1) Why a generation license cancellation is more than a regulatory problem
In Turkey, an electricity generation license is not merely an administrative permission—it is the legal backbone of a power project’s value. It anchors:
- project financing and security packages,
- land rights and easements (often linked to the license term),
- EPC and O&M contract milestones,
- offtake arrangements and revenue projections,
- shareholder exit timing and valuation.
When the Energy Market Regulatory Authority (EMRA/EPDK) cancels a generation license, the consequences can cascade across the entire project stack. The legal strategy must therefore be designed with two simultaneous goals:
- prevent irreversible damage (cash flow freeze, defaults, loss of rights), and
- position the case for annulment (and, where applicable, compensation claims) before the administrative courts.
This article explains the legal framework, the most common triggers for cancellation, the remedies available, and a litigation roadmap that is aligned with how Turkish administrative courts apply the rules.
2) Core legal framework: what governs cancellation and judicial review?
Electricity Market Law No. 6446 (primary legislation)
Law No. 6446 sets the licensing architecture and, crucially, establishes “hard” consequences for certain failures. For generation projects, a standout provision is the construction timeline rule: if the plant is not built within the construction period specified in the license (outside force majeure and other justified reasons), the license is cancelled and the bank guarantee letter is recorded as revenue, and additional restrictions may follow. (Türkiye Büyük Millet Meclisi)
The same section also introduces a three-year disqualification regime following cancellation—affecting not only the license holder but also certain shareholders and managers connected to it. (Türkiye Büyük Millet Meclisi)
Electricity Market Licensing Regulation (secondary legislation)
The Licensing Regulation details procedures, timing, documentation, and the legal effect of EMRA Board decisions. It expressly provides that cancellation decisions generally enter into force on the date of the decision (unless the Board states otherwise). (LEXPERA)
It also repeats and operationalizes key cancellation grounds (including the construction deadline logic) and the three-year ban mechanics. (LEXPERA)
Administrative Procedure and Litigation Framework (İYUK No. 2577)
From a remedies perspective, İYUK is decisive on two points:
- Filing a lawsuit does not automatically suspend the administrative act. (LEXPERA)
- A stay of execution (injunctive relief) requires two cumulative conditions: (i) clear unlawfulness and (ii) risk of irreparable or difficult-to-compensate harm. (LEXPERA)
İYUK also sets the general lawsuit time limit of 60 days in administrative disputes (unless a special law provides otherwise). (LEXPERA)
Finally, İYUK contains rules on competent venue—including a special venue rule for disputes tied to immovable property (zoning, expropriation, licensing/permits connected to the immovable, etc.). (LEXPERA)
3) The “classic” cancellation trigger: construction deadline + guarantee forfeiture
For many investors, the most financially destructive cancellation scenario is the one linked to the construction schedule.
3.1 Legal rule (high impact)
Law No. 6446 ties cancellation to the failure to complete construction within the license-specified construction period (with limited exceptions such as force majeure and justified causes not attributable to the license holder). In that scenario, cancellation can be accompanied by forfeiture of the guarantee letter. (Türkiye Büyük Millet Meclisi)
3.2 Collateral damage: the three-year “ban” and reputational impact
The law goes further: if the license is cancelled, the company and certain connected persons (including shareholders with 10%+ and specified managers) may be prevented from obtaining or applying for licenses for a period (commonly structured as three years). (Türkiye Büyük Millet Meclisi)
The Licensing Regulation mirrors this architecture in detail. (LEXPERA)
3.3 Why this becomes litigated
In real projects, construction delay is rarely “one party’s fault.” Delays may be driven by:
- permitting and environmental approvals,
- zoning implementation plans,
- land acquisition disputes,
- expropriation timelines,
- grid connection constraints,
- contractor defaults,
- supply chain disruptions,
- judicial stays in parallel proceedings.
The legal battle is typically about causation and attribution: whether the delay falls under force majeure or “justified reasons not attributable to the license holder,” whether the investor took reasonable steps, and whether EMRA’s reasoning is proportionate and sufficiently evidenced.
4) Other common grounds for cancellation (beyond construction deadlines)
While construction delay dominates the landscape, cancellation may also arise from other compliance failures. The Licensing Regulation expressly contemplates further cancellation pathways (for example, certain YEKA-linked events or failures to submit required documentation within the Board-set timeframe). (LEXPERA)
In practice, the most common clusters are:
4.1 Loss of licensing conditions
If the “conditions that formed the basis of the license” are lost, the law provides for termination by Board decision in relevant scenarios. (Türkiye Büyük Millet Meclisi)
Typical examples include corporate eligibility failures, prohibited changes in control, or compliance breaches that undermine the licensing basis.
4.2 Regulatory non-compliance and audit findings
Licenses bring ongoing obligations: reporting, audit cooperation, technical compliance, and market behavior rules. A pattern of serious breaches can produce enforcement action that escalates toward cancellation.
4.3 Project restructuring and financing stress
If a project is financed, restructuring may require changes in shareholding, control rights, or “step-in” mechanisms. The Licensing Regulation contains pathways for transferring rights/obligations under regulated conditions—this becomes crucial when the objective is to keep the project alive without triggering cancellation. (LEXPERA)
5) Immediate legal effects: why timing is everything
5.1 Cancellation is usually effective immediately
Under the Licensing Regulation, cancellation generally becomes effective on the date of the Board decision unless stated otherwise. (LEXPERA)
That means you cannot assume “we have a lawsuit, so we are safe.” You must treat the cancellation as operationally real from day one.
