PPP Research Center

 Romanian Public-Private Partnership Law Review

No. 9 / 2014

TABLE OF CONTENTS: 

Litigations between states and foreign investors - public or private law litigations - ?
by Claudiu Buglea, PhD, Lecturer, Faculty of Law, University of Bucharest

Risk assessment in feasibility studies for investments, including for public-private partnerships
by Ion Ghizdeanu, PhD, Professor, President of the National Commission of Prognosis, Researcher, NIER, Romanian Academy

Tax implications on the public-private partnership contract in terms of the taxes on land and buildings and of the construction tax
by Marilena Ene, LLM, Attorney at Law, Bucharest Bar

The general framework of amendments in the public-private partnership contract
by Simona Gherghina, PhD, Lecturer, Faculty of Law, University of Bucharest

Considerations regarding the duration of the concession contract
by Monica Amalia Rațiu, PhD, Lecturer, Faculty of Law, University of Bucharest

 

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Litigations between states and foreign investors - public or private law litigations - ?

Claudiu Buglea, PhD
Lecturer
Faculty of Law
University of Bucharest

Abstract:

This material aims to present a new type of litigation, specifically a litigation arising between two highly qualified partners, respectively a state and a professional (natural or legal person) that must be a national of another state.

Basically, this type of dispute is rooted in a legal investment relation. Specifically, a professional invests on the territory of another state (in any of the known forms), and thus indirectly or directly engages in a relation with the host state and, eventually, one of the legal relation parties does not fulfill its obligations, thus triggering such a litigation.

To resolve such a litigation, special mechanisms are created, but a series of waivers from the states have also been required.

Keywords: litigation, foreign investment, foreign investor, host state, arbitration, sovereignty.

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Risk assessment in feasibility studies for investments, including for public-private partnerships

Ion Ghizdeanu, PhD
Professor
President of the National Commission of Prognosis
Researcher, NIER, Romanian Academy

Abstract:

The economic calculation to justify the opportunity of an investment project seems, at a first glance, to be relatively simple, basically coming from comparing the expected benefits with the necessary costs to put it into practice.

In the case of public-private partnerships, which are complex long-term contracts, a first difficulty in evaluating comes from the implementation period of the contract, but it is not the temporal aspect which is most significant. Differentiating risk between partners is essential for classifying the public-private partnership, with no implications for economic calculation of those risks. Uncertainties about the value and changing in time of the risks amount attached to the public-private partnership induce multiple implications of economic calculation of investment opportunity.

In addition, there are general challenges and risks, which depend on the environment’s rapid economic growth and accompanying any investment project. Obviously the presence of the public authority can mitigate them. In this context, in this paper we propose to tackle the latest solutions offered by literature on the economic calculus of risk and uncertainty.

Keywords: economic calculation for an investment, risk and uncertainty in investment, public-private partnership, rate of return of a project, the actual cost of an investment.

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Tax implications on the public-private partnership contract in terms of the taxes on land and buildings and of the construction tax

Marilena Ene
LLM
Attorney at Law
Bucharest Bar

 Abstract:

Making a correct fiscal analysis in a public-private partnership project is of particular importance given that any error will increase costs across the public-private partnership contract, which by its essence is a long-term arrangement. Throughout the article a brief analysis of legal provisions related to local taxes as well as construction tax is included, which may have an impact on such a project.

Keywords: public-private partnership, PPP, land tax, building tax, construction tax, the project company, the public partner, the private partner.

 

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The general framework of amendments in the public-private partnership contract

Simona Gherghina, PhD
Lecturer
Faculty of Law
University of Bucharest

 Abstract:

The principles governing the procedure for the award of a concession or public-private partnership contract will continue to be relevant during the contract performance. A further effect of this continuous application will be the setting of a limit for any contract amendment. Given that the relatively long duration of concession and public-private partnership contracts involve their adaptation to changing circumstances of the frame in which they are performed, at least in order to maintain the initial economic balance, the amendment of the contract in compliance with the principles becomes an essential element of any contractual mechanism of this type.

The regulation of this aspect in the new directives requires the identification of the regulatory framework to which public-private partnership contracts are subject to. Given the particularities of Romanian law, these contracts will be subject to the scope of the Directive 2014/23/EU on the award of concession contracts.

Keywords: concession, public-private partnership, contract amendment, transparency, equality of treatment.

 

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Considerations regarding the duration of the concession contract

Monica Amalia Rațiu, PhD
Lecturer
Faculty of Law
University of Bucharest

Abstract:

The publication of the Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts compels also in Romania the completion of a process of reconsideration and consequently amending the legislation.

The practice of the contracting authorities and certain cases subject to the Court of Justice have demonstrated the need for the economic actors in the market to benefit from an accessible legislation, written clearly and unequivocally also in the field of concessions, with emphasis on aspects that differentiate concessions from public procurements.

The impact study conducted in the field has subjected to careful analysis those aspects that were likely to lead to interpretations contrary to the spirit of the Treaty and to anticompetitive practices, due to lack of legal certainty.

Regulating certain aspects regarding the duration of the concession contract has not been the subject of a detailed analysis in the mentioned impact study, as it is considered a relevant factor rather for the wording of the clauses of the concession contract than a relevant factor in the award procedure itself. The result of interviewing the target audience of the impact study has been, primarily, the concern to agree upon, in the legislation, a period long enough to allow the return on investment and making a profit and, to a lesser extent, issues related to blocking the access to a certain market segment in the situation of awarding a contract for a too long period.

On the other hand, in determining the duration of a concession or public-private partnership that involves private investments, the calculation mechanisms described in the doctrine and the practice of project finance, which dictate the practical possibilities for recover the investment and gain the corresponding profit, cannot be ignored.

Keywords:  public-private partnership, services and public works concession, duration of the concession, recover of the investment, reasonable return on invested capital, Directive 2014/23/EU of the European Parliament and of the Council on the award of concession contracts.