ABSTRACT
Within the framework of this study, first of all, the scope and features of the Build-Operate-Transfer Model (“BOT”) will be explained and the role of alternative dispute resolution methods in the resolution of disputes that may occur in the BOT model will be evaluated.
I. INTRODUCTION
Considering that foreign investors prefer the Build-Operate-Transfer model in international agreements, arbitration plays an important role in the resolution of disputes that may arise in the BOT process. For this reason, the resolution of disputes arising especially within the framework of the BOT will be examined concretely within the scope of a dispute in which Turkey and the USA are parties.
Many business disagreements have arisen as a result of the advancements and innovations in commercial interactions. Arbitration is the most popular means of alternative dispute resolution for resolving problems that may emerge in Build-Operate-Transfer model agreements, which foreign investors prefer when entering into international partnerships. Many advantages provided by the arbitration method are an incentive for investors, as the litigation method is insufficient within the scope of the resolution process of this dispute.
II. ALTERNATIVE DISPUTE RESOLUTIONS
A. Alternative Dispute Resolution Methods
The increase and globalization of trade brings about an increase in commercial disputes. Although litigation seems to be a priority among traditional judicial remedies, after a while, alternative dispute resolution methods that examine more complex and technical issues have started to emerge due to various reasons. This system, which started to be institutionalized in the Anglo Saxon legal system, became a common value of law over time and started to be used more widely.
The concept called conflict does not only belong to the field of law, but is also used in many areas of social life. Today, it is believed by most people that resolving disputes through the courts takes more time, causes unnecessary expense and is more likely to have negative consequences. For this reason, inaction is the most common unilateral dispute resolution method1. In the field of law, when there is a dispute between the parties, it is seen that the first method that comes to mind for application if the parties do not remain inactive in this situation is litigation. This is called judicial or conventional procedure2.
Increasing social and commercial relations have brought problems and this has increased the application to state courts. Therefore, the existing judicial mechanisms have started to have difficulties and technical problems due to the litigation load and workload. Such negative aspects of the traditional application method have led to the creation of alternative ways and methods for dispute resolution. Alternative dispute resolution methods are cheaper, faster than traditional methods, enabling the parties to participate in the resolution process, preventing possible hostility between the parties, thus enabling the relations of the parties to be sustainable, and creating a more effective result as they consider the interests of both parties to the dispute. Likewise, these reasons also include the solutions targeted by alternative dispute resolutions. Among these objectives are to reduce the workload of the courts, to reduce the loss of time and material, to enable the parties to take a more active role in the dispute resolution process, in summary; creating an effective solution in the shortest time and at the least cost.
B. Definition Of Alternative Dispute Resolution
Alternative dispute has different definitions in both Turkish doctrine and comparative law doctrines. “The most popular one among the definitions in the doctrine is that alternative dispute resolution is any type of dispute resolution method that is out of the jurisdiction of state courts and constitutes an alternative to this jurisdiction”3. This definition in the doctrine is very comprehensive and requires the addition of some details regarding the alternative dispute. The best example of this is the existence of an impartial and independent third party in definitions involving alternative dispute resolution. Accordingly, in a definition in the doctrine, it is stated that alternative dispute resolutions are methods that emerge as an alternative to judicial methods and that an impartial intervention or assistance is used4.
In another definition, it is stated that alternative dispute resolution is a method that can be used outside the judicial process or within the trial process, where the disputes are tried to be resolved with the participation of impartial third parties/ parties, the application may be mandatory or optional, but the solution reached is not binding as a rule5. However, when this definition is accepted, that is, when the existence of an impartial third party is seen as an essential element, the way of negotiation, which we frequently see in practice, is eliminated from alternative dispute ways. “Accordingly, alternative dispute resolution is a method that the parties often resort to voluntarily, but in some cases, obligatory in order not to be exposed to the negative aspects of the state judiciary in order to resolve the dispute that has arisen between them. It is all kinds of methods that do not replace the state jurisdiction, complement it, enable the parties to participate in the dispute process, reach an effective but nonbinding solution, which can be applied outside the judicial process or within the judicial process, and which can be accepted by the legal order”6.
