ABSTRACT
As it is known, today, public services may be delegated to private legal entities by concession agreements. While it is also known that jurisdictional disputes arising from the public concession agreements fall into the administrative jurisdiction’s area of responsibility, the question of which judicial remedy will be authorized in case of conflicts caused by the supplemental agreements comes up as the first dispute between the parties in most of the lawsuits. In this study, within the scope of the law, we will first examine the agreements which the administration is party of. Furthermore, the notion of public services will be elaborated, and later on, which judicial remedy needs to be provided in case of conflicts caused by concession agreements and practice agreements partaking of supplemental of concession agreements will be analyzed.
I. INTRODUCTION
Public service, which is provided to society to meet its general and common necessities and to provide public interests or benefits, is one of the irreplaceable component of a social state. In some situations, it can be observed that public service is conducted by private legal persons. By assigning a public service to a private legal person entirely through conducting an administrative contract, the term “concession” unfolds. Concession agreements are the contracts which are conducted by private legal persons to perform a public service1. Due to the fact that concession contracts are qualified as administrative contracts, all disputes arising from concession contracts, as a rule, fall into administrative justice’s authority. However, according to the Law numbered 4446 and Law numbered 45012, it is regulated that in public services and related concession agreements, the application for national or international arbitration authorities are accessible, in case of disputes arising from the concession contracts. Hence, administrative audit coverage of the jurisdiction is limited whereas, civil jurisdiction is being promoted.
If a joint stock company, which signed a concession agreement to carry out public services with the administration, has signed an agreement with a third party further to that concession agreement or even for the purpose of actualizing the public service in question, whether the agreement will be regulated under administrative or civil law should be determined based on the legal character of the third party. Hence, if the third party is a private legal person, the contract will not be considered as an administrative agreement. Also, if the third party is a Public Economic Enterprise (“PEE”), we cannot define this contract as an administrative contract. In the Legislative Decree no. 223 Article 1, it is underlined that Public Economic Enterprises will work in accordance with productivity and profitability principles and that they will be subject to private law regulations; as a result it is presumed that they are adopted as commercial partnerships and traders3. In our article, it is discussed which judicial remedy is lawful in terms of the conflict of interest arisen from the concession contracts which is one of the contracts of the administration as a public law corporation, and the supplemental agreements for those contracts’ execution.
II. AGREEMENTS THAT THE ADMINISTRATION IS A PART OF
Before outlining the administrative agreements, it would be appropriate to mention briefly about the agreements of the administration first. Agreements which the administration signs with real persons or legal entities are called agreements of administration. The contracts that are conducted by the administration are called “private law contracts” or “administrative contracts” according to their rules and their contractual parties. Administration’s private law contracts are dependent on private law, while administrative contracts are dependent on public law as a rule. In the general legal doctrine, it is accepted that in order to define a contract as an administrative contract, three conditions as set forth below should be met collectively:
- At least one of the parties should be an administration.
- The subject of the contract should be relevant to conducting public service4.
- There should be some clauses in the agreement, which fall beyond the scope of private law. This means the possibility of demanding and getting some innovations while the service is being conducted because of the regulations that are the most important standard which determines the administrative contracts, bestowed to the administration and exceed private law5.
The characteristic feature of the administrative contracts is that some particular functions are provided for the administration. These functions fall outside the scope of private law, are unilateral and contain supremacy. The most important criterion that differentiates administrative contracts from the private law contracts of the administration is this feature. It is obligatory that one of the administrative contract’s parties be an administrative organ and that the subject of the contract be a public service. At this point, analyzing public service and procedures of giving public service would therefore be useful.
III. PUBLIC SERVICE
A. Description
Although the concept of public service does not have any specific description, according to the Council of State and the legal doctrine however, public service can be defined as: “The activities which are conducted by private legal persons under the surveillance and supervision of administration within the Administrative Law and the private legal system that is related to Administrative Law for public necessities and which can cause uneasiness and chaos unless they are conducted.”6 As it is understood from the description, public service consists of the operations that are made for the satisfaction of public needs. Fundamentally, these operations fall within the responsibilities of the administration, and may also be conducted by private legal persons as a result of changing conditions within the society.
