Public works and service concession contracts are complex agreements prone to significant conflict.
As is well known, concessions are essentially characterized by the fact that the concessionaire is not compensated through a fixed price but rather granted the right to exploit the work or service, thereby transferring the operational risk to them. Given that the concessionaire needs sufficient time to recover their investments and achieve profits through the exploitation of the works or services, concessions are usually long-term contracts. This implies that the execution of the contract is particularly exposed to potential problems arising between the parties.
Many circumstances can lead to conflicts between the contracting Administration and the concessionaire during the lengthy period a concession is executed. Conflicts commonly arise, for example, in the application of deductions in the concessionaire\\\\\\\'s compensation, in the procedures for imposing penalties, or in the approval of contract modifications. Additionally, extraordinary situations that may cause rebalancing of the concession (stemming from unforeseeable risks or factum principis, among others) or the termination of the contract are also sources of tension between the parties, as the interests involved are usually significant and often opposed.
Therefore, it is advisable for both contracting Administrations and Concessionary Companies to seek specialized legal advice not only in public contracting but specifically in concession contracts. This is essential not only for the proper protection of the specific interests of the parties in conflict situations but also for the appropriate maintenance of the long-term contractual relationship.
At Araújo&Benetti, based in Palma de Mallorca, we have top-tier professionals in public contracting with extensive experience in legal advice specifically related to the execution of concession contracts. Our experts advise concessionaires in various sectors (hospital, water supply, infrastructure, etc.) and have participated in numerous penalty imposition procedures, concession rebalancing claims, and termination procedures. Additionally, they have multiple publications in this field.