Private public partnerships contract and proposals for vietnamese legislation

HO CHI MINH CITY UNIVERSITY OF LAW MANAGING BOARD OF SPECIAL PROGRAMS BACHELOR’S THESIS MAJOR: COMMERCIAL LAW PRIVATE PUBLIC PARTNERSHIPS CONTRACT AND PROPOSALS FOR VIENAMESE LEGISLATION Student Mai Thi Thanh Phuong Student ID 0955010178 Class CLC34 Instructor LL.M Nguyen Hoang Thuy Trang HO CHI MINH CITY, 2013 HO CHI MINH CITY UNIVERSITY OF LAW MANAGING BOARD OF SPECIAL PROGRAMS BACHELOR’S THESIS REGULAR ACADEMIC AFFAIRS COURSE 34 (2009 – 2013) PRIVATE PUBLIC PARTNERSHIPS CONTRACT AND PROPOSALS FOR VIENAMESE LEGISLATION Student Mai Thi Thanh Phuong Student ID 0955010178 Class CLC34 Instructor LL.M Nguyen Hoang Thuy Trang HO CHI MINH CITY, 2013 COMMITMENT I hereby commit that the thesis “Private public partnerships contract and proposals for Vietnamese legislation” is my work of research All information or data raised in this thesis is completely cited honestly Besides, author also personally gives arguments and opinions relevant to issued problems in the thesis with the instruction of LL.M Nguyen Hoang Thuy Trang – lecturer of Faculty of Commercial law, not absolutely copy from any precious works I sincerely appreciate family’s encouragement and especially devoted guidance from my instructor I am responsible for this commitment Ho Chi Minh City, 15 July 2013 Mai Thi Thanh Phuong ABBREVIATION PPPs Private public partnerships PFI Private Finance Initiative PSP Private Sector Participation EU European Union US United States UK United Kingdom Decree 108/2006/ND-CP Decree 108/2006/ND-CP of providing detailed provisions and guidelines for implementation of a number of articles of the Investment Law Decision 71/2010/QD-TTg Decision 71/2010/QD-TTg of promulgating the regulation on pilot investment in the public private partnership form Directive 2004/18/EC Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts ICSID International Center for Settlement of Investment Disputes OECD Organization for Economic Co-operation and Development BOT Build – Operate - Transfer BTO Build – Transfer – Operate BT Build - Transfer DB Design - Build BOO Build – Own – Operate BOOT Build – Own – Operate – Transfer DBFO Design – Build – Finance – Operate BLT Build – Lease – Transfer BDO Build – Design - Operate TABLE OF CONTENT Introduction Chapter 1: Overview of PPPs procurement and PPPs contract 1.1 PPPs procurement 1.1.1 History of PPPs procurement 1.1.2 Concept of PPPs procurement .9 1.1.3 Importance of PPPs procurement 15 1.1.4 Classifications of PPPs procurement 17 1.2 PPPs contract 21 1.2.1 Nature of PPPs contract 21 1.2.2 Distinguishing PPPs contract and other contracts .27 1.2.2.1 PPPs contract and traditional procurement contract 27 1.2.2.2 PPPs contract and civil contract involving foreign elements 28 Chapter 2: Proposals for several institutions of Vietnamese legislation on PPPs project contract 30 2.1 Overview of PPPs procurement development in Viet nam 30 2.2 Context of PPPs procurement’s regulations in Viet nam 31 2.3 Proposals for improvement to regulations on PPPs contract 32 2.3.1 Defining PPPs contract as administrative contract 32 2.3.2 Promulgating a standard - form contract 33 2.3.3 Specifying legal position of the Public sector .35 2.3.4 Governing law 39 2.3.5 Dispute resolution mechanism .38 2.3.6 Advancing several specific institutions in contract .43 2.3.6.1 Time for validity 43 2.3.6.2 Modification of contract 44 2.3.6.3 Termination of contract 45 2.3.6.4 Force majeure 47 2.3.6.5 Step-in right 48 2.3.6.6 Projects transfer 48 Conclusion 50 INTRODUCTION Rationale for research Based on modern economic outlook, a synchronous infrastructural system and a steady public services network have come to be a prime drive for national economic growth They not only provide foundation for economic activities but also facilitate investment environment as well as represent potentiality of an attractive economy However, regardless of considerable efforts in adopting different models, economic recession and financial crisis have lately put the nations on the status of facing up to budget constraint which leads to unmet demand of infrastructure Becoming aware of this situation, countries eagerly seek for more effective solutions for addressing the requirement of additional infrastructure The government of each state has begun implementing far-reaching reforms by replacing inefficient traditional frameworks with appropriate procurement approaches over the past years Private Public Partnerships (PPPs) are one of preeminent consideration among current processes In reality, despite its recent formation, concept of the PPPs becomes increasingly familiar to nations as a favorable project delivery mechanism PPPs recognize that participants, including both public and private sectors have certain advantages, and by following each to what it does best, whilst public services and infrastructure can be provided in the most efficient manner As a result, many countries are keen to have specific and enforceable regulations, especially legislation for the application and promotion of PPPs structure to create regimes for legal actions widely and successfully In a developing country like Viet nam, the development of infrastructure and public services is extremely dominant for fostering procurement delivery, answering domestic external pressures and meeting demand for global integration The statistics show that from now to 2020, Vietnam needs an investment capital of about 30-40 billion USD each year to develop essential infrastructure system, including transport, electricity and water supply Meanwhile, the mobilization capacity of tradition investment channels meets only around 50-60 percent of the demand.1 In response to growing demand for http://tuoitrenews.vn/business/8207/foreigners-contribute-opinions-to-PPP-regulations infrastructure, the government has implemented PPPs as the best suited option in conformity with complicated management and huge source of capital In doing so, the government enables the private partner jointly with public sector to construct, finance and manage public infrastructure projects with the wish to strengthen the participation of domestic and foreign private economic areas in Vietnam’s infrastructure development At the same time, Viet nam has been too preparing all necessary conditions to implement the PPPs scheme, in which completing a legal framework on PPPs is extremely important Originally, Viet nam has officially allowed conducting some methods of PPPs program such as BT, BOT, BTO under Law on foreign investment in Viet nam 1996, then Law on investment 2006 and guidance documents In recent times, Decision 71/2010/QD-TTg of promulgating the regulation on pilot investment in the public private partnership form has been enacted to publically acknowledge entire methods of PPPs procurement and not just three above ones It signifies the importance of PPPs procurement in the state’s growth strategy regardless of being pilot regulations PPPs substantially call for the presence of both public and private sectors and provide a win-win solution between two seemingly conflicting premises In this partnership relation, the government looks for private sector’s significant role in funding, innovation and skill in delivery of infrastructure and public services, whereas, the private may find great business opportunities as return or reward Although PPPs offer partners such advantages, it is not easy to implement in fact It originates in serious concerns and intense interests from the investors of unequal legal position in relation with public sector in many activities of PPPs procurement such as bid, negotiation and signing contract, implementation of project… Hence, law provisions are effective instrument of facilitating invested participation and protecting private partner, especially regulations on project contract PPPs contract is considered as the best place to express a whole of negotiation process with binding commitments for both parties As a result, it becomes foremost prominence of the investors to secure their best interests and need to be taken into account in PPPs program However, Viet nam’s regulations have only stopped on several general principles for project contract Knowing that parties may freely negotiate and unite any terms of contract, a set of detailed instructions for complicated and long-term contract like PPPs contract is very crucial In reality, PPPs contract currently often transfer obligations to private sector rather than emphasizing the opportunity for partnership The regulations of project contract also have the tendency of expressing the upper hand of the state which certainly leads to the restriction of facility investment To build a transparent and efficient mechanism for PPPs contract, the setting of a clear provisions or guidance in detailed in the contract is required It may help the investors predict and calculate risks as well as benefits when jointly cooperating with a special party like the state and then strive for investment attraction The above reasons make the study of PPPs contract valuable to the practice of the private parties In addition, it is of the author’s interest to learn more about the nature of PPPs contract due to its special characteristics Therefore, the topic Private-publicpartnerships contract and several regarded recommendations for Vietnamese legislation to attract investment is selected to be discussed in the author’s graduation thesis Literature review In almost nations, PPPs procurement is primarily researched on financial perspective without referring to risks of the private sector under terms of contract In Vietnam, there is hardly any study on the chosen research topic Most of studies or researches make contribution to the general collective wisdom of investment forms in Law on Investment such as BOT, namely: - “BOT contract – Method attracts foreign invested capital in Viet nam” by Le Nguyen Thuy Dung (2000): This bachelor’s thesis gives an overview of content and implementation of BOT contract - “Reality and improvement on foreign investment based on BOT method” by Nguyen Thi Lang (2003): This is PhD thesis which provides the reality of legislation enactment of BOT contract and recommendations - “BOT contract in prevailing law provisions and practical application in Viet nam” by Nguyen Thi Lang (2008): This master thesis researches the reality of procedure of BOT, legal position