ORYA ENERJİ ELEKTRİK ÜRETİM A.Ş. v. TÜRKİYE

SECOND SECTION

DECISION

Application no. 16763/21
ORYA ENERJİ ELEKTRİK ÜRETİM A.Ş.
against Türkiye

The European Court of Human Rights (Second Section), sitting on 12 March 2024 as a Committee composed of:

 Pauliine Koskelo, President,
 Lorraine Schembri Orland,
 Davor Derenčinović, judges,
and Dorothee von Arnim, Deputy Section Registrar,

Having regard to:

the application (no. 16763/21) against the Republic of Türkiye lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 23 March 2021 by an electricity generating company, ORYA Enerji Elektrik Üretim A.Ş., registered in Istanbul (“the applicant company”) and represented by Mr K. Ulaş, a lawyer practising in Istanbul;

Having deliberated, decides as follows:

SUBJECT MATTER OF THE CASE

1.  The case concerns the domestic courts’ refusal to compensate the applicant company for the termination of a contract for the licensing of a geothermal field between the applicant company and the Directorate General of Mine Survey and Search (“the DGMSS” hereinafter).

2.  The DGMSS initiated a tender for the geothermal search licence of a field. The applicant company had had the opportunity to fully examine the tender documents prior to the bidding. None of the documents or the referenced regulations stated that the field concerned was fit for electricity generation. Furthermore, the DGMSS had not made any assertions regarding the field’s fitness for electricity generation.

3.  On 11 August 2011 the applicant company, who had won the bid, signed the contract with the DGMSS in exchange for 27.142.360,00 US dollars.

4.  Article 9 § 2 of the contract states that the first technical data relating to the temperature and flow rate of the hot water in the geothermal field presented in the annexes to the contract and in the tender documents had been obtained at the end of the initial works. The final data could only be obtained by the applicant company at the end of its own work and the DGMSS could not be held liable in the event of any change in these data.

5.  The applicant company states before the Court that it entered the bid for the purposes of building a geothermal electricity plant on the land.

6.  According to the applicant company, its subsequent examinations carried out on the site showed that the field was unfit for such purpose, a result which seems to have been partly confirmed in an expert report gathered by a Peace Court, following the applicant company’s request, and contested by the DGMSS.

7.  On 27 June 2016 the applicant company notified the DGMSS of the termination of the contract and requested the return of the tender price. On 28 July 2016, the Directorate rejected this request.

8.  On 13 October 2016 the applicant company lodged a case with the Civil Court of General Jurisdiction (“the Civil Court”) requesting the restitution of the tender price as well as the reimbursement of the expenses incurred since the field was not fit for electricity generation.

9.  The applicant company alleged that the DGMSS had not carried out the necessary checks prior to selling the search licence and/or that it was aware that the characteristics of the water present in the ground did not allow the production of electricity.

10.  The applicant company based its claims on the principle of good faith within the meaning of Article 2 of the Civil Code and on provisions of the Code of obligations related to mistake and wilful misrepresentation. It considered that the contract fell within the scope of the commercial activities carried out by the DGMSS, which are subject to rules of private law and explained that this was the reason why it lodged the case with the civil courts.

11.  The Civil Court obtained two sets of expert reports following the applicant company’s objections. According to the reports, the applicant company did not carry out all the necessary research and came to the conclusion that the land did not have sufficient energy potential following “incomplete, problematic and unsuccessful” survey works.

12.  On 9 November 2017, the Civil Court rejected the case on the grounds that firstly the applicant company’s allegations had not been scientifically proven and secondly that it could not find any commitment in the contract or in any other tender document that the field concerned had been fit for the purpose of building an electricity generating plant. The Civil Court reasoned that the applicant company had entered this bid knowing the conditions set forth in these documents and it should have acted as a “diligent merchant” within the meaning of the Code of Trade.

13.  The Civil Court further considered that the claim was time-barred.

14.  The applicant company appealed against the judgment and contested the Civil Court’s conclusions. It also complained about the conclusions of the experts’ reports, stating that the experts were civil servants and thus not independent. It further alleged that an expert in geophysics should have been appointed.

15.  The Court of Appeal dismissed the applicant company’s appeal. It noted that neither the contract and its annexes nor the other documents indicated in any way that the field was suitable for the production of electricity. It also pointed out that, under Article 9 § 2 of the contract, the data relating to the temperature and flow of the water were not definitive and that the DGMSS could not be held liable in the event that the final data did not correspond to those initially indicated.

16.  According to the Court of Appeal, the applicant company could not properly claim that the data and information contained in the documents were misleading. As a result, the conditions for error or wilful misrepresentation were not met.

17.  The Court of Appeal further considered that the experts appointed by the Civil Court, a geology engineer and a mining engineer, were scientifically qualified and that their report was sufficient.

18.  Finally, the Court of Appeal stated that, contrary to the view of the Civil Court of First Instance, the applicant’s action was not out of time.

19.  On 19 November 2020 the Turkish Constitutional Court rejected the applicant company’s complaint under Article 6 § 1 of the Convention for being manifestly ill-founded and the complaint under Article 1 of Protocol No. 1 to the Convention for incompatibility ratione materiae.

20.  The applicant company complained, relying on Article 1 of Protocol No. 1 to the Convention, of the domestic courts’ refusal to find the DGMSS responsible and for rejecting its compensation claim. The applicant company further complained, relying on Article 6 § 1 of the Convention, of the expert reports’ quality, the domestic courts’ treatment of its objections thereto and the outcome of the proceedings claiming it to be arbitrary. It further complained of the higher courts’ reasoning.

