ABSTRACT
To evaluate responsibility under Mining Law, it is imperative to initially analyze specific notions. It is necessary to conduct a thorough analysis of the titles “mine”, “miner”, “mine worker”, and “mining sector” individually, in order to proceed in the right direction. It is possible to define the mining concept in different ways, both geographically and legally. Subsequently, it is possible to question whether the concepts of miner and mine worker are similar or even identical. Viewed from both a worldwide and national sectoral perspective, it is evident that mining holds a pivotal position in economic terms. Consequently, the concept of a mine operator assumes immense significance as the operation of mines necessitates an individual to take on the responsibility. The process of obtaining licenses and permissions is crucial in the context of mine operations. It is imperative to carefully examine the procedures for obtaining exploration and pre-operating licenses, the different stages involved in granting licenses and concessions, and the rights granted by special provincial administrations pertaining to the mine. Ignoring these crucial aspects could result in severe consequences that must be avoided at all costs. In the realm of mining law, the issue of legal liability at mining sites holds utmost significance, particularly the concept of hazard liability, which prevails as the dominant situation in mining activities. In this regard, Article 71 of the TCO is considered a guiding provision that sheds light on this form of liability. Hence, the present study aims to meticulously examine the potential situations that may emerge from mining operations and the implications of hazard liability, specifically in the context of mines. The royalty agreement is a crucial contract in mining law, as it involves the transfer of mining rights from the rightful owners to either natural or legal third parties for the exploration or operation of mines in designated areas. This consensual contract binds both parties to certain obligations, and its legal nature falls under the category of consensual agreements. It is noteworthy that these contracts are not subject to any specific form prescribed under the TCO.
I. INTRODUCTION
This article presents a comprehensive analysis of one of the most vital natural resources - the mine. The exploration commences by examining the fundamental concept of a mine, followed by a comparison of the global and national approaches towards mining. The article also accentuates the critical role played by mine operators in the context of liability, including legal and hazard liability. The discussion further encompasses various topics, including the importance of royalty agreements, mining law in terms of damage claims, collusive royalty agreements and other related issues that have significant implications for mining operations. By offering a thorough examination of these topics, the article intends to provide a comprehensive conclusion that highlights the complex nature of mining and the associated legal framework.
II. MINING, MINER, THE CONCEPT MINE WORKER AND MINING INDUSTRY
A. The Concept of Mine
To gain a comprehensive understanding of the multifaceted nature of mining operations, it is crucial to begin with a strong definition of the term “mineral.” Scientifically, minerals and fossils are formed over centuries due to various internal and external factors, and their extraction can have significant economic and commercial value1. However, to establish a legal framework for mining operations, a definition that is consistent with the law is necessary. If the Mining Law2 is examined for the definition of the concept; Article 2 provides a definition that clearly outlines minerals as, “All kinds of substances found naturally in the earth’s crust and water resources, other than oil, natural gas, geothermal and water resources, which have economic and commercial value, are mines according to this Law.” Article 3 titled “Definitions” in the same Law, the concept of resource; “in the earth’s crust or in its depths; we see it as defined as solid, liquid and gas accumulations that will meet possible economic expectations in terms of form, quality and quantity”. Once the definition of a mine is established, it becomes evident that there are two primary systems used globally to classify mines3. These are the counting system and the identification system. In the first system, the scope of minerals is limited and listed explicitly in the law, leaving no room for interpretation. However, the second system takes a broader approach and establishes a definition for minerals. This definition is used to determine whether a product falls within the scope of the law as a mineral or not. Adopting the second approach allows for greater flexibility in defining minerals, and may help to ensure that no valuable minerals are left unregulated. Therefore, it is important to carefully consider which system is most appropriate for a particular jurisdiction in order to promote responsible and sustainable mining practices.
In legal terms, mining law can be defined as “The body of law that governs the rules and regulations related to the possession, ownership, discovery, opening, and exploitation of mines and quarries, as well as the underlying principles that guide such activities”4.
B. The Concepts of Miner and Mine Worker
Following the elucidation of the notion of mine, an examination of the concepts of miner and mine worker is imperative. While the legislation does not provide a specific definition of this occupational group, it can be construed that miners and mine workers refer to the workforce engaged in the extraction of mines and the subsequent processing. Notably, the mining sector is associated with various hazards and potential perils that may arise due to the nature of the profession, which primarily entails working underground. Throughout history and in modern times, numerous countries, including our own, have experienced devastating mining accidents resulting in significant loss of life and injury. The physically demanding and hazardous nature of mining work means that it is primarily performed by men. The forthcoming sections of this study will examine the topic of liability in the context of mining enterprises.
