Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
Annex 4: Concession Contract Guide
2.27 Intellectual Property Rights
To be able to operate the Concessioned Assets under emergency circumstances,
or on expiry or termination of the Term, the Concessionaire should grant to the
Authority an irrevocable license or sub-license to use the intellectual property
rights relating to the renewal, maintenance, or operation of those assets. The
Authority should itself be permitted to grant sub-licenses to subsequent Concessionaires
or operators.
If the Concessionaire is also a train operator, the Authority may require licenses to
use processes for operational systems used in the delivery of freight services. If this
is proprietary software, then following expiry or termination of the Term, it is likely
for those processes to be required until a new Concessionaire or operator has been
appointed, and has had an opportunity to introduce its own systems.
2.28 Payments
Provision should be made for payments and timing of payments, such as when
they would otherwise fall due on a public or banking holiday.
In the event of a failure to make payment by the due date, compensation should be
paid. The Concessionaire will be borrowing funds; any interest payable to the Concessionaire
should represent its costs for lack of punctual payment. However, the
rate of compensation should not be such that the Concessionaire has an incentive
to delay paying the Authority because compensation represents a cheaper alternative
under the Agreement than borrowing. Thus the rate of interest for late payment
should be linked to fluctuating costs for funds.
2.29 Proper Law and Language
In most Host Countries it is accepted that the law controlling the Agreement will
be the law of the host country.
As to the language, the costs of international bidders and their Funders will be
substantially reduced if translations are not required; therefore English, French
or Spanish have advantages; typically, English is the most universal. However
there may be political or cultural reasons that this is unacceptable.
2.30 Dispute Resolution
Except and to the extent that economic, standard-of-service, or safety issues may
be dealt with under law by a regulator, in effect, there are three main ways of resolving
disputes arising under the Agreement, namely expert determination, arbitration,
and litigation. Whether two out of three ought to be used depends upon
host country law. In some jurisdictions, no mechanisms exist to recognize an expert
determination as final, binding, and enforceable. In other jurisdictions, the
courts will intervene in arbitration, or when registering an award for enforcement
the courts will accept a rehearing of the issues. In some jurisdictions, concessions
will fall within administrative law; therefore, disputes arising under or in connection
with the Agreement would have to be referred to the Administrative Courts.
Among reasons not to use the courts is the caliber of the judiciary. Concessions
are complex, as are the agreements relating to granting them. There is a risk that
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