Concession Agreement Parties

The concession contract may contain provisions covering a number of different conditions and activities in the port, including environmental conditions, construction and maintenance of a fence around the site, advertising and discharge of liquids into port waters (see Box 54). Concession documents must also indicate exactly when the concession period actually begins, which can be a complex issue. Some of these provisions will come into force upon signature, such as warranties, confidentiality rules and clauses relating to applicable law and dispute resolution. In the event of a transfer of assets or construction of infrastructure under a BOT agreement, the corresponding conditions will enter into force as soon as the existing conditions are not met. Conditions precedent relate to a large extent to the provision and proper performance of certain documents necessary for the performance or support of the obligations arising from the concession contract. The main reason for the application of a full concession contract is tax. In the 1980s, many ports (especially service ports) were in a serious financial situation: state-controlled, overcrowded, poorly maintained, market-oriented and often unable to provide essential port services. This situation has occurred not only in developing countries, but also in many industrialized countries. However, in developing countries, financial resources were most often lacking to modernise port facilities and pre-finance redundancy payments for surplus staff.

Concession contracts provided a timely solution: private investors made the money available for the modernisation of port facilities and were often willing to assume certain debts to port staff. This freed up state resources for use in other sectors of the economy. For all their advantages, concession contracts have a price, including the government`s abandonment of full and complete control of port development. The specific content of a rental agreement depends heavily on the conditions of establishment and local factors. The lease agreement usually details the responsibilities and commitments assigned to each party. . . .

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