THE COURT’S ASSESSMENT

21.  The Court recalls that a civil-law dispute between private parties does not itself engage the responsibility of the State under Article 1 of Protocol No. 1 to the Convention. In particular, the mere fact that the State, through its judicial system, provided a forum for the determination of a private-law dispute does not give rise to an interference by the State with property rights under Article 1 of Protocol No. 1. The State may be held responsible for losses caused by such determinations if court decisions are not given in accordance with domestic law or if they are flawed by arbitrariness or manifest unreasonableness contrary to Article 1 of Protocol No. 1. However, the Court’s jurisdiction to verify that domestic law has been correctly interpreted and applied is limited and it is not its function to take the place of the national courts. Rather, its role is to ensure that the decisions of those courts are not arbitrary or otherwise manifestly unreasonable (see Zagrebačka banka d.d. v. Croatia, no. 39544/05, § 250, 12 December 2013, and the case-law cited therein).

22.  The legislation governing private-law relations between individuals, including legal persons, of all the State Parties to the Convention includes rules which determine the effects of these legal relations with respect to property and, in some cases, compel a person to surrender a possession to another. This type of rule cannot in principle be considered contrary to Article 1 of Protocol No. 1 unless a person is arbitrarily and unjustly deprived of property in favour of another (ibidem, § 251).

23.  The Court further recalls that when an interference with the right to peaceful enjoyment of possessions is perpetrated by a private individual, a positive obligation arises for the State to ensure in its domestic legal system that property rights are sufficiently protected by law and that adequate remedies are provided whereby the victim of an interference can seek to vindicate his rights, including, where appropriate, by claiming damages in respect of any loss sustained. It follows that the measures which the State can be required to take in such a context can be preventive or remedial (Kotov v. Russia [GC], no. 54522/00, § 113, 3 April 2012).

24.  As to the remedial measures which the State can be required to provide in certain circumstances, they include an appropriate legal mechanism allowing the aggrieved party to assert its rights effectively. Although Article 1 of Protocol No. 1 contains no explicit procedural requirements, the existence of procedural positive obligations under this provision was recognised by the Court both in cases involving State authorities and in cases between private parties only. Thus, in a case (Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01, § 83, ECHR 2007‑I) belonging to the latter category the Court held that States were under an obligation to afford judicial procedures that offered the necessary procedural guarantees and therefore enabled the domestic courts and tribunals to adjudicate effectively and fairly any disputes between private persons (ibidem, § 114, and the references cited therein).

25.  Finally, the boundaries between the State’s positive and negative obligations under Article 1 of Protocol No. 1 do not lend themselves to a precise definition. The applicable principles are nonetheless similar (Saraç and Others v. Turkey, no. 23189/09, § 71, 30 March 2021).

26.  Whatever the exact nature of the contract under domestic law, the Court observes that it concerns the commercial activities of DGMSS and is subject to the rules of private law. That point is, moreover, confirmed by the applicant company.

27.  The Court notes that neither the conclusion nor the performance of the contract, which was freely accepted by the applicant company, involved the exercise of public powers or privileges. Although the other party to the contract was an administrative entity, there was no interference of this entity in virtue of that quality with the contract and its implementation.

28.  Therefore, the Court is called upon to verify if the domestic court decisions are flawed by arbitrariness or manifest unreasonableness contrary to Article 1 of Protocol No. 1 and if the applicant company was afforded an adequate remedy to assert its rights.

29.  When the applicant company wished to terminate the contract and be restituted the tender price and reimbursed for expenses incurred based on the allegation that it had been misled by DGMSS, which allegedly had not acted in good faith, it was able to bring legal proceedings in the course of which it was able to put forward its arguments and contest those of the opposing party.

30.  The domestic courts conducted a sufficient examination, which included requesting an expert report and addressing the applicant company’s objections by requesting a second expert report.

31.  It is true that the Court of Appeal did not respond specifically to the applicant company’s allegation that the experts who drafted the latest report were public servants. However, the applicant company did not indicate which administration these experts were attached to, nor did it give any explanation on the reasons why its doubts concerning their impartiality might be objectively justified. Moreover, it did not raise that specific complaint before the Court and did not even provide a copy of the report.

32.  In any event, the Court of Appeal did not base its decision on the technical aspects of the expert report, the relevance and accuracy of which are disputed by the applicant company.

33.  It rejected the case based on the fact that no promise to the effect that the field concerned was fit for the purpose of building an electricity generating plant had been made to the applicant company in the contract and that under Article 9 § 2 of the contract, the data relating to the temperature and flow of the water were not definitive and that the DGMSS could not be held liable if the final data did not correspond to those initially indicated. It is not up to the Court to substitute itself to the domestic courts’ interpretation of the facts and the domestic law given that these are not arbitrary or otherwise manifestly unreasonable.

34.  It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

35.  The applicant company also raised complaints under Article 6 § 1 of the Convention. Even assuming that these complaints raise different issues than those examined above, the Court considers that, in the light of all the material in its possession and in so far as the matters complained of are within its competence, this complaint does not disclose any appearance of a violation of the rights and freedoms enshrined in the Convention or the Protocols thereto.

36.  It follows that this part of the application must equally be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

For these reasons, the Court, unanimously,

Declares the application inadmissible.

Done in English and notified in writing on 11 April 2024.

 Dorothee von Arnim Pauliine Koskelo
 Deputy Registrar President