2.10 Assignments and Public Sector Changes

A project agreement should ensure that a party cannot assign the contract or any essential part of it without consent from the other party. Project companies may be concerned that the public entity could be privatized, restructured or dissolved during the concession period. Project Company may wish to include adequate assignment provisions in project agreement. Government gives the assurance that new or surviving entity will become fully liable to perform the contracting entity's obligations.

2.11 Miscellaneous Provisions

Project agreement may also cover issues such as interpretation of the project agreement, resolution of disputes and procedural matters. International lenders to a BOT project in developing countries usually expect the project agreement to be governed by the law of a neutral jurisdiction and for the disputes to settle by international arbitration.

3.  STANDARDIZED PROJECT AGREEMENT

It is a common practice to formulate standardized project agreement for a particular infrastructure sector in spite of the fact that legal, social, political, and economic environment of one project could differ from another. Standardization of the project agreement is the preferred approach to formulation of project agreement because of the following advantages:

• Experience shows that the costs of BOT projects and the time needed to prepare and develop them may be reduced considerably by standardization.
  
  
• Comparison and evaluation of bids is greatly facilitated if the bids are based on some well known contractual terms.

• Standardized agreements may facilitate the financing of BOT projects since the financiers will be familiar with the content of the agreements.
  
  
• Subcontracting and the negotiating of other project-related contracts are greatly facilitated by the use of standardized project agreements.
  
  
• Standardized project agreements are usually more carefully prepared, resulting in a higher quality.

However, in spite of the advantages of standardization, there are arguments against standardization of the project agreement. One of the arguments is that the standardized contracts do not have a place in BOT market as it is so unique and the applicable laws in the host countries are widely varied and content and comprehensiveness of the agreement will depend on the legal framework. Another argument is that the contracting parties have different business culture and in view of this it is difficult to identify common contractual provisions.