C. Historical Development Of Alternative Dispute Resolution
When the history of alternative dispute resolution is examined, these methods have been used by different civilizations throughout history. These methods have been institutionalized based on new reasons and old methods have been shaped according to today’s needs and have an effective and institutional feature. Alternative dispute resolution methods emerged as an Anglo-Saxon origin institution in a professional sense and started to spread rapidly in Continental European countries, especially with the effect of globalization7. “The process of enactment of alternative dispute resolution methods in the United States began in 1990. In 1992, the American Bar Association established a special section to spread dispute esoluteion methods. With the adoption of the Alternative Dispute Resolution Law in 1998, each federal district court was given the authority to create its own alternative dispute resolution programs, and thus, the institutionalization of alternative dispute resolution methods was completed and alternative dispute resolution methods became federal legal policy. In 1999, the ethical rules of alternative dispute resolution methods began to be established and the ethical principles of alternative dispute resolution methods were accepted by the Texas State Court. In Europe, the Committee of Ministers of the Council of Europe hastaken recommendations on the development of alternative dispute resolution methods and mediation in criminal law, administrative law and in general in private law as a whole. Studies on alternative dispute resolution methods have also been carried out in the European Union. The Green Paper on alternative dispute resolution methods was prepared by the European Commission in 2002. It can be said that the aim of the Green Paper is to provide a broadbased consultation on some legal issues related to ADR (Alternative Dispute Resolution) in civil and commercial law disputes. Again, a proposal for a directive on mediation in the resolution of private law disputes was prepared by the European Commission in 2004 and presented to the European Parliament”8.
D. Features Of Alternative Dispute Resolution
The features of alternative dispute resolution can be explained in 4 articles. The first of these, the principle of voluntariness, means that the parties can choose alternative ways in any dispute that may arise as a result of an agreement they will make before or after the dispute has arisen. Although the case of choosing alternative dispute resolutions is on a voluntary basis, it may also appear as a legal obligation in some cases. In cases where alternative dispute resolution is either compulsory or optional, if it fails, the relevant dispute may be resolved through litigation. In addition to all these, the parties have the opportunity to choose the alternative way to be applied in the settlement of the dispute.
Another and one of the most important features are the implementation of the principle of confidentiality. Contrary to state courts, confidentiality, which is one of the most important features offered to parties by alternative dispute resolutions, is often seen as the most important reason for resorting to this method. In accordance with the principle of confidentiality, all kinds of statements, documents and confessions submitted by the parties during the resolution process are kept confidential. Even if this dispute is the subject of the lawsuit, the aforementioned confidentiality also manifests itself in the litigation process. With this assurance, a more open and sincere solution process is formed. The said confidentiality binds not only the parties to the dispute but also the participants, and this situation encourages the parties to prefer the alternative dispute method. The principle of confidentiality can be ignored by mutual agreement of the parties.
While party dominance and flexibility are another important feature of alternative dispute resolution, since it aims not to carry the complex procedures involved in the trial, it gives the parties a wide authority over the method to resolve the dispute. As long as the parties deem necessary, they can decide that the third party will intervene in the dispute and participate effectively in the resolution process.
Finally, the fact that some alternative dispute resolutions are not binding and therefore the decision to be taken at the end of the dispute process remains only as a recommendation, gives the parties the opportunity to implement the decision taken in line with their wishes. On the other hand, the parties can decide that the decision made as a result of their agreement is binding. However, they should not force the other party to do so. At the end of the dispute resolution methods, it is understood that it does not constitute a final judgment since the dispute can be brought to the litigation in any way.
E. Advantages And Disadvantages Of Alternative Dispute Methods
“In the doctrine, alternative dispute resolution is explained on the basis of 4 C’s. These are consensus, continuity, control and confidentiality”9. Continuity is defined as the parties’ continuing connection without degradation, while consensus is defined as the parties’ participation in the settlement process and their will as a crucial component. Confidentiality is the process of resolving a disagreement outside of the public eye, whereas control is the process moving forward in accordance with the needs and desires of the parties.
The most important factors in choosing alternative dispute resolution methods are the earning of money and time. When compared to traditional litigation, these procedures settle disputes significantly faster, and the likelihood of using expert witnesses is decreased because the disagreement is decided by a committee of experts in the area of dispute. The decision reached as an outcome of the conflict will be more voluntarily complied with if the parties actively participate in its settlement, increasing its binding nature.
The alternative offers a less adversarial environment compared to the classical litigation procedure. This situation will especially contribute positively to the continuity of commercial relations, the development of relations in a constructive system will keep the relations between the parties tighter, on the contrary to the combative environment of the traditional litigation.
