Public-private partnerships (PPPs) are recognized as a valuable means of procuring and delivering infrastructure and public services through the implementation of contractual, long-term agreements between a public entity and a private counterpart. They bring significant benefits not only to the public sector, through focusing on the provision of public services in an efficient manner, but also to the private sector, by allowing it to expand into new markets.
There is a legal framework in Greece for the establishment of PPPs, which was ratified by the Greek Parliament in September 2005 (Law 3389/2005, the "PPP Law"). Before this law was introduced, construction projects in Greece were realized through concession agreements, which had to be ratified by the Greek Parliament. This process caused considerable delays in implementing these agreements. The PPP Law abolishes the requirement of parliamentary ratification and instead provides for two specialized bodies to implement PPP contracts — the Inter-Ministerial PPP Committee, which controls and coordinates PPP projects and awards the concessions, and the PPP Secretariat, which provides assistance in the administration of PPP projects.
The PPP Law also codifies certain concepts related to PPPs, regulates the implementation of PPP projects, describes the contract award procedures and determines the public entities that can implement these contracts. The law addresses a number of risk allocation issues that had previously caused difficulties in financing projects in Greece. To protect the private sector's interests, the PPP Law also provides incentives that offer substantial security to entrepreneurs engaged in long-term contracts with public authorities. It also sets out the minimum content of a PPP contract and deals with other issues such as taxation, the granting of permits and licenses, protection of the environment, treatment of archaeological finds and expropriation. Legal issues related to these partnerships, such as the transfer of claims, validity of security granted to banks, bankruptcy and resolution of disputes, are clearly defined.
The PPP Law specifies that Greek law will apply in the resolution of disputes arising out of the interpretation, application or validity of partnership contracts. Regarding the resolution of disputes, Article 31(1) provides that "Any dispute arising with regard to the application, interpretation or execution of the Partnership Agreements ... shall be settled by arbitration." This is in deviation from the provisions in force relating to arbitration involving the Greek State, which provide that it can enter into an arbitration agreement only following the favourable opinion of the plenary session of the Legal Council of the State and decrees issued by the Minister of Finance and the competent minister. The PPP Law provides that the partnership contracts must set out the rules for the appointment of arbitrators, the applicable arbitral rules, the place of arbitration (which does not have to be in Greece), the fees of the arbitral tribunal and the language of the arbitration. Article 31(2) goes on to note that "The arbitral decision shall be final and irrevocable with no right of appeal and will be enforceable directly and the parties must comply immediately with its terms."
Since its ratification in September 2005, the public sector's response to the PPP Law has been very positive. More than 28 projects, worth a total of €2.4 billion, have been submitted for evaluation to the PPP Secretariat by public entities. Since March 2007, the Inter-Ministerial PPP Committee has approved 16 projects that fall under the sectors of education, public administration buildings, justice and culture. Two of these projects have already gone to tender and a number of further tenders will be launched in the first half of 2008.
The ratification of the PPP Law constitutes a significant system reform for construction of public infrastructure in Greece. It has introduced a stable legal framework that will hopefully continue to promote and facilitate the wider implementation and development of PPPs.