of parties, BOT contract with special treatment and proposals applied law “must not contravene the Vietnamese law”70 This provision is difficult to be applied by court in reality Therefore, it is really necessary to supplement provisions for criteria for accessing to such an extent that application of foreign law is acceptable 2.3.5 Dispute resolution mechanism At present, Decision 71/2010/QD-TTg has no provision to regulate dispute resolution matter, whilst Decree 108/2006/ND-CP refers to it under article 44 It definitely results in the inefficient and ambiguous regulations of settlement mechanism Although it hardly emerge any dispute from the public and the private at that time, the shortage of legal provisions may be harmful to any parties, especially private sector It is very crucial to determine whether the court system is a suitable venue for resolution of disputes between the contracting parties According to Law on the organization of people’s courts in Viet nam, there are five specialized types of court, including: civil court, criminal court, economic court, administrative court, labor court As discussed above, PPPs contract is administrative contract which is, as a result, handled and settled at administrative court However, pursuant to administrative procedure law of Viet nam, lawsuits under jurisdiction of courts are: (1) administrative acts or decisions, (2) lists of voters to elect deputies, (3) disciplinary decisions on dismissal of civil servants, (4) decisions settling complaints arising from decisions on competition cases.71 It means that there is no basis for administrative court to be in charge of dispute in regard to PPPs procurement Hence, it is extreme important to devise appropriate regulations to govern the dispute settlement mechanism Firstly, Viet nam should specify the type of court which undertakes disputes under PPPs contract There are thus two suggestions for selection: commercial court or administrative court Accordingly, if the PPPs contract is approached under commercial nature of partnership’s perspective, it has not any chance for administrative court because essence of resolved administrative cases just pertains to state management relation It, therefore, may be settled by commercial court mechanism Whereas, under the viewpoint that PPPs contract as administrative 70 71 Article 22.2 of Decree 108/2006/ND-CP and Article 27.2 of Decision 71/2010/QD-TTg Article 28 of Law on administrative procedure 2011 43 contract, administrative court should involve in deciding relevant disputes As a result, Viet nam should supplement additional regulations and independent mechanism for administrative court which specialize in adjudicating on “administrative disputes”, including claims against governmental bodies which are parties to administrative contracts Moreover, regarding to the content of administrative judgment, Viet nam should define the competency of court to not only declare illegal sued decisions or acts but also resolve related cases Especially, based on the public services delivery purpose, disputes which arise between the public and the private sector or between public service providers (competing concessionaires or concessionaires providing services in different segments of the same infrastructure sector) should be taken into account by administrative court Such disputes may involve allegations of unfair trade practices or incompletion of obligations or violation of specific duties of public service providers As a result, legislative provisions have been found necessary in order to establish an appropriate framework for the settlement of these disputes Secondly, alternative dispute resolution mechanisms (such as negotiation, conciliation and mediation) should be considered as a transition path for harmonizing the contract To explain it, many authors suggest that parties are likely to see “the bigger picture of the on-going relationship”72 and be ready to compose solutions Viet nam may require parties resort to these types as compulsory procedure before permitting the parties’ cases to be tried in court like EU members The efforts to solve problems and disputes with good faith and positive expectations on both sides may develop extensive interaction over a wide range of major and minor issues These also results in helping parties obtain mutual consent for issued problems without counting on expensive and wasted time method like court Furthermore, arbitration mechanism should be more encouraged for resolution of disputes, especially in case there is any suspicion that the courts of the host country shall not treat a foreign investor fairly In the context of dependence of court system in Viet nam at present, this method becomes very important to attract investment from foreign investors Although stipulated in Article 44 of Decree 108/2006/ND-CP on settlement of dispute, it is vital to be done same in PPPs procurement legislation Arbitration can offer a greater assurance of a fair and 72 http://ppp.worldbank.org/public-private-partnership/legislation-regulation/framework-assessment/legalenvironment/dispute-resolution 44 competent decision with flexible proceedings where parties can appoint people with specific skills, including