Energy Investments and Right of Construction

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)[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[4]. The General Assembly of Civil Chambers of Court of Cassation, dated 21.06.2006, clearly states as follows[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.



[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 Hakkı (Superficies), Ankara University Law Faculty Journal, 1998, Volume 47 Numbers 1-4, p. 114-115.

[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).

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