It has been previously noted that the Law does not provide explicit definitions of the terms “miner” and “mine worker”. Before exploring how these concepts can be defined based on the Law’s provisions, it is necessary to address whether there is a distinction between these terms and, if so, what that distinction might be. Dictionary of the Turkish Language Institution5 provides two definitions for “miner”: one who operates a mine and a laborer who works in a mine. Therefore, it can be inferred that the term “miner” encompasses both the operator and the worker within a mine. Finally, if we need to take a look at the definitions related to our subject in the Mining Law Article 3, while mining operations are defined as “preparatory work for production and activities for production”; mining activities are defined as “all activities related to exploration of minerals, preparation for production, production, shipment, ore preparation and enrichment, disposal of wastes, storage/to store operations in the license area, closure of mining operations and bringing them into harmony with the environment and the construction of temporary facilities for these activities”. A definition was introduced as “construction of facilities”. In the light of these definitions, it is possible to see the scope of work of a miner in general terms.
C. Mining Industry
In terms of sectoral analysis of the mining industry, it’s important to recognize that mineral resources can be a crucial factor in driving economic growth and development for nations that have the ability to harness their natural resources effectively. Given its capacity to create high-value products and generate employment, the mining industry has the potential to deter urban migration and spur regional development, particularly since it tends to be located near rural areas. The mining sector is a vital component of global economic development, and its impact can be seen in many countries worldwide, including our own. The United States, China, South Africa, Canada, Australia, and Russia are the leading countries that have established themselves as major players in the mining industry. Alongside these nations, countries like Saudi Arabia, Kuwait, Iran, and the Turkic Republics boast significant reserves in the petroleum sector, which, although not technically a mineral, is an essential energy source for many countries. The extraction and utilization of these natural resources not only add significant value to a nation’s economy but also have the potential to create job opportunities, especially in rural areas, and stimulate regional development. It is clear that the mining sector plays a crucial role in the growth and development of countries that have the potential to utilize their natural resources effectively. In the global trade market, crude oil, non-ferrous metals, and industrial minerals hold a significant position among the mining products. Recent statistics indicate a shift in demand towards advanced ceramic materials, plastic, and polymer-based materials, while there is a decrease in the use of traditional metals such as steel, copper, lead, and tin. The mining industry’s contribution to the US economy is remarkable, with a total production value of 27.6 billion dollars and a total added value of 2.28 trillion dollars, making it a significant driver of the country’s economic growth. As such, the mining sector plays a crucial role in shaping the future of the global economy. In the Canadian mining industry, which is highly prominent in the global market, the total production value amounted to approximately USD 45.3 billion as of 2009. Furthermore, the tax revenue generated by this sector in Canada reaches approximately USD 13.5 billion annually, indicative of the sector’s economic significance. Moreover, the United States, Canada, and Australia stand out as countries that allocate the highest budgets for mineral exploration activities, further underscoring the vital role that mining plays in the global economy. It should be noted that prices in the mining sector, like in any other industry, are largely influenced by supply and demand dynamics. The mining industry has undergone an extraordinary expansion on a worldwide scale since 2001, with exceptional growth in nations like China, Brazil, and India, where economic prosperity has been substantial. Despite the adverse effects of the economic downturn in late 2008, the mining sector has made an astonishing resurgence, spurred on by favorable developments in the global economy and a surge in demand in the subsequent years. By analyzing Türkiye’s mining industry, it becomes evident that our nation possesses a multitude of mineral deposits, thanks to its distinctive geological and tectonic characteristics. Comparatively, while the global production of 90 diverse types of mines is notable, it pales in comparison to our country’s output of 60. Türkiye boasts an abundance of raw materials for energy production, including industrial and metallic minerals, lignite, and geothermal resources. Notably, our country stands out for its remarkable reserves of boron minerals, owning an astonishing 72% of the global total. It is widely acknowledged that Türkiye’s resource wealth is one of the richest in the world. When we examine the numerical data, it can be observed that Türkiye’s export of mineral sector goods increased by 24% to reach 4.7 billion USD in 2017, in comparison to the previous year. For the year 2018, the overall export target for Türkiye is set at 170 billion USD, with the mineral sector aiming for a 20-25% increase compared to 2017, reaching 6 billion USD. In order to achieve the ambitious target of 15 billion USD by the year 2023, a growth rate of 20-25% is required6.
III. MINING LAW TRENDS IN THE WORLD AND IN TURKEY
To gain a broader understanding of global and Turkish mining law, it is important to recognize that mineral resources are not the only focus in today’s world. Rather, there has been an incredible upsurge in sustainable development efforts that impact all aspects of countries’ industrial and commercial sectors. The world has undergone a significant shift in its approach towards mineral resources, with a focus on sustainability and environmentally responsible practices. This perspective is not only limited to mining, but is evident across a multitude of fields. Therefore, it is crucial to consider the wider context when examining mining law from a global and Turkish perspective7. As a general explanation of the concept of sustainable development; “The basic philosophy of sustainable development is to evaluate the interaction of the economic and social structure and the environment in a holistic way and to ensure that present and future generations benefit from the opportunities brought by development in an equitable way”8 can be given.