experts other than lawyers Moreover, Viet nam should take consideration to participate in the International Center for Settlement of Investment Disputes (ICSID) It is an autonomous international institution with the primary purpose of providing facilities for conciliation and arbitration of international investment disputes between eligible parties As a result, the foreign investors particularly prefer this mechanism to outline the dispute resolution term in contract for making ensure of equal judgment Moreover, ICSID does not conciliate or arbitrate disputes itself, it provides the institutional and procedural framework for independent conciliation commissions and arbitral tribunals constituted in each case to resolve the dispute.73 This creates the flexibility of disputes resolution manners under accurate and detailed guidance Thirdly, specific board or office in some nation’ model may useful for Viet nam with reference to resolve issues For example, conciliation board in India’s legislation has the function to make proposals for settlement of dispute at any stage of the conciliation proceeding.74 The regulation office in Philippine is considered the first level mechanism for dispute resolution.75 Regulators are emphatic in claiming that they fulfill function independently and appear credible through their actions and behaviors As agreed, both partners are respectful of the high technical capacity and personal credibility appointed regulators Hence, parties in PPPs may take into consideration these enforceable establishments by term of contract rather than counting on being created by statute Fourthly, Vietnamese law needs to intensify independent occupation of court system The presence of the public sector as a special party in PPPs contract would not bring the transparency and equality to judgments In Viet nam, requirement that regulatory agencies or court should be able to take decisions without interference or inappropriate pressures from public sector is hardly possible As a result, legislative provisions 73 https://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=RightFrame&FromPage=Di spute%20Settlement%20Facilities&pageName=Disp_settl_facilities 74 Article 37.d of Andhra Pradesh Infrastructure Development Enabling Act 2001of India 75 Manish Kumar and Gerald Brock (2012), Developing credibility in PPPs: The case of Manila water supply, p.6 (download at http://ssrn.com/abstract=1988530) 45 require the independence of the regulatory decision-making process In order to achieve the desired level of independence, it is advisable to entrust court as legally and functionally independent system and commit itself to a course of dependent actions with investors Fifthly, under law enforcement issues, Vietnamese legislation should give response of the questions related to the execution and national budget matters in case of the public sector Especially, this may result in state management issues to avoid budget losses and inefficient expenditure which all should be provided in law by a vibrant manner Finally, Viet nam should raise a question of recognition and enforcement of foreign civil judgments Moreover, in case contract disputes is resolved and enforced, what rights and obligations are required of the contractors, especially the matter related to subject executes the court judgment, determines national budget from public sector… Consequently, an agreement without a mechanism to resolve disputes can become meaningless in a practical sense Parties should be accessible to appropriate mechanisms in compliance with ultimate principles to resolve any disputes efficiently, transparently without disruption in service to the end-user Legislation ought to be in a manner to open channels of dispute resolution methods and reduce the potential for disputes in the life of the PPPs 2.3.6 Advancing several specific institutions in contract Despite the significant involvement in all aspects or only a minor role of service delivery, private sector has great interest in regulations of roles, awards, obligations and responsibilities under PPPs procurement As a result, the state, on the one hand, remains responsible and accountable for delivering services and projects in a manner that protects and furthers the public interest, on the other hand, provides some privileges and transparency for the investors in necessity under favorable contract term Accordingly, because PPPs contract is considered as the best place to set out these considerable flexibilities, legislation on it should be taken some consideration There are, nevertheless, constraints and procedural requirements under Vietnamese legislation that will impact the ability of private sector to enter into PPPs need to be put more emphasis on 46 2.3.6.1 Time for validity Careful consideration for time to determine the validity of contract has been meaningful in term of right and obligation control in PPP procurement However, prevailing law of Viet nam has not any provision of time for contract’s validity In reality, parties entering into contract may take into account two main approaches: “actual contract” and “agreed contract”.76 The former refers to the fact that validity of contract is based on the time