Compensation Events may occur in either the design and construction phase of the project or the operating phase of the project. There may be different Compensation Events in the design and construction phase compared with the operating phase.
The specific Compensation Events will differ for project specific reasons, but will generally fall within the following categories of events:
(a) a breach by government of any Project Contracts;
(b) during the design and construction phase only, any act or omission of government or a relevant government related party60 (but only in their capacity as a contracting party),61 other than any such act or omission which is authorised, permitted or otherwise in accordance with a project document;
(c) during the operating phase, loss directly caused by the malicious, unlawful or reckless act of government employees or other government-related parties (but only in their capacity as a contracting party, and only to the extent that the private party is not required to guard against this through its design solution and Contracted Services);62
(d) delay in any works to be carried out by government which are required to allow for the relocation or decanting of equipment, staff or users of the facility (e.g. students, patients etc);
(e)
(f)
(g) the modification, withdrawal, revocation or replacement under environmental and planning legislation of a government obtained development approval, other than due to an application for a further development approval by, or any other action or inaction of, the private party or its sub-contractors, or as a result of a private party Modification proposal;
(h)
(i) compensable Changes in Law;64
(j) a government, or court, direction to suspend or cease all or any part of the works because of a native title claim or application or as a result of the discovery of an artefact (provided the cessation order does not result from a private party breach of its obligations in dealing with discovered artefacts and subject to sections 5.1.1(d) and 5.2.3 of Chapter 5 (Native title and artefacts));
(k) industrial action but only to the extent that it directly affects the project and the private party can demonstrate that the action results directly from an act or omission of the government contracting party, or any of its employees at the facility/site, excluding industrial action caused or motivated by opposition to PPPs; and
(l) government-initiated Modifications65
(m)
Additional events should only be adopted where this is warranted by the unique features of the project.
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60 What constitutes a government related party will depend on the nature of the project, although it is intended to capture government employees, consultants and other parties at the site which are appointed by government or whom government effectively controls (for example, as a result of delivering core services).
61 Government's role as contracting party is separate from its role as being responsible for the general administration of government affairs. Accordingly, these Compensation Events only capture acts or omissions (including breaches) of government in its capacity as a contracting party, not acts and omissions carried out in its role as general administrator of government affairs. Please also refer to section 1.6.4 of Chapter 1 (Contractual issues).
62 Although government may in theory have a relatively greater level of control than the private party over actions of government-related parties, the private party is expected to be able to manage damage (by any party), other than deliberate damage, through appropriate facility design and security services. Government expects the private party to deliver a solution which accommodates risks associated with the delivery of core services and the government-related parties delivering or using these core services.
64 Compensation for compensable Changes in Law will be dealt with in accordance with the principles set out in Chapter 20 (Change in Law).
65 Compensation for government-initiated Modifications will be dealt with in accordance with the principles set out in Chapter 19 (Modifications).