before the court lacking jurisdiction and one before itself. The panels included banking experts, and the panel of 12.04.2016 also included a legal expert.

The court's reasons for dismissal rest on three points:

🏦 Court of appeal: a transfer, not an investment transaction

The 13th Civil Chamber of the Istanbul Regional Court of Appeal (2021/1085 E., 2023/1738 K.) first determined the nature of the transaction. The claimant had also attached to his petition a framework agreement for bond/bill trading and a framework agreement for trading and intermediation in investment instruments. According to the Chamber, the transaction in dispute is not an investment transaction carried out under these agreements; it is merely a transfer made on instruction under the banking services agreement.

This finding matters. Even though the money went to a forex company, the bank's role was money transfer, not investment intermediation. The care expected of the bank was determined accordingly: checking that the instruction really came from the account holder.

The Chamber stressed that the bank did not rely directly on the instruction. After the instruction reached the bank, bank staff called the claimant personally; the claimant said that, on the basis of the instruction brought by his son, USD 500,000.00 should be sent to the bank in Switzerland. The SWIFT message of 05.02.2007 also bears the claimant's signature.

✍️ The telephone record, the signed receipt and ratification

In the telephone call the claimant did not state the name of the beneficiary forex company expressly. The regional court of appeal did not find this decisive: the claimant had expressly asked for the transfer to be made to the address written in the instruction, and it was clear from the content of the conversation that he knew the money would go to an account opened in the beneficiary's name at the bank in Switzerland.

The Chamber also reasoned separately that the outcome would not change even if the claimant's allegation were accepted as true. Even assuming that the son gave the instruction to send the money to the forex company against the claimant's will:

In view of these facts, the Chamber held that the claimant would be deemed to have ratified afterwards the transaction that allegedly exceeded the authority of representation given to the son. In unauthorised representation, the later approval of the person represented makes the transaction valid from the outset; this principle is now set out in Article 46 of the Turkish Code of Obligations No. 6098, and at the time of the events in Article 38 of Code of Obligations No. 818. Although the text of the decision does not cite an article number, its reasoning rests on this principle.

The Chamber drew attention to one more fact: from the account in Switzerland to which the money was sent, the money was then withdrawn by the claimant's son and moved to another account without the claimant's consent. In other words, what became of the money was determined within the family after the bank's transfer. As a result, the appeal was rejected on the merits, it being stated that the bank had no statutory or contractual liability for its act, which consisted only of carrying out the written and oral instruction within the claimant's knowledge and consent.

⚖️ Court of Cassation: final affirmation

The claimants' heirs appealed the decision. The 11th Civil Chamber of the Court of Cassation characterised the dispute as a claim for recovery of material compensation in the amount of the transfer, relating to a transfer of USD 500,000.00 alleged to have been made from the claimant's account without oral or written instruction. It cited Articles 369/1, 370 and 371 of Code of Civil Procedure No. 6100 as the applicable law.

The Chamber found no error in the first-instance judgment and stated that the regional court of appeal's decision rejecting the appeal on the merits under Article 353/1-b-1 of the Code of Civil Procedure was in conformity with procedure and law, and UPHELD the decision. Because actions brought by consumers before a consumer court are exempt from court fees under Article 73/2 of Law No. 6502, no fee was charged to the heirs. The decision was given on 02.12.2024, as final and unanimously.

🔍 Where does the bank's liability end?

Through a concrete case, the decision shows the criteria that determine a bank's liability in claims of a transaction made without instruction:

Among similar decisions on our site, the decision on later approval of an option trade made without instructionTR addresses how the principle of ratification appears in investment transactions, while the decision on an investor who stayed silent on a statementTR addresses the consequences of not objecting to account statements. The distinctive features of this case are that the transaction was characterised as a transfer rather than an investment, and that the person who brought the instruction was a relative of the account holder.

💬 Frequently asked questions

For detailed information and legal support, you can contact Savun Law & Consultancy. Contact details are on the contact page; other decisions on disputes involving banks, intermediary institutions and investment accounts can be followed on the Precedent DecisionsTR page.