Greece has two different legal instruments in relation to non-concession and concession PPPs:
• Law 3389/2005 “Partnerships between the Public and Private sectors” (as amended by Law 3483/2006), or the “PPP Act ”, deals with PPPs, while
• Law 4413/2016 “Award and performance of Concession Contracts – Harmonisation with Directive 2014/23/EU and other provisions”, or the “Concessions Act”, deals with concession.
The PPP Act defines PPPs as the partnerships between public entities and private entities that observe certain requirements. Among other requirements, PPPs have the purpose of performing construction works or providing services in the area of competence of the public entities, under a provision of the law, or a contract, or under public entities’ articles of incorporation. In PPPs, private entities will be paid either in a lump sum or in instalments by the public entities or by the final users of these works or services.
A quite active PPP unit has been established in the Ministry of Finance (the “PPP General Secretariat”). The authority is responsible for the pre-selection of proposed partnership projects. The final selection is made by the Joint Ministers’ Committee. The PPP Law only regulates the contractual PPPs (but not IPPP).
The PPP General Secretariat has been quite active in previous years. In 2011 alone, seven out of ten agreements were signed. Several other projects have been approved since then and are currently in various stages of the tender process.
Although the role of the PPP General Secretariat is mainly as adviser, with the final approval decision to be made by the Joint Ministers’ Committee, it has a key role in the selection, approval, and execution of a PPP project:
• It is responsible for including a proposal for a PPP in the relevant List of Proposed Partnerships;
• It produces all types of standardised Partnership Contracts or Ancillary Agreements in order to assist Public and Private Entities in formulating the terms and conditions of their Partnership Contracts; and
• It monitors the award procedure.
The public entities involved are obliged by law to follow the suggestions on the contract award procedure of PPP General Secretariat. The PPP General Secretariat recommends the instructions, amendments, and changes to the award procedure, including the tender documents and the draft agreement.
The PPP Act was enacted in order to provide a simplified legal framework for other forms of partnerships, beyond that of concessions. In other words, the PPP Act was enacted to implement projects and services in which the end users are not charged. This is the case with public schools, hospitals, fire stations and other users. The implementation of those projects presupposes their future payment directly by the state on an annual base.
The recently enacted Concessions Act and Law 4412/2016 (in relation to public tenders) make explicit reference that certain of their provisions are equally applicable to (non-concession) PPPs and in some instances may also prevail. Although the provisions of the PPP Act are sufficiently clear, these recent enactments may confuse (foreign) investors. The absence of sufficient testing of boundaries between the above legal regimes adds to the confusion.
The PPP Act was enacted in order to provide a simplified legal framework for other forms of partnerships beyond concession. In other words, the PPP Act was enacted to implement projects for which the end users are not charged.
The implementation of those projects presupposes their future payment directly by the state on an annual basis.
The recently enacted Concessions Act and Law 4412/2016 (in relation to public tenders) make explicit reference that certain of their provisions are equally applicable to non-concession PPPs and in some instances may also prevail. Although the provisions of the PPP Act are sufficiently clear, these recent enactments may confuse foreign investors. The absence of sufficient testing of boundaries between the above legal regimes adds to the confusion.
Concessions are governed by Law 4413/2016 (“Concessions Act”), which incorporated EU Directive 2014/23 (the “Directive”) into national law. It was enacted to provide for a uniform and reliable legal framework in relation to concession projects. Up until this enactment, there had been a lack of legal certainty, with many various legal provisions applicable at the same time, meaning the Greek Parliament had to rectify each concession agreement.
The Concessions Act merely copies the definition of the Directive in relation to “concession contracts” defining it as a written agreement for pecuniary interest by which one or more contracting authorities or contracting entities entrust the execution of works or the provision of services to one or more economic operators, and the consideration of which for such execution of works or provision of services consists of either the sole right to exploit the works / services in question, or of such a right together with some additional payment.
The Concessions Act is quite extensive and is entirely in line with EU Law. However, the relevant provisions mainly set up the general principles and framework for the effective award and execution of concessions, leaving the determination of the specific terms and procedures for the selection of the concessionaire and for the execution of the specific contract to the tender documents and the concession agreement.
More detailed guidance or more flexibility?
There are many provisions of substantial and procedural law which aim at prompt and effective legal protection and dispute resolution, safeguarding the principles of transparency and equal treatment, promoting competition and combatting corruption, while, at the same time providing the contracting authorities/entities with controlled flexibility over the detailed terms of the award as well as the execution of the specific concession, its financing etc.
Despite the above, it is questionable whether such discretion may lead to unfavourable clauses for the concessionaire in various matters such as the change of tariffs and standards in the sector concerned.
Notwithstanding the above, there is a well-established legal framework. Its scope of application is clear. The legal framework does not make any specific reference to models such as BOT or PFU but does allow the use of various other models of PPPs to be adapted to accommodate project risks. The PPP Act requires the contracting authority to select projects following a prior satisfactory economic evaluation/feasibility study. The Concessions Act is silent on this matter. However, this obligation of the contracting authority is inferred by other legal provisions.
Securities and Government Support
The PPP Act explicitly provides for the possibility for a private party to create security interests over the project’s movable assets, shares, and proceeds, or other valuable securities related to the project without notable exceptions.
The Concessions Act does not refer to specific types of security interests. However, it explicitly provides that all kind of securities must be mentioned in and governed by the concession documents. Both acts provide for balanced rules of termination of the project agreement and make reference to the possibility of compensation of the private party in case of early termination.
The private party must be supported as much as possible by the competent public authorities in obtaining the required licenses or permits. The PPP Act establishes time limitations in which such licenses are deemed to have been granted if the competent authorities fail to issue them provided that the application of the private party was due, complete and proper. However, neither Act provides for a specific “one-stop-shop” permitting procedure or clear rules on which specific permits a private party has to obtain. This issue is left for other provisions of national law. In practice, the list of such licenses / permits is usually very extensive with a lot of bureaucracy involved.
“Step-in” rights (not requiring new tender), if the private party defaults are possible under specific conditions and with certain limitations. The Concessions Act neither prevents nor allows such rights.
Similarly, the PPP Act expressly allows a “direct agreement” between lenders and the contracting authority, while the Concessions Act makes no express reference.
In relation to the adaption of tariffs in user-pays-models, the PPP Act requires regular mandatory adaption of tariffs according to a published index/formula (e.g. consumer price index).
Both acts allow for international arbitration. The UN Convention applies, and Greece has ratified many bilateral treaties for the avoidance of double taxation. The project agreement must be governed by Greek law. In relation to side agreements, Greek law implicitly allows the use of foreign law.
The new legislation still needs to prove its effectiveness
In 2015, the “capital controls” were introduced, and are still in force to certain extent, creating uncertainty for investors in relation to their freedom to repatriate their profits.