The 'PPP legal framework' comprises all the laws and regulations that control whether, and how, PPPs can be implemented. Both governments and private companies looking to implement PPPs need to scrutinize the relevant laws and regulations, to identify any provisions, requirements, or constraints that may apply to PPPs. Governments embarking on PPPs may also need to adapt the existing legal framework to do so-at a minimum to ensure that PPP contracts can be entered into and clarify the legal rights and processes that apply; or in some cases to introduce PPP-specific processes and responsibilities such as those described in the following sections. Some governments do so by adapting existing laws; others introduce specific legislation.
The nature of the legal framework for PPP depends heavily on the type of legal system in place. There are two main types of legal systems in the world: common law, and civil law. In civil law systems, the operations of government are usually tightly prescribed in administrative law. This typically establishes legal rights and processes that apply to PPP contracts, as described further below. Common law systems are typically much less prescriptive, with fewer provisions implied into a contract by law. As a result, contracts in common law countries tend to be larger than in civil law countries-more importance is attached to specifying in the contract the terms governing the relationship between the parties to a contract, as the absences or ambiguities cannot so easily be remedied or resolved by operation of law.
This section briefly describes and provides examples of PPP legal frameworks: Section 2.2.1 describes the broad scope of legislation that may affect PPPs; and Section 2.2.2 focuses on PPP-specific legislation. The following resources provide overview guidance on assessing and developing the legal and regulatory framework for PPPs:
• Jeff Delmon and Victoria Delmon's Legal Guide [#60] reviews key legal issues in 17 countries
• The World Bank's PPP Infrastructure Resource Center presents the key features of common and civil law systems, and their impacts on PPP arrangements, and has useful online tools for assessing governments' legal environment for PPPs in the [#286, Legislative Frameworks]
• Annex 2 of the EPEC Guide to Guidance has an overview of legal and regulatory requirements for PPPs in countries with different legal traditions [#83]
• Farquharson et al [#95, pages 16-21] sets out 'key questions' that investors and lenders are likely to ask about the legal and regulatory framework, and some principles on developing effective frameworks
• The World Bank's online PPP Toolkit for Roads and Highways [#282, Module 4] section on 'legislative framework' describes the types of enabling law for PPPs, and lists and describes the other laws that typically impact a PPP project in highway infrastructure.