Local Expert: GLN Warsaw. Checklist Poland

Transcription

1 1-General Policy and Concession Legal Framework POLAND Core Area Summary of PFI Guide recommendations 1 / Best Practice Rating Assessment The existence of a policy framework for public private partnerships 16/24 Medium Compliance ("PPPs") and the existence of a specific concession law or of a 0,67 comprehensive set of laws regulating concessions and allowing easy access to a clear and stable legal environment for PPPs. 2-Definitions and Scope of the Concession Law 3-Selection of the Concessionaire 4-Project Agreement 5-Security and Support Issues 6-Settlement of Disputes and Applicable Laws The existence of a clear definition of the boundaries and scope of application of the concession legal framework (definition of "concession", sectors concerned, competent authorities, eligible concessionaires) limiting the risk of a challenge to the validity of concession contracts irrespective of the name given to the act. Mandatory application of a fair and transparent selection process. Limited exceptions allowing direct negotiations, competitive rules for unsolicited proposals and the possibility to challenge illegal awards. Flexibility with respect to the content of the provisions of concession agreements which should allow a proper allocation of risks without unnecessary or unrealistic/not bankable/compulsory requirements/interferences from the contracting authority (obligations, tariff, termination, compensation). Availability of reliable security instruments on the assets and cash-flow of the concessionaire in favour of lenders including "step-in" rights and the possibility of government financial support or guarantee of the contracting authority s proper performance of its obligations. Possibility to obtain proper sanction for breach under the applicable law through international arbitration and enforcement of arbitral awards. 15/36 O,42 34/45 0,76 13/27 0,48 4/18 0,22 9/15 0,6 Low Compliance High Compliance Low Compliance Very Low Compliance Medium Compliance OVERALL RATING 53% Medium Compliance 1 UNCITRAL Legislative Guide on Privately Financed Infrastructure Projects, 2001 (hereinafter the "PFI Guide") Local Expert: GLN Warsaw

2 2. OVERALL ASSESSMENT: A general PPP Law was introduced in Poland in October The PPP Law is largely conforms with internationally accepted principles of concession laws fore some core areas with however some serious exception which could jeopardize the success of PPP projects in the country. Regrettably, there are no government institutions specialising in the promotion and development of PPP in Poland. There is no explicit PPP policy either except the law itself. The situation is quite bad with respect to security issues necessary for financing as well as with respect to the uncertainty prevailing regarding the possibility of application of the international arbitration aggravated by the absence of ratification of the ICSID Convention which could have imposed the validity of an international arbitration provision backed on the Washington International Convention As a result of lack of institutional government support for PPP projects and the relative novelty of the PPP regulations in Poland, they have not yet been applied in practice. It can reasonably be expected that the situation will change in the next few years since many large infrastructure projects (stadiums and toll motorways) are to be developed in connection with the partial hosting of EURO 2012 football cup in Poland.

3 3. Key for assessment of Each Question Yes 3 points Yes, with reservations 2 points No, with limited compliance / redeeming 1 point features No 0 point N/A Not applicable 0 point Key for Assessment of Each Core Area and for Overall Assessment > 90% Very High Compliance 3+1 points 70%-89% High Compliance 3 points 50%-69% Medium Compliance 2 points 30%-49% Low Compliance 1 point < 30% Very low Compliance 0 point

4 4. 1. GENERAL POLICY AND CONCESSION FRAMEWORK 1. Is there a general/national policy framework (explicit or implicit) for PPPs in infrastructure or public services? PPPs are understood in this context as different forms of cooperation between public authorities and the world of business which aim to ensure the funding, construction, renovation, management or maintenance of infrastructure or the provision of a public service. PPP Law A new Act on Public-Private Partnership dated 28 July 2005 (the PPP Law ) has been adopted in Poland in order to stimulate the development of PPP projects. The PPP Law can be considered an explicit national policy framework for PPPs in infrastructure and public services it is generally descriptive of the standard PPP process, introduces few new legal notions and is not very well harmonised with the other laws which may apply in the scope of concessions/ppp. 2. If the answer to 1 is yes, is PPPs policy framework distinct from that for privatisation? Privatisation Law The PPP framework is distinct from the privatisation framework, which is regulated by the Act dated 30 August 1996 on Commercialisation and Privatisation (the Privatisation Law ).