investor is granted investment certificates but not the time for signing contract In reality, PPP contract could not be valid if the investment project is not approved or in case project company is not established The latter mentions to definite formation of rights and obligations after parties sign contract Therefore, private or public sector has to define clearly the time for validity of PPP contract, including arrangements which would be effective immediately upon signing or accompanied by certain requirements These approaches may be based on specific contract for convenience to regulate 2.3.6.2 Modification of contract At certain times during the implementation phase, failure to mitigate risks or unexpected changes in conditions and circumstances or vagueness of the contract may raise the need for modification of the PPPs agreement in order to realign risk-sharing or carry out agreed-upon term flexibly Article 24.1 of Decision 71/2010/QD-TTg refers to permitted modification of project contract in case of the changes of size, technical standards or total investment capital or force majeure circumstances It is considered as an important and compulsory requirement for long-term duration and complex projects like PPPs procurement The allowance of modification from parties is originated from “incomplete contract” principle in public services delivery contract At the beginning, they cannot cover all the unknown circumstances and possible problems with delivery of service – especially over 25 to 30 years In some countries, the factors that influence the likelihood of modification are “the opacity of the original tendering process, the lack of expertise in the public sector leading to the terms of individual contracts being 76 Nguyễn Thị Láng (2008), Master thesis “BOT contract in prevailing law provisions and practical application in Viet nam” 47 belatedly understood and the absence of independent regulators”77 To carry on favorably the project, related partners many renegotiate initial terms or finish all the incomplete terms of contract to modify satisfactorily As a result, Viet nam’s legislation regarding this matter is completely reasonable However, Viet nam also takes emphasis on several points: Firstly, since the probability of renegotiation and alteration of the initial regulatory premise are substantial, PPPs law should define specific criteria of how such situations is to be modified For example, in non-contractible situations, it is not necessary to modify contract in case the owner wants to make an investment that cuts production costs without affecting the service quality, he can so without renegotiating the contract Vice versa, if one party wants to implement an investment without being the owner, they have to gain admission within renegotiations with the other partner The need to seek the owner’s consent for efficiency-enhancing investments implies that the modification is compulsory Secondly, the negotiation of contract also requires the presence and consent of authorized partners in certain relevant stage of PPPs procurement This brings in outright actions without any approval by the investment certificate-grating agency stipulated in Article 24.2 of Decision 71/2010/QD-TTg In reality, modification of contract is hardly accepted by this agency due to many administrative procedures or requirements It can lead to the tardiness of project whilst, competent agencies transfer the blame on to each other For example, there is a case that ownership involves bargaining power in non-contractible situations In general, to build an effective mechanism for modification, the dismissal of unessential administrative requirements and the setting of clear circumstances in the original contract are required 2.3.6.3 Termination of contract Termination and termination compensation forms the commercial backbone to the PPPs risk allocation Viet nam has provided cases of termination the project contract: (i) expiration of the agreed term, (ii) violations of parties result in expiration ahead of 77 Stephen Thomsen, Ibid, p.19 48 schedule without taking effective remedies, (iii) force majeure events and (iv) others.78 Contract termination is a drastic step and should be avoided, if possible However, there are times when termination is appropriate, especially law allow for termination and it would also need to focus Firstly, the termination contract originates from private sector with authority is actual tough to follow regardless of law provisions In reality, the termination of contract are often available to bring a legal action before an administrative court that is then able to rule on whether the breach by the authority is sufficiently material to justify termination.79 The first is that it confirms that public services must be guaranteed by the authority and must not be threatened by action or inaction of the private partner Then, in some circumstances the private sector could not draw up termination cases, it could resort to the relevant court to settle without any pressure from the public However, it had better for legislation to define the defaults which may lead to from parties with essential approaches upon each project, including: defining the specific default