Pearl River Delta Law

Home » Arbitration » The Erosion of the Concept of Public Service in Water Concessions

The Erosion of the Concept of Public Service in Water Concessions

CUHK

This Monday I will be presenting a paper at the International Conference ‘Managing the Globalization of Sanitation and Water Services ‘Blue Gold’ Regulatory and Economic Challenges’, to be held at the Chinese University of Hong Kong. The paper is entitled ‘The Erosion of the Concept of Public Service in Water Concessions’.

Here is the abstract:

Concession contracts are increasingly being used in the water services industry throughout the world. Normally water services are entrusted to a private entity by means of a partnership between the public sector and a private company where the latter exclusively operates, maintains and carries out the development of infrastructures or supplies water, ensuring that the service is provided under conditions which are not necessarily the same as prevailing market conditions. With the globalisation of markets, concession contracts are also increasingly associated with foreign investment. Water concession contracts have frequently sparked vigorous public debate because water is considered by citizens as a vital resource and access to water a human right. Water services are characterised by their universality and by the fact that, in most cases, they are provided under a regime of monopoly (local, regional or even national). This means that the provision of these service should be subject to compliance with certain fundamental principles: universality, equality, continuity, impartiality, adaption to the needs of users, etc.; and entails the recognition of special rights to the users of such services and the imposition of some restrictions to the parties’ freedom of contract. The protection of citizen-users, the third-party beneficiaries to such concession contracts, is essential for the success of these partnerships. Over the last decades legislators worldwide have recognised the important role of consumer policy in shaping the market. The protection of consumers, their interests and their safety is an essential part of countries’ overall objective to improve the quality of life of all citizens. With the ongoing globalisation of markets and the internationalisation of water concession contracts, arbitration is more and more recognised as the best mechanism for the resolution of possible disputes which may arise. The aim of this presentation is to discuss the challenges brought about by privatisation in the water industry by looking into the most pressing issues that have been discussed in international investment arbitration over the last years. What challenges are being faced by the parties to the concession contract? Do contractual provisions and general statutory rules suit the interests of the parties, or do they need to be re-shaped? Is the current financial crisis introducing any special difficulties in the execution of these contracts? Are the interests of citizens-users being taken into account in the course of investment arbitration proceedings? What lessons can be learned and improvements introduced?


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