Living Agreements for a Risky World by Ryan J.

Orr

Contracts are meant to enshrine agreements in something like stone. But contracts covering longterm infrastructure investments in emerging markets are written in something closer to sand. As more companies invest in these marketsbuilding roads, bridges, utilities, and telecom systemscontracts must become flexible enough to account for the changes that political and economic instability create. In case after case, investors have seen agreements brokered with foreign governments change suddenly and rarely to their benefit. One World Bank study of more than 1,000 long-term investments in Latin American infrastructure concluded that 30% of the underlying contracts were ultimately renegotiated. In the 1990s, two-thirds of the agreements that supported 33 investments in independent power projects in developing countries were similarly revised, a Stanford study showed. One explanation for the changes is what Harvard economist Raymond Vernon called the obsolescing bargain: Over the long life cycle of an infrastructure project, negotiating power shifts from the private investor to the government customer. Initially, the customer offers attractive terms because it needs private investment, technology, or management expertise; when the customer has what it desires, it unilaterally changes the terms. Frequently, government takings are triggered by unpredictable events such as economic crises, coups, assassinations, or wars. Such big, destabilizing changes expose issues not covered in the initial agreement and alter both parties attitudes about suitable risks and rewards. In other cases, government insistence on contract changes is not the product of an external crisis but of changing political circumstances, public opposition to a project, or opposition within the bureaucracy itself. Recently, a group of senior lawyers and business executives gathered for the General Counsels Roundtable at Stanford University under the aegis of the Collaboratory for Research on Global Projects to analyze the legal issues raised by a decades worth of failed and distressed projects in emerging markets. One outcome of that meeting was the promising, although still not widely accepted, idea that contracts can be redesigned as living, breathing frameworks for ongoing negotiation, yet still fix terms solidly enough that parties can obtain necessary financing and operate with acceptable levels of certainty. As one general counsel noted, Businesspeople want to know: If this thing goes all screwy, whats my safety net? What guarantees do I have? What is the very worst it can be? To address conflicting needs for flexibility and predictability, the group proposed two alternatives for improving project outcomes. The first involves the creation of a governance model to better align the economic interests of public and private parties through co-ownership and cogovernance of the project company, as is now popular in so-called public-private

partnerships. With a shared economic destiny, there may be more incentive for parties to resolve the kinds of disputes that historically have contributed to project failure. The second alternative involves the use of a number of types of contractual tools. Shockabsorber clauses are designed to facilitate low-cost, amicable renegotiation. Safety-net clauses satisfy the need for security and provide protections in the event that renegotiations fail. Versions of both appear in many traditional business contractsalthough they have not previously been sorted into these categoriesand could be combined in contracts that are threatened by political instability. Shock-absorber clauses take various forms in the business world. In construction contracts, change clauses allow the customer to make unilateral adjustments to the agreement during a project and let the contractor recover costs associated with those changes. The customer benefits because construction continues even when disputes arise. In the pharmaceutical industry, development and license agreements allow small research labs to work with global drug development companies under terms that may shift if, for example, a promising product fails clinical trials or an apparently trivial technology turns out to be exceedingly valuable. In international trade, negotiators from different nations may arrange to periodically divide financial rewards that were not anticipated in the original treaty. Safety-net clauses, also common in many industries, generally state that faltering renegotiations will move to litigation or arbitration. Adopting such clauses for the international arbitration of large projects requires very detailed provisions for variables such as governing law, supervisory agency, language, location, and types of damages. Companies can use existing legal mechanisms to enforce judgments against a contracting government outside its home country in cases where local courts have frustrated attempts to collect arbitral awards. Firms can also state that obtaining political-risk insurance or other types of insurance is a condition for proceeding with a contract. When changed circumstances or attitudes destabilize long-term agreements, companies have two choices: renegotiation or formal dispute resolution. Contracts that combine shock-absorber and safety-net clauses can guarantee a better outcome in either case. For companies looking at the high-risk, high-reward prospect of taking on major projects abroad, these types of contracts provide the starting point for a trust-based partnershipand an ending point should trust ultimately fail.

