Ⅰ. INTRODUCTION
Under the Turkish Code of Obligations No. 6098 ("TCO"), the provisions regarding workplace leases differ significantly depending on the physical nature of the workplace and the legal character of the contract. Within this framework, the classification of the leased premises as a "covered" or "uncovered" workplace and whether the lease relationship is ordinary lease, product lease or a mixed contract play a decisive role in determining the applicable provisions. Fuel stations, on the other hand, are one of the typical examples that blur the sharpness of these distinctions due to the fact that they host open and closed areas at the same time and their contractual structures are often intertwined with dealership relationships. In this article, lease relations regarding fuel stations will be analyzed in terms of the legal nature of the contract and the structural classification of the leased premises, and the cases in which the provisions of the TCO are applicable will be discussed in line with the case law of thr Court of Appeal and the opinions in the doctrine.
Ⅱ. LEASE AGREEMENTS UNDER THE TURKISH CODE OF OBLIGATIONS
Article 299 of the TCO defines lease agreements as "an agreement whereby the lessor undertakes to leave the use or both the use and enjoyment of a thing to the lessee, and the lessee undertakes to pay the agreed lease in return". Within the framework of this definition, lease agreements are classified under three main headings in the doctrine: (i) ordinary lease, (ii) product lease and (iii) financial lease. With the exception of financial lease agreements, which are outside the scope of this article, the distinction between ordinary lease and product lease plays a decisive role in determining the legal nature of the lease relationship.
Ordinary lease agreements under the general provisions of the TCO can be defined as a type of contract in which the lessor undertakes the obligation to transfer the use of the leased premises to the lessee for a certain period of time in return for a price. Housing and covered workplace leases, which are a subheading of ordinary lease agreements, are regulated by special provisions between Articles 339-356 of the TCO and contain mandatory provisions that protect the lessee. These provisions include limitations on lease increases, prohibition of termination before the expiration of ten years, and security deposit. However, these provisions protecting the lessee such as the prohibition of termination, limitations on lease increase, and limitations on penalty clauses are valid for residential and covered workplace leases, and these provisions do not apply to uncovered workplace leases.
On the other hand, product lease is regulated under Article 357 and following of the TCO and can be defined as a type of lease relationship that grants the lessee the right to both use and benefit from the fruits. The characteristic feature of product leases is that the leased property has the potential to produce an economic value, in other words, to generate income. The lessee not only uses the leased property, but also benefits from the products obtained from it, in other words, the economic benefits. The fact that the leased property generates income along with its use is the most distinctive element of this type of contract.
Agricultural land, vineyards, gardens, animals, means of production and some commercial enterprises constitute the classical examples of product lease.In such agreements, the lease is often agreed upon not as a fixed amount, but as a variable rate based on the amount of product or revenue generated.In practice, it is observed that especially in cases where income-generating businesses – such as factories, hotels, gas stations – are leased in their entirety or the assets related to the business are leased together, the contract is intended to provide economic benefit, not only use.In such cases, even though the contract is called "lease", it may be characterized as a product lease or a mixed contract in terms of its content and results.
The difference between these two types of lease is not only a theoretical distinction; it leads to serious differences in terms of legal consequences. In particular, the provisions to be applied in terms of termination of the contract, eviction conditions, maintenance and operation obligations and the method of determining the lease differ. In product lease agreements, more economic responsibility may be imposed on the party, while in ordinary lease agreements, the provisions protecting the lessee are more prominent.
In practice, the name of the lease agreement may not always reflect the reality. The fact that the parties title the agreement as "lease agreement" does not necessarily mean that it is an ordinary lease. As a matter of fact, in the case law of the Court of Appeal, it is observed that when determining the legal nature of the lease relationship, attention is paid not only to the title of the contract, but also to the economic content of the relationship between the parties, the actual implementation of the contract and the income-generating characteristics of the leased property.
