An undertaking’s ability to carry on its commercial activity depends both on its possessing the characteristics prescribed by the legislation and on its holding the licence appropriate to the line of business it pursues. The required characteristics and the licensing procedure are laid down in detail in the Regulation on Business Opening and Operating Licences. Where an application is made without all of the criteria being met together, the licence application may be unsuccessful. Where a breach of the legislation is subsequently identified at an undertaking that is already operating, the administration first allows time for the deficiency to be remedied. If the time allowed produces no result, the undertaking may be temporarily suspended from operating, and in some cases revocation of the licence in its entirety also arises.
The grounds leading to the suspension of work and the closure of business premises are regulated under the Regulation on the Suspension of Work at Business Premises. Undertakings that consider the suspension or closure sanction imposed on them to be unlawful may, depending on the nature of the act, bring an action for annulment before the administrative courts; in addition, they may have recourse to a full remedy action in order to obtain reparation for the pecuniary and non-pecuniary damage they have suffered.
The legislation determines the criteria that undertakings must meet by way of a classification. Three groups are envisaged in the Regulation: sanitary establishments, non-sanitary establishments, and public rest and entertainment venues. Grocers, supermarkets, greengrocers, delicatessens, dried-fruit and nut shops, kiosks, canteens, bread dealerships and places where meat and fish products are sold are assessed within the category of sanitary establishments. Undertakings whose activity carries a greater or lesser likelihood of causing biological, chemical or physical harm to the environment are treated as non-sanitary establishments; factories, power stations and facilities in organised industrial zones are examples of this group. Since the risk they pose to the environment and to human health is higher, these undertakings are subject to a far stricter inspection regime. The third group comprises accommodation facilities such as hotels and guest houses; premises serving alcohol such as casinos, bars and licensed restaurants; and amusement parks and internet cafés.
Licence Revocation and Closure in Sanitary Establishments
Undertakings such as supermarkets, grocers and kiosks fall within the group of sanitary establishments in the scheme of the legislation. That concept covers business premises which do not harm their surroundings through effects such as odour, noise or harmful waste. By reason of the nature of the activity they carry on, such undertakings are obliged to comply with the hygiene rules laid down in the regulations. The business premises must also be designed in a manner appropriate to the purpose of the activity and kept clean and well lit.
Undertakings in this class, such as grocers, supermarkets, kiosks, butchers and greengrocers, can obtain a business opening and operating licence only if they possess all of the conditions required by the legislation together; otherwise the application is refused. On the other hand, an undertaking that satisfied every condition at the outset may lose those characteristics over time. Elements and deficiencies not complying with the legislation may be identified in subsequent inspections. Where such a finding is made, the owner of the business premises is allowed a period of fifteen days, on a one-off basis, in which to remedy the shortcomings identified. If the deficiencies are not made good within that period, the licence is revoked and the business premises are closed.
In addition, where the relevant persons at the undertaking make untrue or false declarations as to the required conditions, legal proceedings may be initiated against them.
Suspension of Activity and Closure in Non-Sanitary Establishments
Factories, power stations and facilities located in organised industrial zones fall within the class of non-sanitary undertakings. Because of the activities they carry on, which give rise to a greater or lesser degree of danger to the environment and to human health, the legislation prescribes distinctly strict measures for these undertakings.
Non-sanitary establishments are themselves divided into three classes. First-class non-sanitary establishments are facilities that must without exception be sited away from residential areas. As regards those in the second class, an investigation must be carried out before opening as to whether they will cause harm to dwellings or to people. Third-class establishments are places that may be opened in areas where dwellings and people are present, but which must be subject to regular inspection.
By way of example, the creation of a health protection strip around industrial and manufacturing zones is mandatory. In other words, no development set aside for dwellings or for human habitation is permitted around the areas in which these hazardous facilities are located.
At first-class non-sanitary establishments such as cement factories or power plants, the employment of a responsible manager is also mandatory. Where this obligation is not met, an appropriate period is allowed for the deficiency to be remedied; if it is not remedied within that period, revocation of the business licence becomes possible. If, following an inspection carried out at a facility in this class, it is determined to be harmful to public and environmental health, activity may be suspended until the shortcomings and breaches are remedied.
