A Survey of the Contracts of Build, Operate and Transfer (B.O.T.) in Free Trade Zones of Iran

Abstract

Build – operate – Transfers (B.O.T.) contract is a contract in which one part of the contract (investee government) gives the right of construction and operation of an infrastructural project to a consortium including several private entities. In this contract, after constructing and operating the project, the consortium is obliged to transfer the project to the investee government after a specific time. Different governments especially in the underdeveloped countries consider this contract as an effective tool in attracting foreign investment in order to get an effective management to run infrastructural projects. In order to succeed in this method, the investee government should provide legal, economic and political bases for the private investors to operate. In the Iranian legal system, the only existing rule is the rule of encouraging and supporting foreign investors legislated in 2002 in the Expediency Council in which this contract is briefly noted. Due to the particular position of the free trade zones, this kind of contract can be advantageous for the government in Iran in order to attract foreign investment and have access to the modern technologies. This study conceptually explores B.O.T. contracts and the role of such pacts in attracting foreign investment. Moreover, the dispossessions of the international investors as well as the ways of solving their problems are investigated through this study.