top of page
Search
  • Writer's pictureSámano Abogados

Regulation of the Public Private Partnerships Law [15/11/2012].


We would like to inform you that on November 5, 2012, the new Regulation of the Public Private Partnerships Law was published in the Official Federal Gazette (DOF) (hereinafter “the Regulation”). In addition, this November 22 the Guidelines establishing the provisions to determine the social profitability and the advisability of carrying out a Project through a public private partnership were published in the DOF. In this respect, allow us to share with you the legal analysis we have done of these documents.


Legal Nature

The purpose of this regulation is to regulate the Public Private Partnerships between the State and the private sector, developing and establishing the procedures and formalities for the application of the provisions of the Public Private Partnerships Law (hereinafter the “PPP Law”).

Relevant Themes

Infrastructure Development

The Regulation states that for purposes of the PPP Law it will be considered that there is a long-term contractual relationship when the construction of the infrastructure and the providing of the services require the signing of a contract with a duration of more than three years.

It also provides that the public private partnership projects in which infrastructure provided by the State is used must establish, among other things, the obligation of the private sector to develop additional infrastructure to what is already provided.


Article 3 establishes that the participation of the federal agencies and entities in public private partnership projects may be through one or more of the following forms:


a) With budgeted federal resources. b) With resources of the National Infrastructure Fund or other federal public resources not budgeted. c) With contributions other than cash.

One of the most relevant aspects of the Regulation is that for purposes of the investment required for public private partnership project it defines the following as PPP projects:


  • Pure Project. This is the PPP whose resources for the payment of the services to the public sector or the final user and the costs of investment, operation, maintenance and preservation of the infrastructure, all come from budgeted federal resources.

  • Combined Project. This is the PPP whose resources for the payment of the services to the public sector or to the final user and the costs of investment, operation, maintenance and preservation of the infrastructure, come from the public sector, either through one or more forms referred to in paragraphs a) and b) indicated in paragraphs above, and from a source of payment different from those.

  • Self-financing project. This is the PPP whose resources for its development and execution come entirely from contributions other than cash; resources from private parties, or income generated by such project.


The projects carried out in public private partnerships must expressly include the mention that it is a PPP project and include: (i) the prior analyses and studies, (ii) the unsolicited proposals presented in accordance with the terms of the PPP Law, (iii) the award procedures in terms of chapter four of the PPP Law, (iv) the authorizations for the development of the project and the requests presented for that purpose, and (v) the contracts and agreements executed with the developer.


Article 9 of the Regulation indicates that every procedure related to the public private partnership projects that corresponds to federal agencies must be done before the SHCP through the administrative units of programming and budget of that Ministry. The procedures of the entities will be done through the sector coordinator, or directly in the case of non-sectorized entities.

CompraNet


The CompraNet site will act as a collector of the most relevant information of the PPP projects under study, and the following information should be published on its site:

(i) The public private partnership projects in which federal agencies and entities participate. (ii) The unsolicited proposals that are presented to the federal agencies and entities. (iii) The single registry of developers, identifying the partners that control the company and its managers, with a specific part for developers sanctioned by a final ruling.


The purpose of this registry is to provide publicity and transparency to the PPP projects, and therefore their registration in CompraNet is not a prior requirement for their authorization.


Registry for Statistical Purposes


The PPP Law provides that the SHCP will publish a registry for statistical purposes with the information regarding the public private partnership projects. This registry is exclusively for statistical purposes and does not represent any requirement in order to carry out any activity provided for in the Law or in any other provision.


Preparation and initiation of the Projects


The Regulation establishes in detail the requirements for the viability analysis that the entities or agencies that propose a PPP must do, which refer to technical, economic, financial and legal aspects. Additionally, and depending on the PPP, they may also include aspects of environmental impact, social profitability, real estate, personal property and rights necessary for their development.


The PPP Projects will be considered viable when the interested federal agency or entity so determines through an opinion it prepares based on the above mentioned analyses. The interested agencies and entities will be exclusively responsible for that opinion and its content (they become the promoters of the project).


