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Laws & Regulations

The PPP legal framework comprises all the laws and regulations that control whether, and how, PPPs can be implemented. Both governments and private companies looking to implement or enter into PPPs need to scrutinize the relevant laws and regulations, to identify any provisions, requirements, or constraints that may apply to PPPs.

Governments embarking on PPPs may also need to adapt the existing legal framework to ensure that PPP contracts can be entered into and clarify the legal rights and processes that apply, and in some cases to introduce PPP-specific processes and responsibilities. Some governments do this by adapting existing laws, others through the introduction of specific legislation.

The nature of the legal framework for PPP depends heavily on the type of legal system in place: common or civil law.

  • In civil law systems, the operations of government are tightly prescribed in administrative law. This establishes legal rights and processes that apply to PPP contracts.
  • Common law systems are much less prescriptive, with fewer provisions implied into a contract by law. As a result, contracts in common law countries tend to be larger than in civil law countries.  This is because importance is attached to specifying in the contract the terms governing the relationship between the parties to a contract, as the absences or ambiguities cannot so easily be remedied or resolved through the application of the law.

Scope of the PPP legal framework

The PPP legal and regulatory framework can include specific PPP legislation; however, the legal framework for PPP is broader in scope, and can comprise a range of types of law.

In civil law countries, PPP contracts are housed in general administrative law, which governs the functions and decision-making processes of government agencies. This body of law can create legal rights for both the contracting authority and private party, in addition to (or overriding) those specified in the contract. Some protections of the operator are also implied by law. Administrative law may also define processes and institutional roles relevant to PPPs, such as those for procurement, or resolution of contractual disputes—including the ultimate jurisdiction of administrative courts, unless otherwise specified.

In both civil and common law jurisdictions, there may also be specific laws that apply to aspects of the PPP process. These can include:

  • Procurement law: the transaction process for a PPP must typically comply with public procurement law and regulations, unless PPPs are specifically exempt.
  • Public financial management law: institutional responsibilities, processes, and rules established in public financial management laws and regulations can contribute to the PPP framework. This could include project approval requirements, fiscal limits, budgeting processes, and reporting requirements.
  • Sector laws and regulatory frameworks: PPPs are often implemented in sectors that are already governed by sector-level law and regulatory frameworks. These may constrain the government’s ability to contract with the private sector, or provide rules for doing so. 

Other laws affecting the operation of private firms, which also apply to PPP companies, should be taken into consideration when defining PPP projects and processes. These can include:

  • Environmental law and regulations;
  • Laws and regulations governing land acquisition and ownership;
  • Licensing requirements, particularly for international firms;
  • Tax rules; and
  • Employment law.

These laws, taken together, may comprise the legal framework for implementing PPP—that is, there may be no need for PPP-specific legislation.

PPP Legislation

Some countries enact special PPP laws. These may be used a means to adapt the existing legal framework, if this is not clear or comprehensive, or constrains the government’s ability to structure and manage PPPs well. The same can be achieved by adapting existing laws to accommodate PPPs. A PPP-specific law can help raise the profile and demonstrate political commitment to the PPP program.

PPP laws may establish guiding principles, processes, and institutional responsibilities for a PPP program (such as for procurement, and dealing with disputes), along with policies such as public financial management rules for PPPs. A well-designed PPP law typically sets out principles that may be supported by more detailed regulations, with the intention of avoiding rigidity and enabling the PPP program to adapt over time.

PPP laws are most common in civil law countries.  For example, all Latin American countries implementing PPPs do so under a specific PPP or concession law (or both). Some common law countries also adopt PPP laws as a more binding commitment by government than a PPP policy.

Learn More

    • 2014
    • Asian Development Bank (ADB), World Bank Group (WBG), Inter-American Development Bank (IDB), PPIAF

    PPP Laws & Regulations

    PPP Reference Guide Version 2.0

    The ‘PPP legal framework’ comprises all the laws and regulations that control whether, and how, PPPs can be implemented. Both governments and private companies looking to implement PPPs need to scrutinize the relevant laws and regulations, to identify any provisions, requirements, or constraints that may apply to PPPs. Governments embarking on PPPs may also need to adapt the existing legal framework to do so—at a minimum to ensure that PPP contracts can be entered into and clarify the legal rights and processes that apply; or in some cases to introduce PPP-specific processes and responsibilities such as those described in the following sections. Some governments do so by adapting existing laws; others introduce specific legislation....