The world is reaching a critical tipping point in environmental protection and sustainable development, and countries must act to ensure that economic growth is achieved without compromising the health of the planet. As a result, there has been a notable shift in attitudes towards sustainable development in the mining sector, with many companies implementing codes of conduct that emphasize environmentally responsible practices. To remain competitive and future-proof, it is imperative for the mining industry to embrace sustainable development, which not only ensures the preservation of our planet, but also leads to a stronger and more prosperous economy in the long run. Thus, it is imperative for all players in the mining sector to embrace sustainable development and work towards achieving a balance between economic growth and environmental protection9. The principles governing the mining sector are closely aligned with initiatives like the Mining, Minerals, and Sustainable Development (MMSD) Project, which is being spearheaded by international organizations including the United Nations and the World Bank. It is arguable that countries are becoming more cognizant of the ecosystem, leading to a shift in their policies towards a greater reverence for the environment and climate, while considering the utilization of natural resources. One such approach is exemplified by the World Commission on Environment and Development’s (WCED) report: “development that meets the needs of the present without compromising the ability of the next generation to meet their own needs”.
IV. THE CONCEPT OF MINE OPERATOR IN TERMS OF RIGHTS ON MINES
Upon reviewing the rights afforded to individuals who operate a mine, it should be emphasized that mining rights encompass various stages including the issuance of exploration, pre-operation, and operation licenses. Additionally, it should be noted that transferring this right is subject to specific provisions as set forth in the Mining Law No. 3213 and the accompanying Regulation for its implementation10. These legal frameworks provide a comprehensive set of guidelines for the granting and transfer of mining rights, ensuring that all activities related to the extraction of mineral resources are carried out in a lawful and transparent manner11. The rights related to mining, such as the exploration, pre-operation, and operation licenses, as well as the right to discovery, can be transferred to real or legal entities that possess the necessary qualifications to exercise the rights outlined in Article 6 of the Mining Law, which pertains to “mining capacity,” provided that there are “no legal obstacles”. According to Article 6/2 of the Mining Law, the principle of indivisibility of the mining right dictates that the mining right can only be granted to a single natural or legal person. This provision ensures that the mining rights are granted in a manner that is consistent with the Mining Law and that the individual or entity receiving the rights is capable of carrying out the necessary mining activities.
A. General Application Authority
To explain the process of obtaining mining rights, it is important to discuss the entity responsible for granting these rights. In general, it can be stated that the authorization for exploration, pre-operation, and operation licenses is considered an “administrative permit” from a legal perspective. The right to obtain these licenses is similar to the right of ownership and is considered a right in rem, as established by the Supreme Court of Cassation12. As previously mentioned, the grant of mining rights is deemed an administrative act, therefore any disputes arising from it fall under the jurisdiction of administrative judicial review. In exchange for a certain fee, the private individual who acquires these rights is entitled to operate the mine solely for their own benefit. This represents a significant responsibility, as the exploitation of natural resources must be carried out in a responsible and sustainable manner to ensure the long-term health of the environment and the community.
B. Granting an Exploration License
If we examine the process of obtaining the exploitation right, the next stage is the granting of an exploration license. According to Article 3 of the Mining Law, an “exploration license” is an official permit to conduct mineral exploration activities in a designated area. As stipulated in Article 17 of the Mining Law, the power to issue this license lies with the Mining Department and may be issued for a maximum duration of 30 months.
C. Granting of Preliminary Operating License
After the exploration phase, the next step in obtaining the exploitation right is to secure a “pre-operating license”, which is an authorization certificate granted for a maximum of three years. The pre-operating license allows for the continuity of mining activities and the preparation for the operation phase, including any additional research that may be necessary. It is governed by Article 19 of the Mining Law and serves as an essential link between the exploration and operation phases of mining operations, providing a clear regulatory framework to ensure compliance with legal requirements13.
To secure a pre-operating license, the holder of an exploration license must submit a preliminary operation project to the Mining Department and formally request the license at the end of the exploration license period or during the exploration stage (Regulation Article 9). Once the requisite formalities have been completed, a pre-operating license is issued for a duration of three years, as mandated by Article 20 of the Mining Law.
D. Granting an Operating License
To conduct mining activities, an “operation license” is required, which is a legal certificate of authorization (Mining Law Article 3). Pursuant to the Mining Law No. 3213 and the Regulation on its Implementation Article , the license holder is required to apply to the Mining Department for an operating license by the end of the exploration or pre-operation license period (Article 24). By complying with this process, the right to an operation license is granted14.