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Contractele sunt menite s consacre acordurile n ceva de tip piatra. Dar contractele care acoper investiiile de infrastructur pe termen lung n pieele emergente sunt scrise n ceva asemanator nisipului. Deoarece tot mai multe companii investesc n aceste piee-construirea de drumuri, poduri, utiliti, i sisteme de telecomunicaii-contractele trebuie s devin suficient de flexibile pentru a ine cont de schimbrile create de instabilitatea politic i economic. De la caz la caz,investitorii au vzut cum se schimba brusc i rareori n beneficiul lor acorduri mediate cu guvernele strine. Un studiu al Bncii Mondiale cu mai mult de 1.000 de investiii pe termen lung n infrastructura Americii Latine a ajuns la concluzia c 30% din contractele care stau la baza finala, au fost renegociate. n anii 1990, dou treimi din acordurile care au susinut 33 de investiii n proiecte de energie independente n rile n curs de dezvoltare au fost revizuite n mod similar, a aratat un studiu Standford. O explicaie pentru aceste schimbri este ceea ce economistul Harvard,Raymond Vernon,numeste "afacere invechita": De-a lungul ciclului de via lung a unui proiect de infrastructur, puterea de negociere se schimba de la investitorul privat la clientul guvernului. Iniial, clientul ofer termeni atractivi, deoarece are nevoie de investiii private, tehnologie, sau expertiza de management; n cazul n care clientul are ceea ce-si dorete, se schimb n mod unilateral termenii. Frecvent, ntreprinderile de stat sunt declanate de evenimente imprevizibile, cum ar fi crizele economice, lovituri de stat, asasinate, sau rzboaie. Astfel de schimbri majore, destabilizatoare expun problemele care nu sunt reglementate n acordul iniial i modifica atitudinea ambelor pri "cu privire la riscurile i recompensele corespunztoare. n alte cazuri, insistena guvernului privind schimbrile contractului nu este produsul unei crize externe, ci a schimbarii mprejurrilor politice, opoziia public pentru un proiect, sau opoziie n cadrul birocraiei n sine. Recent, un grup de avocai seniori i directori de afaceri s-au adunat pentru Sfaturi generale "Masa Rotunda la Universitatea Stanford sub egida colaborarii pentru cercetare pe proiecte globale pentru a analiza problemele legale ridicate de valoare unui deceniu de proiecte euate i aflate n dificultate pe pieele emergente.Un rezultat al acestei intruniri a fost promitator, dei nu este inca acceptat la scara larga, in ideea c contractele pot fi reproiectate ca si cadrele de negociere n curs de desfurare traind,respirand, dar care nc nu stabilesc termeni suficient de solizi pentru ca ambele parti sa poata obine finanarea necesar i s opereze la un nivel acceptabil de certitudine. Asa cum un consilier general amintea, "Oamenii de afaceri vor sa stie: Dac acest lucru se duce tot nastrusnic, care este net meu sigur? Ce garanii am? Ce se poate intampla in cel mai rau caz? "

Pentru a rezolva conflictul pentru nevoia de flexibilitate i predictibilitate, grupul a propus dou alternative pentru mbuntirea rezultatelor proiectului. Prima presupune crearea unui "model de guvernare" pentru a alinia mai bine interesele economice ale prilor publice i private, prin coproprietate i cogovernance din compania de proiect, asa cum este acum popular n aa-numitele parteneriate public-privat. Cu un destin economic comun, poate fi mai stimulent pentru partide sa rezolve astfel de tipuri de litigii, care istoric au contribuit la eecul proiectului. A doua alternativ presupune utilizarea unui numr de tipuri de instrumente contractuale. "Clauzele absorbarii soc" sunt concepute pentru a facilita costurile scazute si renegocierea pe cale amiabil. "Clauzele de net securizat", satisfac nevoia de securitate i ofer protecie n cazul n care nu reuesc renegocierile. Ambele versiuni apar n multe contracte de afaceri tradiionale, dei ele nu au mai fost sortate n aceste categorii i-ar putea fi combinate n contractele care sunt ameninate de instabilitate politic. Clauze absorbarii soc iau diferite forme, n lumea afacerilor. n contracte de construcii, schinbarea clauzelor permite clientului sa faca ajustri unilaterale ale acordului n timpul unui proiect i s lase contractantul sa recupereze costurile asociate cu modificrile respective. Beneficiile clienilor, deoarece continu construcia chiar i atunci cnd apar litigii. n industria farmaceutic, "acordurile de dezvoltare i de licen" permit laboratoarelor de dimensiuni reduse sa lucreze cu companii globale de dezvoltare a medicamentelor n conformitate cu termenii care se pot schimba n cazul n care, de exemplu, un produs promitor sau o tehnologie aparent banala se dovedete a fi extrem de valoros.In comerul internaional, negociatorii din naiuni diferite pot aranja s mpart periodic recompensele financiare care nu au fost anticipate n tratat original. Clauzele de net sigur, comune n mai multe domenii, sustin ca renegocierile se vor muta la litigii sau arbitraj. Adoptarea astfel de clauze de arbitraj internaional pentru proiecte de anvergur necesit dispoziii foarte detaliate pentru variabile, cum ar fi legea care reglementeaz, agenii de supraveghere, limba, locaia, i tipuri de daune. Companiile pot folosi mecanismele legale existente s execute hotrrile mpotriva unui guvern contractant n afara rii de origine n cazul n care tribunalele locale au tentative frustrate de a colecta arbitrale. Firmele, de asemenea pot afirma c obinerea asigurrii riscului politic sau a altor tipuri de asigurari, este o condiie pentru a continua cu un contract. Atunci cnd circumstanele sau atitudinile schimbate destabilizeaza acordurile pe termen lung, companiile au dou opiuni: de renegociere sau de solutionare a litigiilor formale. Contracte care combin clauzele absorbirii soc i clauzele de net sigur poate garanta un rezultat mai bun n ambele cazuri. Pentru companiile care cauta la un grad ridicat de risc,recompense mari pe proiecte majore n strintate, aceste tipuri de contracte furnizeaza punctul de plecare pentru un parteneriat bazat pe ncredere i un punct de sfarsit prin care se crede ca in cele din urma nu reusesc.