Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
Annex 4: Concession Contract Guide
the judiciary will not fully understand commercial and other issues involved; or
there could be corruption within the court system, delays in processes and hearings,
and the risk of numerous appeals. Another key issue is how long it may take
to go through levels of the courts to reach a final decision.
The Concessionaire and its Funders will want to determine whether potential
exists in the host country for the Concessionaire to apply for a judicial review in
circumstances where the regulator makes a decision that would adversely affect
the Concessionaire, and the decision is deemed unreasonable.
International investors and Funders will be influenced by the potential for satisfactory
dispute resolution through arbitration. Therefore whether the host country
is a signatory to the New York Convention on the Enforcement of Foreign Arbitral
Awards, ICSID (International Center for Settlement of Investment Disputes)
or other regional conventions becomes important.
As a condition precedent to launching any dispute proceedings, it may be useful
to require a meeting between the Authority senior administrator and the Concessionaire
chief executive officer who should be given a short period of time to resolve
the issue. At a minimum, the requirement to meet ensures that senior officers
must seek to understand the issues and the approach of their counterparts
before embarking on an expensive dispute. As a corollary to this requirement,
pre-reform process training within the Authority needs to emphasize that administrators
should take decisions proactively rather than hiding behind the pretext
that the decision was forced upon the Authority because of a finding under the
Disputes Resolution Procedure.
Expert determination, where this is an option, can be valuable in settling technical
disputes, e.g., if the dispute relates to construction or operational issues. In some
cases, a permanent disputes resolution panel has been established for the construction
phase to expedite resolution of technical disputes during construction. In other
cases, financial disputes have been referred to a panel of financial experts.
From the Authority’s perspective, any disputes are strictly between itself and the
Concessionaire, not involving third parties. From the Concessionaire’s perspective,
involving third parties such as its own contractors is advantageous, particularly if it
seeks to pass its liabilities down to those contractors. However, if dispute resolution
involves a three-person arbitration panel comprising one appointee from the
Authority, one from the Concessionaire, and an umpire, a joiner of proceedings is
impractical because contractors would not have a representative arbitrator. Therefore,
if dispute resolution deals with more than two parties, a single arbitrator is the
best solution.
2.31 Boilerplate
The Agreement will require several standard terms to address issues such as the
service of notices, whether the Agreement represents the entire agreement or if
there are a series of contracts, and a provision to preserve the Agreement in the
event that a provision is found to be illegal, and the like.
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