"...It is stated in the lease agreement that the leased
premises include all office, administrative, market, and cafeteria
units, as well as the fuel station (excluding the ground floor),
except for the drivers' association service building within the
fuel station. It cannot be determined from the content of the
agreement whether the lease is subject to the general provisions of
the Turkish Code of Obligations, to the provisions governing
residential or covered workplace leases, or to the provisions
governing leases of agricultural produce. As explained
above, Article 316 of the Turkish Code of Obligations stipulates
that in the event of a breach of contract, a minimum notice period
of 30 days must be granted for residential and covered workplace
leases, whereas in other types of leases, the lessor may terminate
the contract immediately by written notice without issuing a prior
warning to the lessee. Therefore, it is necessary to
determine the dominant characteristic of the leased
premises."
[Decision of the 6th Civil Chamber of the Court of
Appeal, dated 07.07.2014 and numbered 2014/7570 E.-2014/9012
K.]
Especially in disputes regarding fuel stations, there are decisions that the station is not only an immovable property, but also constitutes an economic integrity; in cases where elements such as equipment, customer environment and license are transferred together, the contract should be qualified as a product lease or mixed contract.
Ⅲ. LEGAL CLASSIFICATION IN LEASE AGREEMENTS OF FUEL STATIONS
The legal nature of lease agreements regarding fuel stations may differ in each concrete case. Whether the contract will be considered as ordinary lease, product lease or mixed contract depends on many criteria such as the scope of the elements subject to lease, the way of determining the lease price, the will of the parties and the actual execution of the contract. In particular, in cases where only the immovable property is leased, ordinary lease provisions are applied, whereas in cases where the license, equipment, customer circle and operating rights are also transferred, product lease or mixed contract provisions are applied. In this regard, the Court of Appeal considers the economic content of the contract and the relationship between the parties rather than the title of the contract, and evaluates the income-indexed lease and the direct conduct of the commercial activity by the lessee in favor of product lease. For this reason, in order to determine the legal nature of the lease relations with fuel stations, both the elements within the scope of the contract and the physical characteristics of the leased premises should be evaluated. In this framework, two key questions determine the extent to which the provisions of the TCO are applicable: whether the contract qualifies as an ordinary lease, a product lease, or a mixed contract; and whether the station is considered a covered or uncovered workplace.
Fuel stations do not only consist of a physical immovable property, but often have the characteristics of a holistic commercial enterprise aimed at generating income. The leased elements do not only consist of the land or the building, but also include elements of economic value such as pumps, tanks, automation systems, business license, customer environment and, in some cases, dealership rights attached to the brand. The predominant view in the doctrine is that the mere fact that the contract bears the title "lease" is not sufficient to accept its legal nature as an ordinary lease contract and that it should be characterized as a product lease. Although the title of such agreements is " lease", in cases where elements such as operating rights, licenses and customer base are transferred, it is accepted that the qualities specific to product lease predominate, and therefore the agreement should be interpreted accordingly. This situation frequently arises in structures that aim to generate income, such as fuel stations.
In 3rd Civil Chamber of the Court of Appeal's decision dated 05.07.2019, numbered 2018/7771 E.-2019/6309 K. states:
"...The defendant argued that the leased property in dispute is a fuel station and, by its nature, is subject to the provisions governing revenue-based leases, and therefore a lawsuit for lease determination cannot be filed; that the lease was indexed to the price of diesel fuel and was increased and paid monthly in accordance with fluctuations in fuel prices; and that since the agreement does not contain a provision on lease increases, the relevant period for lease determination was also incorrect, thus requesting the dismissal of the case.
... In the present case, the 6th Civil Chamber of the Court of Appeal, in its decision dated 22.09.2008 and numbered 2008/8024 – 2008/10005, established that the lease agreement in question is subject to the provisions on revenue/agricultural produce leases set forth in Article 270 et seq. of the former Code of Obligations No. 818 (corresponding to Article 357 et seq. of the curlease TCO). The leased property at the center of the dispute is a lease governed by the provisions on leases of agricultural produce under the Turkish Code of Obligations and, therefore, cannot benefit from the provisions applicable to residential and covered workplace leases under Articles 339, 344, and the subsequent articles of the TCO."
