The return of land allocation in organized industrial zones does not merely mean relinquishing the allocated parcel or returning the land to the organized industrial zone. This process requires the joint assessment of numerous legal issues, including the legal nature of the allocation decision, the participant’s investment obligations, the time limits for obtaining a construction permit and an opening and operating license, environmental impact assessment obligations, whether title deed transfer has been completed, and the method by which the allocation fee will be refunded.
Law No. 4562 on Organized Industrial Zones provides that land allocations must be carried out in accordance with the procedures and principles set forth in the relevant regulation and in line with the principle of transparency. The same legal framework also stipulates that allocated or sold parcels may not be used for purposes other than their allocation purpose and may not be transferred before the debt is fully paid and the facility commences production.
In practice, the return of allocation appears in two different forms. The first is the participant’s voluntary relinquishment of the allocation. The second is the cancellation of the allocation by the organized industrial zone due to the participant’s failure to make the investment within the prescribed period or due to conduct contrary to the applicable legislation. In both cases, it is not sufficient to state that “the parcel has been returned.” The refund of the allocation fee, whether revaluation or interest will apply, which organ adopted the cancellation decision, and which judicial remedy may be pursued against that decision must all be examined separately.
Bektaş Law Office, under the leadership of Attorney Bahadır Bektaş, provides legal consultancy and litigation services in the field of organized industrial zone law, including allocation, cancellation of allocation, return of allocation, annulment of OIZ board decisions, and disputes concerning refund of allocation fees. Since OIZ allocation disputes often require the simultaneous management of technical documentation, administrative procedures, and judicial strategy, acting with a specialized legal team from the outset is essential to preventing loss of rights.
The Allocation Process and Its Legal Nature
The allocation process in organized industrial zones is directly connected with the founding purpose of OIZs. Organized industrial zones are established to ensure the development of industry in planned areas, prevent unplanned industrialization, reduce environmental problems, and concentrate industrial investments within areas equipped with specific infrastructure facilities. For this reason, OIZ parcels should not be treated as ordinary immovable properties that can be freely bought and sold in the classical sense.
An allocated parcel is granted to the participant for the purpose of carrying out a specific investment. Therefore, the allocation right cannot be regarded as a property advantage independent of the participant’s investment obligations.
Pursuant to Article 18 of Law No. 4562, preliminary allocation and parcel allocation are carried out by the board of directors in accordance with the principles determined by the entrepreneurs’ committee or the general assembly. Allocated or sold lands may not be used for purposes other than their allocation purpose; and a prohibition on sale, transfer, and assignment applies until the debt is fully paid or the facility commences production. As a rule, these restrictions are also formalized by annotation in the land registry.
The same article provides that if the participant fails to commence production within the periods specified in the regulation, the parcel may be registered in the name of the OIZ after the amount paid for the allocation is refunded in accordance with the prescribed procedure.
The legal nature of the allocation relationship is significant in practice. This is because the relationship may sometimes be characterized as a private law contract and, in other circumstances, as an administrative act established through the exercise of public authority. Although OIZs are private law legal entities, they also exercise certain powers with a public law character, such as issuing permits, implementing zoning plans, granting opening and operating licenses, providing infrastructure services, and supervising compliance with allocation conditions.
For this reason, in the cancellation or return of allocation process, it may not be sufficient to examine only the contractual provisions. Law No. 4562, the OIZ Implementation Regulation, the allocation agreement, decisions of OIZ organs, and the theory of administrative acts must all be assessed together.
Before title deed transfer is completed, the allocation right is generally not a property right, but rather a participant right arising from the allocation agreement and the applicable legislation. However, if title deed transfer has been completed, the dispute becomes more complex. In such cases, annotations registered on the title deed, repurchase rights, the condition of commencing production, the OIZ’s approval or conformity opinion, and the participant’s undertakings must also be examined.
Accordingly, the first step in return of allocation files is to determine the procedural stage of the allocation. Questions such as whether there is only an allocation decision, whether an allocation agreement has been signed, whether a construction permit has been obtained, whether an opening and operating license has been issued, and whether title deed transfer has been completed directly affect the legal remedy to be pursued.
