In this article, the transfer of mining right will be examined.
Introduction
All natural resources and wealth within the borders of our country are under the sovereignty of the state, as stated in Article 168 of our Constitution. Their exploration and exploitation are also the responsibility of the state. The state can only transfer this right to real or legal persons for a certain period.
Mines are natural resources and wealth mentioned in the Constitution. Therefore, the right to dispose of, explore, and exploit these mines belongs to the state, regardless of who owns the land where the mine is located. The state can only transfer the right to explore and exploit under certain conditions.
The granting and transfer of mining rights are subject to specific provisions in the Mining Law No. 3213 and its Implementing Regulation.
What is Mining Right?
To exploit the mines under the sovereignty of the state, one must have a mining license. The rights and obligations arising from the law or the mining license in favor of the miner are called mining rights. The person who has the mining right can either operate the mining area personally or assign the use of the right to a third party through a royalty contract. On the other hand, it is also possible for the miner to transfer his right, the mining right, to a third party through a transfer contract.
The ability to freely transfer the rights on the exploration and exploitation license, the mining right, is important for the continuity of mining activities and the assurance of the license. The mining right, which has the ability to be transferred, has a commercial value.
Restricting or prohibiting the transfer of mining rights has a deterrent effect on investors who will invest in the mining sector. In addition, in relation to mining; reducing the discretion of public authorities in the transfer of mining licenses or privileges can prevent possible bribery incidents and provide the speed required by commercial life.
Before discussing the transfer of mining rights, let’s briefly talk about the mining license.
What is a Mining License?
The right to explore or exploit a mine can be transferred depending on whether the person to whom it will be transferred can obtain a license on this matter. According to the Mining Law, the first application, exploration license, discovery, visible reserve development, and operation license rights cannot be divided into shares. Each is considered as a whole for operation. It is not possible to transfer licenses by dividing them into parts. The condition for the validity of the transfer is that it must be made as a whole.
How is the Transfer of Mining Rights Done?
The mining right (exploration, pre-operation, and operation license); if it is being established for the first time, the procedures to be carried out for this will be different from the procedures to be carried out for the transfer of a previously granted mining right. The transfer and transfer of a previously granted mining right can occur in various ways, such as by inheritance, by execution, or by court decision, as in the case of sale.
Acquisition of the Mining Right by Establishment
All mining rights such as mining licenses and discovery rights can be transferred to real or legal persons who have the legal capacity to use the mining rights specified in Article 6 of the Mining Law by the Mining Directorate General, unless there is a legal impediment. As a natural consequence of the principle of non-division of the mining right, the mining right can be granted to a single real person or a single legal entity.
Acquisition of the Mining Right by Transfer
When the mining right is transferred to another person, this transfer generally takes place through an official legal transaction to be carried out before the competent authority (Mining Directorate General) and registration in the mining register.
Acquisition of the Mining Right by Registration (Voluntary Transfer)
The authority competent for the transfer of the mining right is the Ministry of Energy and Natural Resources. In order for the transfer transaction to take place, it is necessary to obtain the Ministry’s permission containing no legal impediment in the transfer transaction. The legal impediment refers to whether the obligations of the transferor against the State are also accepted in full and entirely by the transferee. Therefore, for permission to be granted, the transferee must declare that he/she fully and completely accepts the obligations of the transferor against the State.
Acquisition of the Mining Right without Registration
The mining right is acquired without registration in cases of inheritance, forced sale (auction), and acquisition by court decree. In these cases, no transactions can be made on the mining right acquired without registration. Transactions on the mining right can only be made after registration in the mining register. Additionally, the expropriation of the real estate subject to the mining right is also an acquisition without registration for that real estate.
Transfer by Auction through Execution
Only the operating right, the tools and equipment necessary for operation, and the materials necessary for one year of operation can be seized and subject to provisional attachment. The sale of an entire mine by auction through execution is subject to the procedure specified in Article 43 of the Mining Law.
Transfer by Auction in Other Cases Specified in the Mining Law
According to the Mining Law, only mining operation licenses can be sold through auction. Mining operation areas that have fallen, been abandoned, or neglected for any reason are auctioned off at the Mining Directorate General under the conditions prescribed by the Ministry of Energy and Natural Resources.
Expropriation
It should be noted that here, expropriation refers not to the mining right itself but to the real estate subject to the mining right.
Acquisition of Mining Right by Court Decree
Decisions of judicial authorities in mining law do not bind the administration. Therefore, when the enforcement of a judicial decision regarding a transfer is requested, the Mining Directorate General must examine the situation of the parties in accordance with the Mining Law and carry out the transfer if there is no obstacle to the transfer. In the acquisition of the mining right by court decree, a court decision given by the Court of Justice instead of a transfer petition is effective.
Mining Easement Right
Mining easement is the right to use a piece of land subject to private ownership for the purpose of mining exploration and extraction. A mining easement, which is an administrative easement, arises before registration in the mining register.
How Should the Form of the Mining Right Transfer Contract Be?