B. Principles and Methods
The administration conducts public services according to some principles. As abovementioned, public service can also be conducted by private legal persons. The administration is under obligation for controlling whether these, as expressed in the Constitution, “private enterprises”7, conduct public services properly or not. The basic principles of public services can be enumerated as continuity, equality, variability/adaptation, and finally being gratuitous. Public service has to be conducted under these principles.
An operation that administration is insufficient to conduct can be conducted by a private legal person by the permission of administration, in other words it is possible that the related services can be provided in this way. Nowadays, administration gives private enterprises a place in various areas to conduct public services not only with regard to the areas that it remains incapable, but also to make contribution to stimulate the economy. Public service shows itself in many forms. These are; “consignment”, “joint consignment”, “assuming”, “license forms”, “Concession Agreements”, “Build Operate Transfer and Public-Private Partnership” forms. Today, in national and international arena, Concession Agreements have the largest field of application in these forms.
IV. PUBLIC CONCESSION AGREEMENTS
A. Description and Elements
Concession is constituting and/or managing a public service by a specific person according to an agreement between the administration and a specific private law person while the profits and damages belong to the private law person8. Concession is provided to the private legal person with the concession agreements. Concession agreements are the administrative contracts which set forth constituting a public service by a private legal person and managing it for a while or managing a public service which has already been constituted9. In these contracts, the administration which is a public corporation is called “concession grantor” and the private legal person that conducts the public service is called “concessionnaire”. The public service that is conducted by the private legal person will be left to the administration free of charge at the end of the time that the parties determined.
The elements of concession can be listed as contractual element, subject element, charging element, concessionnaire’s managing on its own profit and loss element. Fundamentally, it is possible to deduce these elements from the description of concession above. Concessionnaire and administration make an agreement to satisfy a public need and the concessionnaire carries interest in return of such services that it has provided by recovering charge from the clients. In addition to these elements, some judicial decisions and doctrine require the elements of being specific and long-term. Moreover, the doctrine manifests that these elements are the elements that separate concession agreement from the other administrative contracts.
1. Contractual Element
Concession is a bilateral proceeding. For this reason, in contractual element, the condition of executing an agreement between the administration and a joint-stock company that will conduct the service in specie as a private legal person is demanded. As a natural result of this condition, the administration cannot assign a public service duty to the private legal person on its own motion as a public service concession9.
2. Subject Element
The subject of concession can be determined as conducting a public service and/or operating it. For this reason, if there is no public service then public service concession cannot exist.
3. Operating on Its Own Profit and Loss Element
In concession agreements, in case the fund and the risk belong to the private enterprise that signed the contract with the administration and the operation makes a loss, the private legal person will be responsible for the loss10.
There have been several controversies over the qualification of concession agreements. As a result of these arguments the Constitutional Court and the Council of State determined based on the elements of administrative contracts that concession agreements are administrative contracts. The Constitutional Court determined concession agreements as an administrative contract as a result of its decision as “Public service concession agreements have all the qualifications of administrative contracts because of both it’s providing authority based on public power for constituting and/or managing public service, also for conducting the service, on the other hand administration having the authority to supervision whether the service is systematic or not.”11 In this way, the Constitutional Court verified the Council of State’s12 decisions in this aspect.