The most effective reason for the parties to choose alternative dispute methods is confidentiality. When it comes to family businesses and commercial matters, the parties prioritize confidentiality in order not to damage their reputations. Contrary to the traditional litigation, offering the parties a privacy area that they can decide on themselves allows both parties to be involved in a more open trial process and both parties win.
Alternative dispute resolutions have their advantages as well as disadvantages. First of all, since these methods depend on the wishes and active participation of the parties, the unwillingness of one party leads to malicious uses such as prolonging the process. If there is a situation where that both parties are not financially equivalent to each other, it becomes difficult to satisfy both parties in the negotiation process. Such a situation undermines the goal of “satisfactory solution”.
In addition to all these, breaking with the traditional way, not applying to state courts, in short, going out of the ordinary can create distrust for the parties. The loss of trust in alternative dispute methods, in which the parties take an active role and where flexibil ity is dominant, will significantly reduce the demand for these ways. The inadequacy of the third parties that will contribute to the dispute resolution in terms of professional expertise, impartiality, independence and confidentiality will cause the alternative dispute resolution to not have the expected effects. Another problem arises from the lack of decision unity. It is possible that different decisions will be made regarding similar cases, since the decisions that emerged as a result of the conflict cannot have the quality of case law. Therefore, this state of ignorance will create a disadvantage for the parties in applying to alternative dispute resolutions.
F. Types Of Alternative Dispute Resolution
1. Generally
Although methods such as negotiation, mediation, conciliation and arbitration come to mind when alternative solutions are mentioned, alternative dispute resolution methods are not limited to these. Mixed alternative dispute resolution methods are formed when the abovementioned methods change the purposes of the parties or the nature of the dispute, or even a combination of several of them. For example; Mediation+Arbitration: It is possible to create secondary solutions such as the Med-Arb (mediation+arbitration) method. Apart from all these, the parties to the dispute can create alternative dispute resolution methods other than negotiation, mediation, conciliation and arbitration with combining one or more of these methods10.
2. Classification
With the changes made on the existing alternative dispute methods, the boundaries of the concepts can change continuously. Therefore, when it comes to the classification of these concepts, the first of the distinctions is the distinction between primary and mixed (secondary) methods11. When it comes to alternative ways of dispute such as mediation, arbitration, negotiation and conciliation, the first methods that come to mind are the primary ones. Secondary methods, on the other hand, are formed by changing the shape of the primary methods listed above and gaining a new form. Examples of these methods are serial jury trials, impartial preliminary assessment, and short hearings.
G. Alternative Dispute Resolutions
1. Negotiation
The negotiation, which is highly demanded abroad, unfortunately cannot find much application in our country. According to Ziya Akıncı; “Negotiation is the communication carried out directly by the parties or through the parties’ lawyers, without the intervention of an impartial third party, in order to reach a common decision on the resolution of a dispute. Negotiation is a way in which the parties can participate in accordance with their own will and wishes, and play a role in the resolution of the dispute without the intervention of a third party. The aim here is not to refute the opinion of the other party, but to reveal the problem more clearly and to reach a solution that can be accepted by both parties, considering mutual interests”12. In this method, lawyers can act as placeholders for the parties during the resolution process, as well as the parties may perform the dispute resolution without resorting to a placeholder. Another important point to be noted in this regard is that the principle of confidentiality also manifests itself in the negotiation. Statements, documents and confessions put forward during the resolution process of the dispute will not be used as evidence in the lawsuit that may occur later.
There are two different types of negotiation. The first of these is competitive negotiation, while the other is collaborative and solution negotiation. When looking at the meanings of the words, the way the negotiation types work is clearly visible, but to summarize; During competitive negotiation, the parties put their common interests aside and see negotiation as a battle to be won. On the other hand, in the collaborative and solutionoriented negotiation method, the parties mutually renounce their wishes by considering their common gains.
2. Mediation
The method of resolving the resulting dispute through a third party is called mediation. It is among the most frequently used and the first dispute resolution methods in our country. Parties, who start the resolution of the dispute at the mediation stage, can then take the same dispute to the court or arbitration. Although mediation is based on voluntary participation, for example in Turkish Law, application to mediation is accepted as mandatory before applying to the court. The parties can withdraw from the mediation process at any time. During the mediation, the parties can determine the principles and the principle of confidentiality shows itself here as well. The process will be kept confidential and the statements and documents in this process will not be used as evidence at the court stage. Unless otherwise agreed, the parties comply with this principle. Unlike negotiation, an impartial third party plays a role in the resolution of the dispute in the mediation process, but the third party’s powers are limited, and it plays the role of helping the parties in the resolution of the dispute.
