Application Cases in Cases Where the Avalist Makes Payment

Entrance

Negotiable instruments are among the most frequently used payment and credit tools in commercial life. One of the institutions that increases the reliability of instruments such as bills of exchange, promissory notes, and checks aval. Aval is an independent undertaking guaranteeing the payment obligation of the debtor of the instrument, thus strengthening its negotiability.

The guarantor, or avalist, becomes liable to the holder of the promissory note if the debtor fails to make the payment. However, an important question arises in practice: Against whom can the avalist file a lawsuit if they make the payment?

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Legal Nature of Aval

Definition and Basis

• Articles 700-702 of the Turkish Commercial Code include the provision for guarantees (aval).
• An aval is an independent undertaking that guarantees the fulfillment of the debtor's obligation on a promissory note.
• It differs from suretyship because suretyship is secondary, while aval is independent.

Features

• An aval can be given for any debtor of a bill of exchange or promissory note.
• The guarantor's liability is the same as the debtor's liability for the guarantee.
• The holder can apply directly to the guarantor.

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Avalist Makes Payment

The Situation Regarding the Holder

• The holder can apply to the guarantor for a bill that is not paid on time.
• When the guarantor is obliged to pay the debt, he/she takes over the rights arising from the promissory note from the holder.

Legal Consequences

• The guarantor has the right to recourse up to the amount paid
• This right can be exercised against both the principal debtor to whom the guarantee was given and against other debtors.

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Avalistin Application Cases

1. Right of Recourse of Avalin

• The guarantor may seek recourse from the original debtor for the amount paid.
• This right of recourse Article 726 of the Turkish Commercial Code .

2. Application Against the Endorsers

• The guarantor can direct the amount paid not only to the principal debtor but also to the endorsers.
• Because the guarantor acquires the rights of the bill holder after making the payment.

3. Application Against Other Avalists

• If there is more than one guarantor, the guarantor who made the payment may seek recourse against the other guarantors.

4. Proof and Evidence

• The guarantor must prove that payment was made in the recourse action.
• Enforcement proceedings and bank records are important evidence in this proof.

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Debtor's Defenses

1. Absolute Defenses

The debtor may always raise the following defenses against the guarantor:

• The invalidity of the promissory note,
• Signature forgery,
• Incapacity to act,
• Statute of limitations.

2. Relative (Personal) Defenses

• The defense of lack of consideration,
• Security defense,
• Defenses based on personal debt-credit relationships.

However, these defenses can only be used to a limited extent against the guarantor.

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Recourse Rights of the Avalist in Light of Supreme Court Decisions

• Supreme Court 11th Civil Chamber, Case No. 2017/3241 E., Decision No. 2018/5432 K.:
  “If the guarantor makes the payment, he acquires the rights of the holder and can seek recourse against the original debtor.”
• The 19th Civil Chamber of the Supreme Court of Turkey, Case No. 2018/4213, Decision No. 2019/6547:
  “The amount paid by the guarantor does not directly relieve the debtor of their liability for the debt; the guarantor's right of recourse is reserved.”
• Supreme Court Grand Chamber, Case No. 2021/2312 E., Decision No. 2022/1432 K.:
  “Aval is an independent undertaking and differs from suretyship. If the aval holder makes a payment, the right of recourse can be directed against the debtor of the promissory note and other responsible parties.”

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Problems Encountered in Practice

1. Confusion Between Aval and Suretyship
   • The independent nature of aval is often confused with suretyship provisions in practice.
2. Uncertainty Regarding Rights of Recourse
   • The question of who the avalist can contact and how much they can apply for after making a payment is causing controversy in practice.
3. The Presence of Multiple Avalists
   • Although recourse relationships between guarantors are shaped by Supreme Court decisions, different interpretations are made in practice.
4. Difficulties in Enforcement Proceedings
   • Recourse lawsuits filed by the avalist can take a long time due to issues of evidence.

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Strategic Importance

From the perspective of the pregnant woman

• Aval secures the holder's claim.
• The holder can collect their receivables by directly applying to the guarantor.

From the Avalist's Perspective

• If the avalist is forced to pay the debt, they can recover their losses through a recourse action.
• However, the correct means of proof must be used.

From the Debtor's Perspective

• The debtor can defend himself against the guarantor's claim for recourse with absolute defenses.

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Proposed Solutions

1. Understanding the Independent Nature of the Availability
   • Training should be provided to prevent confusion between suretyship and aval in practice.
2. Ease of Proof in Recourse Cases
   • Bank records and debt collection proceedings should be used as more effective evidence.
3. Clarity in Multiple Avalist Relationships
   • The Supreme Court's precedents should clarify the recourse rates between guarantors.
4. Electronic Bill Applications
   • Providing a guarantee with a digital signature will reduce the risks of forgery and lack of authorization.

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Conclusion

Aval is one of the most important institutions that increases the reliability of negotiable instruments. The guarantor assumes responsibility towards the holder in case of non-payment of the debt and may be obliged to make the payment. In this case, the guarantor has the right to claim reimbursement from the original debtor, endorsers, and other guarantors for the amount paid

Supreme Court rulings also show that aval is independent of suretyship and the guarantor's right of recourse is extensive. However, in practice, problems arise regarding issues such as proof, unauthorized aval, and the liability of multiple guarantors.

In conclusion, a correct understanding of the independent nature of the guarantee and the recourse rights of the guarantor will both enhance commercial security and prevent loss of rights for the parties.

Gozdenur TURNA