B. Proceeding for Disputes in Public Service Concession Agreements
As a rule, in administrative contracts dispute resolutions are made in administrative judicial review. Because concession agreements are qualified as administrative contracts, all disputes arising from these contracts, in principle, fall into the administrative justice’s responsibility. However, in the Article 2/1-c of the Administrative Jurisdiction Procedures Code (“AJPC”) numbered 2577 the administrative court’s responsibility for concession agreements is limited with the arrangement below which is brought for the disputes that the administrative court is responsible for;
“The cases concerning the disputes between the parties arising from the administrative contracts executed for conducting one of the public services, except for the disputes arising from concession conditioning and contracts that are stipulated by arbitration”
Arbitration remedy is applicable for concession agreements as a result of the regulation as “It can be assumed that the disputes arising from the concession conditions and contracts about public services can be resolved by national or international arbitration. International arbitration remedy is only applicable for the disputes containing foreign elements” in the Constitution’s article 125/1 with the Code numbered 4446. Following this code, with the Law numbered 4501, the procedures and the principles that are applied in case of appeal by the arbitration are regulated. Accordingly, if they prefer, parties can settle for appealing to arbitration for the resolution of disputes arising from concession agreements. Fundamentally, the control jurisdiction of the administrative justice is limited by arbitration remedy.
The reason that the concession agreements do not fall into the administrative jurisdiction is that the civil jurisdiction is authorized for arbitration remedy and its decisions. For this reason, if the parties have decided on going to arbitration, then the administrative justice will not be the authorized jurisdiction.
Thus, in line with this Constitutional modification, with the Code numbered 2575 of the Council of State, Article 24/1, it is decided that the duty of “concluding the administrative cases arising from administrative court conditioning and contracts about public services which are not envisaged for arbitration” is assigned to the Council of State. Due to the fact that the Code numbered 2575 of the Council of State is a special law comparing to the Council of State Code numbered 2577, for the disputes arising from the concession agreements that arbitration is not assumed, the judicial remedy will be administrative justice and the court of jurisdiction will be the Council of State. Otherwise, for disputes arising from concession agreements, civil jurisdiction remedy will be applicable.
V. SUPPLEMENTAL AGREEMENTS OF CONCESSION AGREEMENTS AND THE JUDICIAL REMEDY IN DISPUTES ARISING FROM THESE CONTRACTS
Some contracts may also be signed between concessionnaire and third parties to conduct the concession agreements that are signed between administration and private legal person. These contracts, which serve to the concession that is given to the private legal person and which the administration does not become a party of, are the execution contracts. In these agreements, which are executed to grant public service as the subject of concession, the third person might therefore be a private legal person. Whether the agreement executed by the private legal person, who signed the concession agreement with the administration to conduct a public service, with a third person to perform the related public service falls within the private law or administrative law should be determined based on that third person’s characteristics.
A. Judicial Remedy in Disputes Arising from Execution Agreements - Private Legal Persons and State Economic Enterprises
While the third person who is a contracting party of the execution agreement can be a private legal person, it can also be a State Economic Enterprise (“SEE”). It is clear that in case the third person is a private legal person, the execution agreement will not be accepted as an administrative contract13. In addition to this, another matter that could lead to a possible discussion in the execution is the situation when the third person is a SEE. According to the Article 1 of the Legislative Decree (“LD”) numbered 233, it is underlined that the SEEs work in accordance with productivity and profitability principles like trading companies, also indicated that they will be dependent on its private legal rules and understood that they are adopted as trading companies and traders14. In the same way, once again, it is designated by ensuring that the SEEs have the adjective of trader in the Article 18/1 of the Turkish Commercial Code (“TCC”) as indicated below;
“Trading companies and associations which manage concerns to achieve their goals and even the enterprises and establishments, which are constituted by statutory bodies like State, Province, City Hall to be administrated within the scope of private law and managed as a concern pursuant to their laws of establishment, are adopted as traders”
The Article 4/2 of the Legislative Decree numbered 233 states that economic enterprises are dependent on private legal rules, except for the designated matters in the Legislative Decree numbered 233. For adopting state economic enterprises as traders, the condition of being established to operate commercially is also sufficient. The Article 16/1 of the Turkish Commercial Code does not look for these two conditions together and designated that these enterprises that are “constituted commercially” can be adopted as traders by putting the annex of “or” after the sentence of “being managed in their private legal rules chamber according to their own law of establishment”; therefore, the Supreme Court and the doctrine concord with this reading1516. At this point, the conclusion that the disputes arising from the execution agreements that the SEE is a party of except for the private legal persons can be solved by judicial remedies is deduced. Thus, this matter is supported by the Supreme Court decisions17.
