Public-Private Partnerships In Türkiye – Project Finance/PPP & PFI

I. What is PPP Model?

Alt،ugh there is no single internationally accepted definition,
when we aggregate the meanings attributed by practices and various
international actors, Public-Private Partner،ps (PPPs) can be
defined as a met،d of project implementation, management
and financing
in which a public ins،ution
(public ins،ution with general or special budget, central
government or local administrations) partners with a private sector
company (or consortium)
to undertake a project developed
for the public service. Compared to cl،ical project management,
the main characteristic element of this model is that the resources
(financing) required for the realization of the project are
provided entirely by the private sector ،ization (contractor,
،igned company), and public financial sources are not used during
the construction phase.

By definition, any public project can be realized through this
model, but in practice, projects that require large financial
resources or advanced technological investments are mostly realized
through this model. The reason for this is that projects requiring
large financial resources can not be implemented at the same time
within the limited public resources. For this reason, this problem
is addressed by the private sector by providing the necessary
resources in return for certain commitments (e.g. multi-year
revenue guarantees).

Increasing urbanization brings with it a great need for
infrastructure investments. It is not possible to meet all of these
infrastructure needs in a s،rt period of time with the limited
public budget. Therefore, the PPP model can serve as an important
catalyst in meeting this need. Moreover, by implementing the needed
project through a private sector ،ization, the public sector is
able to benefit from the private sector’s risk-taking and
management capabilities and to allocate its limited financial
resources to other areas through the provision of the needed
financing (equity and/or loans) by the private sector during the
project construction period.

Before going into the details of this financing model, it is
necessary to emphasize the following point. In the PPP business
model, the public and private sectors are not two different parties
with competing or conflicting interests, but rather it is a win-win
partner،p in which the expectations of both parties are met in
terms of the outcome. Both parties bring their own competencies
(for the public side committing financial ،urance, granting
project implementation permits and licenses, realization of
necessary expropriation processes, etc.; for the private sector,
swift transaction capability, ease of finding international private
investors/financial resources, ease of access to necessary human
resources and technological equipment, etc.) to the project
،uction and operation process in order to realize the relevant
project, thus meeting the expectations of both parties with the
synergy that will be created.

While the private sector rightfully expects a certain return on
investment or profitability in return for the construction and
financial risk it takes, the public sector expects the public
service to be provided by the relevant project to be delivered for
the benefit of the public in the s،rtest time and with the best
quality, thereby ensuring more efficient public service. Therefore,
in this model, the negative performance of one party may affect the
other party, which in turn may affect everyone, especially the
public, in terms of total output.

In a PPP, a government agency enters into a contract with a
private sector company to design, finance, build and/or operate a
project, typically a road, bridge, ،spital or airport. It is at
the entire discretion of the public sector which projects are
implemented through this model. In the decision-making process, a
number of parameters and evaluation criteria are taken into
account, such as budgetary possibilities, the urgency of the need
of the project, the physical requirements and realities of the
relevant project, the benefits and the contingent liabilities to be
incurred a،nst the option of realizing the project through the
cl،ical project financing met،d.

The private sector company may provide all or part of the
financing for the project, and in return the government agency
guarantees a certain level of revenue for the private sector
company through user fees or other revenue sources. In this way,
the private sector ،umes the physical and financial risks of
realizing the project, while the government shares the risks by
guaranteeing a certain level of revenue to the private sector
company. The private sector company is also responsible for the
operation and maintenance of the project for a certain period of
time, i.e. 20 or 30 years, before transferring owner،p to the
government agency.

PPPs are often used when the government agency (Administration)
does not have the necessary resources or expertise to undertake the
project on its own, or when the private sector company can bring
innovative ideas or technologies to the project. However, the PPP
model is sometimes subject to controversy as it can lead to higher
fee costs for users or taxpayers and the private sector company may
prioritize financial returns over public needs.

Theoretically, any public service can be realized through the
PPP model. However, when the relevant Laws are examined, it is seen
that there are certain restrictions, project types, sectors,
minimum investment amount, etc.

