Legal Risk And Prevention Of BOT Project Investors

In order to encourage the foreign private capital to take part in the infrastructure investment and construction in host country, BOT(Build-Operate-Transfer), the creative infrastructure investment and construction model that the host country authorize the right of franchising to foreign private capital and allow it acquires reasonable benefit during the term of franchising, has obtained favor of many developing countries since it was specific raised by the Turkish Prime Minister Turgut Ozal on 1980 s.The earliest practice of BOT model in China began in 1984. After that, China has successfully operated many infrastructure projects by the model of BOT or quasi-BOT, and therefore accumulated many experiences. Today, as the power of domestic private capital is increasing, the BOT projects of infrastructure construction and municipal utility in China are not only invested by foreign investors but also many domestic private investors.During the operation of BOT project, the investor should sets up a specific project company, and the project company should signs an agreement of franchising with government to obtain the right of investment, construction, operation and so on to the project. Then the project company should signs contracts with many subjects such as bank, builder and supplier to ensure that the fund is sufficient and the project is built successfully. When the term of franchising is expired, the project company should transfer the right to project to the government. According to the above operation of BOT project, we can find that the position of investor is very special because it’s the key of BOT project and the main responsible to the risk. The paper, on the angle of investor, tries to prevent the legal risk of BOT project investor by analyzing the various legal risks during the operation of BOT project, and the author wishes this research may enhance the confidence of investor.This paper, based on the angle of the BOT project investor, the management theory of company legal risk, and the experiences and cases accumulated by the author in the lawyer career, tries to conclude legal risks of the BOT project investor and their original reasons and affections. And the author also tries to supply specific measures of legal risk prevention during the whole BOT project operation to the BOT project investor for reference.