events (“itemised list”) or relying on a broader definition of default The investors, as a result, find positive method to bring the public sector into a court Secondly, it is necessary to supplement several relevant provisions First of all, there is need to set out regulation about “cure period” as the period of time granted to a defaulting contracting party to cure or fix a default before termination of the PPPs contract occurs Moreover, parties ought to discuss the notice period which is agreed in the written contract for preparation Besides, the private sector should especially refer to repeated minor breaches – the authority will need to address the question of repeated minor breaches by the private partner and the extent to which these should give rise to contract termination This may involve introducing a warning notice/penalty point mechanism Thirdly, the article 26.2 of Decision 71/2010/QD-TTg refers to the “measures to be taken when the contract terminates ahead of schedule” without mentioning to compensation Compensation is necessary in all cases A no-compensation regime makes it difficult to attract investors and lenders Legislation should point out methods 78 Article 26.1 of Decision 71/2010/QD-TTg Allen and Overy (2013), Termination and force majeure provisions in PPPs contract, European PPP expertise center, p.15 79 49 to calculate the damages EU members often use the “book value compensation” (the investment costs incurred for the PPPs project are used as the basis for calculating the compensation) and “financing-based compensation” methods (compensation is defined by reference to the financing raised by the private partner for the project, typically senior debt, subordinated debt and equity) for relevant subjects like operator, lender, third party… to approach.80 With young development of PPPs procurement, Viet nam should consider the latter for easy and flexible calculation of each specific project As a result, termination provisions should be invoked thoroughly to reduce uncertainty in related partnership and thereby give confidence to all the private sectors involved in the project, even for lenders, contractors, investors… 2.3.6.4 Force majeure Force majeure provisions deal with circumstances which are beyond the control of the contracting parties and make it impossible for the affected party to fulfill its contractual obligations Force majeure clauses in project agreements are often detailed and carefully drafted They must be an “exceptional” event beyond a party’s control, but what constitutes “exceptional” is open to debate.81 Therefore, parties should take consideration two main approaches for defining force majeure events: (1) given a broad definition, such as in France, where case law defines it as any event that is unforeseeable, beyond the control of the parties and makes it impossible for either party to perform its obligations under the contract or (2) defined through an itemized list of events The typical provisions include (i) direct political events like exploration, nationalization; (ii) indirect political events such as war, acts of terrorism, nuclear explosions, riots, strikes and protests and (iii) natural disasters, namely earthquakes, landslides, flood… In practice, although itemized lists are often not exhaustive and not contain “catch-all” provisions, it is the preferred approach to define force majeure events Parties just refer to the list of events as illustration only and not necessarily limit the general words of the definition Especially, among force majeure events, changes in law are the biggest concern of investors It may be foreseeable by the private partners, the they should anticipate such 80 81 Allen & Ovary, Ibid, p.31 http://www.internationallawoffice.com/newsletters/detail.aspx?g=5efc9070-7bf5-4cd0-a979-20369d495a26 50 risks in their bidding stage Some changes are unforeseeable should be handled properly the allocation of such risks The best practice for such risk is for both parties to share it since both have may have little influence on legislation and different capabilities in handling changes in law risks Besides, the investors may require the state to commit to a stable legislation policy for a certain time to avoid any damages for them Moreover, period of time before a prolonged force majeure event which can lead to termination of the PPPs contract should be defined noticeably, typically lasting between six and twelve months Generally, it is important for contractors to carefully consider the definition of force majeure and how an event of force majeure will affect their rights and obligations under a long - running project like PPPs method Because the prediction of force majeure is extreme hard to calculate, even if the courts can be expected to interpret and enforce the contract fairly, unexpected events which occur over the life of the partnership should be required by adjustment of the terms of the original agreement 2.3.6.5 Step-in right The term “step-in right” in this case is similar to the “right to receive a project” referred in article 22 of Decision 71/2010/QD-TTg Lenders’ step-in rights are important provisions for the bankability of PPPs projects While there are a few of nation like