Success stories

I. Background of the Case

The case concerned an application for annulment filed by the Municipality of Mykonos against the Presidential Decree approving the Special Spatial Development Plan for Strategic Investments (ESCHASE) entitled “Tourism Development in Mykonos”, located in the “Karapetis” area of the Ano Mera Municipal Community, Municipality of Mykonos, Region of South Aegean (Government Gazette D΄ 304/10.06.2020).

In summary, the investment proposal included the development of a model five-star hotel complex with ancillary facilities (sports facilities, wellness centre, etc.), as well as the construction of a tourist marina/shelter for recreational vessels. Following the inclusion of the investment proposal within the Strategic Investments regime pursuant to Decision No. 38/8.05.2019 of the Interministerial Committee for Strategic Investments (ICSI) (Government Gazette B΄ 1624), the Strategic Environmental Impact Study (SEIS) of the project was submitted to public consultation and the relevant Presidential Decree was subsequently issued and published in the Government Gazette (D΄ 304/10.06.2020). Thereafter, the Municipality of Mykonos filed an application for annulment against the aforementioned Presidential Decree.

II. ESCHASE as an Instrument of Sustainable Investment

The Council of State initially emphasized that:

1. The approval of an ESCHASE enables the planning of a private investment project intended to host activities of strategic importance and scale, following prior assessment of the qualitative and quantitative characteristics of the proposed investment in relation to the specific property concerned.
2. The spatial and urban planning nature of ESCHASE planning instruments serves the objectives of spatial planning frameworks by allowing the organized development of activities within planned areas, as opposed to uncontrolled, fragmented, and consequently dispersed out-of-plan development.
3. Such planning instruments establish the general rules governing the urban organization of the area under development and constitute the basis for the subsequent implementation of the investment projects.
4. Through the legally required Strategic Environmental Assessment (SEA) procedure, environmental approval is achieved by incorporating environmental protection criteria, which are binding upon the subsequent stage of environmental permitting for the individual projects to be implemented within the area concerned.

The Court concluded that ESCHASE plans, as instruments falling within the level of urban planning — at the same level as Local Urban Plans (LUPs) — constitute:

1. a form of development-oriented urban planning;

and

1. b) a product of systematic scientific and technical substantiation, safeguarded through the SEA procedure and public consultation with the competent authorities and the public.

III. Compatibility with Spatial Planning Frameworks

With regard to the ground for annulment alleging that the contested Presidential Decree was contrary to the directions of the Regional Spatial Planning and Sustainable Development Framework for the South Aegean Region (Government Gazette B΄ 1487/10.10.2003), the Court held that the spatial planning and zoning of the tourism development within the wider area of interest were adequate, given that due consideration had been given to the guidelines and proposals of the Regional Framework, as well as to the provisions of the subsequently adopted Zone of Urban Control (ZOE), which had itself taken into account the tourism-related directions of the said Framework — pursuant to which the area was, in principle, considered suitable for tourism development activities.

Furthermore, regarding the allegation that the applicable Regional Framework imposed restrictions on the establishment of new hotel units, the Court clarified that such objective concerned isolated out-of-plan tourism activities and not organized tourism developments implemented through an “organized development mechanism”, as was the case here through the ESCHASE instrument.

IV. Amendments to Local Urban Planning Schemes

Due to the special and exclusive legal regime governing ESCHASE plans, pursuant to Article 12(4) of Law 3986/2011, as made applicable by Article 24(2) of Law 3894/2010, local urban planning schemes (in this case, the Mykonos Zone of Urban Control – ZOE) may be amended through an ESCHASE, where such amendment is deemed necessary — particularly in cases where the existing regulations are outdated, unclear, or the product of insufficient spatial and urban planning.

This possibility is subject to the condition that, when introducing such amendments, the general directions of the applicable Planning Frameworks and Zoning instruments are duly taken into consideration, so as not to undermine:

1. a) the spatial planning framework applicable to the investment area;
2. b) the general urban planning structure and organization established under the existing planning schemes; and
3. c) urban planning or other measures intended to restrict development pressures, as provided under the relevant planning instruments.

V. The Carrying Capacity of the Island and the SEA Procedure

The Court held that the planning criteria examined within the framework of the Strategic Environmental Assessment (SEA) had been assessed by the Administration in conjunction with all relevant elements of the institutional and regulatory framework (including water protection, waste management, etc.), as well as the favorable opinions issued by the competent authorities. Consequently, the necessary environmental terms and guidelines were imposed, to be further specified through the issuance of subsequent administrative acts during the following stage of the implementation of the investment project.

With regard to carrying capacity, the Court clarified that, at the level of the South Aegean Region, such capacity had not been exhausted, nor did the applicable spatial planning framework indicate that tourism development was necessarily restricted or prohibited. Furthermore, the SEA relating to the contested Presidential Decree had scientifically assessed the carrying capacity of Mykonos in relation to urban planning and tourism pressures, as well as urban expansion, both at island level and within the intervention area, on the basis of the applicable legal framework and in the absence of more specific institutional specifications, concluding that the relevant thresholds had not been exceeded — an assessment which was not contested by the Administration.

VI. Conclusion

In rejecting the application for annulment, the Council of State held that ESCHASE plans, as lawfully organized areas for tourism activities and as instruments of urban planning:

1. a) serve the objectives of spatial planning frameworks (General, Special, and Regional) by facilitating the organized establishment of productive activities within areas subject to planning, as opposed to uncontrolled, fragmented, and dispersed out-of-plan development — in this case, tourism activities; and
2. b) constitute the product of systematic scientific and technical substantiation, given that their approval is based upon a series of scientific studies assessed by the Administration, particularly in relation to the environmental impacts of the proposed investment project.