27.1.1  Circumstances

Government may assume all or some of the service delivery obligations of the private party for a period of time where:

(a)  a situation arises which in the bona fide opinion of government:

(i)  is likely to be a serious risk to the environment, a risk to the health or safety of the users of the facility or other members of the public, a risk to the structural integrity or safety of any parts of the works or the facility, or a serious risk of material damage to public or private property or other specified emergency;

(ii)  in some jurisdictions, causes material disruption to the safe and secure performance of the construction works or the provision of the Contracted Services or operation of the facility;

(iii)  in some jurisdictions, will require the provision of the Contracted Services or alternate services materially greater than that required in the Services Specifications; or

(iv)  requires government to take immediate action to discharge or exercise a statutory duty or power.  Where the service being provided is an essential service, government may be given Step-in Rights to guarantee the continuity of that essential service;  

(b)  in some jurisdictions, there has been an Event of Default except where the private party is complying with an approved cure plan and diligently pursuing a remedy; or

(c)  in some jurisdictions there has been a Default Termination Event.132

(d)  While government is entitled to exercise its Step-in Rights during any period of suspension following the occurrence of a Force Majeure Termination Event, if any of paragraphs (a) to (c) apply, it is not intended that any government emergency step-in regime cut across the force majeure regime (for example, operation of termination rights for force majeure).

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132  Government's step-in rights in sections 27.1.1(b) and (c) will be subject to funders' step-in rights under the funders' direct agreement.