The list of events which can lead to termination will vary from one PPP Contract to another and should be tailored to take account of the specific risks and obligations involved in the relevant PPP Project.
| CIVIL AND COMMON LAW DIFFERENCES Each Party should make sure it understands how underlying law may affect certain termination scenarios under the PPP Contract. For instance, in some jurisdictions (more typically civil law) the Contracting Authority may be entitled to terminate the PPP Contract for convenience or on the grounds of public interest even without an express contractual right. Similarly, the Private Partner may be expected to rely on its rights at general law to terminate for Contracting Authority default instead of having an express right (as has been the case in some PPP Projects in civil law France32 and is also usual in common law Australia). |
Early termination events which may be expected to lead to termination compensation include:36
(a) Private Partner default termination - by the Contracting Authority where the Private Partner fails to comply with its material obligations;
(b) Voluntary termination - by the Contracting Authority at its discretion for convenience or for public policy reasons (also known as termination for public policy);
(c) Contracting Authority default termination - by the Private Partner where the Contracting Authority fails to comply with its material obligations (which are primarily payment obligations if under the availability payment model); and
(d) Prolonged Force Majeure, MAGA or Change in Law - by either Party where no solution has been agreed to continue with the PPP Contract. See Section 1, Force Majeure, Section 2, Material Adverse Government Action and Section 3, Change in Law.
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36 In France, where the PPP Contract is silent, the Private Partner would typically be expected to apply to court for the right to terminate the PPP Contract.