PPP Procurement
Some governments provide protection to the concessionaire for any previously undisclosed change in law, without distinguishing whether that change in law was discriminatory, specific, or of general application. Other governments use the following allocation: •
• •
Discriminatory changes in law (applying to the PPP Project, and not to other projects, or to the concessionaire, and not to other PPP operators) or specific changes in law (specifically impacting projects of the same type as the PPP Project) to the contracting authority General changes in law requiring the concessionaire to make unexpected investments during the operations period to the Contracting Authority; and Any other changes in law to the concessionaire.
The second approach is more beneficial to the contracting authority, but may not be “financeable” in every jurisdiction. The protection which the concessionaire will receive against change in law is limited to changes in law which were not “in the public domain” at the date on which the concessionaire’s bid was submitted. This requires the concessionaire to conduct a thorough due diligence of the legal framework prior to submission of its proposal. This means that any change in law resulting from legislation published in draft form as of the date on which the concessionaire submitted its bid should generally be excluded. It is important to note that change in law provisions are not intended to bind public authorities into not changing the law, but solely to allocate the risk of such changes.
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7.4
Dispute resolution
Contractual disputes are common in PPPs because PPP projects tend to be complex, the PPP contract is long-term, and unexpected circumstances are bound to arise. Moreover, contractual provisions can be subject to interpretation. Therefore, mechanisms are needed to resolve disputes and conflicts.
Dispute resolution processes can help ensure that disputes are resolved quickly and efficiently. Some governments define dispute resolution mechanisms in PPP legislation applied to all PPP contracts. The contract must specify a procedure for handling disputes under the term of the contract. As going through courts may not be appropriate for all disputes that can arise under a PPP contract, alternative formal dispute resolution procedures may offer a more efficient and cost-effective method of resolving disputes. There are five typical dispute resolution mechanisms: