Buenos Aires Cityscape, Capital City of Argentina

A recent legal framework in the Argentine Republic allows for domestic or international arbitration and dispute boards for public-private partnerships, and is expected to increase its use in such type of projects, especially for infrastructure.

On November 30, 2016, Law no. 27.328 (“Law”) on Public-Private Partnership Contracts (“PPP Contracts”) was published in the Official Gazette. The Law now broadly allows for PPP Contracts between the National Government and private parties to agree for domestic or international arbitration or dispute boards to decide on technical issues related to infrastructure projects.

In such regard, the Law allows for international arbitration, but requires the Executive Power to approve, and report to the National Congress on, any international arbitration clauses that may be agreed upon. Also, in case domestic arbitration is agreed upon, the Law states that only clarification and nullification challenges may be lodged against domestic tribunals’ awards, according to the Civil and Commercial Code provisions.

Regarding dispute boards permitted under the Law, its Regulatory Decree 118/2017 allows for their use in any dispute of technical, interpretative or patrimonial nature arising during the execution or termination of the PPP Contract, including the review of penalties, must be subject to the decision of the dispute board. Agreeing to dispute boards exempts private parties from having to make an administrative claim prior to submitting a dispute to the dispute board.

Also, unless otherwise established, the dispute board shall be composed of five members, who shall have a specialization in line with the subject involved and shall stay in their functions during the execution term of the PPP Contract. Such members shall be selected by the parties among those university professionals in engineering, economics and legal sciences included in the list of professionals prepared by the competent PPP authority.

Further, according to the regulations, dispute boards must issue their decisions by means of recommendations. Such recommendations shall be binding in case none of the parties have stated its disagreement within the term established for such purpose in the bid specifications or in the PPP Contract. In case of disagreement with the recommendation, the dispute may be submitted to the competent judicial court or the arbitration tribunal. If the recommendation becomes final, the winning party may request a judicial court or arbitral tribunal to order the breaching party to comply with it.

As it can be inferred from this overview, these recent legal changes are likely to promote arbitration and dispute boards as alternative dispute resolution mechanisms in PPP (and especially infrastructure) projects. Moreover, the implementation of the Law will likely ease and promote an adequate institutional framework for private investment in infrastructure works and services that are necessary for the development of a sustainable economic activity in Argentina.