Approval of Contributions of Federally Budgeted Resources


The SHCP will evaluate, from the budgetary point of view, the projects it receives and will register them in the Portfolio when it considers it appropriate, in order to observe the provisions of the Federal Budget and Treasury Responsibility Law in relation to the scheduling of the resources to be used in investment programs and projects.


The entities and agencies are obligated to give priority to the expenditures arising from the execution of such public private partnerships within their scheduling and budgeting process.


Only the projects registered in the Portfolio will be presented to the Inter-Ministry Public Expenditure, Financing and Divestment Commission of the SHCP for its analysis and approval, no later than August 15th of the corresponding year.


Budgeted federal resources may only be contributed with the prior approval of the Deputies Chamber of the Congress of the Union in order to ensure budget sufficiency.


On November 22nd of this year, SHCP published in the Official Federal Gazette the “Guidelines establishing the provisions for determining the social profitability and the advisability of carrying out a project through a public private partnership.” These Guidelines establish the bases and criteria on which the Investment Units of the SHCP will determine if a PPP project meets the requirements to be registered in the Portfolio of the Integrated Process of Programming and Budget (PIPP for its initials in Spanish). Only the PPP projects registered in the PIPP are subject to allocation of resources in the Federal Expenditures Budget (PEF for its initials in Spanish).

Initiation of the Projects


Article 37 of the Regulation indicates that the award procedure of a public private partnership project may only begin when the following requirements have been met:

(i) The project must be considered viable in terms of the decision issued by the interested agency or entity.

(ii) If the projects require federal budgetary resources:

a) There must be an approval of budget sufficiency or proceed in terms of article 35 of the Federal Budget and Treasury Responsibility Law. b) In the case of multi-annual expenditures, of those mentioned in article 32, last paragraph of the Federal Budget and Treasury Responsibility Law, in all cases the approval of budgetary sufficiency of the Deputies Chamber of the Congress of the Union will be necessary, and it will not be possible to proceed in terms of article 35 of that law, and

(iii) In the case of projects derived from unsolicited proposals, they must also comply with the requirements of article 49 of the Regulation.

A Public Private Partnership Contract (hereinafter “PPP Contract) may only be entered into when the following requirements are met, as applicable:

(i) The award procedure by bid, invitation to at least three persons, or direct award has been concluded.

(ii) In the case of projects with budgeted federal resources: a) There must be an approval of budget sufficiency or proceed in terms of article 35 of the Federal Budget and Treasury Responsibility Law, or b) In the case of multi-annual expenditures, of those mentioned in the last paragraph of article 32 of the Federal Budget and Treasury Responsibility Law, in all cases it will be necessary that the project be authorized in advance in the corresponding Federal Expenditures Budget, and it will not be possible to proceed in terms of article 35 of the cited Federal Budget and Treasury Responsibility Law.


Authorizations for the Projects


The federal authorizations for the development of a project will be granted preferably within the award procedure, and they will be formalized simultaneously with the conclusion of the corresponding PPP Contract.


Unsolicited Proposals


Those interested in presenting an unsolicited proposal may process a manifestation of interest by the federal agency or entity to whom it corresponds to know of said proposal. Such manifestation will only represent one element through which the interested entity may decide to carry out the prior study. It will not imply any commitment, or precedent on the opinion relative to the proposal that may be presented.

The federal agency or entity to which the request for manifestation of interest cited above is presented must answer within a term no greater than 30 (thirty) business days, from the day following the date of reception of such request.

Unsolicited proposals must be accompanied by the declaration of the promoter, under oath, that it is not a proposal previously presented by the same promoter and already resolved. False declaration by the promoter will be cause for immediate rejection of its proposal, without prejudice of any criminal and other liabilities it may incur.


The opinion on an unsolicited proposal may determine that the Project is:

I) Appropiate, in which case the agency or entity must resolve: a) If an invitation to bid should be called, or b) Whether or not it is interested in acquiring the studies that have been presented to it.