In special laws regarding mines, the transfer of mining rights has been subject to a specific form, and it has been stated that the person to whom the rights will be transferred also has many rights and obligations specified in the law. The transfer process of the mining right in the relevant laws is subject to an official form. The compliance with the official formality here is a requirement for validity.
As a result of the obligation to comply with the official form, the transferor and the transferee must make a declaration of intent regarding the transfer in front of the competent official of the State (Mining Directorate General). This process is completed by filling out the form, signing it in the presence of the authorized official, and the official registering the transfer in the mining register.
The transfer of the mining right is carried out in two separate transactions, just as in real estate ownership. In the first stage, the parties must perform an obligating transaction at the Mining Directorate General in front of the authorized official, which creates the obligation to transfer the mining right. This process is carried out through the preparation of a petition. The parties must sign this petition in front of the authorized official. As mentioned above, the authorized official must be affiliated with the Mining Directorate General.
This issue is quite important because, according to the Supreme Court of Appeals’ Joint Decisions on Precedents, a promise of sale of the mining right made at a notary is not valid. The invalidity of the promise made at the notary implies that the commitments made between the parties are also invalid.
In the second stage, the transaction of performance of the commitment comes.
However, with this transaction of performance, the mining right is transferred. The transaction of performance is completed by the registration of the transfer of the mining right in the mining register by the authorized official of the Ministry of Energy and Natural Resources Mining Directorate General, and thus, the transfer of the mining right is completed.
The transfer of the mining right is a conditional (subject to a reason) transaction. If the transfer commitment is not valid, the registration made is also invalid, becoming an invalid registration.
Acquisition of Mining Right by Prescription
The mining right belongs to the state. The state can transfer this right to real and legal persons for a certain period; however, mining ownership cannot be acquired through prescription.
Termination of Mining Right
The mining right may terminate due to the cancellation of exploration, pre-operation, and operation licenses, expiration of their terms (exploration license term is 30 months, pre-operation license term is 3 years, operation license term is a minimum of 10 years; maximum 60 years), or abandonment. In these cases, without any payment to the license holder, after taking the necessary safety measures for wells, galleries, and protective facilities built for them, they are transferred to the State.
Other facilities, vehicles, tools, and materials belong to the license holder. If safety measures are not taken, the legal and criminal responsibilities for incidents that may occur in these areas belong to the miner. The mining right can also be terminated due to the complete destruction of the real estate subject to the mining right.
In addition to these reasons that terminate the mining right, according to Article 37 of the Mining Law titled “Temporary Suspension due to Force Majeure,” in case of force majeure or unexpected events, the Mining Directorate General may decide on the temporary suspension of activities in the pre-operation and operation license areas upon the application of the license holder. The license holder is obliged to return to normal activities in the license area within six months from the elimination of the situation requiring temporary suspension.
It is also useful to mention the royalty contract, which is often confused with the mining contract.
A royalty agreement, or “rödovans sözleşmesi” in Turkish, is a contract in which the holder of a mining license agrees to transfer the right to operate for a certain period, while the recipient agrees to make a certain amount of production and pay a specified amount calculated based on the production made. Here are the elements of a royalty agreement:
- Transfer of the right to use the license area where the operating permit is obtained.
- The amount to be paid by the recipient in exchange for the transfer.
- Determination of the contract period.
Legal Nature of the Contract
A royalty agreement is a private law contract. Therefore, in case of disputes arising from the contract, the provisions of private law will apply. Furthermore, in cases of price comparison, the contract can be considered as a contract that imposes obligations on both parties.
However, if the price is determined in the royalty agreement, the provisions of the Turkish Code of Obligations regarding “lease of products” should be applied; if the price is not determined, the provisions regarding “loan for use” should be applied to the extent that they are appropriate.
Differences Between Mining Right Transfer Contract and Royalty Agreement
The transfer of a mining right through a transfer contract and a royalty agreement are two completely different contracts. However, in practice, it is possible to see royalty agreements used for the purpose of transferring mining licenses. In such cases, if the royalty agreement is made in accordance with the validity form required for the transfer of the mining right, it can provide legal grounds for registration in the mining registry.
On the other hand, if a royalty agreement is made without complying with the form of the mining right transfer contract or does not contain a provision allowing the transfer of the license to the royalty holder, it does not provide legal grounds for the registration of the mining right in the mining registry.
IN GENERAL, THE TRANSFER OF MINING RIGHT
The transfer of a mining right is a process controlled by the state. Therefore, parties involved in such transfer transactions must pay attention to the form requirements specified in the law. Additionally, to avoid loss of rights, it is beneficial for the parties to be knowledgeable not only about formal issues but also about all other issues arising from the law and regulations.
Understanding the differences between a mining right transfer contract and a royalty agreement can be very useful for the parties involved in the contract. For example, as an employee, claiming rights based on the existence of a royalty agreement is more beneficial. This is because in the presence of a royalty agreement, the parties to the contract are jointly responsible to the employee. Knowing such favorable provisions is necessary to protect interests.
If you have any question about incomplete and defective work in construction law, it would be beneficial for you to seek the assistance of a İzmir Turkish lawyer experienced in the field of construction law in order to reach remedies available to you.
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Lagal Intern Leyla YORULMAZ
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