E. Granting an Operating Concession
The Mining Law No. 3213 has introduced significant changes to the previous mining laws, including the exclusion of “operating concession” from the provisions. However, the provisional Articles 2 and 3 of the Law make it clear that any existing operating concessions, exploration and operating licenses on the date of the law’s entry into force will continue to be valid in accordance with the provisions of the Law No. 3213, but only for the minerals for which they were granted by the Law No. 6309. This demonstrates a clear intention to regulate and control the mining industry by ensuring that all existing mining activities are subject to the new law’s provisions, including those that were previously granted under different laws15.
F. Rights Granted by Special Provincial Administrations
Finally, to mention the rights granted by special provincial administrations, “the stones which are not capable of being cut and polished; rough construction or road construction works are excluded from the Mining Law (Article 2/3 of the Mining Law No. 3213) These are subject to the Quarries Regulations”16. Notwithstanding the foregoing, in the event that the license holder provides certification indicating that the material in question is suitable for use in the industry or for export, and considering its reserve status, the substance may be incorporated within the scope of the Mining Law. However, such inclusion shall be subject to the proposal of the Ministry of Energy and Natural Resources and approval by the Council of Ministers (Mining Law Article. 2/3). Therefore, in this context; if a person operates a quarry for his own needs in his own possession or on the land he owns, he does not need to get permission from the state (Quarries Regulations Article 3). However, if he is going to open and operate the quarry for commercial purposes, then the owner or the tenant must apply to the special provincial administration with a petition and get permission (Quarries Regulations Article 4).
V. MINE OPERATOR’S RESPONSIBILITY
As previously mentioned, mining operations involve a variety of inherent risks, which in turn entail various responsibilities for the mine operator. These responsibilities can be traced to a number of legal sources, including but not limited to the Mining Law, the Criminal Code, the Code of Obligations, and the Labour Law. The legal and practical aspects of mining sites are regulated by a combination of laws, such as the Mining Law No. 6309, the Public Hygiene Law No. 1593, and the Labour Law No. 3008. Once again, the General Hygiene Law and Labour Law No. 3008 contain provisions pertaining to occupational health and safety. Additionally, the 1953 by-law concerning safety measures in mining operations mandates that any incidents of accidents, fire, explosion, or cave-ins that occur in the quarry must be promptly reported to the relevant ministry. It also requires that machinery be maintained in proper working order to ensure the health and safety of workers, and that all necessary clothing and protective gear be provided for worker protection. Furthermore, it is required that personnel who identify potential hazards take necessary precautions and report the situation to the authorities. In case of danger, workers must be safely evacuated from the quarry, and they must be trained on all entry and exit points17.
During mineral exploration activities, it is necessary to drill wells and galleries on the land to determine the reserve and establish operational facilities. Additionally, the land where mineral exploration is conducted, as well as neighboring lands, may be utilized for transportation purposes18. In the field where, mineral exploration is carried out, there is the possibility of opening a well, gallery for the determination of the reserve, establishing the necessary facility for the operation activity, and making use of the land where the mineral exploration is made and the neighboring lands for transportation19. According to Article 46 of Mining Law No. 3213, in situations where private property is required for mining activities, the law permits the granting of easement and usufruct rights on such properties, subject to the purpose of the mining activity. These rights may be extended for the duration of the operation license. As a result, miners are entitled to acquire easement and usufruct rights over immovable properties relevant to both exploration and operation periods, in accordance with the law.
VI. LEGAL RESPONSIBILITY IN MINING AREAS
Before delving into the concept of legal liability in mining sites, it is crucial to gain a thorough understanding of the broader definition of legal liability. In simple terms, it is an established principle that if a person causes harm to another person, they are bound to compensate for the damage. However, this definition alone is insufficient to fully explain the complexity of legal liability. In legal terms, liability can be interpreted in two distinct ways - narrow and broad senses. Legal liability is crucial in mining and is broadly categorized into contractual and extra-contractual liability. The former pertains to contractual obligations, while the latter involves legal responsibility for harm or loss caused to an individual or entity. Liability in the broad sense is more comprehensive than liability in the narrow sense, which only pertains to non-contractual liability20. In legal terms, it is highly likely that tort liability arises in such cases, as tort is a significant source of obligation in law. While tortious acts may not always stem from faults, the Turkish Code of Obligations upholds the principle of fault liability. Article 49 of the Turkish Code of Obligations, which pertains to torts, states that “any individual who causes damage to another through an unlawful and negligent act is responsible for compensating for such damage”21. To establish fault liability in accordance with this article, it is necessary to demonstrate the presence of four key elements: firstly, an illegal action; secondly, resultant harm; thirdly, the illegal action must have been carried out in a faulty manner; and fourthly, a clear causal connection must exist between the action and the harm suffered.