II) Not Appropiate, it is in one of the premises indicated in article 34 of the PPP Law, which is to say that the Project is not appropiate because it is not in the public interest, for budgetary reasons or for any other reason determined by the corresponding agency or entity.

For purposes of calling a Bid, the interested federal agency or entity should:

(i) Comply with the terms of article 37 of the Regulation (relative to the part of this memorandum named Initiation of the Projects). (ii) Issue the certificate of reimbursement of expenses established in article 31 section of the PPP Law. (iii) Have the unilateral declaration of consent of the promoter alluded to in section II of article 31 of the PPP Law (relative to the assignment of intellectual property rights). (iv) Have the guarantee of seriousness referred to in article 31 section IV second paragraph of the PPP Law.

It should be indicated that the amount of expenses to reimburse to the petitioner of the request that is indicated in the certificate will be determined by a third party, designated by agreement between the promoter and the interested agency or entity. This amount shall not exceed:

(i) The amount of the expenses actually incurred by the promoter, proven, necessary and directly related to the preparation of the proposal, provided that such amount is within the market rate, or

(ii) The equivalent to four percent of the amount of the initial investment of the project, or the equivalent to ten million Investment Units, whichever is less.

The third party that determines the expenses may be contracted in terms of article 20 of the PPP Law (which is to say, under the provisions Law of the Public Sector Acquisitions, Leases and Services Law), and its fees will be paid in equal parts by the promoter and the interested agency or entity.


The awarding of the Projects


Both the PPP Law and the Regulation provide for the participation of the Agent in the award procedures. Its task will consist of advice, drafting of projects and proposals, logistical, technical or any other kind of support, that help the federal agency or entity carry out any act of the award procedure.

Notwithstanding the participation of the Agent, the inviting federal agency or entity must execute the acts indicated below, without prejudice the support it may receive from the Agent:

(i) The call, invitation to at least three persons, terms and conditions of the award and their clarifications. (ii) Evaluation of the proposals, decision and award of the project, and (iii) Entrance into the PPP Contract.

The services of the Agent will be contracted as provided in articles 20 and 38 of the PPP Law, as well as 148 of the Regulation, which is to say under the terms of the Law the Public Sector Acquisitions, Leases and Services; with the exception of when the services of the Agent are contracted with development bank institutions, in which case it will be done by direct award.


The bids


Those interested in attending the different acts of the Bid, as observers, must manifest this to the inviting federal agency or entity, so that it can issue a record of its registration in a specific registry it keeps for each Bid.

The observers registered in the inviting agency’s registry may attend all the actions in which the bidders participate, as well as all the other public actions of the Bid. If they identify any presumed irregularity, they shall inform the internal control body of the calling entity.

In those projects whose amount of Initial Investment is equal to or greater than four hundred million Investment Units, the participation of a social witness, freely designated by the civil service, must be provided for. Once the social witness is designated, he or she will be contracted by the organizing federal agency or entity, who will cover the fees, in terms of the Public Sector Acquisitions, Leases and Services Law.


The Invitation and Terms of the Bid


The invitation and the terms will be available for purchase by the interested parties from the day of publication of the invitation until the business day immediately prior to the date of presentation and opening of the proposals.


The purchase of the terms will be an essential requisite for presenting proposals. In the case of consortiums, it will be sufficient for at least one of its members to purchase them.


The Presentation of Proposals


Article 49 of the PPP Law indicates that to facilitate the bid, following the act of presentation and opening of the proposals, the organizing entity may register the participants, according to the following:


  1. The review of the documents on the proof of legal existence and legal capacity, experience and technical, administrative, economic and financial capacity, of the bidders; representative capacity of the representatives; the granting of guarantees; as well as any other aspect that, if it were to become known and made public, does not give rise to unfair competition or conditions contrary to the criteria of article 38 of the PPP Law.

  2. If the bidder receives the preliminary registration, it will not have to present the documents again to obtain it, and it will be sufficient that in its technical offer it include its declaration, under oath, that the documents and information so presented are still in force without any change.

  3. The bidders that do not have a preliminary registration, or which have to modify the documents or information presented to obtain that registration, must present in their technical offer all the documents and information required.

