Click here to download the Public-private partnerships 2019 report, published by Getting the Deal Through.

Jurisdictions covered

The following 15 jurisdictions are covered in this report:

Argentina; Bulgaria; China; Colombia; England & Wales; Ghana; Greece; Japan; Nigeria; Portugal; Romania; Spain; Turkey; United Arab Emirates; United States.

Questions

The set of questions relating to the topic of public-private partnerships and answered by the guide for each jurisdiction covered include:

General PPP framework

• • How has the concept of public-private partnership (PPP) developed in your jurisdiction? What types of transactions are permitted and commonly used in your jurisdiction?
• • What categories of public infrastructure are subject to public-private partnership transactions in your jurisdictions?
• • Is there a legislative framework for PPPs in your jurisdiction, or are PPPs undertaken pursuant to general government powers as one-off transactions?
• • Is there a centralised PPP authority or may each agency carry out its own programme?
• • Are PPPs procured only at the national level or may state, municipal or other subdivision government bodies enter into PPPs?
• • How is the private party in a PPP remunerated in your jurisdiction?
• • May revenue risk or usage risk be shared between the private party and the government? How is risk shared?
• • In situations where the private party is compensated in whole or in part through availability or other periodic payments from the government, are the payment obligations of the government subject to the relevant legislative body approving budgetary funding in the future?
• • Is there any cap on the rate of return that may be earned by the private party in the PPP transaction?
• • Is the transfer of direct or indirect ownership interests in the project company or other participants restricted?

Procurement process

• • What procedures normally apply to a PPP procurement? What evaluation criteria are used to award a PPP transaction?
• • May the government consider proposals to deviate from the scope or technical characteristics of the work included in the procurement documentation during the procurement process, without altering such terms with respect to other proponents? How are such deviations assessed?
• • May government parties consider unsolicited proposals for PPP transactions? How are these evaluated?
• • Does the government party provide a stipend for unsuccessful shortlisted proponents or otherwise bear a portion of their costs?
• • Does the government party require that proposals include financing commitments for the PPP transaction? If it does not, are there any mechanisms during the procurement process to ensure that the applicable PPP transaction, once awarded, is financeable?
• • May the government ask its counsel to provide a legal opinion on the enforceability of the PPP agreement? May it provide representations as to the enforceability of the PPP agreement?
• • Are there restrictions on participation in PPP projects by foreign entities? May foreign entities exercise control over the project company?

Design and construction in greenfield PPP projects

• • Does local law mandate that any particular form of contract govern design and construction activities? Does it mandate the choice of governing law?
• • Does local law impose liability for design defects and, if so, on what terms?
• • Does local law require the inclusion of specific warranties? Are there implied warranties in cases where the relevant contract is silent? Does local law mandate or regulate the duration of warranties?
• • Are liquidated damages for delay in construction enforceable? Are certain penalty clauses unenforceable?
• • What restrictions are imposed by local law on the contractor’s ability to limit or disclaim liability for indirect or consequential damages?
• • May a contractor suspend performance for non-payment?
• • Does local law restrict “pay if paid” or “paid when paid” clauses?
• • Are “equivalent project relief” clauses enforceable under local law?
• • May the government party decide unilaterally to expand the scope of work under the PPP agreement?
• • Does local law entitle either party to have a PPP agreement “rebalanced” or set aside if it becomes unduly burdensome owing to unforeseen events? Can this be agreed to by the parties?
• • Are statutory lien laws applicable to construction work performed in connection with a PPP agreement?
• • Are there any other material provisions related to design and construction work that PPP agreements must address?

Operation and maintenance

• • Are private parties’ obligations during the operating period required to be defined in detail or may the PPP agreement set forth performance criteria?
• • Are liquidated damages payable, or are deductions from availability payments possible, for the private party’s failure to operate and maintain the facility as agreed?
• • Are there any legal or customary requirements that facilities be refurbished before they are handed back to the government party at the end of the term?

Risk allocation

• • How is the risk of delays in commercial or financial closing customarily allocated between the parties?
• • How is the risk of delay in obtaining the necessary permits customarily allocated between the parties?
• • How are force majeure and geotechnical, environmental and weather risks customarily allocated between the parties? Is force majeure treated as a general concept relating to acts outside the parties’ control or is it defined with reference to specific enumerated events?
• • How is risk for acts of third parties customarily allocated between parties to a PPP agreement?
• • How are political, legal and macroeconomic risks customarily allocated between the parties? What protection is afforded to the private party against discriminatory change of law or regulation?
• • What events entitle the private party to extensions of time to perform its obligations?
• • What events entitle the private party to additional compensation?
• • How is compensation calculated and paid?
• • Are there any legal or customary requirements for project agreements to specify a programme of insurance? Which party mandatorily or customarily bears the risk of insurance becoming unavailable on commercially reasonable terms?

Default and termination

• • What remedies are available to the government party for breach by the private party?
• • On what grounds may the PPP agreement be terminated?
• • Is there a possibility of termination for convenience?
• • If the PPP agreement is terminated, is compensation available?

Financing

• • Does the government provide debt financing or guarantees for PPP projects? On what terms? Which agencies are responsible?
• • Are lenders afforded privity of contract with the government party through direct agreements or similar mechanisms? What rights will lenders typically have under these agreements?
• • Is there a mechanism under which lenders may exercise step-in rights or take over the PPP project? Are lenders able to obtain a security interest in the PPP agreement itself?
• • Are lenders expressly afforded cure rights beyond those available to the project company or are they permitted to cure only during the same period and under the same conditions as the project company?
• • If the private party refinances the PPP project at a lower cost of funds, is there any requirement that the gains from such refinancing be shared with the government? Are there any restrictions on refinancing?

Governing law and dispute resolution

• • What key project agreements must be governed by local law?
• • Under local law, what immunities does the government party enjoy in PPP transactions? Which of these immunities can be waived by the government?
• • Is arbitration available to settle disputes under the project agreement between the government and the private party? If not, what regime applies?
• • Is there a requirement to enter into mediation or other preliminary dispute resolution procedures as a condition to seeking arbitration or other binding resolution?
• • Is there a special mechanism to deal with technical disputes?