5 5. 3. If the answer to 1. is yes, is such policy framework supported by: 3.1. certain policy framework documents? 3.2. certain institutions (a "task force" or other institution specialised in the promotion and development of PPPs)? For information, are there: reference to PPPs in the Constitution? sector-specific policy frameworks dealing with PPPs? municipal policy frameworks dealing with PPPs? If the Country's legal or institutional framework contains undesirable restrictions on PPPs in infrastructure or public services, please mention these. Article 28 of the PPP Law obliges the Minister for Economy to prepare and publish standard PPP contracts and documentation. However, the documents that can be found on Ministry s website are mostly general descriptions of what should be included in a PPP agreement, sometimes containing sample contractual clauses. Regrettably, there are no government institutions specialising in the promotion and development of PPP in Poland. There is no explicit reference to PPP in the Constitution.

6 6. 4. Does the country have a concessions or a PPPs law (the "Law") or if the answer is no, do the Constitution or other general laws (ex: the Civil Code, sectorial law) recognise the basic principles of concessions and regulate the granting of concessions in such a way that concessions are legally possible in the country? [For the purpose of this questionnaire, the set of rules applicable to concessions in the absence of a specific concession law will also be referred to as the Law] For information, is a new concessions/ppp law or amendments to the existing Law being prepared? PPP Law Economic Freedom Law, Article 46. Poland has a general PPP law (see question 1 above). Granting concessions is possible. Polish law also contains many provisions that regulate the awarding of concessions, understood as government authorisations required for exercising the economic activity in a regulated sector such as the Act dated 2 July 2004 on the Freedom of Economic Activity (the Economic Freedom Law ). Pursuant to the Economic Freedom Law, such concessions are required for: Prospecting for or surveying mineral deposits, extracting minerals from deposits, tankless storage of substances, and storing waste in rock formations, including in underground mining excavations; Manufacturing and trading in explosives, arms and ammunition, and products and technology serving military or police purposes; Manufacturing, processing, storage, transmission, distribution and trading in fuel and energy; Protection of persons and property; Air carriage; and Broadcasting radio and TV programmes. The introduction of concessions in new sectors requires amendments to the Act on Economic Freedom Law.

7 7. 5. If the country has a Public Procurement Law, is it clear to what extent the Public Procurement Law applies or not to the granting of concessions? For information: is the application of the Public Procurement Law specifically excluded? does it apply for certain types of concessions only? is it applicable to the selection of the PPP Law, Article 14 Public In addition, the Act dated 20 December 1996 on Communal Administration (the Communal Administration Law ) provides that local authorities may award the performance of local public tasks (infrastructure and local utility services) on a PPP basis under the general rules of law, subject to restrictions resulting from public finance and public procurement laws (...). Local authorities may also create or hold shares in limited liability or joint stock companies. A draft new PPP Law was proposed by the government in 2007 and was introduced into the legislative process in Parliament. However, due to the 2007 parliamentary elections, the draft was discontinued. The PPP Law provides that the provisions of the Law dated 29 January 2004 on Public Procurement ( Public Procurement Law ) shall apply respectively to PPP contracts and to the selection of the concessionaire ( private partner ). Therefore, the PPP Law is definitely applicable to the selection of concessionaire and should, in principle, apply to all contracts to be entered into by the concessionaire. It should also apply to all types of concessions although it has not yet been tested in practice, and sector-specific laws may have an influence here as well. In addition, the Public Procurement Law introduces