  4. In the case of a consortium, the preliminary registration will apply to its members. If its members change, all the documents and information required must be presented again in the technical offer. The members that leave the consortium and wish to participate individually in the Bid must also present in their technical offer all the required documents and information.


The bids must be presented by someone having the legal capacity to be bound, or with sufficient legal powers to represent and bind the bidder. To participate in the act of presentation and opening of proposals, it will be sufficient that the participants present a document in which they manifest, under oath, that they have sufficient powers to be bound themselves or for their principal, and it is not necessary to evidence legal capacity.


Evaluation of the Proposals and Bid Decision

For the evaluation of the proposals any of the following criteria may be applicable:

(i) By points and percentages.

(ii) Cost-benefit.

(iii) Any other that the organizing entity indicates in the terms of the bid, which must be clear, quantifiable and permit the objective and impartial comparison of the proposals.


In Bids for projects that have their origin in unsolicited proposals, the premium in the evaluation of the offer of the promoter referred to in article 31 section V of the PPP Law will be applied according to the following:

(i) To the economic offer of the promoter the prize indicated in the terms of the bid will be granted, without exceeding the following limits:

a) If the amount of the Initial Investment is up to the equivalent of ten million Investment Units, the prize may be up to ten percent in relation to the best economic offer before the prize.

b) If this Initial Investment is above the limit indicated in the above paragraph and up to the equivalent to one hundred million Investment Units, the prize may be up to eight percent in relation to the best economic offer before the premium.

c) If the Initial Investment is above the upper limit indicated in the above paragraph and up to the equivalent to five hundred million Investment Units, the prize may be up to six percent in relation to the best economic offer before the premium.

d) If the Initial Investment exceeds the upper limit indicated in the above paragraph, the Premium may be up to three percent in relation to the best economic offer before the prize.

e) In no case may the prize represent, in relation to the best economic offer before the prize, a difference greater than the equivalent to ten percent of the Initial Investment of the project, and

(ii) If the promoter is part of a consortium, the prize will be applied to the joint proposal that the consortium presents.

In addition to the provisions that may be indicated in the terms of the bid, the following proposals will not be considered solvent:

(i). Incomplete ones in which the missing information or documents prevents a proper evaluation and determination of its solvency.

(ii). Those that violate the legal, technical or economic conditions expressly indicated in the terms of the bid as relevant for the solvency of the proposal, and

(iii). Those in which it is effectively evidenced that the information or documentation provided by the bidder is false.

Acts after the Award

In the event that the contract is not signed in the time period indicated in the terms of the bid, for unjustified causes attributable to the winner, the project may be awarded to the second place winner and, if it does not accept, to the subsequent places, provided that:

(i) The new winner meets all the conditions established in the bid terms, and

(ii) The difference with the economic offer initially the winner is not greater than the equivalent to ten percent, calculated on the basis of the cited winning proposal. The non-recoverable expenses will be reimbursed in the cases in which the bidder decides not to execute the corresponding contract once the respective bid has been carried out, as follows:

(i) It will be for the non-recoverable expenses actually incurred, proven, essential and directly related to the presentation of the winning proposal in the Bid and provided that such amount is within market prices. In all cases, they will be limited to the following items:

a) The cost of purchase of the bid terms. b) The cost of the guarantees that have been requested to participate in the Bid, and c) The cost of the preparation and formation of the winning proposal, and

(ii) In no case may it exceed the equivalent to two percent of the Initial Investment of the project, or the equivalent to five million Investment Units, whichever is less.

Exceptions to the Bid

For everything not established for the proceedings for invitation of at least three persons or direct award, the provisions of the Regulation of the Bid procedure, to the extent applicable, will be applicable to it.


Goods Necessary for the Projects

Because the development of the different projects it may be necessary to acquire different goods or rights, the Regulation provides that the Federal Agency or Entity or the developer itself may acquire them, preferably contractually, directly or by public bid, as applicable according to the applicable legal provisions, without prejudice that they may be acquired by expropriation. Those goods and rights must be acquired according to the guidelines that the Ministy of Public Affairs issues through the Institute of Administration and Appraisal of National Assets, and the interested agency or entity will be responsible for making the payment resulting from the appraisal.

