The selection of the arbitrator must be carefully carried out. PPPs are unique contracts and most arbitrators will not have had direct experience with PPP projects. It is also important to find an arbitrator who does not have a potential conflict of interest, especially if the jurisdiction is relatively small or the market is developing. There are different forums available for arbitration with international arbitration available as well as the domestic equivalents. A full discussion of the differences is beyond the scope of this reference tool.
Both parties need to be happy with the appointment of the relevant arbitrators such that the decision is seen as legitimate by all parties to avoid further issues.
| EXAMPLE Difficulties with arbitrators The Project Company on a cross-border rail project in a developed market did not favour the arbitration clauses in the PPP contract, which allowed each party to choose an arbitrator to sit on the panel. There were two Procuring Authorities and each had the right to appoint a representative to the arbitration panel. Thus the Procuring Authorities had two representatives compared to only one for the Project Company, creating an impression the process was not fair to the Project Company. A lack of trust in the mechanisms used to resolve disputes can damage the relationship between parties, as well as potentially prolong the dispute or lead to further disputes. |