Another comment about the fact that the matter of the disputes arising from the execution agreements should be solved in judicial justice justifies this matter as; because the execution agreements are not public service concession contracts and administrative employment contracts, they cannot be adopted as administrative contracts18.
According to the evaluation in this context, which judicial remedy will be lawful for the disputes arising from the contract signed with a third person to conduct a public service by a concessionnaire which had signed a concession contract with the administration, depends on the qualification of the third person. If the third person is a private legal person, then the agreement will be out of the administrative justice’s area of responsibility because in order to appeal for the administration justice the agreement should have the qualification of an administrative contract. At least one party of the contract should be the administration in order to be able to count that contract as an administrative contract. In this case, the agreements between the private legal person concessionnaire and another private legal person or a SEE cannot have the qualification of an administrative contract. These contracts are private law contracts dependent on private law rules. By this way, some supplemental agreements are constituted as the addition to these concession contracts however they should not be evaluated as concession agreements. The parties of these supplemental agreements are different from the concession agreements and designating the qualification of these contracts should be done according to their parties.
VI. CONCLUSION
Currently, the form of conducting public service by private enterprises is very common. For social state consciousness to develop and to make contribution to stimulate the developing economies, the administration has private enterprises conduct public service not only in the areas that it remains incapable but also in other various areas. Hence, many large and small scale enterprises take the opportunity for their own developments. Therefore, the issue that which law these concession agreements will be subject to comes up as an important matter.
Providing public services through private enterprises is possible in various methods. The agreements which supremacy of administration are reflected upon the contract and of which one of the parties is administration and which have the subject of public service are considered administrative agreements. As a rule, the administrative agreements are solved in administrative justice; however the agreements in which arbitration is assumed in case of disputes do not fall in the jurisdiction of the administration. In this context; if we analyze the concession form which is the most commonly used form, the disputes that arise from concession agreements in which arbitration clause is not imposed, will be solved in administrative justice. In this point, the necessity of analyzing qualifications of agreements that are made for the execution of concession agreements appears. We can designate the qualification of these agreements by analyzing the qualifications of the contracting parties because the parties of the execution agreements of concession agreements are different than the parties of concession agreements. These agreements, which can be described as execution agreements or supplemental agreements, are made between a concessionnaire and a third person. In that case, if the third person is a private legal person or a SEE, the judicial remedy for a dispute will be judicial justice.
BIBLIOGRAPHY
Ali Bozer, “Sosyal Sigortalar Kurumunun Tacir Sıfatı”, BATIDER, V.I, N.4, 1962
Ali Rıza Yücel, “İdari Sözleşmeler ve İmtiyaz Sözleşmeleri”, Türkiye Mühendislik Haberleri, N. 439-440 – 2005/5-6
İl Han Özay, Gün Işığında Yönetim, Ed. 5, Istanbul 2002
Kemal Gözler, İdare Hukuku Ed. 2, Bursa 2009
Metin Günday, İdare Hukuku, Ed. 10, Ankara 2015
Zehra Odyakmaz, “Genel Olarak İdarenin Sözleşmeleri”, Gazi Üniversitesi Hukuk Fakültesi Dergisi, V.2, N.1-2, Ankara1998, s. 141-195 http://webftp.gazi.edu.tr/ hukuk/dergi/2_12.pdf, Last Access: 07.11.2016
FOOTNOTE
1 Ali Rıza Yücel, İdari Sözleşmeler ve İmtiyaz Sözleşmeleri, Türkiye Mühendislik Haberleri, N. 439-440 – 2005/5-6, p. 1-2
2 The Code Related to the Binding Principles In Case of the Disputes Arising From the Concession Conditionings and Contracts About Public Services, Article 1: “The aim of this Code is to designate the principles and bases that should be concurred by the parties during the making process of contract, in the case of arbitration remedy is provided for the resolution of disputes that are arising from the concession contracts and conditionings about public service.”