Acquisitions by Conventional means

It is important to emphasize that for the acquisition by conventional means by federal entities and agencies, a public bid will not be required in the case of real estate, in rem goods and rights, lease rights, possession rights, litigation rights or any other right recorded in a legitimate title deed. For all other cases, acquisitions must be made as established by the Law of Public Sector Acquisitions, Leases and Services and provisions emanating from it. When the private developer of the project carries out the negotiations for the acquisition of the goods and rights, the calculation of the amounts of investment made by it will take into account the prices and amounts agreed in the respective contract, and therefore additional costs or higher prices paid in any purchase may not be transferred to the agency or entity.


Expropriation


If under the applicable legal provisions the expropriation of the goods or rights necessary to develop the project is appropriate, the Regulation establishes specific requirements so that this may be carried out by the federal entity or agency, in addition to those applicable to the general expropriation procedure.


Specific-Purpose Company

Article 91 of the PPP Law establishes that PPP Contracts may only be executed with entities whose corporate purpose is exclusively to carry out those activities necessary to develop the project in question, which also must comply with the requirements established in article 104 of the Regulation, which are:

(i) Be a Mexican corporation.

(ii) Have a legal nature according to which its corporate capital is conveyed exclusively to the corporate purpose, such as a stock corporation, an investment promotion stock corporation and a limited liability company, with or without variable capital.

(iii) Its corporate purpose will be exclusively the development of the project, but may include any other activity complementary to the project.

(iv) The minimum capital of the company must: a) Be equal to or greater than what is indicated in the terms of the bid of the project, and be fully subscribed and paid. b) Not have the right of withdrawal, and c) Be documented in a special series of certificates.

(v) The corporate bylaws and the certificates representing its corporate capital must include the following mentions: a) Prior authorization of the contracting federal agency or entity is required for:


  • Any change to the articles of incorporation and bylaws of the company.

  • The admission and exclusion of new partners or shareholders and, in general, change of its shareholding structure, and

  • The assignment, transfer to third parties, granting in guarantee or conveyance in any manner of the rights over the certificates representing the capital of the company.


b) These authorizations will be granted when their granting does not imply deterioration in the technical and financial capacity of the developer or violation of the terms of awarding the project.

(vi) Its administrators must comply with any requirements that have been indicated in the terms of the award, and

(vii) The others necessary to receive the authorization that the project implies, as well as those indicated in the other provisions applicable to the activities of the project. If the PPP Contract is going to be executed with a consortium, all the entities forming it must comply with the following, in addition to the above mentioned requirements:

(i) The purpose of each company may refer exclusively to the partial activities it will carry out for the development of the project.

(ii) Under no circumstance may members of the consortium participate in the capital of any of the other companies that are members of the same consortium.

(iii) The minimum capital without right of withdrawal of each company must be equal to or greater than what has been indicated in the terms of awarding the project, even when the result of adding them up with those of the other members of the consortium is greater than what is indicated for entering into the contract with just one company.

(iv) Any change to the agreement regulating the relationships of the members of the consortium, as well as the inclusion and exclusion of such members, will require prior authorization of the contracting agency or entity, and

(v) The bylaws, certificates representing the capital of the members of the consortium, and the agreement that governs them, must contain the mentions of sections ii) to iv) immediately above.

Signing of the Contracts

In addition to the minimum requirements established by article 92 of the PPP Law, the Regulation provides that the PPP Contract must contain the terms and conditions related to the following aspects:

(i) The granting of the authorization of the contracting federal agency or entity to begin providing the services.

(ii) The determination of: a) The financial adjustments in the event that during the term of the contract the developer receives better conditions in the financing used for the project. These adjustments must be made such that the benefit of the better conditions equally favors the developer and the contracting federal agency or entity, and b) Any other additional income for the project, and the use to be made of it.