8 8. concessionaire? is it applicable to all or some sub-contracts to be entered into by the concessionaire? Procurement Law, Articles the concept of a concession for construction works, (which is not a concession within the meaning of the Economic Freedom Law, but a separate legal institution which can be used in PPP). 6. If the country has sector-specific laws regulating the granting of concessions in specific sectors, is it clear which law is applicable to a particular sector and/or infrastructure and/or services? Toll Motorways Law, Article 63 EURO 2012 Law, Article 18 Poland has few sector-specific laws regulating the granting of concessions in specific sectors: The Act dated 27 October 1994 on Toll Motorways and National Road Fund (the Toll Motorways Law ) contains regulations that enable the use of the PPP (BOT in particular) formula in the construction of toll motorways; The Act dated 7 September 2007 on the Preparation of the Final UEFA EURO 2012 Tournament (the EURO 2012 Law ) contains th regulations for the use of PPP in the construction of stadiums and EURO 2012 related sports facilities. In our opinion, the scope of application of these laws is fairly clear. In addition, Poland also has sector-specific laws regulating the awarding of concessions (permits) in the understanding of the Economic Freedom Law: Act dated 4 February 1994 Geological and Mining Law; Act dated 22 June 2001 the Law on the Pursuit of Economic Activity in the Fields of Manufacturing and Trading in Explosives, Arms and Ammunition and Products and Technology

9 9. Serving Military or Police Purposes; Act dated 4 October 1997 the Energy Law; Act dated 22 August 1997 the Law on the Protection of Persons and Property; Act dated 3 July 2002 the Aviation Law; and Act dated 29 December 1992 the Law on Radio and Television. 7. If the country has a "local public services" law (i.e. law regulating basic legal framework for municipalities using PPPs for the construction of "local infrastructure" and/or the provision of "local utility" services) is it clear which law is applicable to a particular infrastructure and/or services? See the answer to question 4 above. The Public Procurement Law and the public finance laws apply to local public services regulated by the Communal Administration Law; though it is unclear whether the PPP Law applies to local public services.

10 DEFINITIONS AND SCOPE OF THE CONCESSION LAW 2.1 Concession definition 2 8. Does the Law define one or several term(s) (ie: "PPP", "concession", "BOT", others) for the arrangements to be regulated by the Law which specify the limits of application of the Law? For information, please provide the given definition, if any. (Irrespective of the name given in the Law the word PPP Law, Articles 1-4 The PPP Law defines the following terms: PPP ( cooperation of a public entity and private partner for remuneration, on the basis of a contract, serving a public purpose, which can only be used if it is more beneficial for the public entity than other forms of cooperation ); Private Partner, Public Entity, Project (definitions omitted as not very important). 2 For further information on the concession definition please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendation 3 and Commission Interpretative Communication on Concessions Under Community Law dated 12 April 2000; together with additional EU major documents/decision /recommendation on concessions including Directives 2004/18/EC and 2004/17 EC of 31 March 2004; Green Paper on Public-Private Partnerships and Community Law on Public Contracts and Concessions dated 30 April 2004; Report on the public consultation on the Green Paper (SEC(2005) 629- Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Public-Private Partnerships and Community Law on Public Procurement and Concessions (Brussels, COM(2005) 569) European Parliament resolution on public-private partnerships and Community law on public procurement and concessions (2006/2043(INI))

11 11. concession will be used for all types of defined agreements for purposes of this questionnaire) 9. Does the Law provide that it applies to all contracts entering into the definition of concession irrespective of the name given to such contract (concession, licence, usufruct right, lease, etc.)? 10. Does the Law make a clear distinction between concessions and public procurement contracts (i.e.: public works, supply or services) whereby the distinguishing criterion is the transfer of risks inherent to the exploitation? 11. Does the Law make a clear distinction between concession/ppps and licence (i.e. an authorisation to operate granted automatically by a public authority when certain criteria are met)? Please note that the Public Procurement Law introduces the concept of a concession for construction works, where the word concessionaire is used, but not defined. The PPP law does not explicitly state that it applies to all contracts irrespective of their name. However, this conclusion can be inferred from through the construction of the PPP Law, and such a rule was stated in the travaux préparatoires. The PPP Law does not make a clear distinction between concessions and public procurement contracts based on the transfer of risk. However, the PPP Law does contain many provisions relative to the transfer of risk in the project agreement, while the Public Procurement Law doesn t. The PPP Law does not make a clear distinction between concessions and licences ( concessions in the understanding of the Economic Freedom Law). However, these legal institutions are regulated by separate laws and confusion is very unlikely.