As stated previously, not all cases of liability arise from fault, as strict liability can also apply. The principles underlying the acceptance of strict liability are the principles of care and diligence, equity, and danger. While the general rule is one of fault liability, it is essential to note that there are exceptional circumstances in which liability may arise in the absence of fault. For instance, liability may arise where an individual causes damage as a result of an act that they themselves did not perform, but which they nonetheless benefited from. Additionally, liability may arise where there exists a legal connection between the individual and the person who carried out the damaging act, even where the individual had no direct involvement in the act itself. It is important to understand that liability in such cases may be imposed, notwithstanding the absence of any fault on the part of the individual concerned, as stipulated by law”22. It should be noted that within the domain of mining law, one may encounter instances where strict liability applies.
It is pertinent to observe that in the sphere of mining operations, a delicate balance exists between the benefits and the drawbacks of such activities. Put simply, the operator of a mine should not solely profit from the advantages that are afforded by the area in question, but should also bear the responsibility for any problems or damages that may arise as a result of their activities. When it comes to compensating for these damages, the primary consideration is to ensure that an equitable balance is maintained between the various interests at play. It is crucial to maintain a balance between the responsibilities imposed on mining operators and the need to avoid discouraging entrepreneurs from engaging in mining activities, as overly burdensome regulations may impede the development of the industry. Conversely, failure to adequately compensate injured parties for damages suffered may cause undue harm and injustice. Therefore, it is of paramount importance to strike a fair and equitable balance between these competing interests.
VII. MINE OPERATOR’S RESPONSIBILITY IN CONTEXT OF DANGER LIABILITY
As previously outlined, an infringement upon an individual’s rights need not always result from a defective or negligent act. There exist situations in which the party causing the harm may be held liable for their actions, even in the absence of any fault or negligence. The evolution of such a legal framework was undeniably influenced by the advent of the Industrial Revolution, which brought about a proliferation of cases involving strict liability. The rationale behind this legal framework is rooted in the fact that the substantial risks associated with the large enterprises that emerged from the commercial and industrial activities of the post-Industrial Revolution era. To this end, the concept of “Danger Liability,” which is enshrined in the Turkish Code of Obligations, serves to assign responsibility to the owner or operator of a particularly hazardous enterprise for any damages resulting from the operation of said enterprise.
To provide a general definition of the principle of danger liability, we can refer to the explanation given by Ulusan, which states23.
“Hazard liability is the phenomenon of being held liable for the damages arising from the dangerous nature of enterprises, undertakings, facilities and things, which are economically and socially necessary to be established and constructed as a result of the compulsory conditions of social life, even if the persons who have control over these dangerous objects are not at fault and have taken every care to prevent the danger.”
The main objective of introducing a liability provision in cases where there is no fault is to ensure fairness and provide relief to the injured party. The concept of hazard liability can be classified into two categories, namely enterprise liability and non-enterprise liability. The former, which is the more significant of the two, is a primary source of hazard liability24.
A. Concept
The legal definition of hazard liability refers to the responsibility that arises when hazards are inherent in a specific enterprise, activity, or object, and an accident or harm occurs as a result25. The concept of hazard liability has become increasingly important in modern times due to the proliferation of dangerous industrial activities and advances in technology. In light of this, those who engage in such activities or possess, store, or use hazardous objects must be held responsible for any damages that result from the realization of a particular danger. In general, this form of liability mandates that individuals involved in hazardous undertakings are responsible for any resulting damages regardless of their fault. One notable aspect of hazard liability that distinguishes it fromother forms of strict liability is the absence of any means to evade or escape the consequences of this type of liability26. In the realm of legal liability, hazard liability is the most stringent form of liability that cannot be escaped unless the causal link is severed. Regardless of whether the enterprise has obtained all required permits and licenses and its experts have demonstrated due diligence, if an activity poses a considerable risk, then it is unquestionable that sufficient care has been taken. It is noteworthy that hazard liability is distinct from the duty of care and is applicable to any individual or entity that engages in, stores, or employs hazardous materials. Consequently, those who undertake dangerous activities are strictly accountable for any ensuing damages, irrespective of whether they acted negligently or not.
B. Hazard Liability According to Article 71 of the Turkish Code of Obligations
Prior to the enactment of the New Code of Obligations, a general liability for hazardous activities was not clearly established in Turkish law. Article 71 of the Turkish Code of Obligations sets out the necessary conditions for the existence of such liability, which are as follows:
- The presence of a business that poses a significant danger,
- The damage caused by the activity of the business that poses a significant danger,
- The ability of the business to cause frequent and severe damage - The inevitability of the harm despite all reasonable precautions taken by experts,
- The authorization of the activity by the legal order,
- Joint liability for losses on the part of the business owner and operator,
- Compensation of the injured party with an appropriate price,
- The application of special liability provisions in the case of a specific danger situation regulated by special laws.