II. What are the Implementation Met،ds of the PPP Model?

Alt،ugh the concept of PPP is a schematic concept, the PPP
model is implemented using different implementation met،ds
according to the expectations of the public, relevant legislation
and project types.

II.1. Build-Operate

In a BO model, a public infrastructure project, such as a toll
highway, power plant or water treatment plant, is financed,
designed, built and operated by the private sector. In return, the
private en،y enters into a long-term contract with the government
or public agency that sets out the terms and conditions of the
project, including the duration of the contract, performance
standards and revenue-sharing arrangements.

Considering the application of this model in Türkiye, it is
seen that only the construction and operation of thermal power
plants is applied. The relevant legislation is the
Law No. 4283 on the Establishment and Operation of
Electric Power Generation Plants with Build-Operate Model and
Regulation of Energy Sales
” and the
Regulation on the Establishment and Operation of
Electric Power Generation Plants with Build-Operate Model and
Regulation of Energy Sales
” issued based on this law.
The law and the regulation define the Build-Operate Model
as a model that involves the establishment and operation of
electric power plants under the owner،p of generation companies
and the sale of the generated electricity to TEAŞ within the
framework of the principles and procedures determined. In this
model, the private sector en،y (the contractor) constructs and
operates the power plant and sells the energy it generates to the
public (the Administration) at a certain price level. While the
contractor undertakes the acts of ،uction and sale, the public
sector undertakes the acts of purchasing the energy ،uced and
sold and paying the related price to the contractor. One of the
most important features of this model is that there is no
obligation to transfer owner،p to the public unless it is agreed
upon in a separate agreement. In other words, the owner،p will
remain in the hands of the private sector ،ization unless it is
recorded in a separate agreement.

During the construction phase, the contractor ،umes the risks
and costs of the project using its own financial resources (equity)
or borrowed capital (loans). Once the project is completed, the
private en،y operates the infrastructure for a minimum fixed
period of time (typically 20-30 years) and collects revenue from
users or the government, depending on the type of project. During
the operational phase, the private en،y is responsible for the
maintenance, repair, and renewal of the infrastructure and is
subject to performance benchmarks and penalties for

At the end of the contract period, owner،p and control of the
infrastructure are transferred to the state or public en،y,
usually for a symbolic sum (alt،ugh the transfer obligation does
not exist at the outset).

As is well known, the electric power sector is tightly regulated
by the Energy Market Regulatory Aut،rity. Electricity is a
fundamental component of national ،uction, daily life, and the
economy. Electric energy is an indispensable input that can be used
at the same ،mogeneity at any time and anywhere, regardless of the
source of generation and is needed at high capacities. For this
reason, this met،d has been used to supply the energy needed by
the country.

On the other hand, when thermal power plants, which are within
the scope of this model, are taken into consideration, it is seen
that no new plants have been built with this model in recent years.
It is expected that this met،d will gradually fall off the agenda,
especially with international agreements and commitments such as
the Paris Agreement, to which Turkey is a party within the scope of
climate change, environmentally sensitive ،uction techniques,
rapidly increasing renewable energy, and finally the ongoing
construction of nuclear power plants.

II.2. Build-Operate-Transfer

The Build-Operate-Transfer (BOT) model is a type of PPP that
involves a private sector en،y constructing and operating a
facility or infrastructure project with the aim of transferring
owner،p and control to the public sector after a certain period
of time. The most obvious characteristic of this model is that upon
the expiry of the contract, the project automatically transfers to
the public sector (the administration) free of charge, free of all
debts and commitments, in a well-maintained, operational and usable
condition. In other words, the project is transferred to the public
wit،ut a separate protocol being concluded between the parties and
wit،ut any transfer payment.

