Supreme Administrative Court ruled on the significance of lease expiry in a water management project

The Supreme Administrative Court held that the expiry of a lease may break the legal continuity of a water management project and lead to the activity being assessed under the new legislation.

In its decision KHO:2025:84, the Supreme Administrative Court assessed the legal basis for a water cooperative's groundwater abstraction in a situation where the activity had originally been based on a 30-year lease agreement concluded in 1988. The lease was entered into under the old Water Act (264/1961) and expired in 2018. After the lease ended, the Regional State Administrative Agency granted a permit for water abstraction while still applying the old Water Act, because the abstraction was considered to have started lawfully before the entry into force of the current Water Act (587/2011), and the Vaasa Administrative Court upheld this approach.

However, the Supreme Administrative Court found that the expiry of the lease fundamentally changed the legal basis for the use of the water intake area. As a result, the case no longer concerned the same water management project that had been lawfully initiated before 2012. Consequently, the old Water Act could not be applied on the basis of transitional provisions; instead, the current Water Act should be applied. The Court quashed the decisions of the Regional State Administrative Agency and the Vaasa Administrative Court and remitted the matter to the Regional State Administrative Agency for reconsideration.

The decision highlights that rights to use land areas connected to water management projects must be based on an agreement or permit that remains continuously in force. If a fixed-term agreement ends without new arrangements, the project's legal situation may change materially and the activity will be assessed under the legislation currently in force. For this reason, it is advisable to review the continuation of agreements and potential permitting needs well in advance of the end of the contract period.