In this context, it is important to highlight that the final paragraph of the aforementioned article refers to the idea of compensating the injured party with a suitable price for damages incurred due to the activity of a hazardous business, even if the operation is authorized by legal regulations. It is noteworthy that this concept of compensation is distinct from that of compensating for harm caused by wrongful intent, as is the case in liability for intentional torts. The latter involves damages caused deliberately by the responsible party, while in hazard liability, the damages incurred are unintended.
After listing the elements of the danger responsibility above, if we need to draw a general framework about this responsibility; first of all, it can be said that the concept of posing a significant danger should be understood that the operation in question tends to cause frequent and heavy losses, and the subjective element is that the damage will still occur despite all the care expected from an expert. When the element of danger is evaluated on an objective basis, it is understood that the danger is permanent and the damage that may arise is severe. As it is known regarding the damage, the damage must occur in order for a legal liability to arise. In terms of mining activities, this damage can be material or moral. The important point here is that the damage is caused by the activity of the enterprise that poses a significant danger and without the fault of the enterprise. In the legal context, it is essential to establish a clear causal link between the event that occurred and the resulting damage in order to establish liability. This causal link is crucial and cannot be broken by any means, including the defective acts of the injured party or a third party, or force majeure. When the causal link is severed, the responsibility of the enterprise may be removed, especially in cases of force majeure or gross negligence on the part of the injured party. To establish liability for a workplace accident, the accident must have occurred in the workplace, and there must be an unmistakable causal link between the operation of the workplace or the hazards arising therefrom and the resulting damage. Therefore, it is of utmost importance to identify the causal link to determine the existence of hazard liability, as it is a critical factor in determining the liability of the enterprise.
VIII. ROYALTY CONTRACT
A. Definition, Legal Nature and Form of Royalty Contract
1. Definition of Royalty Contract
In the context of mining activities, a royalty agreement refers to a contractual arrangement between a license holder who holds the right to explore or exploit minerals in a mining area and a third party, either an individual or a legal entity, for the transfer of the mine operation. The terms and conditions of the royalty agreement are governed by the Turkish Code of Obligations No. 6098 (“TCO”), particularly the provisions related to product rent. Under a royalty agreement, the third party agrees to pay a fee to the licenseholder, who holds the right in the mining areas, for each ton of mineral produced. The TCO’s provisions on product rent apply by analogy to the royalty agreement27. On the other hand, royalty contracts are accepted as subcontracting contracts within the scope of some Supreme Court of Cassation Decisions.
The term “royalty” refers to “the amount that a private or legal person who operates a mine, under contract with the right holder for a limited period of time, agrees to pay to the original license holder for each ton of mineral produced, while the legal rights and responsibilities of the mining areas remain with the right holder. This payment is made in return for the right to operate the mine, which is temporarily transferred to the private or legal person by the right holder”28.
2. Legal Character of the Royalty Contract
In accordance with the provisions of the TCO, royalty agreements are a legal relationship that arises from the mutual declarations of will of the contracting parties. Such agreements involve the license holder transferring the right to operate the mine for a fixed duration, while the royalty payer agrees to pay the agreed portion of the production to the license holder. Thus, royalty agreements are a consensual contract that places obligations on both parties. It should be noted that such agreements impose an immediate performance obligation on the royalty payer and a continuous performance obligation on the license holder29.
3. Form of Royalty Contract
In light of the fact that royalty agreements do not entail the transfer of mining licenses, but rather the transfer of rights to a third party for a predetermined period under the terms of the agreement, such agreements are not required to adhere to any specific form according to the Turkish Code of Obligations. The parties are free to conclude the agreement through a simple written contract or by notarizing it, as long as they mutually agree to the chosen form.
B. Damages Caused by Occupational Health and Safety Provisions
In the realm of workplace safety, employees working on job sites face daily risks of occupational accidents. In the case of mining sites, the risk of occupational accidents is particularly high. It is the employer’s primary responsibility to take all necessary measures to prevent occupational hazards and to ensure that the workplace is safe for their workers. The employer’s duty does not end with taking these measures; they are also accountable for ensuring that their workers comply with them. Additionally, the employer is obligated to supervise their workers at the worksite, as failure to do so may result in legal and criminal liability. It is therefore imperative that employers take all necessary precautions and remain vigilant in their efforts to promote workplace safety.