3. Reconciliation
In reconciliation, as in mediation, the dispute is resolved by an impartial third party, and these two methods are often interchangeable. The aim is to reach a common solution by fulfilling the wishes of both parties, but the only feature that distinguishes conciliation from mediation is that the conciliator produces a solution in favor of both parties. The conciliator, who plays a more active role from the parties and is at the center in the resolution of the conflict, is the person who will make the most effort to reach a solution, keep the communication tight, identify the problems and produce effective solutions.
The application to reconciliation is made by the referral of the courts or by mutual agreement of the parties in the cases stipulated by the law. In cases where it is stipulated as a prerequisite to resort to reconciliation before applying to local courts under the law, the parties must first resort to mediation. Otherwise, the case will be rejected due to nonfulfillment of the case requirement13.
The solution proposals put forward by the conciliator can be arranged according to the wishes and desires of the parties, and the conciliator can request additional documents from the parties at any time. As with other resolution methods, confidentiality is at the forefront in this method, unless the parties agree otherwise. The suggestions given by the conciliator are not binding, and even if the parties sign this solution, the ways of applying to the court remain open.
4. Arbitration
Arbitration, which has been a popular alternative conflict resolution tool for many years, particularly among businesspeople, is increasingly chosen over local courts due to time and cost considerations. Arbitration is one of the most applied methods in the Build-Operate-Transfer model, and this article will examine arbitration in detail.
H. General Principles Of Arbitration And National Arbitration In Turkish Law
1. Compulsary and Voluntary Arbitraiton
The form of arbitration that is required by law and the parties have no participation in its implementation is termed compulsory arbitration. Compulsory arbitration is an exception and in which cases the arbitration is compulsory is regulated by the provisions of the special law. The parties cannot apply to state courts in matters and cases that belong to compulsory arbitration14. If the arbitration procedure to be applied in disputes within the scope of compulsory arbitration is not specified, the provisions of the Code of Civil Procedure regarding voluntary arbitration will find application by analogy. As an example of compulsory arbitration can be listed in Turkish Law are Law 3533 on Settlement of Disputes Between Public Institutions by Compulsory Arbitration15, Turkish Football Federation Dispute Resolution Board and Arbitration Board.
On the other hand, in cases where the law does not provide for arbitration, resorting to arbitration is called voluntary arbitration. Although the parties are not obliged to apply in voluntary arbitration, the parties can resort to traditional legal remedies for the resolution of the dispute or they can appoint an impartial third party to resolve the dispute. When we look at Turkish Law, we see that discretionary arbitration is regulated within the Code of Civil Procedure, but the regulations are not limited to this law, but are also regulated by special laws.
2. Ad Hoc Arbitration and Institutional Arbitration
Ad hoc arbitration is a type of arbitration in which the parties act freely to resolve the dispute, whereas institutional arbitration is a type of arbitration in which a specific institution moves the resolution process forward in line with its regulations. The purpose of the parties to act freely; The arbitrators of the parties can act according to their own wishes in choosing the method to be applied in the settlement of the dispute and the place where the settlement will be carried out. As a matter of fact, if the arbitration procedure has not been determined, the arbitrators will determine the procedure to be applied. The benefit of ad hoc arbitration is that the parties can act flexibly and that it is less costly in terms of fees to be paid to the institution than institutional arbitration.
On the other hand, there is no need for the parties to determine the rules, since the rules that already exist in institutional arbitration are to be respected. Predetermined procedures and rules give more confidence to the parties, thus ensuring that institutional arbitration is more likely to be preferred. These institutions provide administrative control not only in the appointment of an arbitrator to the dispute, but also in the entire resolution process. Arbitrators do not work continuously in the institution, and in every application made by the parties, an arbitrator authorized to resolve the dispute is appointed. Although not every arbitration institution is the same, the parties should conduct a comprehensive research on the institution to which they will apply. In addition to the advantages of institutional arbitration, it has disadvantages such as being costly and taking a long time due to formality.
