Turkey: The Recent Court Of Appeals’ Decision Dated May 2014 States: No Extra Charge For Power Plants For Using Sea Water As Cooling Water

There has long been discussion regarding the issue of payment by thermal power plants to the Treasury for the usage of sea water in the production of cooling water and fresh water by the power plants located in seaside cities.

This issue was finally clarified and regulated by a recent court decision, which was rendered by the 4th Chamber of Civil Law of the Court of Appeals in May, 2014. Because sea water is also being used as cooling water in many of the seaside power plants in Turkey, this important decision has the potential to affect Turkish power plants.

Based on the court's decision, we believe that seaside thermal power plants in Turkey do not have to pay consideration for the usage of sea water and that if the thermal power plants do receive a payment request, they may challenge such a request before the administrative courts by relying on this court precedent. Specifically, The 4th Chamber of Civil Law of the Court of Appeals stated in its long-awaited decision dated May 29, 2014, file number 2014/6226 and decision number 2014/8951, that "the Treasury could not request any consideration for usage and consumption of sea water based on the facts that utilization of places that are not possessed and places dedicated for public interest is subject to provisions of special law according to Article 715 of Turkish Civil Code (the "TCC") and there is no explicit regulation that allows requesting consideration for usage and consumption of sea water in Turkish legislation."

Additionally, the process of using sea water as cooling water does not constitute "consumption." The water replaces itself and, therefore, provides another reason for objecting to any payment request made by the Treasury. The court summarized its decision as follows: "the flow of sea water moves to the chlorination pool by virtue of the pier built within the sea. After being decontaminated in the chlorination pool, it is circulated to a system, called condensers, through two different pipes with the help of a buster pump to absorb heat from the steam. Following this process, the sea water is discharged back to the local source; in other words, to the sea through the same way. Thus, all the sea water used as cooling water returns to sea. And it is unfair to request consideration from power plants working with the aforementioned system for use of sea water without evaluating the fact that the sea water returns to sea."

There is no explicit regulation under Turkish Law regarding whether the usage of sea water should be subject to consideration. According to the Turkish Code of Obligation, however, a debt may occur based on the following three reasons: (i) agreement, (ii) tort actions, and (iii) unjust enrichment. The Treasury, as a common practice, first inspects the companies that are using sea water, controls the amount of sea water used, assesses a fee and executes an administrative act by which a debt occurs. In this case, none of the above-mentioned reasons exist; nor does any data show that the power plant pollutes the sea water it uses. Accordingly, it is evident that there is no legal ground for requesting consideration for the usage of sea water.

We would like to point out that the following arguments were also evaluated by the court before the final decision was rendered in favor of the power plant company. It is obvious that the usage of sea water does not constitute a "tort" against the Treasury and does not cause any "unfair enrichment" because any enrichment of the owner of the power plant does not cause any depletion of the Treasury. Further, there is no causal link between the two. In addition, provisions of the agreement executed between the owner of the power plant and the Ministry of Energy, with regard to authorizations, expressly states that the Ministry of Energy will be responsible for obtaining any permit and/or approval related to water usage for the operation of the power plant. Accordingly, it is impossible to say that the debt in question occurs from the agreement. Therefore, the usage of sea water should not be deemed as a reason which would cause a debt to occur.

Furthermore, power plants are required to obtain a discharge permit from the Provincial Directorate of Environment and Forestry for usage of water, which is free of charge. This is an additional argument that supports our conclusion. Also, while discussing whether consideration should be paid for the usage of sea water, the fact that the sea is an unlimited resource and that it is impossible to drain the sea (due to its limitless amount of water, as compared to rivers and lakes), together with the precedent of the Supreme Court Assembly of Civil Chambers, dated December 6, 1950, and numbered 91/35, which concludes that "it is not possible to establish an ownership right over the sea water since it is dedicated to public usage" should likewise be taken into consideration. In light of the foregoing discussion regarding the Court of Appeals decision in May of 2014, there should be no further discussion or argument as to the issue of whether the usage of sea water by power plant companies should be subject to any consideration.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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