A guidebook on public-private partnership in infrastructure

B. DISPUTE RESOLUTION 
The legal basis for the settlement of disputes is an important consideration in 
the implementation of PPP projects. Private parties (concessionaire, financiers and 
contractors) feel encouraged to participate in PPP projects when they have the 
confidence that the disputes between the contracting authority and other 
governmental agencies and the concessionaire, or between the concessionaire and 
other parties (for example, the users or customers of the facility) can be resolved 
fairly and efficiently. Disputes may arise in all phases of a PPP project, namely, 
construction, operation, and final handover to the government.
The agreed methods of dispute resolution between the parties are generally 
mentioned in the contract agreement as allowed under the legal framework of 
dispute resolution in the country.
The legal framework for dispute resolution may be embodied in a number of 
legal instruments and relevant rules and procedures of the country. The legal 
instruments may include the PPP/private contract law, company law, tax law, 
competition law, consumer protection law, insolvency law, infrastructure sector laws, 
property law, foreign investment law, intellectual property law, environmental law, 

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A Guidebook on Public-Private Partnership in Infrastructure 
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public procurement law or rules, acquisition or appropriation law, and various other 
laws. The commonly used methods for dispute resolution include: 
• Facilitated negotiation. A facilitator is appointed by the parties in the 
contract. The facilitator aids the parties in resolving any dispute through 
negotiation. He/She does not provide any opinion but assists the parties in 
analyzing the merits of their cases.
• Conciliation and mediation. A person or a panel appointed by the parties 
provides independent and impartial assistance to them in resolving a 
dispute. This process may end either in the settlement of the dispute 
agreed by the parties or it may end unsuccessfully. 
• Non-binding expert appraisal. A neutral third party provides an appraisal 
on the merits of the cases of parties in dispute and also suggests an 
outcome for their consideration. The process is usually followed by 
negotiations between parties. 
• Review of technical disputes by independent experts. This method is often 
used for the settlement of technical disputes between parties in contract. 
To review disagreements, the contesting parties refer such matters to an 
independent expert appointed by them. The decision of the independent 
expert may either be binding or non-binding, as agreed in the contract 
agreement.
• Arbitration. In this process, the matter in dispute is referred to a board or 
tribunal of arbitrators appointed by the parties according to an agreed 
procedure set forth in the contract agreement. Such arbitration is held in 
accordance with the rules and at a place as agreed in the contract 
agreement. Any award made by the arbitral board or tribunal is binding on 
parties.
• Adjudication by Regulatory Authority. If a statutory Regulatory Authority 
exists with powers to adjudicate upon disputes between the contracting 
government agency and the concessionaire, matters of dispute may be 
referred to the Regulatory Authority. An appellate tribunal or a court of law 
as defined in the contract agreement can consider an appeal against such 
adjudication.
• Legal proceedings. In accordance with the legal provisions, parties in 
dispute may go to the domestic judiciary for the settlement of their 
disputes. 
It is important that the settlement mechanisms considered in the contract 
agreement are in line with the international practices and requirements, particularly 
when large-scale investments from the foreign private sector are expected.
Generally, the contract agreement(s) specifies what methods of dispute 
resolution would be followed to settle any dispute arising between the parties and the 
rules and procedures to be followed for that. The United Nations Commission on 
International Trade Law (UNCITRAL) has prepared a Legislative Guide on Privately 

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A Guidebook on Public-Private Partnership in Infrastructure
 
 

Financed Infrastructure Projects.

35 
The UNCITRAL Guide provides clauses related to 
dispute resolution that may be considered for inclusion in the contract document. 
35.
Available at . 

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