(iii) The methodology for proving the increase of costs and their updating, which will contain at least the following elements: a) The list of inputs whose change in cost will generate changes in the costs of the contract. b) The price index that will be used to calculate the corresponding adjustments. c) The formula for making the adjustments, and d) The dates, time periods and other terms and conditions for making the adjustments.

(iv) The assignment of rights of the contract and, if applicable, of the respective authorization for the development of the project, the transfer to third parties of such rights, their granting in guarantee or conveyance in any manner in accordance with the PPP Law and the Regulation.

(v) The supervision of the provision of the services and, if applicable, of the execution of the works.

(vi) The intervention that the contracting entity or agency may carry out in accordance with the PPP Law in the projects as well as the authority of the interveners.

(vii) The intervention of the projects and authority of the interveners, for the creditors of the developer.

(viii) The causes for early termination established in the Regulation.

(ix) The reimbursement of the investments made by the developer in case of early termination for causes not attributable to it.

(x) The enforcement of the guarantees that the developer grants.

(xi) The destiny of the real estate, goods and rights used in the provision of the services at the end of the contract; and

(xii) The others that the parties consider necessary. If the PPP Contract is executed with a consortium, the following requirements must be complied with in addition to the above:


  1. The clear and specific mention of which activities each of its members is responsible for carrying out.

  2. The joint or joint and several obligation, as determined by the contracting agency or entity, of all the members in relation to compliance with the obligations of the PPP Contract, and

  3. The mention that any change to the agreement entered into between the members of the consortium, as well as the inclusion or exclusion of its members, will require the prior authorization of the contracting federal agency or entity.


It is important to emphasize that the duration of the PPP Contract will remain subject to the condition precedent that the developer grants, to the satisfaction of the contracting entity or agency, the guarantees agreed to in accordance with the Regulation and the PPP Law.

The Regulation provides for the possibility that the rights of the developer derived from the PPP Contract and, if applicable, from the respective authorizations for the development of the project, be assigned, transferred to third parties, granted in guarantee or conveyed in any manner, with the prior authorization of the contracting federal agency or entity. Such authorization will be granted when its granting does not imply a deterioration in the technical and financial capacity of the developer, or violate the terms of the awarding of the project and will be granted preferentially when it guarantees the fulfillment of financing directly related to the project, or for purposes of the intervention in it.

Execution of the Projects

In order for the developer to be able to begin providing the services contracted under the PPP Contract, it must obtain an authorization from the contracting federal entity or agency, which may be granted fully or partially. This latter will be granted if aspects are pending that, in the judgment of the contracting entity or agency, do not affect providing the services and the developer agrees to correct them within the time period agreed to with agency.

Through the PPP Law authority is granted to the contracting federal agency or entity to intervene in any stage of development of the project when in its judgment the developer violates its obligations, for causes attributable to the latter, and puts the development of the project in serious jeopardy, for which the contracting entity or agency shall notify the developer of the cause of the intervention and a time period for remedying it which may not be less than twenty business days from the day following the date on which the notice takes effect, and if it does not do so, the agency or entity may proceed to the intervention, without prejudice of the sanctions and liability that may be incurred by the developer.


Termination of the Public Private Partnership

As already mentioned, the PPP Contract must establish the causes for its early termination. Furthermore, the PPP Contract may be terminated when there are reasons of general interest or when for justified causes the need to require the goods or services originally contracted is extinguished, and it is demonstrated that to continue complying with the contracted obligations would cause damage or harm to the State. In all cases, the early termination of a PPP Contract must be upheld by a decision of the contracting entity or agency that specifies the justified reasons and causes for it.

If the early termination occurs for causes not attributable to the developer, it will have the right to request the reimbursement of the expenses and investments it demonstrates to have made that are unrecoverable, pending amortization, which must be indispensable and directly related to the project. The amount of the reimbursement will be calculated according to the terms and conditions agreed to in the PPP Contract, and therefore it is extremely important to establish such procedure clearly and precisely therein. If the early termination arises from a situation attributable to the developer, it will not be entitled to any reimbursement.

