1. Process for Termination

The process pertaining to termination may be initiated by either party to the agreement; the private partner or by the public entity. When an event that is grounds for termination occurs during the agreement period, the affected party would need to serve the other party with a show cause notice. The show cause notice would include the following contents:

a. The affected party would intend to know from the other party as to the reasons that led to the event, which is grounds for termination

b. In light of the event which is ground for termination; why should the agreement between the parties not be terminated

c. The notice would need to provide the time period within which the other party must respond/ show cause.

The other party would then respond to the show cause notice issued by the affected party within the stipulated time period failing which the affected party could issue a termination notice to the other party.

In the event the other party responds to the show cause notice within the specified time period then; such a response would include:

a. Reasons that led to non-performance of obligations or events that are ground for termination

b. Willingness to rectify/ cure the defect/ event/ damage

c. Time period required to cure/ remedy the damage

d. Support/ assistance required for the cure/ remedy

The affected party must in the meantime, serve notice to lenders' of the project communicating their intention to terminate the agreement with the other party. Lenders are communicated as the Lenders would need to initiate the process pertaining to their right of substitution in accordance with the Substitution Agreement; in the event of private partner's default. Moreover, the Lenders also have an interest in the project, in the event of public entity's event of default.

The affected party on the basis of the response received from the other party may either choose to issue a termination notice, or choose to provide the other party with time period to cure/ remedy the defect/ damage. The matter may be also referred for a dispute resolution system/ set up such as mediation, arbitration, etc.

The diagram given below sets out a typical process involved in termination of agreements: