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New Mechanism

for BOT Contract Dispute Resolution in China

 

FEATURED PAPER

By Yuan Yuan

China and France

 



ABSTRACT

Nowadays, the BOT project became the core infrastructure construction method in China. Because of the complexity of the BOT project, there will be many different disputes along with the project construction. Especially, most disputes came from the contract. Therefore, the purpose of this paper is, to propose a new mechanism of the BOT project to maximize efficiency to resolve contract disputes and make BOT projects develop sustainably. ADR is a common way to solve the disputes in different area. Therefore, based on research and study kinds of relevant literature. This paper presents Alternatives Dispute Resolution as the main solution as well, and to find out the best dispute resolution in ADR process of BOT project by combining the characteristics of the BOT project.

In order to find out the best resolution. Firstly, to select relevant attributes which based on literature analysis and review, these are critical indicators in project dispute in China. Secondly, to explore five alternatives in the ADR process, and analyze the outcomes and features. Finally, based on six critical attributes to make comparisons with these five alternatives by using different methodologies. Finally, after deep and close comparisons, to find out the prevention as the best resolution and summarize the best dispute resolution process of the BOT project at the same time.

Keywords: BOT, infrastructure, the disputes in China, ADR, Prevention, Mediation

INTRODUCTION

In recent year, with the rapid development of China’s economy and the improvement of infrastructure demand. China began to refer to the construction results of the BOT (Build-Operation-Transfer) model in Western countries, and gradually began infrastructure construction in China with the BOT model. To encourage private enterprises, private capital to cooperate with the government and participate in the construction of public infrastructure is a new urbanization development strategy in China. The BOT project has had significant developments in China, and it is called ‘Concession’ project as well. The Chinese government actively guides and encourages social capitalists to participate in construction projects with incentive policy and forms a sustainable capital investment mechanism. The Concession Agreement is a typical contract of the BOT project. It refers to two parties. One is the government, and another is the franchisees. Most franchisees could be a project company at the end of the BOT project.

Although the BOT projects have been adopted in the field of infrastructure construction widely. Because of the imperfect law in China, it is inevitable to has the disputes in BOT contract. Especially, to solve these disputes requires a long process and high cost, so that the private capital does not intend to participate in the BOT project, they cannot have an adequate return. From 2013 to 2016, BOT disputes increased by 71%. According to statistics, there are 85.54% of civil cases, 2.7% of administrative cases and 11.76% of criminal cases. Civil cases mainly include contracts, property, infringement and financial disputes, of which contract disputes accounted for 78.22%.[1]

In China, there has been much controversy over how to resolve the BOT project disputes. Therefore, in this research, to analyze and build a new mechanism is vital to solving the disputes in BOT contract disputes.

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How to cite this paper: Yuan, Y. (2019). New Mechanism for BOT Contract Dispute Resolution in China, PM World Journal, Vol. VIII, Issue I (January).  Available online at https://pmworldjournal.net/wp-content/uploads/2019/01/pmwj78-Jan2019-Yuan-bot-dispute-resolution-in-china.pdf

Editor’s note: This paper was prepared for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development.  http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director, at [email protected].

 



About the Author


Yuan Yuan

China and France

 

 

 

Yuan Yuan is a Master of Science (MSC) student in SKEMA business school, majoring in Program Project Management and Business Development. She used to work for China Lustre United Consulting Llc. Participated in some PPP projects consulting work, and have a good experience of PPP project. In 2018, She participated in the performance evaluation of special funds of Yunnan Province Industrial Information Development Committee. After that, she as a consultant to participate in the preparation of the China Financial Performance Evaluation Operation, thus, she has an excellent ability of project performance management aspect. She is highly recommended by the project manager, as executor, and project team leader.

Yuan Yuan lives in China, and France. She can be contacted at [email protected]

 

[1] Supreme People’s Court Monitor. (2018.3.21). Public-private partnership disputes in the Chinese courts. Retrieved from https://supremepeoplescourtmonitor.com/2018/03/21/public-private-partnership-disputes-in-the-chinese-courts/