Examining common types of PPP project disputes

Following three years of development, the public-private partnership (PPP) model has become the mainstream financing model in China’s infrastructure and public service sector. The PPP is driving the transformation and upgrading of Chinese enterprises and the reform of China’s fiscal budgeting system, and is spurring the improvement of the service and business of all sorts of consulting firms and dispute resolution institutions. If one takes a look at China and the countries strung along the Belt and Road, be it highways, railroads, subways, ports or power stations, or be it heating, telecoms, real property, industrial parks, etc., none of them has been left untouched by the PPP model.

However, with deepening co-operation in PPP projects and with parties moving from the infatuation stage to the nitty-gritty of married life, all manner of disputes are also cropping up. The authors have summarized a few relatively central dispute types, the significance of which can guard against and respond to future possible disputes.

Disputes due to the conversion of existing build-transfer (BT) and other such projects to the PPP model. Every region has certain existing projects that the government would wish to convert to the PPP model and continue in that form. However, the conversion inevitably involves such issues as an adjustment of the project scope, a change in payment method, and cancellation of the provided security. Such issues tend to give rise to disputes due to the changes in the public and private parties’ interests.

Wang Jihong is a partner and Li Xiaodan is an associate at Zhong Lun Law Firm