3 Supreme Court 23rd Civil Chamber (CC) numbered, E. 2014/5176, K.2015/545; Constitutional Court dated 03.02.2015 and numbered E.1994/70, K1994/65-2.
4 Supreme Court 9th CC dated 20.12.1993 and numbered, E.1993/9709, K.1993/19056: “.. In the case of being related to other thing and things about public service, not directly the conduction of public service, then it is not an administrative contract…”
5 Kemal Gözler, İdare Hukuku V.II, Ed.2 , Bursa 2009, p. 42; İl Han Özay, Gün Işığında Yönetim, Ed. 5, Istanbul, 2002, p. 251.
6 Özay, p.224.; Council of State 1st Chamber dated 24.09.1992, numbered E. 1992/232, K. 1992/294; Constitutional Court dated 11.04.1994, numbered E. 1994/43, K. 1994/42-2.
7 Constitution Art. 47 : “private enterprises that have public service qualification….. can be nationalized” IV: Labour and agreement freedom Art. 48: Everyone has the freedom of working and making agreement in every area they like. It is free to constitute private enterprises.
8 Gözler, p. 296.
9 Metin Günday, İdare Hukuku, Ed. 10, Ankara 2015, p. 172.
10 Council of State 1st Chamber dated 24.09.1992, numbered E. 1992/232, K. 1992/294.
11 Constitutional Court, dated 28.06.1995, numbered E.1994/71, K.1994/23.
12 Council of State 1st Chamber dated 24.09.1992, numbered E. 1992/232, K. 1992/294, Danıştay Dergisi, N.87, p.33-40.
13 Zehra Odyakmaz, “Genel Olarak İdarenin Sözleşmeleri”, Gazi Üniversitesi Hukuk Fakültesi Dergisi, V. 2, p.1-2, Ankara1998, http://webftp.gazi. edu.tr/hukuk/dergi/2_12.pdf, Last Access: 07.11.2016; Gözler, p.42.
14 Supreme Court 23rd Civil Chamber, dated 03.02.2015, numbered E.2014/5176 K. 2015/545; Constitutional Court, dated 22.12.1994, numbered E. 1994/70 K. 1994/65-2.
15 Supreme Court Assembly of Civil Chambers, 25.02.2004, E.2004/4-40, K.2004/113.
16 Ali Bozer, “Sosyal Sigortalar Kurumunun Tacir Sıfatı”, BATIDER, V. I, N.4, 1962, p. 576.
17 Council of State 13rd Chamber E. 2015/2773 K. 2015/3169, “…It is determined by the Administrative Court that the case is dismissed for the jurisdiction according to the Administrative Jurisdiction Procedures Law no. 2577 article 15/1-a on the grounds that; from taking contract award decision to the contract signing decision step relying on the related laws, the cases for demanding the cancelation of the taken decisions and made operations by administration should be solved in administrative justice, disputes that are arising from the execution of contract rules and consisting after the contract is signed should be solved in judicial justice according to private law rules, in this context; concerning the matter of dispute, the rescission and performance guarantee’s revenue record which is the operation as the matter in dispute that is arising from the execution of the contract and for this reason it’s vision and solution are in judicial justice with the reason of violation of terms of the contract which have the qualification of contract governed by private law that is signed between suer and administration as defender and based on their free wills at the tender result of mobile parking system execution and management within the Law no. 2886, the decision is appealed by the suer… the bill of review is not disapproved and so the mentioned court decision is APPROVED…”
18 Günday, p. 218