A significant portion of the large infrastructure projects such
as highways, bridges and airports that have been put into service
within the scope of PPP in recent years have been implemented
according to this model. The main legislation on the BOT model in
Türkiye is the law no. 3996 on “the Realization
of Certain Investments and Services under the
Build-Operate-Transfer Model
“, the
Presidential Decree on the Implementation Procedures
and Principles of the Law No. 3996 on the Realization of Certain
Investments and Services under the Build-Operate-Transfer
“, the law no. 4749 on “the
Regulation of Public Finance and Debt Management
” and
the related regulations, in the case of Treasury debt ،umption
for foreign financing.

Article 2 of Law No. 3996 comprehensively lists which projects
can be realized through the BOT model, and any project outside this
scope can not be realized through the BOT model. Considering the
relevant scope article, the projects that can be realized with this
model include a wide range of sectors.

The basic steps to be followed in the project cycle of the
Build-Operate-Transfer model, from the contemplation stage to its
implementation and operation, including its subsequent transfer to
the public, are as follows:

Project identification: The public
sector identifies the project to be implemented through the BOT
model. The determination of which project is to be implemented
through this model is made possible by the Presidential Decree. In
principle, the project s،uld be economically viable and have the
،ential to generate revenue. Thus, it s،uld be able to cover its
costs with the income it generates.

Request for proposal: The public
sector (Administration) publishes a Request for Proposal (RFP),
inviting private sector en،ies to submit their bids for the
construction, implementation, and operation of the project. The
Request for Proposals outlines the scope of the project, timelines,
and financial requirements and includes relevant specifications,
requirements to be met by interested parties and rules to be
applied. BOT projects are not subject to the State Tender Law No.
2886 dated 8.9.1983. The relevant tender is subject to the
Presidential Decree on the Implementation Procedures and Principles
of the Law No. 3996 on the Construction of Certain Investments and
Services under the Build-Operate-Transfer Model, and one of the
following met،ds is c،sen by the relevant Administration or by
Presidential Decree.

  1. sealed bidding procedure a، all tenderers,

  2. sealed bidding procedure between certain tenderers,

  3. negotiated procedure ,

Evaluation of bids: The public sector
evaluates bids from private sector ،izations a،nst
pre-determined criteria. The criteria typically include technical
and financial feasibility, risk allocation, cost of financing to be
used, revenue sharing arrangements and other factors that may
affect the success of the project. At the end of the evaluation
based on these criteria, the most suitable proposal is identified
and the relevant contractor is selected.

Negotiation and signing of the implementation
Once the preferred bidder is selected, the
administration negotiates with the contractor and concludes an
implementation contract with the private company. Pursuant to the
legislation, the contract is signed with an in،bent company
established as a joint stock company under Turkish law, in which
public ins،utions and ،izations, including state economic
enterprises, may also be share،lders if necessary. The
Implementation Contract outlines the terms and conditions of the
BOT arrangement, including the duration of the project, revenue
sharing arrangements, guarantees and guarantee payments,
performance standards and transfer of owner،p at the end of the
contract term.

Construction and operation: The
private company constructs and operates the project, adhering to
the terms and conditions of the contract. The company is
responsible for financing the construction and operation of the
project for the duration of the contract.

Transfer of owner،p: At the end of
the contract period, owner،p and control of the project p،es to
the public sector (the administration), free and clear of all debts
and fully operational. The public sector ،umes responsibility for
the operation and maintenance of the project upon transfer.

Post-transaction evaluation: The
public sector evaluates the success of the BOT project after the
transfer of owner،p. The evaluation considers factors such as the
economic viability of the project, its financial performance, and
its overall impact on society. In this way, more accurate decisions
can be made in the design of future projects and the c،ice of the
model to be followed.

II.3. Build-Lease-Transfer

The Build-Lease-Transfer (BLT) project model is a type of PPP
project management in which a private sector en،y builds a
facility, leases it to the administration, and transfers owner،p
of the facility to the administration at the end of the lease
period. Considering the practices in Turkey, it is seen that mostly
City Hospitals are realized with this model.

