From 2021, What Are the Rights and Obligations under the PPP Project Contract?

From 2021, what are the rights and obligations under PPP project contracts? (illustrative photo)

The rights and obligations under PPP project contracts are stipulated in the Law on Investment in the Form of Public-Private Partnership 2020 as follows:

1. The first point to note is the rights of the lender, which include the following:

- During the execution of the PPP project contract, the rights of the lender are exercised as agreed by the parties in the credit agreement, the PPP project contract, and relevant legal regulations.- In case the PPP project contract is terminated prematurely requiring the selection of a substitute investor, the lender will cooperate with the contract-signing agency to select the substitute investor as stipulated in point b clause 1 Article 39 of this Law. This must be agreed upon in writing by the contract-signing agency, the lender, and the investor or PPP project enterprise.

2. The second point, which is equally important, is the regulations on the transfer of shares, capital contributions, rights, and obligations under the PPP project contract:

- In the case of a PPP project enterprise established by consortium investors, members have the right to transfer shares and capital contributions to each other but must ensure the minimum ownership percentage of each member as stipulated in point a clause 2 Article 41 of this Law.- Investors have the right to transfer shares and capital contributions to other investors after completing the construction phase for projects with construction components or after moving to the operation phase for projects without construction components.- The transfer stipulated in clauses 1 and 2 of this Article must meet the following requirements:

- It must not change the execution of the signed PPP project contract;- It must comply with relevant legal regulations;- It must be approved by the contract-signing agency;- It must have the consent of the lender and consortium members in the case of consortium investors.

- The transferee must meet the following requirements:

- They must not be restricted from receiving the transfer according to legal regulations;- They must have the financial and managerial capability to execute the PPP project contract and related agreements;- They must commit to continue fulfilling the rights and obligations of the transferor as stipulated in the PPP project contract and related agreements.

- If the transfer stipulated in clauses 1 and 2 of this Article changes the content of the enterprise registration, the PPP project enterprise must comply with relevant regulations of the Enterprise Law.

3. Vietnamese law governs the PPP project contract as follows:

- Vietnamese law will govern within the scope of: the PPP project contract and its appendices, and other related documents signed between Vietnamese state agencies and investors or PPP project enterprises.- For issues not regulated by Vietnamese law, the parties may specifically agree within the PPP contract as long as it does not contravene the fundamental principles of Vietnamese law.

More details can be found in Law on Investment in the Form of Public-Private Partnership 2020, effective January 1, 2021.

Thanh Thao

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