• Energy Investments and Right of Construction
  • November 26, 2015
  • Law Firm: Erdem Erdem Law Office - Istanbul Office
  • Introduction

    Power generation facilities are established, in general, over publicly owned or expropriated properties. However, it is also possible to build energy projects over lands that are owned by private law persons. In such cases, projects are generated by means of an agreement between the project developer and the land owner. An agreement is entered into between the parties in the event the acquisition of land, or establishing a long-term usage right in favor of the project developer comes into question. At this point, due to its characteristics and various advantages, obtaining a right of construction over the land is generally preferred. Therefore, the beneficiaries’ rights and the effects of the right of construction will be briefly examined herein.

    Right of Construction

    As per Art. 826 of Civil Law numbered 4721 (“CL”), the right of construction is defined as “an easement right that grants its third party beneficiary the authority to build construction on or underneath the land, or to preserve an existing construction.” Hence, the right of construction entitles a person to build and own construction on a third party person’s property. The owner of the servient estate holds ownership of the land; yet, is obliged to respect the presence and preservation of the construction of beneficiaries’ over the land.

    Right of Construction and Lease Agreement

    As stated, the land may be brought into a project developer’s use with methods other than transfer of the ownership. The first method is to sign a lease agreement. However, due to the fact that the lease agreement grants personal rights (right in personam) to the parties, they do not provide sufficient protection for the project developer; in particular, when weighing the necessity of a long-term operation for a profitable energy investment against the possibility of the land owner’s possible demise, or transfer of the land to third parties. At this point, annotation of the lease agreement with the land registry may be a solution. Unless the agreement is annotated with the land registry, it shall not grant any right against third persons, and the future of the land shall be jeopardized by the risks of transfer of the land and title through descent. However, although the annotation creates an effect of right in rem and servitude attached to the property, it does not render the rights arising from the lease agreement as real rights (right in rem)[1], and the lessee shall not benefit from certain protection mechanisms vested with the beneficiary of a real right.

    On the other hand, establishment of a right of construction is quite efficient for energy projects due to the fact that it provides a right to construct over the land, as well as the ownership of the construction, throughout the duration of the right of construction. Furthermore, while the lessee is only authorized to file actions for protection of possession against the third parties’ unlawful interventions, the beneficiary of the right of construction shall be authorized to file real actions (actio in rem) as well, which is explained below.

    Protection of the Right of Construction

    The rights of a beneficiary of a right of construction for protection of its authority to construct on the land, and to preserve such construction, should also be considered. This issue bears importance, especially with regard to preventing unlawful intervention of the owners of the servient estate or the previous owners facing expropriation.

    There are no explicit provisions regarding the protection of the beneficiaries of the right of construction against unlawful interventions of third parties. However, the right of the beneficiary to file real actions against the offenses of third parties is an acknowledged principle arising from Roman law[2]. Leading scholars on the matter defend that Art. 683/2 of the CL, which entitles the owner to file a possessory action, might be applied to easement rights by analogy, as well. As per this Article, in cases where the unlawful intervention prevents the easement right beneficiary from executing his right, such beneficiary can file a possessory action[3].

    Within this context, the beneficiaries of a right of construction may file a possessory action (or actio negatoria). A possessory action aims to prevent on-going unlawful intervention against a land owner’s possession and ownership right. The intervention does not need to be faulty in order for this action to be filed. Additionally, as this action is an action in rem, it is not subject to a time-bar, but the intervention needs to be ongoing.

    The Court of Cassation has also decided that all beneficiaries of a right in rem can file a possessory action[4]. The General Assembly of Civil Chambers of Court of Cassation, dated 21.06.2006, clearly states as follows[5]: “However, this right in rem may be claimed against anyone. Even though there are no special provisions in the Civil Law protecting easement rights, in this regard, the provisions regarding ownership shall be applied by analogy. As such, the beneficiary of easement right may file a possessory action as per Article 638 of the Civil Law.”

    In addition to the possessory action, the beneficiary of the right of construction may request prevention of any potential unlawful intervention, and may file an action for damages if the requirements of the law of torts are met. Moreover, the beneficiaries of easement rights may oppose the claims in rem of third persons, as well. In cases where a third person claims a right over the servient estate that prevent the beneficiary from exercising his easement right, the beneficiary may file a negative declaratory action, or if there are new registrations that conflict with the easement right, the beneficiary may claim the annulment of these registrations[6].

    Right of Construction on Pledged Immovables

    Prior to the implementation of the project, it is common to check whether the servient estate is subject to any encumbrances. Particularly, for the cases in which the right of construction is established on land that is owned by private law persons through an agreement, the existence of a pledge should be checked. If a right of pledge is already established over the land prior to the establishment of the right of construction, the beneficiary of the pledge may request the sale of the land, free from the right of construction. Article 132 of Enforcement and Bankruptcy Law numbered 2004 is quite clear: “If the debtor establishes an easement right or a right of encumbrance over the land without consent of the creditor, this establishment shall not affect a creditor’s right, and the creditor may request the sale of the land with or without such right.” In such case, the beneficiary shall face the risk of losing all of his rights over the land. Furthermore, the beneficiary of the right of construction shall not be able to argue having acted in good faith since the pledge is registered with the land registry. Therefore, the consent of the creditor of the pledged land should be obtained in order to avoid unfavorable outcomes for the beneficiary of the right of construction.

    Conclusion

    Energy investments are high-cost projects that are profitable in the long term. Throughout this term, a right of construction may be established over the land in order to provide protection for a project developer’s rights against the land owner and third persons. However, during the establishment of a right of construction, the presence of a previously established pledged should be seriously considered.



    [1] Kemal Oǧuzman/Özer Seliçi/Saibe Oktay-Özdemir, Esya Hukuku, Istanbul, 2013, p. 253, n. 1037.

    [2] In order to obtain further information regarding (Actio de Superficiebus), an action in rem by which the beneficiary can file actions against both the land owner and the third persons, please see Nadi Günal, Roma Hukuku’nda Üst Hakki (Superficies), Ankara University Law Faculty Journal, 1998, Volume 47 Numbers 1-4, p. 114-115.

    [3] Oǧuzman/Seliçi/Oktay-Özdemir, s. 784, n. 2760-2762.

    [4] Court of Cassation 14th Civil Chamber, 15.3.2011, E. 2011/1699, K. 2011/3284; Court of Cassation 14th Civil Chamber, 6.12.2005, E. 2013/13320, K. 2014/1459,; Court of Cassation 14th Civil Chamber, 5.2.2014, E. 2005/9293, K. 2005/10983 (www.kazanci.com.tr).

    [5] General Assembly of Civil Chambers of Court of Cassation, 21.6.2006, E. 2006/14-454, K. 2006/459, (www.kazanci.com.tr).

    [6] Oǧuzman/Seliçi/Oktay-Özdemir, p. 784, n. 2765-2766.