Grounds for Return of Allocation and Their Legal Consequences
Article 60 of the OIZ Implementation Regulation is one of the fundamental provisions concerning land allocation periods and cancellation of allocation. Pursuant to this article, the participant must have its projects approved by the OIZ and obtain a construction permit within one year from the allocation date. The participant must also obtain an opening and operating license within two years from the date of the construction permit and, where necessary, obtain either an “EIA Not Required” decision or an “EIA Positive” decision.
If these obligations are not fulfilled, the allocation may be cancelled by the board of directors. Where reasonable grounds exist, certain periods may be extended by the board of directors. In cases where a construction permit has been obtained but an opening and operating license could not be secured, an additional period may be granted by the Ministry.
The return of allocation may also arise upon the participant’s own request. Pursuant to Article 62 of the Regulation, the participant may return the parcel allocation at any time within the periods specified under Article 60. Conversely, if the participant fails to complete construction within the prescribed period or within any additional period granted, the OIZ is authorized to cancel the allocation.
The return or cancellation becomes effective on the date it is notified to the parties. Therefore, the notification date is of critical importance both for the refund of the allocation fee and for the calculation of the period for filing a lawsuit.
In the event of return or cancellation of allocation, the method by which the paid amount will be refunded is also important. The Regulation provides that, in certain cases, the allocation fee must be updated from the date of payment by the participant until the date of refund on the basis of either the revaluation rate or statutory interest. However, the amount to be refunded to the participant may not exceed the current parcel allocation price determined by the OIZ. Furthermore, if the participant whose payment has been refunded applies again after the return or cancellation process, that participant does not enjoy any priority right.
In recent years, speculative transfers and collusive transactions have become increasingly sensitive issues in the context of allocation cancellation. The Regulation provides that if the Ministry determines that transactions have been carried out for the collusive or speculative transfer of an allocated parcel, the parcel allocation shall be cancelled. In such a case, the participant may not claim compensation or revaluation; only the refund of the allocation fee may be considered.
Similarly, shareholding changes exceeding certain thresholds in the company’s ownership structure without Ministry approval may also be treated as speculative transactions.
At this point, the practical approach of Bektaş Law Office is not to treat the return or cancellation of allocation as a matter of merely submitting a single petition. OIZ correspondence, board of directors’ decisions, payment receipts, construction permit applications, EIA documents, requests for extension of time, and the actual progress of the investment must be analyzed together. This is because the cancellation of allocation is not always unlawful, just as not every cancellation decision is automatically lawful.
Judicial Remedies and Decisions of the Council of State
One of the most critical issues in OIZ allocation disputes is determining the competent judicial venue. While the contractual aspect of the allocation relationship may bring the matter before the civil courts, administrative jurisdiction may also be relevant in respect of unilateral acts of the OIZ that bear the characteristics of public authority. This distinction has direct consequences for the limitation period, the competent court, the form of relief requested, and the applicable interim protection mechanisms.
The decision of the Council of State, Assembly of Administrative Law Chambers, dated 23 February 2022, numbered E.2021/2812, K.2022/624, contains significant assessments on this issue. In that decision, the question of which OIZ organ had the authority to cancel an allocation under the former regulation was discussed, and the principle of parallelism in authority and procedure, one of the fundamental principles of administrative law, was emphasized. The Assembly drew attention to the importance of the relationship between the organ authorized to make the allocation and the organ authorized to revoke or cancel it.
The practical significance of this decision is that an allocation cancellation decision must be examined not only in terms of its substance, but also in terms of authority and procedure. Was the decision adopted by the board of directors? Were the principles determined by the entrepreneurs’ committee or the general assembly observed? Was the decision duly notified to the participant? Were extension requests evaluated? Was equal treatment ensured among participants in similar situations? These questions form the backbone of a lawsuit concerning cancellation of allocation.
In its decision dated 15 February 2024, numbered E.2023/1438, K.2024/641, the 3rd Civil Chamber of the Court of Cassation evaluated both the cancellation of allocation and the subsequent reallocation process. The Court held that there was no unlawfulness in cancelling the allocation due to the failure to make an investment for a long period of time. However, it also stated that further examination was required as to how applications concerning reallocation of the cancelled parcel to a third party had been evaluated, whether the newly allocated company was competent, and whether the allocation conditions had been correctly applied.
