Annex 1
THE FUNCTIONS
AND DUTIES
OF THE
PPP ARBITER
1. The role of the PPP Arbiter was established
by the Greater London Authority Act 1999 (GLA Act). Under the
terms of the GLA Act, the Arbiter is independent of Government
and of the PPP Parties and can only be dismissed by the Secretary
of State on grounds of incapacity or misbehaviour, or for unreasonable
delay in the discharge of his functions.
2. The PPP Arbiter has two principal statutory
functions:
— to give directions on matters specified
in the PPP Agreements, when asked to do so by one of the Parties
to a PPP Agreement; and
— to give guidance on any matter relating
to a PPP Agreement, when asked to do so by either (or both) of
the Parties to a PPP Agreement.
3. When the Arbiter is asked for guidance
by one Party only, he has discretion about whether to give guidance.
Where he is asked for directions, or is asked for guidance by
both Parties to an Agreement, his is required to give such direction
or guidance.
4. In addition the PPP Arbiter also has
further powers "for the purposes of the proper discharge
of the functions" conferred on him by the GLA Act. For example
the PPP Arbiter may do "all such things as he considers appropriate
for or in connection with the giving of a direction or guidance
and... do such other things as he considers necessary or expedient...
for purposes preparatory or ancillary to the giving of directions
or guidance generally... notwithstanding that there is no matter
in relation to which a direction or guidance is required".
5. The PPP Arbiter's function in respect
of directions is limited by the terms of the PPP Agreements: if
there is no specific provision in a PPP Agreement for the PPP
Arbiter's involvement then disputes are dealt with through contractual
dispute resolution. Even on matters within his remit, he is only
brought in if one of the Parties seek a direction from him. The
PPP Arbiter therefore has no unilateral power to change, or propose
to change, provisions in the PPP Agreements. Even where he has
made a direction on a disputed matter within his remit, the Parties
may, under the provisions of the GLA Act, jointly agree to set
it aside.
6. In exercising his functions, the Arbiter
is under a statutory duty to act in the way he considers is best
calculated to achieve four objectives:
— to ensure that London Underground
has the opportunity to revise its requirements under the PPP Agreements
if the proper price exceeds the resources available;
— to promote efficiency and economy
in the provision, construction, renewal, or improvement and maintenance
of the railway infrastructure;
— to ensure that if a rate of return
is incorporated in a PPP Agreement, and taking into account matters
specified in the Agreement, a company which is efficient and economic
in its performance of the requirements in that PPP Agreement would
earn that return; and
— to enable the Infracos to plan the
future performance of the PPP Agreements with reasonable certainty.
The Arbiter is also under a duty to take account
of any factors which are notified to him by both Parties to an
Agreement, or are specified in the relevant PPP Agreement, as
ones to which he must have regard.
September 2007
| 
