Module 4 Legal Tools for Port Reform

Legal Tools for Port Reform Introduction and Overview Port Authority and Terminal Operations Full Concession Agreements Port Regulation Module 4

Objectives of a Ports Law Create an institutional framework and a business framework to develop and manage seaports, through the establishment of port-related management and regulatory bodies Set operational conditions for private operators Regulate organizational and financial relationships between public institutions and the maritime administration Module 4

conflict of interests rules Drafting a Ports Law Establishment of Port Authorities : public or corporate entities ? Creation of a solid basis to delineate port functions and responsibilities, through a core set of provisions : preface : objectives of the reform ? transfers of rights ? organizational, financial and fiscal relations between related public institutions ? definitions of critical functions, features of port administration bodies : from service ports to landlord ports objectives and functions of the port authority land management conflict of interests rules Module 4

- Transfer of government-owned assets Corporatised Ports – Special considerations Share issuance : How will the government exercise influence on the Ports Authority ? How will the shares be distributed ? - Public Majority - Golden share Capitalization : How will it be effected ? - Transfer of government-owned assets - Land transfer - Equity injection Module 4

Legal Tools for Port Reform Introduction and Overview Port Authority and Terminal Operations Full Concession Agreements Port Regulation Module 4

Important issues (1/3) Separation between public oversight and commercial operations : a Port Authority should not be directly involved in terminal operations. It may exercise licensing and regulatory functions with respect to marine and port services and facilities through… Public license ? Concession ? Leasehold contract ? Marine Management : - National maritime administration - Port Authority (when NOT corporatised) Module 4

Important issues (2/3) Regulation of other functions : - Navigation aids - Infrastructure and assets maintenance - Police powers, etc How will the Port Authority’s financial powers be regulated ? Guarantee of financial autonomy : balanced budget, free tariff determination Module 4

Important issues (3/3) To what extent will the Port Authority’s liability for the effects of default, negligence or any other wrongful act be limited ? Role of National Port Commission : - Strategic planning - Sector regulatory framework Module 4

Implementation problems Effects of port reform on the existing work force Valuation of assets and the Capitalization of a new Port Authority Need to replace/retrain top management Creation of a clear definition of the port area Module 4

Legal Tools for Port Reform Introduction and Overview Port Authority and Terminal Operations Full Concession Agreements Port Regulation Module 4

Definition of a Concession “Series of contracts that define the relationship between the Government and the private sector regarding the right to exploit port land and facilities as well as the obligation to construct port infrastructure and superstructure.” Module 4

Full concession and BOT schemes Why choose a full concession scheme, rather than a leasehold or a land rent scheme ? Which arrangement to select ? BOT ? BOOT ? BTO ? WBOT ? Module 4

Full concession, lease and rent contracts (1/3) Module 4

Full concession, lease and rent contracts (2/3) Module 4

Full concession, lease and rent contracts (2/3) Module 4

Contents of a typical Concession Agreement (1/6) Definitions Appointment of the Operator Term of the Agreement General Rights and Obligations of the Operator General Rights and Obligations of the Port Authority Transfer of Rights, Obligations and Assets Performance Parameters Transfer of Employees Module 4

Contents of a typical Concession Agreement (2/6) Force Majeure Liability for Loss and Damage of Goods Lease of Facilities Activities Permitted by the Authority Liability for Damage Regulations by the Authority Access to the Site Miscellaneous Conditions Module 4

Contents of a typical Concession Agreement (3/6) Construction and maintenance BOT Arrangements Investments under a BOOT Arrangement Functional and Technical Design Design and Construction Flaws Building Conditions Construction under a BOT Arrangement Zero Date Module 4

Contents of a typical Concession Agreement (4/6) Drop Dead Date Extension Events Completions Tests and Take-over Handback and Transfer of Facilities Lender’s Security Change in Law Freedom to Set Tariffs Concession Fee Module 4

Contents of a typical Concession Agreement (5/6) Security and Safety Access Unclaimed Cargoes and Containers Taxes Information and Communication Insurance and Indemnity Termination and Prolongation Module 4

Contents of a typical Concession Agreement (6/6) Option to Continue Termination due to non-compliance Bankruptcy Expiry of Concession Arbitration Costs Governing Law Module 4

Legal Tools for Port Reform Introduction and Overview Port Authority and Terminal Operations Full Concession Agreements Port Regulation Module 4

General elements of Port Regulation Vessel Traffic Management Pilotage Order and Safety in the Port Reporting and communication Transport and handling of dangerous cargoes Miscellaneous other subjects : inquiries in case of damage, cleanliness of basins, passenger traffic facilities, waste reception facilities… Module 4