The Legal Regime of the Build-Operate-Transfer (BOT) Contract

Abstract

The Build-Operate-Transfer (BOT) contract is a relatively modern contractual mechanism adopted by states to address the increasing demand for public facilities and infrastructure among citizens. Based on a relationship between the state and private entities, it involves the state, acting as a public-law legal entity, entering into an agreement with a private investor governed by private law. Under this arrangement, the investor is responsible for financing, designing, constructing, operating and maintaining a public facility for a set period. The facility is then transferred to the state in accordance with the contract’s terms and conditions.

The BOT mechanism is intended primarily to facilitate the development of major infrastructure and public facilities, such as roads, ports and airports, while alleviating the financial burden on the state and encouraging private-sector investment and expertise. Furthermore, the BOT contract has an international dimension, particularly given the frequent involvement of foreign investors and cross-border investment operations.

Despite doctrinal debates concerning its legal characterisation — particularly whether it should be regarded as a civil contract or an administrative contract — the BOT contract can be classified as an administrative contract when concluded by a public-law entity for the purpose of establishing, operating or managing a public service, and when it is subject to the rules governing administrative contracts. In this context, the BOT contract is one of the contemporary forms of public service concession arrangement, reflecting the growing role of public–private partnerships in the development and management of public infrastructure.