This decision confirms that lease agreements concerning fuel stations are generally considered product leases. However, when determining the applicable provisions of the TCO, both the type of the contract and the physical characteristics of the leased property must be taken into account. In particular, since the tenant-protective rules under Articles 339 to 356 of the TCO apply only to covered premises, the classification of a fuel station as a covered or uncovered workplace becomes a critical issue in practice.
The Court of Appeal is based on the principle of "predominant characteristic" or "predominant purpose of use", and the predominant use of the immovable is determined by evaluating the open and closed areas of the immovable together. For example, if most of the station is an open area (the area where the pumps are located), even if there is a building, the place may be considered as an uncovered workplace. However, if closed areas such as markets, offices and restaurants are dominant, it may be considered as a covered workplace. As a matter of fact, in one of its decisions, the Court of Appeal ruled that even in a gas station where there are closed areas such as restaurants and teahouses, the contract should be considered as a n uncovered workplace on the grounds that the dominant characteristic is not of a covered workplace.
In addition, it is observed in the decisions of the Court of Appeal that such classifications are made on the basis of expert reports and square meter ratios, and that technical determinations have a direct impact on the legal characterization. In practice, especially in terms of mixed structures such as fuel stations, it is seen that the distinction between covered and uncovered workplace is made on the basis of the actual use of the leased premises and the concretization of this use with technical data (for example, square meter ratio, expert determination).
"...It is understood that the immovable subject to the lawsuit consists of 43 m2 closed area and 70 m2 open area and was leaseed to be used as a tea shop. Upon the decision of reversal, a report was obtained from the civil engineer expert by conducting a re-discovery at the scene, and in the expert report; It was determined that the 43 m2 area was a single-storey, single-storey, plastered and whitewashed closed tea stove built in masonry style, and the area of approximately 70 m2 was used as an open tea stove by placing tables and chairs. The superior quality or prevailing quality should be understood as the quality that defines the leased property according to the intended use to which it is allocated. Even if compulsory buildings are built on the lands leased as beach, tea garden, fuel station in order to benefit from them, these immovables cannot be considered as covered-musakkaf in terms of the superior use. In this respect, it is understood that the lease agreement is subject to the general provisions of the Turkish Code of Obligations, since the leased property built in masonry style is uncovered and uncovered." [Decision of the 3rd Civil Chamber of the Court of Appeal dated 26.6.2019 and numbered 2019/3021 E.-2019/5814 K.]
As a result, the legal nature of lease agreements regarding fuel stations should be determined not only according to the textual appearance or title of the agreement, but also by evaluating the scope of the assets subject to the lease relationship, the way the lease price is determined, the roles actually undertaken by the parties and the use of the station together, and determining both the type of agreement and the application area of the provisions of the TCO. In particular, the principle of prevailing qualification, which is taken into consideration by the Court of Appeal in the distinction between covered and uncovered workplaces, and the square meter analysis supported by experts are directly effective in terms of which provisions will be applied in these types of lease agreements. In this framework, the type of agreement and the applicable provisions of the TCO should be determined not only by the text, but also by taking into consideration the economic function of the leased property and the manner of its use, as well as the holistic structure of the relationship between the parties.
Ⅳ. CONCLUSION
Lease agreements regarding fuel stations are of a mixed nature that cannot be evaluated uniformly in terms of both the legal nature of the agreement and the physical characteristics of the leased premises. Whether the contract is an ordinary lease, a product lease or a mixed contract is determined on a case-by-case basis based on factors such as the scope of the elements subject to the lease relationship, the method of determining the leaseal price and the position of the parties in actual practice.
Conversely, whether the leased premises qualify as a covered or uncovered workplace is particularly significant in determining the applicability of the tenant-protective provisions of the TCO. At this point, the 'prevailing qualification' principle developed in the Court of Appeal's jurisprudence, as well as classifications based on technical evaluations, play a decisive role in practice. For these reasons, in order to make the correct legal assessment in disputes arising from lease relations regarding fuel stations, both the contractual structure and the physical nature of the immovable should be considered together, and a content-based assessment should be adopted rather than formal approaches.
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.