12 Application of the Law 12. Does the Law provide that it prevails over any sector-specific law or other laws dealing with concession? The status of the PPP Law is not defined in the law itself. However, as the PPP Law is of general application, sector-specific PPP Laws should prevail over its provisions. 2.3 Entities involved Public Authorities 13. Does the Law identify (or allow identification by reference to other laws or regulations) the public authorities that are empowered to award concessions and enter into project agreements ("Contracting Authority")? PPP Law, Article 4 Article 4 of the PPP Law contains a list of public entities that are empowered to award concessions and enter into project agreements: national authorities (government administration), If yes, for information, which of the following authorities are identified? local authorities (communes, departments and voivodships), government institutional special purpose 3 For further information on the entities involved, please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendation 2, 6 and 42.

13 national authorities (e.g.: the government, ministries, independent agencies)? provincial authorities? local or municipal authorities? public enterprises? 13. Economic Freedom Law, art.5 funds (fundusze celowe, responsible for the financing of certain public tasks), public universities and superior schools, public research & development units, independent public healthcare facilities (zakłady opieki zdrowotnej), national or local public cultural institutions, the Polish Academy of Sciences and its organisational units, state or local legal entities created on the basis of other laws in order to carry out public tasks, excluding enterprises, banks and commercial companies. In addition, the Economic Freedom Law provides, licences required to carry out economic activity ( concessions ) in a regulated sector are granted, modified and withdrawn by the competent minister or authority, for example: mining licences minister of health, minister of the economy, minister of the maritime economy, the National Atomic Energy Agency, etc. (Article 16 of the Geological and Mining Law). energy sector licences President of the Energy Regulation Office (Article 23 of the Energy Law) broadcasting licences Chairman of the National Council of Radio and Television (Broadcasting Law, Article 33).

14 14. licences for the production of arms and providing security services minister of internal affairs, air transport licences President of the Civil Aviation Office (Aviation Law, Article 164). 14. Is there a specialised agency established to take care of concessions (which consent or recommendation is necessary for the granting of a concession, ex: Concession / PPPs Agency)? 15. Is the division of power between different public authorities involved in the concessions granting process simple and coordinated (ex: one stop shop)? There is no specialised PPP authority in Poland. The PPP Law does not contain any provisions regulating such a division of power. It is also very difficult to assess it in practice, because no PPP projects on the basis of the PPP law have yet been started Concessionaire and Project Company 16. Can concession be granted to a domestic and/or foreign person or to a domestic person with a foreign shareholder / can the shareholders of the concessionaire be domestic and/or foreign persons (without discrimination)? PPP Law, Article 4 and Economic Freedom Law, Article 13 Equal treatment is provided for all entities with their registered office or place of residence in the EU and EEA Member States. For information only, can concession be granted to It is unlikely that concessions would be granted to a

15 15. public entities or to entities jointly owned by private and public entities? public entity, though this has not been tested in practice. 2.4 Concerned sectors Does the Law identify (or allow identification by reference to other law or regulations) the sectors and/or types of infrastructure and/or services in respect of which concessions may or may not be granted? 18. Do the sectors eligible for concessions correspond to a large extent to those listed below, or if not, is the list of eligible sectors an open-ended one (as opposed to being exhaustive) allowing (or at least not preventing) concessions to be granted in numerous sectors? For information: a) does it include the transportation sector? is the railway system included? The PPP Law does not identify the sectors in which concessions may be granted. We believe that this means that the list of eligible sectors is open-ended. The list of eligible sectors is generally meant to be open-ended, though, as the application of the PPP Law has not yet been tested, it is possible that in practice some restrictions may be encountered in the process. Generally speaking, all sectors listed below should be eligible for PPP. 4 For further information on the concerned sectors please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendation 3 and 4.

16 16. are rail transport services included? are ports included? are airports included? are public roads included? b) does it include the electricity sector? is the generation of electricity included? is the transmission of electricity included? is the distribution of electricity included? c) does it include the water and wastewater sector? is water production included? is water treatment included? is wastewater treatment included? is water distribution included? is wastewater collection (sewerage) included? d) does it include solid waste collection, transfer or disposal? e) does it include the oil, gas and mineral sector? f) does it include other public services such as education, health care and prisons? g) Does it include any other sectors or infrastructure (please specify)?

