It is estimated that the global infrastructure investment need will reach a total of 94 trillion dollars by 2040. Increasing infrastructure and changing structure of public services, continuous increase in demands, global climate and environmental pressure lead all public administrators to find sustainable, modern, safe, flexible and perhaps most importantly fast solutions. Especially the development of technology and increasing engineering capabilities necessitate the integration of this development into public services. Private sector’s technology follow-up, speed, ability to create additional financing, engineering experience and skills are considered as an important alternative source for public investments today.
As the level of knowledge of civilisation develops, basic infrastructure needs such as healthier urbanisation, more qualified infrastructures, faster and safer transportation gain importance. This need is expected to be provided by the public sector to the users, in a sense to the taxpayers. Global climate change problems force us to find more robust, long-lasting and environmentally friendly solutions with fewer resources. These developments necessitate public administrators to reconsider their understanding of the development model. In addition, the inadequacy of public resources in financing high-cost infrastructure investments makes the use of Public Private Partnership (PPP) model widespread.
The model establishes co-operation for a common goal. The effective aspect of the model is that public and private sector parties direct their different characteristics in the same direction in order to meet the increasing infrastructure need together. In summary, the PPP model does not set the parties against each other, but enables them to provide public services in the most appropriate way by using the different resources of both parties together.
The International Centre for Settlement of Investment Disputes (“ICSID” or “Centre”), located in Washington, was established in 1965 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention”) to provide a forum for conflict resolution in a framework that balances the interests and requirements of the parties involved. The rationale behind providing such a forum was, to introduce a special conciliation and arbitration system for investment disputes, especially after nationalization and compensation threats against the investment flows in the 1960s.
The ICSID Convention considers international cooperation for economic development and the role of private international investments. Further, it recognizes international methods of settlement which may be more appropriate in international investment disputes.
As an investor-welcoming country and as a party to various multilateral and bilateral investment treaties (“BITs”), Turkey signed and ratified the ICSID Convention, which permits investment disputes between Turkey and foreign investors to be submitted to ICSID. Accordingly, ICSID Convention has particular importance for Turkey’s investments, in particular, the public-private partnership investment projects (“PPP Projects”) to be developed by foreign private investors in Turkey.
In this article, firstly, we set the basic characteristics of the ICSID system. Secondly, we discuss the enforceability of the ICSID awards in Turkey and share our final remarks and practical concerns on the matter.
In February 2015, an article published by Public Services International (PSI) argued that Public-Private Partnerships (PPPs) don’t work. Although an avid champion of PPPs I feel that valid criticisms were made that should lead to the development of improved PPPs.
The following PSI criticisms were directed at PPPs:
Additionally, PPPs were described as mechanisms of privatization that essentially cut the public sector out of providing cost efficient and effective infrastructure and public services.
Much has evolved since 2015 and PPPs have been moving to a more people focused and environmentally friendly paradigm that addresses these criticisms. Increasingly, PPP procurements are becoming more transparent under mandates that:
The Turkish health sector has undergone major reforms over the past two decades as part of the Health Transformation Program. The most important pillar of such program has been the development of the public-private partnership (“PPP”) model health campus projects (also known as “city hospital projects”). The PPP model enables the provision of large-scale public infrastructure projects with the involvement and expertise of the private sector. In this sense, with the PPP model, the Turkish government has aimed to develop modern, high-quality and more specialized health facilities with the partnership of the private sector to increase effiency in the health sector.
Specific legislations were enacted to realize the health projects under the PPP model. To date, more than 20 health campus projects with an investment amount of more than €10 billion have been developed through PPP model in Turkey, and most of them are currently in operation.
Under Turkish law, the PPP model is not regulated by a framework PPP law, but there are different pieces of legislation, some of which are specific to PPP types (such as the Build-Operate-Transfer Law No. 3996 or the Build-Operate Law No. 4283), while some others are sector-specific (such as the Health PPP Law No. 6428). Turkey does not have a centralized PPP authority either. The competent authorities for PPP projects are separate in each sector, such as the Ministry of Health, the Ministry of Energy and Natural Resources, the General Directorate of State Airports (DHMI) and the General Directorate of Highways (KGM).
Until early 1980s infrastructure services in Turkey were performed primarily by the public sector. Until that date, public services were delegated to the private sector typically through “concession method” (imtiyaz usulü) where the public authority grants concession agreements to the private sector. Concession agreements are administrative law contracts which grant superior authority to the public administration delegating services to a private party as opposed to private law contracts where the contracting parties have a more balanced status.
In early 1980s, as part of a liberalisation wave in the Turkish economy, Turkey began gradually changing its legal framework to allow for the long-term delegation of public services as well as to provide more flexibility to the private sector by way of private law contracts.