This approach demonstrates that cancellation of allocation and reallocation may be subject to separate judicial review. In other words, even if the cancellation of allocation is deemed lawful with respect to the former participant, the reallocation of the parcel to a third party may still be unlawful. Issues such as the principle of equality, transparency, objective evaluation of applications, and the competence of the investor may be raised as grounds for challenging the reallocation process.
Procedure, Evidence, and Litigation Strategy
The first step in return or cancellation of allocation files is to establish the chronology of the dispute. The allocation date, date of the allocation agreement, payment dates, construction permit application, permit date, application for opening and operating license, EIA process, requests for extension of time, OIZ notices, date of the board of directors’ decision, and notification date must all be identified one by one. If litigation is initiated without establishing this chronology, serious risks may arise in terms of limitation periods, jurisdiction, and burden of proof.
The second stage is the accurate identification of the act to be challenged. In practice, the participant is often sent only a notification letter. However, the act that must usually be challenged is the decision of the board of directors or the entrepreneurs’ committee. For this reason, the OIZ should be requested to provide a copy of the decision, the meeting minutes, the reports forming the basis of the decision, and the allocation file. If a lawsuit is filed only against the notification letter without knowing the content of the underlying decision, there is a risk that the case will be constructed upon an incomplete administrative act.
The third stage is evidence strategy. The participant must prove not only the intention to invest, but also the objective stage reached by the investment. Architectural and structural projects, permit application documents, letters submitted to the OIZ, registered electronic mail records, machinery orders, investment incentive certificates, bank loan documents, construction photographs, site records, infrastructure delivery minutes, EIA applications, and correspondence evidencing delays attributable to the OIZ are all significant in this respect.
If the delay resulted from the OIZ’s failure to deliver infrastructure, zoning plan problems, opinions awaited from third-party public institutions, or any other objective impediment, this must be supported by technical documentation.
At the fourth stage, the relief sought must be carefully formulated. Depending on the nature of the dispute, the following claims may come into consideration: annulment of the allocation cancellation decision, annulment of the reallocation decision, stay of execution, interim injunction, refund of the allocation fee, payment of any underpaid difference, interest, or compensation. In files where title deed transfer has been completed, cancellation of title deed registration, registration claims, repurchase rights, or the legal effects of annotations must also be assessed separately. Therefore, in many cases, drafting the petition narrowly as a mere request for “annulment of the allocation cancellation” will not be sufficient.
Bektaş Law Office, acting as an organized industrial zones law office under the leadership of Attorney Bahadır Bektaş, provides legal support not only at the litigation stage, but also during pre-litigation evidence collection, applications to the OIZ, requests for extension of time, analysis of board of directors’ decisions, and strategic negotiation. In these types of disputes, early legal intervention often ensures that the evidence capable of determining the outcome of the case is collected in a timely manner.
Assessment and Conclusion
Although the return of allocation in organized industrial zones may appear at first glance to be a simple process of returning a parcel of land, it is in fact a highly technical legal process. Whether the participant had its projects approved within the prescribed period, whether a construction permit was obtained, whether the opening and operating license process was completed, whether EIA obligations were fulfilled, and to whom any delay may be attributed must all be assessed separately.
The legislation aims to ensure that investments are implemented within reasonable periods and that idle parcels are reintegrated into the economy.
On the other hand, OIZ administrations do not have unlimited discretion when adopting allocation cancellation or reallocation decisions. Authority, procedure, reasoning, the principle of equality, transparency, proportionality, and the specific circumstances of the case are all subject to judicial review.
In particular, granting different time extensions to participants in similar situations, rejecting extension requests without adequate reasoning, failing to take delays attributable to the OIZ into account, or reallocating a cancelled parcel to a third party without an objective evaluation may constitute significant unlawful acts capable of being challenged before the courts.
Bektaş Law Office provides comprehensive legal support to its clients in disputes concerning allocation, return of allocation, cancellation of allocation, annulment of OIZ decisions, and refund of allocation fees in organized industrial zones through its specialized team.
In order to avoid loss of rights in OIZ allocation processes and to structure the litigation strategy correctly, obtaining professional legal support from Bektaş Law Office under the leadership of Attorney Bahadır Bektaş, an attorney experienced in organized industrial zone law, will contribute to the sound and strategic management of the entire process.