17 SELECTION OF THE CONCESSIONAIRE General Considerations 19. Does the Law require in principle the Contracting Authority to select a concessionaire through competitive procedures? PPP Law, Article 14 The PPP Law provides that the provisions of the Public Procurement Law shall apply respectively to PPP contracts and to the selection of the concessionaire ( private partner ). The Public Procurement Law introduces such competitive procedures. 20. Is there reference in the Law to the principles of transparency, equal treatment and proportionality. For information, please specify if a reference is made to the principle of mutual recognition. Public Procurement Law, Articles 7 and 8 See the answer to question 19 above. The provisions of the Public Procurement Law introduce the principles of transparency and equal treatment. 21. Is there a provision in the Law concerning the publication of information related to the competitive procedures in the Country media and in the international media (for large projects)? Public Procurement Law, Article 11, PPP Law, See the answer to question 19 above. Both the PPP Law and Public Procurement Law provide for the publication of information in the national (and sometimes EU) public procurement bulletins; the norms overlap. 5 For further information on the selection of the concessionaire, please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendations 14 to 39 included.

18 18. Article Are there provisions of the Law, regulations or special manual, recommendation governing in detail the selection of the concessionaire ("Regulations") (i.e.: the pre-selection of bidders, the procedure for requesting proposals, other procedure such as competitive dialogue/two stage procedure)? Public Procurement Law See the answer to question 19 above. This manual is the Public Procurement Law itself. 23. Does the Law / Regulations provide that, if the Contracting Authority rejects an applicant at the time of preselection or disqualified a bidder, it must make public the reasons for the decision (or inform the rejected bidder thereof explaining the reasons for rejection)? Public Procurement Law, Article 92, Article 96 See the answer to question 19 above and question 27 below. Please note that pursuant to Public Procurement Law, the Public Procurement Office may cancel the award proceedings at any stage without making public the reasons for the cancellation. 3.2 Award of concession 24. Does the Law / Regulations provide that all proposals are ranked solely on the basis of the evaluation criteria set forth in the pre-selection documents/ request for proposals? PPP Law, Article 15, Public Procurement Law, Article 91 Article 15 of the PPP Law sets out the main criteria of selecting the best offer the division of risks and tasks between the public and private partner, as well as the amount and maturity of payments to be made by the public partner. In addition, see the answer to question 19 above (reference to Public Procurement Law): Article 91 of the Public Procurement Law sets out the rules of evaluation based on the pre-selection criteria

19 19. (price and other criteria set out in the request for proposals). 25. Does the Law / Regulations provide that a notice of the award of the project, identifying the concessionaire and including a summary of the essential terms of the project agreement is to be published? Public Procurement Law, Article 92 See the answer to question 19 above and question 27 below. 26. Does the Law / Regulations provide that the Contracting Authority or any other public authority maintain records of key information pertaining to the selection and award proceedings? Public Procurement Law, Articles See the answer to question 19 above. The Contracting Authority has to draw up detailed public minutes (protokół) from the award proceedings and keep them for four years. It also must submit an annual report on the awarded concessions to the President of the Public Procurement Office. 27. If the answer to 26 is yes, does the Law provide that such record is accessible for public or at least to interested parties? Public Procurement Law, Article 92 See the answer to question 19 above. The Contracting Authority must inform all the entities participating in the award proceedings in detail about the choice of the winning offer, as well as about competing offers that were not selected based on the selection criteria, or were rejected in the award proceedings, and must provide detailed actual and legal grounds for such outcome of award proceedings. If the threshold for the award exceeds 10M for services and 20M for construction works, this information must also be published on the Contracting Authority s website or in its registered office.