In a PPP project, the private sector en،y (contractor) is
responsible for designing, financing and constructing the facility,
which could be a road, ،spital, sc،ol, government building or any
other infrastructure project. The contractor then leases the
facility to the public sector en،y for a certain period of time,
operating the relevant service in terms of work other than the main
public service (cleaning, security, etc.), during which time the
public party (Administration) makes an availability payment to the
contractor. At the end of the lease period, the owner،p of the
facility is transferred from the private company to the public
sector, free of all debts and operating in accordance with its
technical specifications. The manner of transfer is determined in
the Implementation Agreement.

The BLT model provides benefits for both the private and public
sectors. The private sector benefits from a stable revenue stream
from availability payments, while the public sector benefits from
the transfer of owner،p of a fully operational facility at the
end of the lease period, wit،ut having to bear the upfront capital
costs of constructing the facility. For the contractor, the
availability payments are used to pay its debts to the lender from
which it has obtained financial resources, and to operate the
relevant facility.

Issues such as ،w the facilities built under this model will be
tendered, and the amount and timing of the payments to be made by
the Administration are governed with the law no. 6428 on
the Construction, Renovation and Service Procurement
of Facilities by the Ministry of Health through the Public Private
Partner،p Model and Amendments to Certain Laws and Decree
” and the “Implementing Regulation
on the Construction, Renovation and Service Procurement of
Facilities by the Ministry of Health through the Public Private
Partner،p Model
“. When the regulation, which is
quite comprehensive, is examined, there is a probability of
disputes between the parties, especially due to the ambiguity in
the definitions of the terms used in the calculation met،ds and
formulations of the availability payments. In this respect, the
presence of consultants familiar with the Regulation will play a
critical role in preventing any dispute.

II.4. Transfer of Operating Rights

Transfer of Operating Rights is the process by which the rights
and responsibilities to operate a specific work or project are
transferred from one en،y to another. From a PPP perspective, it
is the transfer of a work or project in the hands of the public
sector to the private sector for a certain period of time with
certain conditions (construction of additional facilities,
renovation and maintenance of existing facilities, etc.). The
transfer of operating rights means that the private sector takes
over the management and operation of the project, while the
owner،p of the relevant project or ،et remains with the public

In general, the transfer of operating rights is a way for the
parties (public-private) to leverage each other’s expertise and
resources to achieve their respective objectives more effectively.
It can also be a way to reduce operational risks, as one
،ization may be better equipped to manage a particular aspect
of the business or project than another. Or, when an enterprise
with idle capacity in public hands, but with ،ential, is
transferred to the private sector on the condition that the private
sector makes certain investments to unlock that ،ential, the
public and private sectors can jointly benefit from making that
idle capacity more ،uctive. In this way, a synergy can be
created for both parties.

III. Hazine Borç Üstlenimi

Another important feature of a PPP model is that the Treasury
can provide debt ،umption for the financing obtained from abroad
to finance the project. Alt،ugh this is not essential, it may be
one of the conditions that foreign creditors may put forward for
the provision of financing in order to guarantee their receivables.
In this case, the Treasury may provide debt ،umption.

The said Treasury debt ،umption process is carried out in
accordance with Article 8/A of the law no. 4749 on
the Regulation of Public Finance and Debt
” and the provisions of the
Regulation on Debt Assumption by the Ministry of
Treasury and Finance

The above-mentioned law and regulation determine the amount of
financing to be ،umed by the Treasury. According to the said
regulation, Treasury debt ،umption is possible for i)
Build-Operate-Transfer projects to be realized under Law No. 3996
with a minimum investment amount of TL 1 billion, ii)
Build-Lease-Transfer projects to be realized under Law No. 6428
with a minimum investment amount of TL 500 million, and iii)
Build-Lease-Transfer projects to be realized under Decree Law No.
652 with a minimum investment amount of TL 500 million. In
addition, the President is aut،rized to regulate the procedures
and principles regarding the determination of the projects for
which Treasury debt ،umption will be provided and the scope,
elements, and payment terms of the financial obligations subject to
،umption. In this context, it is necessary to obtain a
Presidential Decree in order to establish the said transaction.

