Public-Private Partnerships (PPPs) have become a cornerstone for developing critical infrastructure in Panama, merging state resources with private sector expertise. Law 93 of 2019, regulated by Executive Decree 840 of 2020, provides a robust legal framework for these collaborations, where law firms play an indispensable role.
Key Functions of Law Firms in PPPs
- Legal Structuring:
- Draft contracts balancing risks and responsibilities between the state and private entities.
- Ensure compliance with local and international regulations (e.g., environmental, labor standards).
- Risk Mitigation:
- Identify potential conflicts, such as regulatory changes or timeline breaches.
- Negotiate force majeure clauses and dispute resolution mechanisms.
- Financing and Guarantees:
- Advise on trust structures and co-financing models.
- Review agreements with financial institutions to ensure transparent payment flows.
Common PPP Challenges
- Contractual Complexity:
- Ambiguous interpretation of technical or financial clauses.
- Bureaucratic Rigidity:
- Delays in state approvals or unilateral contract modifications.
- Fiscal Sustainability:
- Ensuring projects do not strain public budgets long-term.
Recommendations for Companies
- Thorough Due Diligence:
- Assess political, financial, and operational risks before entering a PPP.
- Multidisciplinary Collaboration:
- Engage lawyers, engineers, and tax consultants from the design phase.