    • 2014
    • European Investment Bank (EIB)

    The EPEC PPP Guide

    The European PPP Expertise Centre (EPEC) has published several versions of its Guide to Guidance over the last few years. The Guide to Guidance is principally aimed at public procuring authorities considering the use of public-private partnership (PPP) arrangements. Given the positive feedback it has received, EPEC decided to turn the Guide to Guidance into a webtool rebranded as the EPEC PPP Guide. The aim of the EPEC PPP Guide is to give users easy access to regularly updated PPP guidance and allow them to interact with the EPEC team (e.g. propose new guidance, rate the EPEC PPP Guide).  

    • 2009
    • Philippe Marin
    • PPIAF, World Bank Group (WBG)

    Public-Private Partnerships for Urban Water Utilities

    A Review of Experiences in Developing Countries

    This study seeks to contribute to the understanding of the performance of PPP projects in urban water utilities in developing countries. It focuses on projects in which a private operator is introduced to run the utility, consequently excluding build, operate, and transfer projects and  similar arrangements limited to the construction and operation of treatment facilities. It reviews the overall spread of urban water PPPs during the past 15 years and seeks to respond to the questions of whether and how they have helped to improve services and to expand access for the populations concerned. The study analyzes performance data from more than 65 large water PPP projects that have been in place for at least five years (three years in the...

    • 2001
    • United Nations Commission on International Trade Law (UNCITRAL)

    Legislative Guide on Privately Financed Infrastructure Projects

    This document from the United Nations Commission on International Trade Law contains a set of recommended legislative principles entitled legislative recommendations. The legislative recommendations are intended to assist in the establishment of a legislative framework favorable to privately financed infrastructure projects. The legislative recommendations are followed by notes that offer an analytical introduction with references to financial, regulatory, legal, policy and other issues raised in the subject area. The user is advised to read the legislative recommendations together with the notes, which provide background information to enhance understanding of the legislative recommendations. The legislative recommendations deal...

    • 2004
    • United Nations Commission on International Trade Law (UNCITRAL)

    Model Legislative Provisions on Privately Financed Infrastructure Projects

    The following pages contain a set of general recommended legislative principles entitled “legislative recommendations” and model legislative provisions (the “model provisions”) on privately financed infrastructure projects. The legislative recommendations and the model provisions are intended to assist domestic legislative bodies in the establishment of a legislative framework favorable to privately financed infrastructure projects. They are followed by notes that offer an analytical explanation of the financial, regulatory, legal, policy and other issues raised in the subject area. The reader is advised to read the legislative recommendations and the model provisions together with the notes, which provide background information to...

    • 2010
    • Edward Farquharson, Clemencia Torres de Mästle, E.R. Yescombe, and Javier Encinas
    • PPIAF

    How to Engage with the Private Sector in Public-Private Partnerships in Emerging Markets

    This guide reviews the necessary steps to successfully engage and manage a public-private partnership (PPP) from the early stages. It presents a framework that highlights the requirements, options, and challenges that governments face when embarking into PPPs, and explains how to address them so that a sound PPP program can be implemented and the benefits for both public and private partners can fully materialize. This book draws on experiences from both mature and developing PPP markets across the world, and case studies illustrate the key messages throughout. It discusses the policies, processes, and institutions needed to select the right projects and then manage preparation for market and operation. It identifies the underlying...

    • 2010
    • H.K. Yong
    • Commonwealth Secretariat, United Kingdom

    Public-Private Partnerships Policy and Practice

    Public–Private Partnerships Policy and Practice provides guidance on public-private partnership theory and practice for senior policy-makers and other public sector officials in developing countries. The guide focuses on the key lessons learned, and emerging best practices, from both successful and failed PPP transactions over a thirty-year period. The guide explains relevant concepts in non-specialist language. Each section begins with a summary of its key points, and provides a high-level outline. Page 33 provides a checklist for modern concession law principles from the European Bank for Reconstruction and Development (EBRD).