20 Final negotiations 28. Does the Law /Regulations contain provisions regulating final negotiations (i.e. post contract award) so that transparency, equal treatment and competition are preserved? 29. Does the Law / Regulations provide that the Contracting Authority has the authority to terminate negotiations with the invited bidder when it becomes apparent that the bid will not result in an agreement and start negotiations with the second ranked candidate? PPP Law Neither the PPP Law nor the Public Procurement Law, applied mutatis mutandis include any final negotiations rules. PPP Law Neither the PPP Law nor the Public Procurement Law, applied mutatis mutandis include any final negotiations rules. 3.4 Concession Award without competitive procedure 30. According to the Law / Regulations, does the Contracting Authority have the authority to award a concession without competitive procedures only in limited exceptional circumstances such as the ones listed below? For information, which of the following conditions allowing direct negotiations are provided for? Public Procurement Law, Article 4 See the answer to question 19 above. The competitive procedures of the Public Procurement Law do not apply to the awards of concessions: below 14,000; covered by State secrecy for important reasons of the national security and national interest; Other exclusions apply but they are irrelevant in the case of PPP concessions.

21 21. when there is an urgent need for ensuring continuity of the provision of service and engaging in a competitive selection procedure would be impractical? for projects of short duration and with an anticipated initial investment value not exceeding a specified minimal amount (or with an anticipated turnover not exceeding a specified minimal amount)? reasons of national defence or national security? cases when there is only one source capable of providing the required service (e.g.: in the case of patented technology or unique know-how)? when an invitation to the pre-selection proceedings or a request for proposals has been issued but no applications or proposals were submitted or all proposals failed to meet the evaluation criteria? others (please specify)? 31. According to the Law / Regulations, is there a procedure (rules) to be respected for the award of a concession without competitive procedures? PPP Law, Article 4 Neither the PPP Law nor the Public Procurement Law, applied mutatis mutandis include any such rules. One exception is provided by Article 4 section 3f of the Public Procurement Law, stating that the law shall not apply to supplies and services being subject to Article 236 of the Treaty establishing the European Union, i.e. orders for armament, ammunition and military equipment. Decision No. 291/MON of the Minister of National Defence dated 26 July 2006 on the principles and rules of executing the contracts referring to

22 22. armament in the national defence department will apply to such concessions. The procedure set out in the Decision does not have to be competitive. 3.5 Special case of unsolicited proposals 32. Does the Law / Regulations provide for the adequate framework for the Contracting Authority to handle unsolicited proposals/private initiative concessions (proposal relating to the implementation of a concession that is not submitted in response to a request or solicitation by the Contracting Authority) that ensure transparency and equal treatment and do not distort competition? PPP Law, Article 10 The PPP Law contains very limited provisions in that respect. It explicitly states that unsolicited proposals may be submitted to public partners, but they may not be given any undue advantage in the award proceedings. 3.6 Review procedures 33. Does the Law allow the bidders who claim to have suffered or that may suffer loss or injury, to seek review of the Contracting Authority s acts or failures to act? Public Procurement Law, Articles See the answer to the question 19 above (reference to the Public Procurement Law). Indeed, the bidders enjoy an extensive array of legal claims for the review of the award including the: (i) protest to the Contracting Authority, (ii) appeal to the National Appeal Chamber (by the national Public Procurement Office), (iii) final appeal to the civil court against the decision of the

23 23. National Appeal Chamber.

24 PROJECT AGREEMENT Does the Law contain (or refer to) a model concession/ppp agreement which use is optional (for guidance only as opposed to being mandatory) or a mandatory list of provisions to be included in the agreement (the content of such provisions being left for negotiation)? PPP Law, Article 18, Article 28 Article 18 of the PPP Law contains a non-exhaustive list of issues that must be regulated in the project agreement, including the detailed division of risks, obligations of the parties, timetable, details of financing and tariffs to be charged, information on the project company (if applicable) etc. Article 28 of the PPP Law obliges the Minister of the Economy to prepare and publish standard PPP contracts and documentation see the answer to question 3 above. 4.1 Duration and extension of the project agreement 35. Does the Law provide that the concession duration should depend on the length of time taken for the amortization of the private investment and an appropriate return on the capital? PPP Law, Article 18 The law does not explicitly state that the concession duration should depend on the time required for private investment amortisation and provide an appropriate return on private capital. 6 For further information on the project agreement definition, please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendations 12 and 40 to 68 included.