With respect to the goods involved in the development of the project, the Regulation establishes the following rules when the termination of the PPP Contract is appropriate:

(i) The ownership of the goods subject to the General National Assets Law will revert to the contracting federal agency or entity, or may be transferred to the public law person it indicates.

(ii) The contracting federal agency or entity, directly or through the public law person it indicates, will acquire the necessary and indispensable goods of the project that have been contributed by the developer or by any other person. These acquisitions will be onerous or gratuitous, as agreed in the PPP Contract and its financing regime, and

(iii) The contracting federal agency or entity will have the right of the option to buy, directly or through the public right person it indicates, the other goods not included in section (ii) above, that the developer had been using in the project.

Infractions and Sanctions

The PPP Law grants powers to the Civil Service to temporarily prohibit from participation in contracting procedures or execution of contracts regulated by the PPP Law, the Law of Public Sector Acquisitions, Leases and Services, and the Public Works and Related Services Law, persons that fall under any of the premises described in its article 130.

In view of the above, the Civil Service as well as the internal control bodies of the agencies, may verify at any time that the award procedures and the prior acts for carrying out the projects are done as established in the PPP Law the Regulation and other applicable provisions, and to carry out the audits, visits and inspections they consider relevant.

If the Civil Service finds elements that support the presumed infraction and possible liability of the infringer, the administrative procedure to impose sanctions established in the PPP Law will be initiated (prohibition of no less than three months and no greater than five years), which will be carried out according to the Federal Administrative Procedures Law.

Disputes

In the case of technical or economic disputes, the parties of the PPP Contract will try to resolve them by mutual agreement and according to the principle of good faith.

If the parties do not reach an agreement in the agreed time period or any extension thereof, they will submit the dispute to a committee composed of three experts in the matter in question, one designated by each party and the third by those two, who have the knowledge, capacity and technical resources related to the disputes to settle, according to the requirements stipulated in the PPP Contract regarding its members.

If the experts designated by the parties do not reach an agreement with respect to the designation of the third member, the terms of article 140 of the Regulation will be followed.

Disputes that arise regarding the interpretation or application of the PPP Contract will be resolved by the federal courts only in the cases in which an arbitral clause, or alternative dispute resolution, has not been agreed to, or they are not applicable.

Conciliation

If the purpose of the PPP Contract consists of one of the works that can be considered public works under the Public Works and Related Services Law, the disputes that arise between the parties shall be resolved according to the conciliation procedure established by that law and its respective regulation.

In the other cases, that is when the purpose of the PPP Contract does not consist of a public work, the conciliation procedures established in the Law of Public Sector Acquisitions, Leases and Services and its respective regulation shall be followed.

Arbitral Procedure

The Parties may agree in the PPP Contract that disputes be resolved through an arbitral proceeding; in particular, they may do so in the following causes of rescission: (i) The cancellation, abandonment or delay in the execution of the work, in the circumstances established in the contract. (ii) Not providing the contracted services, their provision in terms different from those agreed to, or their suspension for more than seven consecutive calendar days without a justified cause. Notwithstanding the above, both the PPP Law and the Regulation establish some limitations on any arbitral procedure that is agreed to, which include: (i) The acts of authority considered as such for purposes of the Amparo Law may not be resolved under an arbitral clause. (ii) The revocation of concessions and authorizations in general, or acts of authority, may not be subjected to arbitration. (iii) The resolution of disputes related to the legal validity of any administrative act may only be settled by the federal courts. (iv) The public officer authorized to convene an arbitral proceeding must at least have the level of General Director or the equivalent in the agencies, or its equivalent in the entities.

Guarantees in favor of the Agencies and Entities

The guarantees that developers must grant in favor of a federal agency or entity by virtue of a PPP Contract will be granted in any of the following forms: a) Money deposit constituted through deposit certificate or bill issued by an authorized credit institution. b) Bail granted by an authorized institution. c) Money deposit constituted before the Treasury or the treasurer of the entity, as applicable.

Sincerely, Sámano Abogados, S.C.



1 view0 comments

Comentarios


bottom of page