    • 2005
    • Peter Farlam
    • Organisation for Economic Co-operation and Development (OECD)

    Working Together Assessing Public–Private Partnerships in Africa

     The case studies suggest that PPPs are complex, demanding and time consuming but that under the right conditions, and in the right sectors, they can offer significant benefits to government, the private sector and consumers. They have been generally more successful in sectors such as ports, telecommunications, transport and eco-tourism projects than power and water. But with the correct regulatory framework and strong political commitment, they do offer value for money to governments and good opportunities for investors. A recurring theme is that for PPPs to be successful, governments need to undertake thorough feasibility studies that address the issues of affordability, value for money and risk transfer. 

    • 2010
    • Yogita Mumssen, Lars Johannes, and Geeta Kumar
    • World Bank Group (WBG)

    Output Based Aid: Lessons Learned and Best Practices

    OBA projects are delivering a range of essential services, from improved water supply to electricity access, reproductive health services, roads, telephone and Internet access, and education. OBA is also encouraging service providers to improve operational efficiency and provide innovative service solutions. For instance, a scheme in Nepal is subsidizing approximately 37,300 biogas plants for rural households to increase access to clean and affordable energy for cooking and lighting. Another project in Kenya is combining OBA with microfinance to enable small communitybased water providers in 55 communities to connect poor households to water services. This book contains many other examples. The authors also identify some cross-cutting...

    • 2013
    • Asian Development Bank (ADB)

    Exploring Public-Private Partnership in the Irrigation and Drainage Sector in India: A Scoping Study

    Private sector participation has the potential to enhance the performance of India's irrigation and drainage sector, raising productivity and efficiency levels as well as economic returns. In spite of substantial investment by the Government of India, the country's irrigation and drainage sector finds itself plagued with numerous concerns. The current productivity and efficiency levels, as well as economic returns, are all lower than expected. In light of the growing stress on natural resources and the threat of climatic change, meeting the needs of its growing population poses a huge challenge. To enhance the sector's performance, the central and state governments of India are now looking to decentralize the sector's management and...

    • 2009
    • European PPP Expertise Centre (EPEC), European Investment Bank (EIB)

    European PPP Report 2009

    The DLA Piper European PPP Report 2007 was upbeat and buoyant, reporting on an expanding market with good prospects for sustainable growth. By the end of 2007, the market had changed dramatically, coming close to stopping in its tracks. The spread of the banking crisis has brought about a re-evaluation of whether funders can provide long term, highly leveraged project finance, given the lack of confidence in refinancing options and in capital markets. Deals have closed, but on significantly higher margins and more aggressive terms, with general difficulty in reaching financial close in a timely manner on even the best of projects. Equally, the public sector has been suffering with a reduction in tax revenues and big holes in government...

    • 2007
    • Federal Highway Administration, Office of Policy and Governmental Affairs
    • Department of Transportation (DOT), United States

    Case Studies of Transportation Public-Private Partnerships around the World

    This report provides a fundamental understanding of PPP approaches and their potential consequences on project time, cost, and quality, and presents the results of actual PPP projects performed in several countries around the world through a series of case studies and cameo descriptions. The projects selected for case study vary in type and maturity, and cover the range of private sector involvement associated with different PPP approaches used in selected countries. Each case study explores the reasons why the sponsoring agency elected to pursue the project as a PPP, the structure of the partnership, the nature of project financial and delivery responsibilities, and the issues and impediments that confronted members of the PPP team and...

    • 2010
    • Cledan Mandri-Perrott (with Iain Menzies)
    • PPIAF, World Bank Group (WBG)

    Private Sector Participation in Light Rail/Light Metro Transit Initiatives

    This book addresses the growing worldwide interest in the use of light rail metro transit (LRMT) schemes to provide urban transport solutions and reviews the potential use of public-private partnership (PPP), or private-public participation, models to support LRMT schemes. This work, funded by the World Bank and the Public-Private Infrastructure Advisory Facility, is based on extensive industry consultation and the development of case studies from recent major LRMT schemes, all involving some form of PPP arrangement. The approach begins with the basic premise that the need for an LRMT scheme has already been justified and that there is a need for a systematic approach for assessing and developing the scheme while making use of some form...

    • 2008
    • Anton Eberhard and Katharine Nawal Gratwic

    IPPs in Sub-Saharan Africa: Determinants of Success

    This study analyses the outcomes of independent power projects (IPPs) across Sub-Saharan Africa. Approximately 20 such projects have taken root to date, concentrated mainly in 8 countries. A suite of country level and project level factors play a criticalrole in determining project success, chief among them: the manner in which planning, procurement and contracting are coherently linked, the role of development finance institutions along with the development origins of firms and credit enhancements.