3. Single Stage Arbitration and Two Stage Arbitration
If an application is made to the judiciary against the decision of the arbitrators about the dispute, this situation is called singlestage arbitration. In two stage arbitration, which has a special aspect of arbitration, an application is made to a higher level within the same institution against the decision of the arbitrators about the dispute. The conditions of application to state courts against the decision of the higher authority are determined according to the legal rules of the countries. For example, while a single stage arbitration method has been determined in Turkish Law, two stage arbitration has been adopted in Dutch Law.
4. Bilateral Arbitration and Multilateral Arbitration
In the case, the parties are divided into two as the defendant and the plaintiff, but it is possible that there may be more than one person on both sides. Bilateral arbitration is the situation in which there is only one person in the position of the party applying for arbitration. In multilateral arbitration, there is more than one person in the position of party. Application to multilateral arbitration is usually encountered in investment contracts and work agreements because the responsibility of performance rests on more than two people16. Applying to more than one arbitration court in such disputes will cause extra costs, delays and inconsistent decisions.
5. National Arbitration and International Commercial Arbitration
States have adopted different models when it comes to national and international commercial arbitration. For example, while Russia adopts the UNCITRAL model in international commercial arbitration, it includes different legislation in national arbitration. This is also the case for Turkey. The biggest difference between national arbitration and international commercial arbitration arises in the enforcement and implementation of the decision rendered as a result of the dispute. National arbitration is a type of arbitration that is within the boundaries of a certain legal system due to the parties and the subject of the dispute and is independent of the foreign legal system. Accordingly, national arbitration is controlled and regulated by the legal order of the country to which it is affiliated.
In order not to create confusion in practice, the concept of international commercial arbitration is used instead of international arbitration, because the meaning of the concept of arbitration is seen as a superior concept that takes place in the resolution of international disputes and falls within the scope of international law. International commercial arbitration is used for arbitrations that fall into the field of private law in order to avoid any confusion while interpreting the concept.
As can be understood from the foregoing, national arbitration is bound to the legal system of a particular country, while international commercial arbitration will not be bound to the legal system of a particular country.
III. BUILT OPERATE TRANSFER MODEL
A. Built – Operate – Transfer
The Build, Operate, Transfer (“BOT”) Model is a technique that comes into being as a result of the privatization efforts of the facilities under the management of public administrations. It is installed and funded by the private sector and permits the transfer of the operating process to the administration once a sufficient profit is made.This model, which makes use of the budget resources in the private sector and the knowledge/ experience from the past, is the most prominent among the public private partnerships.
Although there are older examples in the Build - Operate - Transfer model constructions, the foundation of this model was laid in the 17th century and the most popular examples were also created in this period. The establishment and operation of the Suez Canal, the creation of the Trans-Siberian railways and the Eiffel Tower are some of the most important developments that took place in this period17.
B. Public Private Collaborations And Build-Operate-Transfer Model
Public-private partnership practices are seen as a new concept, although they date back to the ancient Greek or Roman period. This is due to the fact that it takes time for techniques to become established, that international institutions and organizations are slow to support them, and that implementation in industrialized nations comes later. In the 1980s, when the influence of the states in the economy decreased and the role of the private sector grew, the concept of privatization was also adopted in this period. Although public private partnerships were initially used in large projects as a field of use, over time it took its place in relatively small services to energy or highway projects.
When it comes to public-private cooperation, more than one model comes to mind, and these models have been developed from the past to the present. Some of these models are;
“• Design-Construct-Manage-Finance
• Design-Build-Operate
• Design-Build-Finance-Operate
• Build-Own-Maintain
• Build-Own-Operate
• Build-Develop-Operate
• Build-Operate-Transfer
• Build-Own-Operate-Transfer
• Build-Rent-Transfer
• Build-Rent-Own-Transfer
• Build-Lease-Operate-Transfer
• Build-Transfer-Operate
• Buy-Build-Operate
• Lease-Own-Operate or Lease-Developoperate”
In the Build-Operate-Transfer model, the main application is the construction and operation of the project financed by a private person selected by the administration and transferring it to the administration or another private person selected by tender after the contract period expires. Although the BOT model is the most popular model among the models listed above, it is a model that finds the most application area and forms the basis for public-private partnerships. Although transportation is the place where this model, which is widely used in our country, finds the most application area, the energy sector follows the transportation sector in the second place.
C. Build Operate Transfer Model Implementation In Turkey
The implementation of the Build-Operate-Transfer model in Turkey is based on the aim of creating investments that need resources and technical knowledge, although it is a controversial issue that it took place in 1994. This model, which paves the way for the projects planned to be carried out in Turkey since 1994, regardless of whether there are domestic or foreign investors, aims to increase employment.
The realization of infrastructure facilities and investments of strategic importance in developing countries is of great importance, and the biggest obstacle to the realization of these investment projects is the lack of resources18. While the problem of lack of resources is usually in question in largescale projects, smallscale projects can mostly be met from internal financing resources19. When there is a lack of resources, external resources can be applied, and when external resources are requested, issues such as the development of the requesting country, sources of income, the reliability of the economic and political environment play an important role in the transfer of external resources20.
D. Advantages And Disadvantages Of The Build-Operate-Transfer Model
Although the Build-Operate-Transfer model is an ongoing model in different countries in the world under different names, its arrival in our country is aimed at encouraging foreign capital to be brought into the country. It has some advantages and disadvantages in this regard.
These advantages can be listed as “Completion of the project on time or earlier, understanding of good management and effective management, benefiting from research, development, experience, technology and knowledge of foreign companies, adding foreign capital to the existing resources in the economy, making investments with foreign resources and increasing the total savings in the country”21.
On the other hand, disadvantages are, “Even if there might not be much of an investment burden at first, this could change in the upcoming years. Depending on the cost and profitability, the investment may be more expensive than what would be obtained by conventional means, and it may take several years for the facilities to begin operating as a consequence of the investment. This raises the possibility of social and economic issues at this time. The protracted time may even clash with the social and economic agendas of the incoming cadres, leading to international issues”22.
The success of the BOT model can be attributed to the appropriateness of the project designs, the appropriateness of the agreements, the support of the legal system for the projects and the responsible behavior of the parties. If we list the factors affecting the success of this model; “As the operating period requires many years, political problems, the need for the project of the country to be invested, the reliable environment and conditions for foreign capital and investors, the economic profitability of the country to be invested, the financiers and other parties (state on behalf of the invested country, joint venture company, shareholders) , financiers, builders, operators, buyers) to fulfill their responsibilities''23.
E. Legal Quality Of The Build Operate Transfer Model
1. Contract Characteristics of the BOT Model
When the legal nature of the BOT model is examined, the first thing to mention is that there is a contractual relationship. It is the Decision of the Council of Ministers No. 94/5907, issued pursuant to the Law No. 3996, where such contracts will enter into force upon signing24. The subject of BOT contracts is the provision of financing between the administration and the investor, the determination of many issues such as the duration of the contract and costs.
2. Qualification of BOT: Sui Generis
The BOT model has created a structure of its own when the performances of two typical contracts are combined and the counter performs are replaced by the finance element. In this model, the main aim of the investor is to have the right to operate the investment in return for financing, while the administration’s is to provide the financing of the investment by the investor. As a result of the combination of more than one typical contract acts, the BOT model, which has a mixed form, has been formed.
3. Qualification of BOT: Being a Fully Bilateral Contract
The Build-Operate-Transfer model consists of a relationship that exists within the framework of the buying giving balance, that is, one of the parties owes the other party of the contract in order to create a debt obligation to itself. In this case, BOT is a type of contract that imposes debts on both parties.
4. Qualification of BOT: Having a Permanent Debt Relationship
BOT model contracts are always effective since the performance of the obligations will take place continuously within a certain period of time.
F. Termination Of Build – Operate – Transfer Contract
In general, although the investment period and the operating period are specified in BOT contracts, there are also BOT models that do not have a predetermined contract period. In BOT contracts for which the contract period is determined, it will automatically terminate following the expiration of the period, and in BOT contracts with an indefinite contract time, the period for giving notice of termination is defined as reasonable.
In the event that there is a reason that absolutely prevents the debtor from realizing the imposition and is not due to the debtor’s own fault, it is accepted that the impossibility has occurred and if this reason is evident, the contractual relationship will not be terminated and the default provisions will be applied. However, if this obstacle makes the continuation of the contractual relationship unbearable, the termination of the contract with just cause or termination due to impossibility will come to the fore 25.