in Spain, Slovakia and Poland, lenders are given the opportunity to rescue a failing project by taking over the ownership of the shares in the private partner, almost jurisdictions provide for some form of lenders’ step-in rights Legislation gives the lenders the ability to rescue a project if the private partner has failed to fulfill the obligations stipulated in the project contract or loan contract It is considered to taking remedial action before the authority terminates the contract and helping lenders protect their loan while the project can be put back on track In doing so, the lenders to PPPs transaction will need to have clarity on what actions will constitute key obligations under PPPs contract Besides, Viet nam should refer to step-in right of authorities in case of “preventing or mitigating a serious risk to environment, public health… from investors or 51 guaranteeing continuity of service or discharging a statutory duty…” 82 In such circumstances, the public sector just assume all or some of the service delivery obligation for a period of time Step-in right of authorities normally follow an investor’s default This is a meaningful provision for the investors in case their default emerges and they need a time to take required action to satisfy obligations without termination or breach of contract promptly Under article 22.2 of Decision 71/2010/QD-TTg, conditions and procedures for the lender must be approved by a competent state agency The state should further whether this approval is mainly administrative procedure or is mandatory conditions parties satisfy for step-in right If any, circumstances should be visibly defined for strict compliance 2.3.6.6 Projects transfer Viet nam has stipulated the transfer of rights and obligations under project contracts as important right of investors This creates opportunities for them to benefit or lose their burden in the process of procurement However, in reality, this can lead to the fact that many investors with potential finance at the bidding stage are in intention of taking over PPPs projects for the purpose of transfer only This tendency may be obstacles for healthy competition to prevent competent investors from last-long investment Therefore, legislation should set out more specific regulations in which the transfer could be permitted besides the requirement of approval of competent state agency or conformity with agreed terms In conclusion, legislation of PPPs contract in Vietnam is on the track of improving Despite being on pilot stage, it should be taken interest to go on to officially widely-accepted stage under decree and law From the legal perspective, several specific institutions, including legal position as well as right and obligation of parties, governing law and dispute resolution should be defined in legal documents on PPPs procurement These significant aspects are actual essential to express the honesty and transparency of Viet nam’s legal policy in investment field for attracting investors 82 UK, Ibid , p.117 52 CONCLUSION With the prominence of great alignment of interests between the public and private sectors, PPPs procurement obtains a high level of support from governments in economic fundamentals and exclusively enforceable legislation Viet nam definitely is not an exception in this common tendency Former Deputy Minister of Planning and Investment Dao Quang Thu said that from now to 2020, Vietnam needs about US$3040 billion in investment capital each year to develop key infrastructure systems, including transport, electricity and water supplies.83 It is clearly not mobilized through traditional investment channels in total Hence, Viet nam should promptly make progress of preparing all necessary conditions to implement the PPPs scheme, especially completing a more suitable legal framework for PPPs activities with the prime purpose of promoting and facilitating foreign direct investment Especially, to turn infrastructure into an attractive sector for foreign private areas, legislation has to put more emphasis on PPPs project contract because it is almost only place and a powerful tool for the private sector to express their strong will as well as explicit requests in negotiation process with public sector In reality, realizing that all contingencies can not be foreseen, a good contract should include clearly defined regulations necessary for PPPs procurement As a result, the more detailed description of the responsibilities, risks and benefits of partners contains, the more successful the probability of partnership’s agreement Nonetheless, because of poorly designed contract regimes in current Vietnamese law, there has been widespread concern among investors that the public sector has not get a fair deal over the longer-term of project Hence, the author’s thesis takes notice of the nature of PPPs contract and recommendations for the shortcoming of several regarded institutions with the purpose of attracting investment The two – chapters structured thesis hopes to give a general understandings of PPPs procurement regarding history, characteristics and importance; of PPPs contract with specific features and proposals for some notable problems for the readers Based on these