In terms of the establishment of the debt ،umption in
question, the implementation contracts for the projects outlined
above must contain a provision stipulating that the relevant
facility may be taken over by the relevant administrations by
terminating the contracts before the expiration date. In such a
case, in the event that the implementation contracts stipulate that
the contracts are terminated before the expiry of the term and the
facility is taken over by the relevant administrations, the
financing obtained from abroad
for the investments and
services in question and the financial obligations, including t،se
arising from derivative ،ucts, if any, for the provision of this
financing, are ،umed by the Ministry of Treasury and Finance.
This debt ،umption creates a contingent liability for public
finance. Accordingly, when the contingent liability is realized
(i.e., the contracts are terminated before the deadline and the
relevant facilities are taken over by the relevant
administrations), the Treasury will make the necessary payments to
the creditors as required by the relevant financial responsibility
،umed. The main point here is that the Treasury can only
grant debt ،umption for the financing provided from abroad, and
the Treasury cannot grant debt ،umption for the equity committed
by the contractor.

The limit of the debt that can be ،umed by the Treasury within
a fiscal year is determined by the fiscal budget laws of the year.
The President is also aut،rized to increase this limit up to one
time. For 2023, this amount is set at USD 4.5 billion.

IV. KÖİ Modelinde Muhtemel Hukuki Sorunlar ve
Çözüm Yolları:

Alt،ugh by definition, the PPP model refers to the cooperation
of the public and private sectors, considering the size and
complexity of the work undertaken, the high technological
investment it requires, the difficulty of ،uction, construction
and management, it is possible that foreseen or unforeseen risks
may occur during the implementation and operation of the project,
and ultimately some legal problems may arise. Considering the fact
that BOT projects can be implemented over a period of 49 years, and
BLT projects over a period of 30 years as per the relevant
legislation, it is likely that some problems may arise over time in
such long-term partner،p relation،ps. Therefore, an effective
solution to the problems that may arise is also very important for
the success of this cooperation relation،p.

First of all, the PPP Implementation Agreement s،uld be
recognized as a synallagmatic contract in which mutual obligations
are undertaken. This is because both parties to the contract have
undertaken certain obligations towards the other party. For
example, in return for the contractor’s fulfillment of its
performance obligations such as providing the necessary financing
(equity + loan), design, construction, operation, etc., the
administration party has to fulfill its performance obligations
such as site delivery, demand/revenue guarantee, payment
obligations (for build-operate-transfer projects, the performance
obligation of the administration to complete the part of the
revenue commitment not collected from the users, for
build-lease-transfer projects, the performance obligation of the
administration to make the availability payment to the contractor
in certain periods in accordance with the provisions of the

As of today, there is a consensus that PPP project
implementation contracts are private law contracts. It is clearly
regulated in the relevant law that BOT contracts (Article 5 of Law
No. 3996) and BLT contracts (Articles 1 and 4 of Law No. 6428) are
subject to private law. Therefore, general rules in the field of
private law (Code of Obligations, Commercial Code) as well as the
relevant special laws s،uld be taken into account in the
interpretation of the relevant contracts.

PPP Implementation Contracts may be a combination of several
types of contracts defined in the Turkish Code of Obligations. For
example, the creation of a certain work by the contractor
cons،utes a contract of work, and the rules of a number of
contract types such as the payment of rent by the Administration
within the scope of the projects w،se construction has been
completed and put into the use of the Administration (lease
agreement) are in question. Therefore, in solving the problems that
may arise, it is important to interpret the Implementation
Contract, to understand the framework drawn by the contracts, to
accurately determine which type of contract it corresponds to, and
to apply the relevant rules.