25 25. For information, please provide the given duration (if any) and relevant information in the Law with respect to the conditions for extension. However, the duration of the project and the remuneration of the private partner have to be set out in the project agreement. Therefore it can be inferred that both the duration and the remuneration will be agreed by the parties in a manner providing for an appropriate return on investment (otherwise the private partner would not be interested in carrying out the PPP project). 4.2 Termination of the project agreement 36. Does the Law provide for a restrictive list of termination events (such as those listed below)? material breach by the other party; if performance is made impossible by the occurrence of circumstances beyond either party s control; PPP Law, Article 18 The PPP Law does not provide for a restrictive list of termination events. The project agreement has to set out the termination events but the Contracting Authority is not required to restrict them in any way. The issue is subject to the negotiations between the public and private partner. mutual consent.

26 Does the Law provide for (or does not prevent ) compensation of the concessionaire: in case of termination for public interest? PPP Law, Article 18 The PPP Law provides that the project agreement must provide for indemnities for the private partner, as well as for the principles of settlement between the parties, in the event of its early termination for losses incurred as a result of public authorities acts? in all cases of early termination (including in case of serious breach or failure by the concessionaire), for the non-depreciated value of assets financed by the concessionaire-? The PPP Law does not prevent the compensation of the private partner for losses incurred as a result of acts by public authorities. 4.3 Tariff setting, service standards 38. Does the Law provide for clear guidance for all aspects of interaction between the bodies that have the power to award concessions and the bodies that regulate tariffs and service standards? The PPP Law does not provide for clear guidance for all aspects of interaction between the bodies that have the power to award concessions and the bodies that regulate tariffs and service standards. 4.4 Financial responsibilities of concessionaire and Contracting Authority 39. Does the Law provide that the concessionaire PPP Law, The PPP Law defines the category of private partner

27 27. can collect tariffs or fees for the use of the facility or its services? 40. Does the Law provide the possibility for fixed and/or consumption-based payments to the concessionaire by the public authorities? Article 18 and Article 4 PPP Law, Article 18 and Article 4 remuneration, which encompasses both the possibility to collect tariffs or fees for the use of the facility or its services and the fixed or consumption based payments by the public authorities. See answer to question 39 above. 5. SECURITY AND SUPPORT ISSUES Security Interests 41. Does the Law provide for the possibility for (or not specifically prevent) a concessionaire to create security interests on the project assets and proceeds or other valuable guarantees related to the project? PPP Law, Article 18 The PPP Law does not address this issue. The only mention of security interests is set out in Article 18 of the PPP Law, which states that the project agreement must describe the rules and scope of insurance coverage for the project, as well as additional guarantees and agreements of the parties in that respect. Because the law does not prevent taking security, we presume it should be possible. 42. If the answer to 42 is yes, does the Law clearly state which types of security can be provided and includes some of the most common type of The PPP Law does not address this issue at all. In our opinion, however, obtaining most common types of guarantees in project financing should be possible 7 For further information on support and financial securities, please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendations 13, 49, 57 and 60.

28 28. guarantees in project financing (such as those listed below)? For information, can a concessionaire pledge or assign: the proceeds and receivables arising out of the concession? the assets for which it has rights of use under a project agreement;? its property? shares of the Project Company? the project agreement? or obtain other valuable guarantees (please specify)? based on the general rules of Polish law regulating security interests, since the PPP Law does not contain any restrictions in this regard. 5.2 Government support 43. Does the Law provide for the possibility (or not specifically prevent) the public authorities to provide support to the Contracting Authority and guarantee for the proper implementation of concessions by the Contracting Authority? 44. Does the Law provide for the possibility (or not specifically prevent) the public authorities to The PPP Law does not address this issue. We are inclined to believe that such additional support for the Contracting Authority by the public authorities will not be possible because of Polish and EU State aid regulations. See the answer to question 43 above.

29 29. provide financial or economic support for the implementation of concessions? 45. If the answer to 44 is yes, does the Law clearly state which public authorities may provide such support and which types of support can be provided? For information, are the following types of support provided for: interest-free or low interest public loans? loan guarantees? direct or indirect equity participation by the government in the project? subsidies for operations in non-profitable sectors? direct subsidies? pro-poor subsidies? tax and customs benefits? foreign exchange protection (convertibility and transfer guarantees)? protection from competition? See the answer to question 43 above.