The safety of workers in mining sites is of utmost importance and employers have a legal obligation to ensure it. To this end, employers must provide adequate training and information to their workers regarding the potential hazards associated with their jobs. In high-risk areas, employers must appoint an occupational health and safety expert holding a Class A occupational safety expertise certificate to identify and mitigate potential hazards30. The expert must warn the employer, in writing, of the risks associated with the workplace, and it is the employer’s responsibility to take all necessary measures to ensure the safety of the site31.
As per the requirement of Article 21 of the Mining Law for a license holder to appoint a permanent supervisor, mining activities in the fields must be carried out under the supervision of a qualified mining engineer. This legal obligation ensures that mining operations are conducted in compliance with applicable laws and regulations, promoting safe and responsible mining practices32. Mining engineers are primarily responsible for controlling the technical operation of mining fields and are not obligated to inspect the activities carried out in the field in terms of occupational health and safety. In mining sites, the license holder must appoint a permanent supervisor from candidates proposed by the royalty owner. The supervisor, although appearing as an employee of the license holder, has their expenses covered by the royalty owner. In the decision of the 21st Chamber of the Court of Cassation Decision No: 2005/791, 2005/6574 it is stated that “If the royalty owner’s opportunity to act independently is restricted and if the license holder has the opportunity to intervene in production, then the existence of the main employer sub-relation is mentioned”33.
Employer liability for accidents in a mine site is based on fault liability, and competent authorities are responsible for determining whether such liability exists. To claim compensation from the employer, a causal link between the accident and the work performed by the employer must be established. If the worker has suffered physical or mental harm, a material compensation lawsuit may be filed, in addition to receiving health aid from the SSI. Under the Turkish Code of Obligations, Article 56 allows workers who have suffered physical or mental harm as a result of occupational accidents or diseases to seek moral compensation if they have endured pain and suffering in addition to material damages. This means that in addition to the financial compensation, workers may also be entitled to compensation for the emotional distress they have experienced. Furthermore, in the unfortunate event of a worker’s death, their family may also be eligible for moral compensation to help them cope with the pain and suffering of losing a loved one. Such provisions not only ensure that workers’ rights are protected but also reinforce the accountability of employers in maintaining safe working conditions.
C. Simulated Royalty Contracts
The license holders of mining enterprises delegate the operations performed on site to the royalty owner, who then directs the mine production. The royalty agent is not an autonomous entity and provides labor services to the license holder’s location34. In the context of providing workers to the license holder, the use of the royalty system is often viewed as a collusive transaction due to the dependency of the workers on the license holder. This dependency makes it challenging to establish a clear subcontractor and principal employer relationship, particularly in the case of fields operated with royalty. When the royalty operator is identified as a sub-employer and the workers in the field are recognized as employees of the license holder, the workers are entitled to labor rights provided by the license holder. Given this scenario, it is crucial to ensure that the employment relationship between the workers and the license holder is accurately defined and that the workers are protected by the applicable labor laws.
In the decision of the 10th Civil Chamber of the Court of Cassation No: 1992/11117, 1993/3693 it is stated that “in the event that a portion or all of the shareholders of the royalty company are transferred to another company, which is operated under a royalty agreement, a subsidiary company relationship is established, and the legal entity veil between the second acquiring company and the first company is lifted. As a result, the workers are entitled to their labor rights and the second acquiring company is held responsible for fulfilling these obligations”35.
IX. CONCLUSION
In the context of mining activities, there exist various employment opportunities that fall under the ambit of occupational health and safety as well as the Labour Law No. 4857. Despite the increased likelihood of occupational accidents in mining sites, employers have a paramount responsibility to guarantee the safety of their workers. Employers are required to take necessary measures to ensure the safety of their workers in mining sites, in line with the extensive regulations governing mine workers in our law. Given the importance of this issue, the relevant legislation has been detailed, and employers are subject to the principle of perfect liability in case of any liability arising in this context. In accordance with the legal requirements discussed previously, the employer is under a legal obligation not only to implement the prescribed occupational health and safety measures but also to monitor their implementation within the relevant work site. It is crucial for employers to recognize and comply with this obligation in order to safeguard the safety of their employees. Failure to adhere to these obligations may result in both tortious and contractual liability for the employer, as they would be in breach of their legal responsibilities towards their workers.
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FOOTNOTE
1 Ece Nur Kesemen, Türk Hukukunda Maden İşletenin Hukuki Sorumluluğu (Maden İşletenin Sorumluluğu, Afyon Kocatepe University, Institute of Social Sciences, Department of Private Law, Master Thesis, Afyonkarahisar 2019, p. 55
2 Mining Law No. 3213, Articles 2 and 3. 15.06.1985, Official Gazette No. 18785 (Official Gazette).
3 Tuğba Yavuz Marım, Madenlerin İşletilmesi ve Rödövans Sözleşmesi (Madenlerin İşletilmesi), Ankara University Institute of Social Sciences Department of Private Law, Master Thesis, Ankara 2021 p, 4.