5.2 A lawsuit does not stop execution by default
İYUK is explicit: filing in the administrative courts does not automatically suspend the decision. (LEXPERA)
Therefore, the stay of execution request is not optional in most projects—it is often the difference between a viable dispute and a dead project.
6) Pre-litigation option: request EMRA to revoke or amend (and why it matters)
Before (or alongside) litigation, İYUK allows an administrative application to request the administration to remove, revoke, amend, or issue a new act. This application must be filed within the lawsuit period and it suspends the running of that period until the administration responds (or is deemed to have rejected). (LEXPERA)
This route can be strategically useful when:
- the decision is based on missing or misunderstood facts,
- the record can be strengthened with additional documents,
- the goal is to negotiate a compliance path (extensions, restructuring, step-in) rather than full confrontation.
That said, these applications must be managed carefully: poorly drafted submissions can lock the company into admissions that later harm the court case.
7) Administrative lawsuit roadmap: annulment action + stay of execution
7.1 Claim type: annulment (and sometimes combined claims)
Most license cancellation challenges are framed as annulment actions (iptal davası). Where the cancellation produces measurable loss, the investor may also explore a separate compensation (full remedy) path, depending on the factual matrix and prerequisites.
7.2 Deadline: typically 60 days
İYUK’s general rule is a 60-day time limit for annulment actions in administrative disputes, starting from written notification. (LEXPERA)
Because service/notification mechanics can be complex (and projects often receive parallel notices), the safer approach is to calculate deadlines conservatively and file early.
7.3 Venue and competence: do not assume “always Ankara”
Many EMRA disputes are filed in Ankara; however, venue can shift depending on the nature of the act and the connected legal subject matter. In particular, İYUK contains a special venue rule for disputes linked to immovable property (zoning, expropriation, permits tied to the land, etc.), directing competence to the court where the immovable is located. (LEXPERA)
For generation projects, land and expropriation frequently intersect with licensing obligations—so venue analysis must be done case by case.
7.4 Stay of execution: the two-condition test
The legal test is strict and cumulative:
- clear unlawfulness, and
- irreparable/difficult-to-compensate harm if executed. (LEXPERA)
In license cancellation cases, the “harm” limb is often easier to show (financing default, termination cascades, loss of land rights, loss of permits, reputational and market consequences). The hardest part is usually demonstrating “clear unlawfulness” at the interim stage.
Practical litigation tip: Courts are persuaded by a structured file that shows:
- compliance calendar and milestone evidence,
- correspondence with permitting authorities and grid operators,
- expert opinions on causation (why the delay is not attributable),
- audited financial exposure (loan covenants, termination penalties),
- a proportionality argument (why less severe measures could have achieved regulatory aims).
8) Building the substantive case: the most effective legal arguments
While every file is different, successful challenges typically rely on a combination of these lines:
8.1 Incorrect attribution of delay (force majeure / justified cause)
If the project faced obstacles not caused by the license holder—and the investor acted diligently—then cancellation and forfeiture can be attacked as a misapplication of the legal standard. Scholarly and practice literature in Turkey frequently emphasizes that the “force majeure” concept becomes decisive in cancellation disputes, especially because cancellation affects not only the project but also connected persons and future market access. (GSI Attorney Partnership)
8.2 Procedural defects and right to be heard
Many cancellations follow inspections, deficiency notices, or “time-to-cure” communications. If the company was not given a meaningful chance to respond, if the file lacks a proper reasoning chain, or if the administration ignored key evidence, these procedural defects can support annulment.
8.3 Proportionality and legitimate expectations
Where the investor made substantial, good-faith progress and the remaining issues were not attributable to the investor, cancellation may be argued as a disproportionate sanction—especially when the consequences include forfeiture and multi-year market exclusion.
8.4 Equality and consistent administrative practice
If comparable projects received extensions or alternative compliance pathways, inconsistent treatment can be litigated through equality and consistency principles in administrative law.
9) Appeals and higher review: what to expect in practice
Administrative litigation is multi-layered. Even if the first instance court grants a stay of execution, the administration may seek to remove it through objection/appeal mechanisms. The Constitutional Court’s decision involving an energy company (Resumut Enerji A.Ş.) illustrates how a stay of execution can be contested before the regional administrative court and how the interim stage can materially affect the investor. (Kararlar Bilgi Bankası)
The practical takeaway is simple: the interim phase is often the real battlefield, and winning (or losing) it shapes settlement leverage, financing survival, and the ability to keep the project intact during trial.
10) Investor-focused crisis playbook: first 10 days after cancellation
If a generation license is cancelled, the fastest, most disciplined response is usually the best defense. A typical emergency plan includes:
- Freeze uncontrolled communications (avoid admissions; centralize messaging).
- Secure the full administrative record (decision, reasoning, inspection reports, notices, service evidence).
- Quantify harm immediately (loan defaults, contractual penalties, employment impact).
- Map the compliance timeline (what was due, what was done, why delays occurred).
- Collect third-party proof (permits, zoning, expropriation correspondence, grid communications).
- Consider an İYUK 11 application to EMRA (where strategically useful). (LEXPERA)
- File annulment action within the deadline (generally 60 days). (LEXPERA)
- File a powerful stay of execution request (two-condition test). (LEXPERA)
- Stabilize contracts (standstill discussions with lenders/EPC; avoid automatic terminations).
- Evaluate restructuring/step-in options where feasible under the Licensing Regulation. (LEXPERA)
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