IV. BOT MODEL AND INTERNATIONAL COMMERCIAL ARBITRATION
If we examine the applicability of international commercial arbitration in terms of foreign investors investing with the BOT model; While agreements are mostly made with foreign investors within the framework of concession agreements, international agreements are signed in many areas suchas pipeline construction, road construction, dam and road construction within the framework of BOT. In this context, ICSID (International Convention on the Settlement of Investment Disputes) is an international arbitration institution established for legal dispute resolution and conciliation. Through this process, disputes regarding international investments are resolved through activities carried out similar to the mediation mechanism.
A. ICSID Arbitration Process
In this part of the article, the conflicts in the Build-Operate-Transfer model will be discussed through a concrete example. For this purpose, the ICSID Arbitration Process will be explained first and then the case between PSEG Global Inc. and Konya Ilgın Elektrik Üretim ve Ticaret Limited Şirketi before ICSID will be explained.. According to that;
The establishment of ICSID (International Center for The Settlement of Investment Disputes), also known as the International Center for the Settlement of Investment Disputes, dates back to the 1960s. The main duty of the Center is to resolve the investment disputes that may arise between the citizens of one state and the citizens of another state through arbitration26. Since the main reason for the establishment of this center is the “Washington Convention on the Settlement of Investment Disputes Between States and Citizens of Other States”, it is accepted as a condition that at least one of the parties who can apply to this center is a member of this convention27. In order for the disputes that may arise to be resolved in this resolution center, the will of the parties to apply must agree. In addition to being a member of the convention, the states that are parties to the dispute must have a treaty showing their mutual consent to the application in order for the Center to be authorized.In summary; In the event of a dispute arising from an investment, if at least one of the parties to this dispute is a member of the convention and the citizenship of the other party belongs to another state, and if there is a written agreement that the dispute that may arise between them will be resolved by the center, then ICSID is authorized to settle. In the meantime, it should be noted that the fact that the investor is a natural or legal person has no effect on the application to the Center, but the way of application to the Center is closed for stateless people and refugees28.
From the moment the parties to the dispute transfer the solution to the Center, it is not possible to return from this point with a unilateral declaration of will, because after this moment of decision, the resolution of the dispute is transferred to the arbitrator. The law to be applied in this dispute, in which the parties apply for resolution, is decided by the parties, but if there is no agreement between the parties, the law determined in the convention is applied.
B. ICSID Arbitration Case Between Pseg Global Inc. And Konya Ilgin Elektrik Üretim Ve Ticaret Limit Şirketi
PSEG Global was found to be right in the lawsuit filed against Konya Ilgın Elektrik Üretim ve Ticaret Limited Şirketi before ICSID on May 2, 2002, and paid 65% of the legal expenses in addition to the compensation of 9.000.000 USD as a result of the arbitration. The basis of the case is based on the BIT (Bilateral Investment Treaty), which entered into force in 1990 between Turkey and the USA.
The underlying issue of the dispute is whether the Build-Operate-Transfer model is subject to administrative or private law. When the period of the contract is examined, the Build - Operate - Transfer model projects are subject to the Council of State, but with the Constitutional amendment made in 1999, these projects started to be evaluated within the scope of private law. In accordance with the agreement made between the investor and the Ministry of Energy and Natural Resources in 1996, the construction and operation of Konya Ilgın Power Plant with BOT is within the scope of private law pursuant to the law numbered 3996 enacted in 1994. According to a decision of the Constitutional Court in 1998, Law No. 3996 was annulled on the grounds that BOT projects were subject to public law instead of private law29. PSEG, which applied to the Council of State after the annulment decision, received permission that this agreement was in the nature of a concession agreement. However, while the Council of State made this decision, it approved the concession agreement by removing the ICSID arbitration method, which is the trial procedure, from the original contract text. Despite this, the plaintiff company PSEG has announced that it reserves the provision that it will resort to arbitration in case of any dispute by making a notification to the Ministry of Energy and Natural Resources (“Ministry”). Although the applicant company, which applied to the Ministry, accepted some financial privileges requested by the Ministry as a result of these applications, it did not approve all revisions of the contract made by the Ministry. Following the silence of the Administration as a result of these applications, with a new legislation enacted in 2001, the realization of the project planned between PSEG and TEAŞ became impossible30. As a result of the new law enacted, a one year term was imposed on the agreements, and this project, which was planned to be made with TEAŞ, was completely canceled and PSEG resorted to ICSID arbitration. Claims made by the plaintiff company while applying for arbitration: malicious sanctions, arbitrariness of sanctions, Constitution is in violation of Article 48 and the expectations presented by the Administration remain unfulfilled. In Turkey’s defenses against the Plaintiff Company, it is seen that the Build-Operate-Transfer model contracts cannot be adapted according to the investor’s conditions, and in addition, there are allegations that the investor has attitudes that are contrary to this contract.