30 Lenders rights 46. Does the Law provide for the possibility for the lenders to step-in or substitute a qualified new concessionaire in case of concessionaire defaults without a new tender? PPP Law, Article 27, Toll Motorways Law, Article 63e The PPP Law does not regulate the participation of lenders in PPP projects at all. No step-in rights for the lenders are mentioned. However, the substitution of the private partner if carrying out the PPP project is impossible is allowed under Article 27 of the PPP Law. The substitution, however, is subject to proceedings equivalent to initial award proceedings. Article 63e of the Toll Motorways Law provides that the Minister of Transport may assign all rights and agreements of an SPV incorporated to build and operate a toll motorway to a different SPV, subject to certain conditions (for example, the minimum share capital of each SPV has to amount to 5M). The lenders could create such SPV for step-in purposes. 6. SETTLEMENT OF DISPUTES AND APPLICABLE LAWS Settlement of disputes 8 For further information on the settlement of disputes, please refer to: PFI Guide, Consolidated legislative Recommendations, Recommendations 57, 69 and 71.

31 Does the Law permit the Contracting Authority to enter into a concession agreement that is subject to international arbitration? PPP Law, Article 26 This issue is not explicitly regulated by the PPP Law. The only rule that can be applied in this area is contained in Article 26 of the PPP Law, which reads: The law applicable to the amicable settlement of disputes arising under the project agreement shall be Polish law. It seems that the concession agreement could be subject to international arbitration. The arbitration procedure, however, will have to be governed by Polish law. 48. Has the government of the country ratified the following international conventions? the Washington Convention on the Settlement of Investment Disputes (ICSID) (1965)? The ICSID Convention has not been ratified by Poland the New York Convention on recognition and enforcement of foreign arbitral awards (1958)? The New York Convention was ratified in Applicable laws 49. Does the Law permit the Contracting Authority to enter into a concession agreement that is governed in whole or in part by foreign law or at least allow the concessionaire to enter into financing and construction agreements governed PPP Law This issue is not regulated by the PPP Law, though from the general construction of the law it seems that the concession agreement must be governed by Polish law. On the other hand, we think that the financing and construction agreements could be governed by foreign

32 32. by foreign law? 50. Has the country ratified any international convention for the protection of foreign investments? laws, since they are not subject to regulation under the PPP Law. Poland is party to many international bilateral conventions on the support and mutual protection of foreign investments. Polish law, through the implementation of acquis communautaire in this regard, provides for equal treatment of EEA investors and companies in Poland. EFECTIVENESS ASSESSMENT: HOW THE LAW WORKS IN PRACTICE: (please comment based on the previous 2006 effectiveness general assessment) Despite the existence of the general PPP framework in Poland since October 2005, the PPP Law is not taken advantage of at all; in fact, many experts in the field say it is "dead". Since its enactment, no PPP projects under the PPP Law have even been commenced. Experts indicate that the main reason for the ineffectiveness of the new law is the need to perform a complicated PPP analysis prior to entering into the concession agreement, as well as the lack of necessary know-how and experience of public partners. Unfortunately, currently there are no government initiatives to foster the development of PPP projects in Poland, such as institutional support, "path-finder" projects or drafts of full standardised contractual documentation for PPP. A new "remedy" draft PPP law was proposed in 2007 as a remedy for the existing situation, but the parliamentary works on the draft were discontinued because of the new 2007 parliamentary elections. It can reasonably be expected that the draft will resurface in 2008, or that some other institutional action will be taken to promote the development of PPP in Poland, especially in light of upcoming preparations for the Final UEFA EURO 2012 Tournament which entails the necessity to construct several large stadiums and speed up the construction of the toll motorway network. Granting simple concessions for construction works with the possibility to remunerate the concessionaire with the right to collect future flows (tariffs or fees) related to exploitation of the constructed building or utility has been possible since 2004 under the Public Procurement Law. Although it can not be regarded as real PPP, it serves a similar purpose and is often called little PPP by Polish law practitioners.

33 Finally, the Toll Motorways Law contains a separate regime for the use of PPP in toll motorway construction, which was first used during the construction of the A2 Toll Motorway. 33.