Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
Annex 4: Concession Contract Guide
The host country law should preclude third-party claims arising from the usual
noise and vibration emanating from the railway as a result of its usage in accordance
with Good Industry Practice. The Concessionaire should remain liable for
excessive noise and vibration, i.e., if Good Industry Practice was not applied and
the cause of the problem is that the Below Rail Infrastructure and/or equipment
have not been properly maintained (allowing that early in the Term, the Concessionaire
will need time to put the infrastructure and equipment into good working
order).
If the host country law does not cover chance finds of antiquities then the concession
should set out the rules governing their discovery. If the law allows any
chance finds to become the property of the finder then the Agreement should
provide that chance finds belong to the Authority and should be dealt with either
by the Authority or under its instruction. The impact of discovery can be dealt
with under either or both Force Majeure Events and Compensation Events (see
post) although larger objects may require time to allow experts to carry out excavations
and investigation.
Linked to the issue of site conditions is the issue of latent defects. To a degree this
turns upon the scope of the maintenance and renewals envisaged under the concession
and the timing of implementing that work. The main issue will be critical
structures. If major works are not envisaged for identified bridges, tunnels, and
buildings, then it is arguable that the Authority has accepted this. Therefore, if it
later emerges that major work is required, reasonable cost for that work should
be borne by the Authority. If, however, it is envisaged that major work will be
carried out at some future date, this may be an issue of timing; thus, if the Concessionaire
has had insufficient time to generate a sinking fund for these works
but has otherwise behaved prudently, the Authority might consider advancing
funds on a subordinated basis to meet the gap between actual expenditure and
the expected date of expenditure at the time the Agreement was executed.
2.16 Intervening Events
These are incidents that affect the ability of one party to the Agreement to perform
its obligations or receive benefits due under the Agreement. There are many
ways to identify and specify consequences of Intervening Events. This Guide includes
Compensation Events, Force Majeure Events, and Political Force Majeure
Events.
Compensation events
Compensation Events are designed to cater for incidents that arise at the Authority’s
risk, resulting in a loss of income or increased costs to the Concessionaire.
Such events are more appropriately dealt with by compensation methods rather
than through Authority Default. Termination should be a last resort in every circumstance,
although if an event renders the parties’ contractual relationship untenable,
the Authority may choose to exercise its voluntary termination rights.
Examples are:
The World Bank Page 263