Ukraine amends its law on public private partnership to attract investments


On 24 November 2015, the Ukrainian Parliament adopted changes to the Law of Ukraine “On Public Private Partnership” as well as to some other related laws with the purpose of eliminating regulatory barriers to the development of public private partnership and encouraging investments to Ukraine.

The changes introduced include, inter alia, the following.

  1. The spheres of application of the public private partnership (the “PPP”) have been broadened and now include not only mineral exploration, construction of roads, railways, bridges and tunnels, engineering etc. but also the production and introduction of energy-saving technologies, construction of modular houses and temporary houses for internal migrants, as well as the provision of social services.
  2. The private partner (i.e. the winner of the contest determining who the private partner will be) shall have the right to establish a legal entity for PPP performance, provided that the following two conditions are met. Firstly, such rights shall be prescribed in the conditions of the contest. Secondly, the private partner shall hold more than 50% of the charter capital of such newly created legal entity.
  3. Objects of the PPP created or bought for the performance of the PPP contract can be in the private partner's ownership. Nevertheless, such objects shall be transferred to the public partner within the period specified in the contract, but no later than the termination date of the contract. The PPP contract can provide for the public and private partners' joint partial ownership of the PPP objects which have been bought or created.
  4. The state can support PPP performance by buying products (services) produced (rendered) by the private partner within the PPP, by providing products (services) to the private partner that are necessary for PPP performance and by making payment to the private partner for bringing the PPP object into operation.
  5. Any disputes arising out of PPP contracts concluded with non-residents can be transferred for consideration by international commercial arbitration, as provided for in the PPP contract.
  6. Private partners gain additional guarantees of their rights. Particularly, PPP contract shall be governed by the laws valid at the moment of its conclusion (so called “stabilisation clause”). If the PPP contract is terminated because the public partner breached its obligations, the private partner shall have the right to obtain compensation for the investments made and losses suffered.

These quite significant number of changes are expected to improve the investment climate in Ukraine by providing the private partners with new rights and guarantees and widening the areas where PPP is allowed.

The Law “On Amending Several Laws of Ukraine Aimed at Eliminating Regulatory Barriers to the Development of Public Private Partnership and Encouraging Investments to Ukraine” which introduces the above described changes shall come into force three months after its publication.