A business opening and operating licence denotes the authorisation granted by the competent administrations to business premises whose operation is subject to no legal impediment. The legislation makes the grant of that authorisation subject to a number of conditions; applications by premises that do not meet the prescribed requirements are refused by the competent administrations. Where it is considered that the refusal is unlawful in point of procedure or of substance, annulment of the act may be sought from the administrative courts. In practice, defects such as the arbitrary exercise of the administration’s discretion, or a decision taken without the necessary examination and investigation or without any concrete reason being given, are frequently encountered.
Where the licence application has been refused even though all the conditions required by the legislation have been satisfied, those concerned may bring an action for annulment. Since the refusal in question constitutes an administrative act, the action to be brought is an action for annulment of an administrative act. Subject-matter jurisdiction in that action lies with the administrative court, and the court with territorial jurisdiction is the court of the place where the administration that issued the refusal is located. The action must be brought within sixty days of notification of the decision to the person concerned.
Business premises cannot be opened or operated without a licence duly obtained from the competent administration. Obtaining the licence depends on all the conditions prescribed by the legislation being fully satisfied. On this point, submitting the requested documents to the administration in full at the time of application is of decisive importance if a favourable decision is to be obtained.
The Concept of the Business Opening and Operating Licence
This licence is an authorisation issued by the administrative units empowered in the matter, enabling business premises bearing the characteristics expressly laid down in the legislation to be opened and operated. The scope of the conditions required is regulated in detail in the Regulation on Business Opening and Operating Licences.
Opening and operating business premises without a licence duly obtained from the competent administrations is in no circumstances acceptable. Licences and documents obtained from professional bodies or similar authorities other than the competent administrations listed in the Regulation do not remove the obligation of the person concerned to obtain a licence under the Regulation. The authorisation must, in other words, be obtained from the administration. In respect of business premises opened and operated without a licence, a closure order may be issued by competent administrations such as the municipality or the special provincial administration.
Stages of the Licence Application
Determining the Class of the Business Premises
If licensing procedures are to be conducted correctly, the first step is to establish the class into which the business premises fall. Business premises are grouped under two main heads: on the one hand non-sanitary establishments and sanitary establishments, and on the other public rest and entertainment venues. The concept of a non-sanitary establishment covers undertakings carrying on activities that give rise to a greater or lesser degree of danger to the environment and to human health. Sanitary establishments, by contrast, are business premises that do not harm their surroundings through effects such as odour, noise or harmful waste. Public rest venues are places opened for the entertainment and accommodation of persons individually or collectively.
Preparing the Required Documents
Whether sanitary or non-sanitary, an establishment can obtain a licence only if a number of documents are completed. Those documents differ according to the type of business premises and are regulated in considerable detail.
The list of documents also varies according to the body from which the licence is to be obtained and according to the district. The full list may be ascertained from the district municipalities.
Furthermore, the conditions required for business premises to be opened are explained comprehensively in Article 5 of the Regulation on Business Opening and Operating Licences. So that the application does not result in a refusal, submitting the documents to the administration in full is of great importance.
Making the Application
Licence applications are made once the forms available from the licensing and inspection directorate and the licence control services have been completed and the necessary documents assembled. The building occupancy permit, for instance, is one of the documents whose production may be required when applying for a business licence. Which documents will be requested at the application stage is regulated in detail in Additional Article 1 of that Regulation, under the heading “Procedures and principles concerning the documents to be requested when business opening and operating licences are issued”.
The administrative authority competent to receive the application is the licence control service attached to the licensing and inspection directorate of the district municipality to which the person concerned belongs. If the address of the business premises falls outside the municipal boundaries, the application will have to be made to the special provincial administration. Where the documents are received in full, the official concerned issues a “receipt certificate” and gives it to the applicant.
Inspection of the Business Premises
The officials of the licence control service first subject the documents submitted by the applicant to a preliminary examination. Applications whose files disclose no problem are passed by the licence control officials to the licence control commission.
