Concession contracts for small hydropower plants in Macedonian law and possibilities for their termination

A concession is a legal institute that combines elements of public and private law, through which the state or its institutions allow a subject, either a natural or a legal person, to use public goods of general interest for the performance of a specific activity. This institute is regulated by an administrative act that determines the concession grantor, the subject of the concession, and the selection of the concessionaire, and by the concession contract, which defines the rights and obligations of both parties. The nature of the concession contract is complex and includes elements of both administrative and civil law. On one hand, the concession is part of administrative law because the decision to grant the concession is a public law act issued by a state body, allowing the use of resources of public interest. On the other hand, the concession contract belongs to civil law, as its provisions are in line with the principles of contract law, where both parties—the grantor and the concessionaire—voluntarily accept their rights and obligations. The concessionaire’s initial rights are acquired upon the signing of the contract, which marks a crucial moment in the realization of concession rights. The concessionaire’s rights include the exclusive use of public goods for a certain period and the performance of activities of public interest. On the other hand, their obligations include complying with all regulations and rules regarding the use of these goods, as well as achieving the contract's objectives, such as ensuring continuity in public services. If the concessionaire fails to fulfill their obligations or breaches the terms of the contract, they are liable for the consequences, which may include financial penalties, unilateral termination of the contract by the state, or the activation of legal mechanisms for compensation. Although disputes arising from concession contracts are tied to public interest, they are often resolved before general courts, similar to other civil contracts. The possibilities for terminating a concession contract are outlined within the contract itself and are in accordance with the current legal norms contained in the Law on Concessions, Public-Private Partnerships, and the Law on Obligations. The contract can be terminated upon the expiration of its validity, through unilateral or mutual termination, due to bankruptcy or liquidation of the concessionaire, and other specified reasons. A key aspect is that the concession contract represents a merging of public and private interests, where the state transfers part of its authority to a private entity while still retaining control over the implementation of concession rights. Any breach of contractual obligations may result in legal and economic consequences, including lengthy court proceedings and potential damage to public resources and the environment.