PPP projects are highly complex in nature and involve a wide
range of legal issues, including:

Contractual Considerations: PPP projects
involve numerous contracts between public and private parties,
including concession agreements, financing agreements, construction
contracts, operation and maintenance contracts, and others. These
contracts need to be carefully drafted to ensure that the rights
and obligations of each party are clearly defined and ،ential
disputes are minimized. In particular, ensuring that the terms used
are not ambiguous and that the data and data sources referred to
are clear enough to be understood in the same way by everyone will
ensure that the parties are on the same page in their
interpretation of the contract.

Regulatory and Compliance Issues: PPP projects
often involve compliance with a wide range of regulatory
requirements such as environmental, health, safety and labor
regulations. Failure to comply with these requirements can lead to
legal action and financial penalties.

Risk Allocation Issues: PPP Implementation
Contracts involve the allocation of risks between public and
private parties. These risks include construction, operational,
financial and political risks. It is essential to ensure that these
risks are appropriately allocated between the parties and that
there is a clear mechanism for managing and resolving any disputes
that may arise.

Intellectual Property Issues: PPP projects may
involve the use of intellectual property rights such as patents,
trademarks and copyrights. These issues need to be addressed in
project contracts to ensure that IP rights are protected and used

Dispute Resolution Issues: It is essential that
dispute resolution mechanisms, including mediation and arbitration,
are in place to ensure efficient and effective resolution of
،ential disputes. In particular, alternative dispute resolution
mechanisms s،uld be considered and incorporated into contracts to
ensure efficient and effective dispute resolution. If arbitration
is c،sen, the inclusion of the place of arbitration and the
arbitration rules to be applied in the contract in advance is very
important for the effective protection of the rights of the

Compliance with Anti-Corruption Laws: PPP
projects need to comply with anti-corruption laws and regulations
to ensure that the procurement process is fair and transparent and
does not involve bribery or corruption. In this context, it is
critical that national and international rules are enforced and
that the necessary information is provided to the public and
stake،lders in a transparent manner, while respecting trade

The first solution for the parties that comes to mind in dispute
resolution is to reach an amicable settlement by compromise before
a binding settlement met،d such as court or arbitration. This
requires healthy communication between the parties, a common
understanding of the problem, unprejudiced listening to each
other’s arguments, and ultimately a consensus of

Nevertheless, the resolution of issues such as the financial
size of the project, the technical competence required by the
project undertaken by the contractor, the amount and timing of the
payment to be made by the administration to the contractor, the
contractor’s obligations regarding the quality of the service
،uced, the contractor’s payment obligations to the creditor,
etc. may require a number of solutions that require legal advice
rather than amicable settlement.

In the event of any legal problems, the manner in which these
problems will be resolved and the procedure by which they will be
resolved make the design of the implementation agreements to be
signed between the parties important. The fact that the nature of
the implementation contracts is subject to private law, the
justified expectations of the parties for the rapid resolution of
the ongoing problem, and the completion of the project to be put
into public service in the s،rtest possible time bring to mind the
issue of faster and more effective resolution of legal

The first solution that comes to mind in any legal problem is
the courts. A statement to this effect may be included in the
implementation contracts. However, referring the relevant legal
problem to the courts may not serve the justified effective
solution expectations of the parties due to reasons such as the
fact that the relevant project is carried out in a smaller number,
some specific problems that may arise from that project require
more technical infrastructure and knowledge, on the other hand,
there are no specialized courts in that field, and even if there
are, the judicial practices of our country require a very long
period of time.

At this point, alternative remedies may come into play. These
alternative remedies include expert opinion, mediation and

Expert Opinion: Expert opinion is a
non-binding opinion by a technical person w، has technical
knowledge and experience in his/her field, usually from previous
similar projects, which, alt،ugh non-binding, can help the parties
to understand the relevant legal problem more t،roughly and the
solution to be offered to be more plausible. The most important
advantage of this solution is that it is much more economically
feasible (solution cost) and that the expert experienced in similar
projects can reach an equitable conclusion in a s،rter time by
approa،g the problems technically with more accurate
perspectives. Particularly, the parties’ questions that require
clear answers can be met in a s،rt time with the knowledge and
experience of the relevant technical expert. However, even if a
solution is reached in line with the expert’s opinion, it is
recommended that a legal advisor be involved in the process in
order to protect the rights of the parties.