PSEG was found to be justified in the arbitration proceedings, since the terms of the arbitration committee could not be regulated against the investor and the Build-Operate-Transfer model was based on incentives for investments. In addition, arbitration committee declared that although it found Turkey’s attitude of not meeting with the investor company to be unfair, it did not bear the title of bad faith, which is the statement of the plaintiff. The legislative changes that occurred during the implementation of the project were evaluated as noncompliance with the state’s obligation to act fairly. As a result of this arbitration, Turkey was found to be unfair and sentenced to cover 65% of the litigation expenses in addition to the compensation of 9.000.000 USD.
V. CONCLUSION
The BOT model, which emerged in a period of increasing privatization and globalization, has enabled foreign capital to come to the country thanks to the bids made with the model, thus saving foreign currency and transferring new technology, and today it has become a typical practice for some service areas, no longer being an alternative method in the organization and financing of services. International commercial arbitration plays a vital role in resolving disputes that may arise during the BOT process. Because foreign investors, in particular, want to resolve a possible dispute through international com mercial arbitration, the applicability of thi method encourages foreign investors.
According to the International Arbitration Law: Legal risks are an important issue that negatively affects the repayment of the loan received in the BOT process or the equity capital used by the investor. Investors desire to be convinced of how the right to property is observed in the legal system in the count try, the scope and consequences of liability clauses, how the trial process works in legal dispute resolution and how reliable this le gal order is. As a guarantee against legal risk, “arbitration records” can be arranged in the contract, with the thought that the state will be in a more advantageous position in the case to be heard in the country of the investing state in public investments and a fair trial cannot be held.
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FOOTNOTE
1 Cengiz Serhat Konuralp, Alternatif Uyuşmazlık Çözüm Yolları: Tahkim, İstanbul Üniversitesi Sosyal Bilimler Enstitüsü Özel Hukuk Anabilim Dalı Doktora Tezi, İstanbul, 2011, p. 4.
2 Konuralp, p. 5.
3 Konuralp, p. 7.
4 Konuralp, p. 8.
5 Mustafa Serdar Özbek, Alternatif Uyuşmazlık Çözümü, Ankara, 2009, p. 127.
6 Konuralp, p. 9.
7 Bahattin Aras, ‘Genel Olarak Alternatif Uyuşmazlık Çözüm Yolları ve Temel Özellikleri’, Adalet Dergisi, Iss. 35, 2009, p. 58-75.
8 Müjgan Karyağdı/ İlhami Öztürk, Vergi ve Sermaye Piyasası Hukukunda Alternatif Uyuşmazlık Çözümü, İstanbul, 2009, p. 8.
9 M. Kâmil Yıldırım, “İhtilafların Mahkeme Dışı Usullerle Çözülmesi Hakkında”, in: Prof. Dr. Yavuz Alangoya için Armağan, İstanbul, 2007, p. 349.
10 Süha Tanrıver, Hukuk Uyuşmazlıkları Bağlamında Alternatif Uyuşmazlık Çözüm Yolları ve Özellikle Arabuluculuk, TBB Dergisi, Iss. 64, 2006, p. 151-177.
11 Ziynet Seldağ Ceylan, “Tahkim ve Hakem Sözleşmeleri”, Türkiye Noterler Birliği Hukuk Dergisi, Iss. 107 İstanbul, 2000, p. 70-71.
12 Ziya Akıncı, Milletlerarası Ticari Uyuşmazlıkların Alternatif Çözüm Yolları, Banka ve Ticaret Hukuku Dergisi Yayınları, V. XVIII, Ankara, 1996, p. 93- 109.
13 Konuralp, p. 36.1.
4 Erol Türel, Tahkim Yargılaması ve İlgili Mevzuat, İstanbul, 2004, p. 561.
15 29.06.1938 Tarihli ve 1657 Sayılı Resmî Gazete.
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17 Güzin Pekgüçlü Karabulut, Türk Hukukunda Yap–İşlet-Devret (YİD) Sözleşmesi, Doktora Tezi, Ankara 2005, p. 22.
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22 Özer, p. 32.
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