    • 2006
    • William D. Eggers and Tom Startup
    • Deloitte

    Closing the Infrastructure Gap

    The Role of Public-Private Partnerships

    Published by Deloitte Research, this study provides a short and easily digestible overview of the advantages and disadvantages of PPPs. Citizens around the globe confront the world’s glaring infrastructure deficit daily. Evidence of the large and growing gap between infrastructure needs and the resources that governments have historically invested in meeting those needs is everywhere: congested roads; bridges in need of repair; poorly maintained transit systems and recreational facilities; and deteriorated hospitals, schools, and waste treatment facilities all in urgent need of rehabilitation and repair. These problems in turn impose huge costs on society, from lower productivity to reduced competitiveness to an increased number of...

    • 2006
    • Norman LaRocque
    • New Zealand Business Round Table

    Contracting for the Delivery of Education Services

    A typology and international examples

    Education sectors the world over are facing a number of social, economic and policy challenges. Governments have responded – to varying degrees – to these challenges by introducing market-based policies that emphasize choice, managerial autonomy for schools and accountability for results. Contracting with the private sector for the delivery of ancillary services such as catering and school transport is relatively common in the education sector. A more recent trend has seen governments contracting with the private sector for the delivery of core education services. While such contracting is not widespread, there are a number of examples in operation in the United States and around the world. This paper provides an overview of...

    • 2011
    • Business News Americas

    Social Infrastructure: The New Frontier for Concessions

    With increasing frequency, public private partnerships are being used to address the issue of social infrastructure in Latin America and the Caribbean. This report provides an analysis of why and how this model can benefit both governments and private investors.

    • 2013
    • Jeffrey Delmon and Victoria Rigby Delmon

    International Project Finance and PPPs

    A legal guide to key growth markets

    International Project Finance and PPPs: A Legal Guide to Key Growth Markets summarizes legal issues relevant to PPP and project financing in the following strategic growth markets: Brazil, Chile, China, Egypt, India, Indonesia, Nigeria, Romania, Russia, South Korea, Tanzania, Turkey, Uganda, the United Arab Emirates, the United States, and Vietnam. The topics addressed highlight the most fundamental legal concerns that investors will have with the enabling environment when contemplating a PPP in a growth market. Those legal issues are: asset ownership; foreign ownership restrictions; tariffs and regulatory regimes; penalty regimes;dispute resolution mechanisms; corporate structures; and security rights. Each summary is prepared by...

    • 2009
    • PPIAF
    • PPIAF

    Toolkit for Public-Private Partnerships in Roads and Highways

    The Toolkit is a reference guide for public authorities in developing countries for the development of PPP (public-private partnership) programs in the highways sector, particularly in assisting in PPP policy development, project preparation and the sourcing and monitoring of external expertise. It provides guidance in the definition of strategy and policy for PPP, the characteristics of PPP projects and the stages for their preparation. Module 4, "Laws & Contracts" https://ppiaf.org/sites/ppiaf.org/files/documents/toolkits/highwaystoolkit/4/index.html examines the legal framework and regulatory environment for PPPs.  It provides a framework for diagnosis and reform and provides the basis for preparation of PPP contracts. Module 5,...

    • 2015
    • Satheesh Sundararajan, Sara Ahmed
    • PPIAF

    Infrastructure Regulation: Developing Countries

    Establishing an effective, sustainable and independent regulatory system for infrastructure services is a long-term process. The goal of a regulatory system is to protect consumers and investors through transparent and predictable decision-making, focusing on economic regulation. A well-functioning regulatory system promotes operational efficiency, offers safeguards for investments, and protects consumers from monopoly positions, while offering better service quality. Overall, regulatory systems play an important role and help balance improved infrastructure assets and services.

    • University of Florida, PPIAF, World Bank Group (WBG)

    Body of Knowledge on Infrastructure Regulation

    The BoKIR summarizes some of the best thinking on infrastructure policy and provides links to more than 500 references, a glossary and self-testing features.

    • 2014
    • Asian Development Bank (ADB), World Bank Group (WBG), Inter-American Development Bank (IDB), PPIAF

    Leyes y Marco Regulatorio para las APP

    Asociationes Publico-Privadas: Guia de Referencia Version 2.0

For legal and regulatory resources go to PPPIRC

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