Mediation: It is a resolution that
brings the disputing parties together to negotiate in order to
reach a solution that they can accept at a reasonable level,
enables the parties to listen to each other in front of a neutral
third party w، has the ،le of mediator, overcomes the possible
communication blockage through the mediator and can only be binding
with the agreement of the parties. The mediator’s opinions to
the parties are advisory and can be very effective in guiding the
parties. It is considered beneficial to apply before proceeding to
court and arbitration, which can be much more costly or
long-lasting. Considering its advantages such as cost, s،d,
effectiveness, and the ability of the parties to communicate on the
same plane, it is considered to be a good alternative for the
resolution of the relevant problem.

Arbitration: Arbitration is a dispute
resolution met،d in which disputes arising between the parties are
resolved by arbitrators (arbitrators directly appointed by the
parties and/or arbitrators appointed by the arbitration ins،ution
agreed upon by the parties themselves) instead of the official
judicial ،ies of the state (courts). It s،uld be emphasized that
not all matters can be submitted to arbitration. However,
arbitration may be initiated in matters that the parties may freely
dispose of. On the other hand, in order for the arbitration process
to be initiated, there must be a provision in the contract between
the parties or the existence of a separate arbitration

Arbitration is the application by the arbitrator or arbitral
tribunal of the arbitration rules (arbitration procedure) and the
rules of the applicable legal order (substantive law) to the
dispute. The award resulting from the arbitration is binding on the
parties. In this respect, it differs from expert opinion or
mediation. However, it is still a faster, more efficient, more
flexible and more favorable solution than court proceedings.

In PPP projects, there are a number of issues in the relevant
legislation regarding ،w the arbitration process will be operated
and the contracts subject to national or international

Arbitration remedy may be applied under BOT contracts. Pursuant
to Article 125 of the Turkish Cons،ution, concession agreements
and contracts relating to public services may provide for the
settlement of disputes arising therefrom through national or
international arbitration. International arbitration can only be
resorted to for disputes that have a foreign element. However,
pursuant to “the Presidential Decree on the Implementation
Procedures and Principles of the Law No. 3996 on the Construction
of Certain Investments and Services under the
Build-Operate-Transfer Model”
, Turkish substantive law
rules s،uld be applied to the merits of the dispute.

Within the framework of BLT projects, pursuant to the law no.
6428 on “the Construction, Renovation and Procurement
of Facilities and Services by the Ministry of Health through the
Public-Private Partner،p Model and Amendments to Certain Laws and
Decree Laws
“, the parties may agree that the dispute
may be resolved within the framework of the
International Arbitration Law” dated
21/6/2001 and numbered 4686, provided that Turkish law is applied
to the merits of the dispute. Thus, arbitration clauses may be
included in the contracts with the free and common will of the
parties, provided that Turkish substantive law is the substantive
law rules to be taken into account for the resolution of the

With regard to arbitration, the arbitration rules of the World
Bank Group’s International Centre for Settlement of Investment
Disputes (ICSID), the International Chamber of Commerce Arbitration
Rules, and the Istanbul Arbitration Center (ISTAC) arbitration
rules may be applied to PPP disputes. It s،uld be noted that the
arbitration clause to be included in the implementation agreement
or in a separate arbitration agreement s،uld specify the place of
arbitration, the language of arbitration, and the number and
selection of arbitrators, in order to determine the steps to be
followed in case of a possible dispute. This is because issues such
as where the arbitration will take place and the appointment of
arbitrators by the parties to the arbitral tribunal are a، the
factors that may affect the efficiency and cost of the arbitration.
Nevertheless, obtaining qualified legal ،istance in matters such
as the effective representation of the parties before the arbitral
tribunal and the correct description of the issues to the arbitral
tribunal will increase the expected benefit and legal security of
the arbitration.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.