4 Serap Telli, İdare Hukuku ve Uluslararası Hukuk Açısından Madenler (Madenler), Ankara 1989 p. 69.
5 Dictionary of Turkish Language Institution https://sozluk.gov.tr/ (Date of access, 23.10.2022).
6 Dünyada ve Türkiye’de Madencilik Sektörü https://www.corlutso.org. tr/uploads/docs/dunyada_ve_turkiyede_madencilik_sektoru.pdf (Date of access, 23.10.2022), p. 3.
7 Mustafa Topaloğlu, Dünyada Maden Hukukuyla İlgili Yeni Yaklaşımlar ve Bu Bağlamda Türk Maden Hukukunun Gelişimi (Maden Hukukuyla İlgili Yeni Yaklaşımlar), p. 1563.
8 Sürdürülebilir Kalkınma Hakkında Temel Bilgiler http://www.surdurulebilirkalkinma.gov.tr/temel-tanimlar/ (Date of access, 23.10.2022).
9 Topaloğlu, Maden Hukukuyla İlgili Yeni Yaklaşımlar, p. 1565’den from Dalupan, M.C.G., Mining and Sustainable Devolopment: Insights from International Law, in: International and Comparative Mineral Law and Policy – Trends and Prospects, Kluwer Law International, The Hague 2005, p.151.
10 Regulation on the Implementation of the Mining Law, 22.08.1985, Official Gazette No. 18850.
11 Demet Özdamar, “Maden Hakkının Verilmesi ve Bu Hakkın Devri” (Maden Hakkı), A Gift to Prof. Dr. Turhan Tufan Yüce, İzmir, 2001, p. 119.
12 Supreme Court Jurisprudence Unification Decision, T. 04.05.1966., E.1996/6, K.1966/4.
13 Telli, Madenler, p. 69.
14 Telli, Madenler p. 107.
15 Telli, Madenler p. 110.
16 Quarries Regulation dated 6 June 1317, 1st Order Code C. 7, p. 49.
17 Demet Özdamar, Maden Hakkı, p. 445.
18 Topaloğlu, Maden Hukukuyla İlgili Yeni Yaklaşımlar, p. 13.
19 Topaloğlu, Maden Hukukuyla İlgili Yeni Yaklaşımlar, p. 25.
20 Fikret Eren, Borçlar Hukuku Genel Hükümler (Borçlar Hukuku), 21th Edition, İstanbul, Beta, 2017, p. 508.
21 Turkish Code of Obligations Article 49, Official Gazette dated 04.02.2011 and numbered 27836.
22 Ece Nur Kesemen, Maden İşletenin Sorumluluğu, p. 10.
23 İlhan Ulusan, “Tehlike Sorumluluğu Üstüne”, Journal of Comparative Legal Studies, C.4, P.6, 1970, p. 23.
24 Eren, Borçlar Hukuku, p. 689
25 Süleyman Yılmaz, “Türk Borçlar Kanunu Tasarısında Sebep Sorumluluğuna İlişkin Yeni Hükümler”, Journal of Ankara University Faculty of Law, C.59, P.3, 2010, p. 551. https://dspace. ankara.edu.tr/xmlui/ (Date of access, 25.10.2022).
26 Güzin Üçışık, “Tehlike Sorumluluğunun Genel Kural ile Düzenlenmesi”, Gazi University Faculty of Law Liability and Compensation Law Symposium, Ankara, 2009, p. 127.
27 Topaloğlu, Maden Hukuku ile İlgili Makaleler, İstanbul 2021, p. 351.
28 Supreme Court 10. HD. 17.10.2014, M. 2014/16695, K. 2014/19906 (www.kazanci.com.tr, Access Date: 26.10.2022).
29 Mustafa Alper Gümüş, Borçlar Hukuku Özel Hükümler, C. I, İstanbul 2012, p. 312, 335.
30 Topaloğlu, Maden Hukuku ile İlgili Makaleler, p. 351.
31 Topaloğlu, Maden Hukuku ile İlgili Makaleler, p. 353.
32 Topaloğlu, Maden Hukuku ile İlgili Makaleler, p. 357.
33 Supreme Court 21.HD. E.2005/791 K. 2005/6474 (www.kararama.yargitay. gov.tr, Access Date: 06.11.2022).
34 Topaloğlu, Maden Hukuku ile İlgili Makaleler, p. 381.
35 Supreme Court 10.HD. E.1992/11117 K.1993/3693 (www. kararama.yargitay.gov.tr, Access Date: 06.11.2022).
