UNCITRALThird International Colloquium on Public-Private Partnerships (PPPs) 23-24 October 2017, Vienna Experts for Chapter IV October 2017

Possible future work on PPPs PROPOSALS FOR CHAPTER IV Scope of Chapter: Construction and operation of infrastructure: legislative framework and project agreement(s) General remarks – project agreement(s) Terminology issues What contract(s) should be covered? Parties (groups of owners) Different project models Different risk constructs

Possible future work on PPPs PROPOSALS FOR CHAPTER IV Contents of project agreements - Legislative Recommendation 40, Model Provision 28 “The concession contract shall provide for such matters as the parties deem appropriate” Illustrative list Role of “model provisions” Party autonomy and/or legal prescription Core terms and conditions (existence or content)? “Boilerplate clauses”

Possible future work on PPPs PROPOSALS FOR CHAPTER IV Governing law - Legislative Recommendation 41, Model Provision 29 Explicit choice of law for project agreement Does it cover dispute settlement? Other contracts for the project? Could the recommendations be shortened Too descriptive? Any further need for revision?

Possible future work on PPPs PROPOSALS FOR CHAPTER IV Conclusion of project agreement Need for explicit legislative provision on procedures? Reduce time and costs “Final negotiations” – scope? Interaction with legislative framework for planning, institutional framework eg approvals process

Possible future work on PPPs PROPOSALS FOR CHAPTER IV Organization of project partner - Legislative Recommendations 42-43, Model Provision 30 Mandatory seat in host country for (new) project company? Time-frame for establishing project company? Permitted scope of activity Associated activities?

Possible future work on PPPs PROPOSALS FOR CHAPTER IV Ownership of assets- Legislative Recommendation 44-5, Model Provisions 31-33 Authority to transfer ownership Clarity on ownership of assets Definition(s) of “ownership” Third parties Handover of assets (end of project) Civil/Administrative law restrictions? Granting all necessary rights Easements (variants) The project site

Possible future work on PPPs PROPOSALS FOR CHAPTER IV Financial arrangements - Legislative Recommendations 46- 49, Model Provisions 34-35 Tariffs Who may change them? Conditions? Government control? Competition? Financial obligations of the contracting authority Direct payments Shadow tolls – poor track record, so as exceptional arrangements? Purchase commitments

Possible future work on PPPs PROPOSALS FOR CHAPTER IV Security interests – Legislative Recommendation 49, Model Provision 35 Amendments? Assignment and transfer of controlling interest/concession - Legislative Recommendations 50-51, Model Provisions 36-37

Possible future work on PPPs PROPOSALS FOR CHAPTER IV Construction works - Legislative Recommendation 52 Interaction with planning and procurement process Functional specifications Variations Responsibility for design obligation Ensuring responsibility for meeting obligations on design and technical standards Monitoring and possibility of suspension Quality guarantees (mandatory, negotiable)

Possible future work on PPPs PROPOSALS FOR CHAPTER IV Operation of Infrastructure - Legislative Recommendations 53-55, Model Provision 38 Performance standards – to become mandatory Solutions where satisfaction is measured by third parties Continuity of service Resilience Transparency and disclosure Open contracting/key terms Rules by concessionaire require regulatory agency or contracting authority approval

Possible future work on PPPs PROPOSALS FOR CHAPTER IV Other operational issues Expand guidance to include Subcontracting arrangements and liability Procedures for reporting obligations Procedures for monitoring the concessionaire’s performance, controls and oversight Role of Auditing/Oversight Agency Third parties’ access to the reports

Possible future work on PPPs PROPOSALS FOR CHAPTER IV General contractual arrangements - Legislative Recommendations 56-60 Expand to include new provisions on Refinancing Operational health, safety and environmental standards Contract management Joint liability and subcontractor arrangements Performance bonds, guarantees and insurance obligations Liabilities and exclusions

Possible future work on PPPs PROPOSALS FOR CHAPTER IV Legislative and regulatory changes and changes in economic conditions - Legislative Recommendations 58(c), Model Provisions 39-40 Revision of project agreement Governance/abuse concerns New provisions to cover All circumstances for modification of contracts during their term When modifications are allowed Notice provisions Model risk matrices Negotiating changes

Possible future work on PPPs PROPOSALS FOR CHAPTER IV Legislative and regulatory changes and changes in economic conditions - Legislative Recommendations 58(c), Model Provisions 39-40 (continued) Consequences of change Refinancing benefits to be split? “Rebalancing the contract” Force majeure

Possible future work on PPPs PROPOSALS FOR CHAPTER IV Step-in rights for the contracting authority - Legislative Recommendation 59, Model Provision 41 Any need for revision? Step-in rights for the lenders - Legislative Recommendation 60, Model Provision 42