The task of the commission is to verify, on the basis of the documents it has received, that the business premises comply with the relevant legislation. In the case of public rest and entertainment venues, however, the licensing and inspection directorate obtains the opinion of the relevant police directorate before the commission’s examination. The person competent to request that opinion is the official of the licence service that accepted the application. If, following the examinations conducted by the police directorate, the business premises are found to be suitable in terms of public order and security, the application is notified to the licensing and inspection directorate. For example, taverns, bars, coffee houses, reading houses, electronic gaming centres, internet cafés and premises where alcoholic drinks are sold for consumption on the premises are required to be situated at the distance prescribed by the legislation from schools, student residences, and places of worship and their facilities. Likewise, public rest and entertainment venues must be located at the distance laid down by the legislation from places where explosive, flammable, combustible and similar dangerous substances are produced, sold, used or stored, and from gas filling installations.
Finalisation of the Licence
If no situation contrary to the legislation is identified at business premises that have passed the commission’s inspection, the business opening and operating licence becomes final.
Undertakings whose licensing procedure has been completed may commence operating. If, at a later stage, a new partner joins the business or one of the existing partners leaves, this does not require a fresh licence to be issued. By contrast, where the business premises move to another address, re-licensing is mandatory. Where the business premises are transferred without any change in the field of activity or the address, a new licence is issued in the name of the transferee upon that party’s application; the information and documents in the existing licence file are taken as the basis. Where the owner of the business premises dies, the heirs may continue to use the old licence without a new one being issued.
Licences that have been issued must be displayed at the business premises in a place where everyone can see them.
The Legal Remedy Against the Refusal Decision
Cases arise in which the licence application is refused by the administration even though all the necessary documents and papers have been submitted and the conditions required by the legislation have been met. In such a case, annulment may be sought on the ground that the refusal is unlawful for various reasons of procedure or of substance. The arbitrary exercise of discretion, and the taking of a refusal decision without the requisite examination and investigation, are among the defects frequently encountered in practice.
The act by which the administration refuses a licence application is, in legal terms, an administrative act. Judicial review of the lawfulness of an administrative act can be secured only through an action for annulment. In order to have the refusal set aside, an action for annulment of an administrative act must therefore be brought before the administrative courts.
In the action to be brought, those concerned must add to the file the correspondence relating to the licence application and all the information and documents in their possession. In such an action, those who claim that their interests have been impaired by the administrative act challenged as unlawful may seek annulment of the refusal.
The Court with Subject-Matter and Territorial Jurisdiction
In actions brought against the refusal of a licence application, which is an administrative act, the administrative courts of the place to which the administration that issued the refusal belongs have subject-matter and territorial jurisdiction.
Time Limit for Bringing the Action
Persons whose licence application has been refused and who contend that the act is unlawful must bring their action within sixty days of notification of the refusal.
In administrative disputes, the time limit for bringing an action begins to run on the date on which written notice is given to the person concerned by the administration — in other words, on the date the act is notified to its addressee.
Possible Outcomes of the Action for Annulment
If, at the end of the proceedings, annulment of the refusal is ordered, the judgment produces retroactive effect. In other words, the refusal is deemed never to have been adopted and is set aside together with all its consequences. The owner of the business premises will thus be able to obtain the business opening licence in line with the court’s judgment and to operate.
It should nevertheless not be overlooked that the relevant authorities have the power to withhold a licence from business premises that have no occupancy permit, that do not fulfil the procedures and conditions laid down in the legislation, that seek to open in a manner contrary to the legislation, or that likewise operate contrary to the legislation.
Compensation for Loss Suffered Through Refusal of a Licence
Persons whose licence application has been unlawfully refused despite their meeting all the conditions required by the legislation will suffer pecuniary and non-pecuniary damage because the business premises cannot commence operating. In such a case the owner of the undertaking may seek reparation for the loss arising from the unlawful administrative act. The person who has suffered the loss must advance that claim by way of a full remedy action brought before the administrative courts. It must be emphasised here that the loss for which compensation is sought is required to be “actual loss”. For example, even if the owner of the business premises has been unable to derive income from that undertaking because of the refusal, where income has been obtained from another source in return for the time and labour freed up by not operating the undertaking during that period, the sum so obtained must be set off against the loss.
The relevant part of the judgment of the 10th Chamber of the Council of State of 11.10.1995, case no. 1994/2455, decision no. 1995/4327, reads as follows:
“The claimant submits that, because of the act of the respondent Governorship which has been found to be unlawful, he was unable to operate the premises he wished to run as a coffee house during the period 1986-1990 and that he suffered a loss of income of TRY 30,000,000. In the face of the claimant’s allegation that he suffered a loss of income because of the respondent Governorship’s act, it is necessary to investigate whether, during the period in which he was unable to obtain a licence, the claimant operated the place he wished to run as a coffee house in some other manner, whether he had the opportunity to carry on another business, and in what manner the place in question was operated after the judgment, and to determine whether the claimant suffered a loss of income in the event and, if so, in what amount that loss of income arose.
That being so, whereas a decision should have been given by establishing the claimant’s actual loss in accordance with the principle of examination of the court’s own motion, the judgment under appeal, which dismissed the action on the ground that the claimant had been unable to document his loss and that a claim of a negligent character could not be allowed, is legally unsound.”
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, and save for limited exceptions representation by counsel is not mandatory. No such obligation is laid down in respect of proceedings heard before the administrative courts either.
The complex structure of administrative law legislation, however, together with the short and strict time limits contained in the Administrative Procedure Act No. 2577, may lead to errors of 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.
How many licences are issued where there are several activities at the same address?
For business premises with the same address and the same operator that have more than one field of activity, a single licence is issued on the basis of the principal field of activity; the ancillary fields of activity are shown separately on the licence. By contrast, separate licences are issued for business premises whose principal field of activity or operator differs, even if they are at the same address.
How is an alcohol-licensed premises zone determined?
An alcohol-licensed premises zone is determined, in line with the opinion of the civil administration authority as to the state of general security and public order, by the municipal council within the municipal boundaries and adjacent areas, and by the provincial general assembly outside those boundaries. Which areas may not be designated as alcohol-licensed premises zones is regulated in Art. 30 of the Regulation on Business Opening and Operating Licences. For example, premises serving alcohol may not be opened within one hundred metres of public and private school buildings, of student residences housing primary and secondary school pupils, or of nursery schools.
How is loss suffered because of a refusal decision claimed?
The owner of the undertaking may seek compensation for the loss suffered as a result of the unlawful administrative act; to that end, a full remedy action must be brought before the administrative courts.
By when may an action be brought against a refusal decision?
Since the act by which the administration refuses a licence application constitutes an administrative act, an action for annulment of an administrative act may be brought to have it set aside. That action must be brought within 60 days of notification of the refusal to the person concerned.
What happens to the licence if the owner of the business premises dies?
The heirs may continue to use the existing licence without any need for a new licence to be issued.
Is a new licence required if the business premises are transferred?
On a transfer, a fresh licence is issued in the name of the new operator on the basis of the information and documents in the file. A new licence must therefore be obtained for business premises that have been taken over. Although the previous licence can no longer be used, the documents in the licence file are taken into account when the new licence is issued.
Independent Legal Assessment
In licensing disputes the outcome of the action is often determined by the contents of the administrative application file. Since the court reviews the lawfulness of the act, as a rule, on the basis of the information and documents existing at the moment it was adopted, completing during the proceedings a document left missing at the application stage does not always change the result. It is therefore advisable to document the application in anticipation of a possible refusal from the outset, and to record all correspondence with the administration.
The reasoning of the refusal must also be examined separately. Acts adopted without any concrete reason being given, or without an on-site examination being carried out, are defective as regards the element of cause and constitute the strongest basis for a claim for annulment. As to compensation for loss, the Council of State’s actual loss criterion is decisive; income capable of being set off must be taken into account from the outset. The following matters stand out in particular in an individual file:
- Clarifying from the outset the class of business premises by reference to which the licence application will be assessed
- Completing the requested documents in full according to the current list for the relevant administration and district
- Obtaining the receipt certificate so that the date of the application is recorded in a manner capable of proof
- Calendaring the date of notification of the refusal and the sixty-day period
- Documenting, alongside the claim for annulment, the heads of loss that will form the basis of the full remedy action
- Identifying in advance any income capable of being set off, so that the sum claimed is determined realistically
Independent Legal provides legal support throughout business opening and operating licence processes, from the preparation of the application file to the conduct of actions for annulment and full remedy actions brought against refusals.