contributed opinions, lawmakers may take for accounted in the process of preparation to draft legal documents in detail some useful opinions 83 http://english.vov.vn/Economy/Investment/Foreigners-contribute-opinions-to-PPP-regulations/256670.vov Besides, investors may consider them as reference when negotiating with the authority to ensure investment in complex and long-term PPPs arrangements BIBLIOGRAPHY Legal documents Vietnamese legal documents Civil Code 2005 Law on administrative procedure 2011 Decree 108/2006/ND-CP of providing detailed provisions and guidelines for implementation of a number of articles of the Investment Law Decision 71/2010/QD-TTg of promulgating the regulation on pilot investment in the public private partnership form Foreign legal documents Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts Civil Code of France Act No.117 on Promotion of Private Finance Initiatives 1999 of Japan Municipal Act 2001 of Canada Andhra Pradesh Infrastructure Development Enabling Act 2001 of India Journals Allen and Overy (2013), Termination and force majeure provisions in PPPs contract, European PPP expertise center Claudine Desrieux (2006), Revisiting relational contracting in PPPs – A comparison of French and American local public services, Institut CDC Dexter Whitfield (2001), PFI and PPPs: What future for public services, European Services Strategy Unit, Pluto Press Edward Farquharson, Clemencia Torres de Mastle, Yescombe and Javier Encinas (2011), How to engage with the private sector in PPPs in emerging markets, The World Bank Jenny Kwan (1999), Canadian Public Private Partnership: A Guide for Local Government, Ministry of Municipal Affairs Liana Teodora Pascariu (2010), The distinction of the administrative contract from other types of contracts, Fascicle of The Faculty of Economics and Public Administration Manish Kumar and Gerald Brock, Developing credibility in PPPs: The case of Manila water supply Mary Rose Brusewitz (2005), PPPs in the United States, Legal advisers review Matija Simončič, Alenka Temeljotov Salaj and Champika Liyanage, A comparative study on legislations relating to PPPs in the UK and Slovenia 10 Mahendra P Singh, German administrative law in common law perspective, Springer 11 Nilufa Akhter Khanom (2009), Conceptual issues in defining PPPs, Paper for Asian business research conference 12 P De Vries and E Yehoue (eds.) (2012), Is public private partnership obsolete? Assessing the Obstacles and Shortcomings of PPP, halshs-00653090, version 13 Ronald W McQuaid, Walter Scherrer (2008), Public Private Partnership in the European Union: Experiences in the UK, Germany and Austria, Uprava letnik VI 14 Rui Cunha Marques and Sanford V Berg (2010), PPPs contract: A tale of two cities with different contractual arrangement, PURC Working paper 15 Sarah Jamil (2008), The miscellaneous desirability of PPPs and an approach to design an appropriate constitution, Department of general economic analysis, D-79085 Freiburg 16 Stephen Thomsen (2005), Encouraging PPP in the utilities sector: the role of development assistance, OECD 17 Department of the Environment and Local Government (2003), A policy framework for PPPs, Ireland 18 European Commission (2003), “Public Finances in EMU,” European Economy No 3/2003 19 European Economy (2003), Public Finance in EMU 2003, Directorate –General for Economic and Financial Affairs, No.3/2003 20 Japan External Trade Organization (JETRO) (2010), PPPs in Australia and Japan: facilitating private sector participation, Asia and Oceania Division, Overseas Research Department 21 IMF Fiscal Affairs Department (FAD) (2004), “Public-Private Partnerships”, SM/04/94 22 The European Investment Bank (2004), The European Investment Bank’s role in PPPs 23 The private-public infrastructure advisory facility, Drawbacks of PPP, Toolkit for PPPs in roads and highways 24 UK, Concession agreement – workbook of issues and example clauses 25 Nguyễn Thị Anh, Distinguishing terms PPP, PSP and privatization (Phân biệt khái niệm PPP, PSP tư nhân hóa), Documents for discussion about Partnership methods between the public sector and private sector 26 Nguyễn Thị Hằng, Public services provision and socialized tendency – Investment under PPPs (Cung cấp dịch vụ cơng xu hướng xã hội hóa – Đầu tư theo hình thức đối tác cơng tư PPP), Documents for discussion about Partnership methods between the public sector and private sector Online http://ppp.worldbank.org/ http://en.wikipedia.org http://water.epa.gov http://www.PPPcouncil.ca/ http://www4.agr.gc.ca/ http://www.effectivestates.org/ http://english.vietnamnet.vn https://icsid.worldbank.org ... support Public and private Public Public Public 1–2 O&M Private Public Public Public 3–5 Leasing Private Public Public Semi – private – 15 Concession Private Public Private Private 20 – 30 BDO Private. .. Private Public Public Private 20 – 30 BOT/BOO Private Public /Private Private Private 20 – 30 Source: Gruber (2003) and OECD Secretariat 22 1.2 PPPs contract 1.2.1 Nature of PPPs contract PPPs contract. .. COMMITMENT I hereby commit that the thesis ? ?Private public partnerships contract and proposals for Vietnamese legislation? ?? is my work of research All information or data raised in this thesis is