Fuel and autogas stations, together with power stations and factories, are assessed as falling within the scope of second-class and third-class non-sanitary establishments. Inspections conducted at these facilities are based on the protection of human health, the avoidance of environmental pollution, the risk of fire and explosion, and the rules on occupational safety and workers’ health. Rules concerning general security, traffic and highways, zoning, condominium ownership and the protection of nature are among the other criteria taken into account in the inspection.
If a breach of the legislation is identified during the inspection, the business premises are allowed a period of fifteen days on a one-off basis. If the breaches and deficiencies are not made good within that period, the competent administration revokes the licence and closes the business premises.
Suspension of Operations in Public Rest and Entertainment Venues
Undertakings in the nature of hotels, guest houses, restaurants and bars are counted among public rest and entertainment venues in our legislation. That concept denotes places opened for the entertainment and accommodation of persons individually or collectively. Such undertakings are likewise required to meet the conditions laid down in the Regulation. In addition, these places are also inspected within the framework of the provisions of the Police Duties and Powers Act. At undertakings in this class, acts such as permitting gambling, producing or selling narcotic substances, and allowing games or films contrary to public morality are prohibited. In respect of undertakings found to have breached these prohibitions, an order suspending operations for a period not exceeding thirty days may be issued.
The licence of an undertaking suspended from operating more than three times within the same year is revoked. Administrative fines may also be imposed on such undertakings.
Principal Grounds Leading to the Closure of Business Premises
The situations leading to closure are not set out collectively in a single provision but are distributed across different parts of the legislation. The following examples may be given of typical situations in which closure of the business premises and revocation of the licence may be ordered:
- Opening business premises without obtaining a licence is in itself a ground for a closure order.
- If a breach of the legislation is identified in inspections carried out within one month of the date on which the licence was granted, the owner of the undertaking is allowed fifteen days in which to remedy it; if the breach persists at the end of that period, the licence is revoked and the business premises are closed.
- Where no responsible manager is retained at a first-class non-sanitary establishment, or where the responsible manager makes an untrue declaration, a period of fifteen days is likewise allowed; if the position is not rectified within that period, the business licence is revoked.
- Where renewal of the licence or an adaptation procedure is required, an application must be made to the competent administration within three months. If no application is made, the administration allows a further period of fifteen days; if the renewal or adaptation is not carried out within that period either, the licence is revoked.
- Where business premises have been suspended from operating three times within one year on the grounds listed in Art. 8 of the PVSK, a repetition of the acts referred to in the same article results in revocation of the licence.
The Legal Process to Be Followed on Closure or Suspension of Operations
Objection and Legal Remedies Against Licence Revocation and Closure
As explained above, where there is a breach of the legislation the licence may be revoked and the business premises closed as a consequence; the suspension of work or of the undertaking’s operations may also arise. In practice, however, instances are encountered in which licences are revoked through arbitrary sanctions and procedurally defective acts. The owner of an undertaking whose licence has been revoked may have recourse to the courts against the administration that adopted the act if they consider it to be unlawful.
Before bringing an action directly, it is also possible to lodge an objection within 30 days of the date on which the decision was notified. Lodging an objection suspends the time limit for bringing an action. If the administration rejects the objection or gives no response at all within 30 days, an action for annulment of the administrative act may be brought. That said, lodging an objection with the administration before proceedings is not a mandatory stage; those concerned may, if they prefer, choose to bring an action directly.
Objection Against a Suspension of Operations Order
An objection may be lodged against a decision suspending the activity of business premises with the Labour Court of the place where the business premises are located, within 6 working days running from the day on which the suspension was carried out. The Labour Court gives its decision within 6 working days and that decision is final.
It must be emphasised here that all acts and actions of the administration must be adopted for the purpose of the public interest and must be lawful in point of substance and of procedure. In some cases, however, procedural rules are disregarded when an administrative act is adopted, and this renders the act unlawful. For example, although the power to suspend operations lies with the senior civil administration authority of the locality, closure of business premises directly by the police is contrary to the legislation. Where an objection is lodged against such an act, a suspension order adopted by an authority lacking competence will be annulled by the court.
