Russian and International Experience of Private Partner’s Civil Guarantees in Public-Private Partnership

Author Name(s): Kamil M. Arslanov, Aynur G. Demiyeva, Bulat A. Ponomarev
Author Email: arslanov-ksu@mail.ru

Abstract

Public-private partnership is a new form of interaction between the subjects of civil turnover, the state and business to achieve joint goals of strategic importance for the economy. The paper is devoted to the legal experience of including in the public-private partnership (hereinafter – PPP) of civil-law guarantees of the private partner rights. The content of such guarantees and rights is disclosed taking into account the existing world and domestic practices, with the focuse on guarantees in the event of unfavorable political and financial-economic circumstances. Particular attention is paid to guarantees against changes in the legal regime during the validity period of a public-private partnership agreement, the ways of their reflection in the law and the shortcomings of the existing domestic legal regulation. It is noted that Russian rulemaking in this area largely corresponds to international standards that establish rules for minimizing the risks of parties within the public-private partnership framework. Despite this, there is a need to expand the list of guarantees available in the current legislation based on the experience of the CIS and South-East Asia countries and the relevance of their concretization in relation to the specifics of a particular project. It is proposed to supplement the existing list with currency guarantees, as well as to make changes in the order of actions of the parties to the public-private partnership agreement, with a significant decrease in the expected profit of an investor and a significant increase in the financial burden on it.

Introduction

Implementation of a project within the framework of public-private partnership agreement is always connected with the risks caused by various (economic, political, technological, etc.) factors [1]. Already at the stage of agreeing on terms of agreement, the parties to the public-private partnership agreement (hereinafter – the PPPA, the public-private partnership agreement) should carefully consider minimizing any potential negative consequences that could impede the successful implementation of the project. In this regard, it is important to develop a mechanism for the adequate distribution of legal risks between partners, respecting the balance of private and public interests. A private partner is more prone to such risks, since the main responsibilities under the agreement fall on it, and this is it who carries the key burden in emerging legal relations. In this regard, in the public-private partnership agreement, it is necessary to clearly guarantee the observance of its rights and legitimate interests.

The civil-law nature of these guarantees means that the measures applied to secure them are of a private legal nature. We are talking about the agreement of the parties with special guarantee terms in the agreement itself: on possible requirements for payment of a penalty or amendment of the agreement when it is improperly executed, on the right of a private partner to recover damages caused by the guilty actions of the counterparty, etc.

Conclusion

The current norms of the domestic legislation providing for guarantees of the rights of a private partner require addition of some details and refinement. This is due to the fact that FZ-224 entered into force only on January 1, 2016, therefore, for such a short period, it has not been formed the necessary contractual practice of the use of public-private partnership agreements, the analysis of which would allow making sufficient generalizations to propose changes to this law.

References

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