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Regulating the Partnership between Public and Private Sectors

Regulating the Partnership between Public and Private Sectors

 

The UAE legislator recently introduced Federal Law No. 12 of 2023 on Regulating the Partnership between Public and Private Sectors. The new legislation is of great importance as it seeks to enhance collaboration and cooperation between the public and private sectors in the UAE. This law is a crucial step towards fostering economic growth, innovation, and development in the country by leveraging the strengths of both sectors.

Importance of the Law

By promoting greater private sector involvement in developmental and strategic initiatives through increased investment in projects that hold economic, social, and service value, the government can effectively and efficiently implement its strategic projects. This approach capitalizes on the private sector’s financial, organizational, technical, and technological capabilities and experiences, while also enabling society to access improved services and attain the most cost-effective outcomes. Furthermore, this collaborative approach fosters enhanced productivity and elevates the quality of public services through the transfer of knowledge and expertise from the private sector to federal entities.

Scope of Application and Exceptions

This law applies to companies and commercial enterprises, excluding those that are completely owned by the government. It also applies to any partnership project within the private sector that is fully or partially funded, as long as it is proposed by a federal entity.

There are certain exemptions to this law, including partnership contracts that were agreed upon before the law was enforced. Additionally, specific service delegation contracts mentioned in the partnership projects guide, as well as projects with a value below the financial threshold specified in the guide, are exempted. Asset and public service privatization projects, as well as supply and procurement contracts related to national security mentioned in the guide, are also exempted.

Furthermore, the law does not apply to federal entities, sectors, and projects that have been exempted by a decision from the Cabinet.

Types of Partnership Projects

Different types of partnership projects are outlined in the Partnership Projects Guide. These include:

  • Build, Operate, Transfer (BOT) model.
  • Build, Own, Operate, Transfer (BOOT) model.
  • Build, Own, Operate (BOO) model.
  • Build, Own, Lease, Transfer (BOLT) model.
  • Financial benefit from assets.
  • Management contracts.

 

Supervision of Project Implementation

The federal entity responsible for initiating the project is tasked with supervising its implementation and managing the execution phase in accordance with the provisions of the project agreement, guidelines, and templates issued by the ministry. The ministry’s role is primarily focused on supervision and aiding the federal entity as needed.

Dispute Resolution

Disputes arising from the execution of the project agreement can be resolved in state courts. Additionally, alternative methods of settling disputes, such as mediation, arbitration, or seeking the opinion of an expert, may also be considered, and agreed upon.

Benefits of Partnership

The advantages of collaboration between the public and private sectors encompass:

– Reducing the government’s financial and operational risks that may arise from project execution.

– Executing projects that provide added value to public funds.

The alliance between the sectors also fosters competitiveness of projects in local, regional, and global markets. This is accomplished by providing training and skill development opportunities for federal entity employees, enabling effective project management and operation. As a result, making a boost in efficient management of public services, leading to increased productivity and enhanced quality of those services.

This Galadari Alert was authored by Mouza Al Shehhi. For more information on this topic, please contact Mouza on:

Mouza Al Shehhi
Trainee Lawyer 
E: mouza.alshehhi@galadarilaw.com