Compensation for the Losses Suffered
Where the act concerning business premises that have been temporarily suspended from operating or whose licence has been revoked is unlawful, the owner of the undertaking may be said to have been caused loss unjustly. In that case the owner of the business premises may seek reparation for the loss of income during the period in which the undertaking was unlawfully closed and for any other losses. If non-pecuniary damage has arisen because of the unlawful acts, compensation for that too may be made the subject of the action.
The Court with Subject-Matter and Territorial Jurisdiction
Since the closure of business premises is an administrative act adopted by the administration, subject-matter jurisdiction in actions brought against that act lies with the administrative courts. As to territorial jurisdiction, the administrative court of the place where the administration that adopted the act is located is decisive.
Frequently Asked Questions
Is representation by a lawyer mandatory before the administrative courts?
Turkish law allows parties to defend and represent themselves in person before the courts; save for limited exceptions, there is no obligation to be represented by counsel. Nor is any such obligation laid down in respect of proceedings heard before the administrative courts.
The complex structure of administrative law legislation, however, and the short and strict time limits in the Administrative Procedure Act No. 2577, may lead to errors of both form and substance that are difficult to remedy where the process is conducted by persons who are not lawyers. It is therefore advisable to obtain support from a lawyer practising in the field of administrative law before any step is taken.
What can be done if a licence application is refused?
The business opening and operating licence denotes the authorisation granted to business premises whose operation is subject to no impediment. Those whose licence application is refused although they meet the conditions may bring an action for annulment. The court with subject-matter and territorial jurisdiction in that action is the administrative court of the place to which the administration that issued the refusal belongs.
What time limits run against a closure order?
Although there is a right to apply to the administration within 30 days of notification of the decision, that application is not a precondition for bringing an action. Without pursuing the objection route, an action for annulment of the administrative act may be brought before the administrative court within 60 days of the date of notification.
How is the time limit calculated if no reply is given to the objection?
Where an objection has been lodged against the closure order but the administration gives no response, the application is deemed to have been tacitly refused on the 30th day from the date of the objection, and an action for annulment of the administrative act may be brought taking that date as the basis.
Can compensation be claimed for a wrongful closure?
The owner of the undertaking may claim compensation from the administration that issued the closure order on the ground that the business premises were wrongfully closed and that loss was suffered as a result.
Does bringing an action allow the business premises to reopen?
Since administrative acts benefit from a presumption of lawfulness, bringing an action does not of itself stay the execution of the act; the business premises cannot continue to operate. If, however, a stay of execution is ordered in the action for annulment brought, the undertaking may carry on its activity while the proceedings are pending.
Where is a suspension of operations order challenged?
An application may be made against a decision suspending activity to the Labour Court of the place where the business premises are located, within 6 working days of the day on which the suspension was carried out.
Independent Legal Assessment
In disputes over the closure of business premises and the suspension of operations, the first factor determining the outcome is the correct characterisation of the act. A closure order resulting in revocation of the licence and a suspension order issued on occupational safety grounds are not subject to the same legal regime; in the former the administrative courts are engaged, in the latter the Labour Court, and the time limits are entirely different from one another. In practice, a significant proportion of lost rights arises from applications made to the wrong authority and from the short periods consumed in the process.
The second determining factor is the meticulous keeping of records relating to the period allowed by the administration for rectification. Whether the fifteen-day period was granted, whether notification was carried out in due form, and whether the deficiencies were remedied within that period are among the matters most frequently in issue in an action for annulment. The following matters should be given particular priority in an individual file:
- Clarifying the class of establishment into which the undertaking falls and the inspection regime that follows from it
- Verifying whether the authority that adopted the closure or suspension order had competence to do so
- Placing on file from the outset the notifications and records relating to the period allowed for rectification
- Assessing the choice between lodging an objection and bringing an action directly together with its effect on time limits
- Substantiating the request for a stay of execution by emphasising that the loss of income is difficult to make good
- Documenting the pecuniary loss for the period of closure in preparation for a full remedy action
Independent Legal provides legal advice and conducts proceedings in licensing disputes, closure and suspension of operations orders and the related compensation claims, from the administrative application stage through to the conclusion of the proceedings.