TY - JOUR
AU - Lin Tan,, Yock
AB - Abstract Positing the public-private partnership as an important optional legal structure in the delivery of infrastructural services in the Belt and Road Initiative (BRI), this exploratory article discusses the crucial, but formidable, problems of risks in management or governance. It considers whether traditional common law conflict of laws as applied in Singapore courts can contribute principles that recognize shared expectations and commitment or foster solidarity, mutuality, and trust—values regarded as essential to their effective resolution. Arguing that traditional conflicts distinctions between State and non-State law as well as between public and private law are unhelpful in this respect, it concludes that modern critical developments contain promising prospects for developing such principles. These principles will predicate a role for foreign State substantive public policies and, if there is relevant ‘relational distance’, implement them in BRI choice-of-law disputes, thereby reconciling private efficiency and public accountability beyond borders. Introduction In this article, an important optional legal structure on which the Belt and Road Initiative (BRI)1 may be platformed2 will be referred to by a term that Davinia Aziz used to describe a fairly analogous platform that has evolved in public international law for the different purposes of delivering global collective goods: this term is the global public-private partnership (PPP).3 While others, such as Michael Likosky, use the term transnational PPP when relating PPPs closer to the concerns of this article,4 the former seems more apt in embracing the mingling of public and private elements of governance and entrepreneurship in the delivery of public services across national boundaries with the consent and involvement or participation of two or more governments. The epithet ‘global’ expresses or indicates more clearly the horizontal character of the BRI’s PPPs, especially as the terminology of transnational PPP has been more indiscriminately employed to embrace top-down PPPs managed by a dominant guest State delivering public services in a host State, as an integral part of development assistance. Whichever term is employed, difficulties of defining the global or transnational PPP will arise.5 There seems, however, to be considerable agreement that: [i]mportant shared characteristics of [such] partnerships include: transnationality (involving cross-border interactions and non-State relations); public policy objectives (as opposed to public bads or exclusively private goods); and a network structure (coordination by participating actors rather than coordination by a central hierarchy).6 This will be one of this article’s assumptions. It is also uncontroversial that the global PPP takes its departure from the national PPP, which itself is not new.7 Thanks to the national PPP, the construction, maintenance, and operation of infrastructures has witnessed a sea change in the last four decades. From being an entirely public sector domain or a predominantly public sector domain incorporating subordinate private participation since the early 20th century, infrastructural delivery has shifted to being a substantial and integrated mixture of public and private domains. Many of the polycentric issues that arise from this intermingling have been ventilated in a huge and rich literature, mostly critical of the original optimism that ushered in PPPs with the promise of transformation and modernization of public services.8 The exciting infusion of the private pursuit of profits through market analogues, it was thought, would, at last, enable the delivery of public services economically and efficiently. The sober reality is that the promises of increased efficiency at lower costs have not been as impressive as hoped for.9 This implies that, insofar as the BRI relies on PPPs as a legal foundation for delivering infrastructural services, it will not be free altogether from the problems that have plagued national PPPs in general. The term BRIPPP will be employed as a convenient reference in the rest of this article. Its coinage is by no means intended to suggest that the PPP is the only public procurement model employed in BRI projects.10 There are stronger assessments that: [c]ountries along the Belt and Road consistently prefer the PPP model. Southeast Asia and Central and East Europe have cultivated a culture of partnership and have accumulated a wealth of experience in the implementation of the model. The [PPP] model is possibly the primary approach to achieving interconnectivity as proposed by the Belt and Road Initiative.11 Notably, however, while there have been several published and scholarly case studies on global PPPs,12 the literature has yet to pick up on BRIPPPs. This article must be content, therefore, to proceed on the supposition that the BRIPPP experience will not be a peculiar or extraordinary global PPP experience, by reason only that it will mainly be located in developing countries along the Belt and Road region. By referring to the BRIPPP, it is also not intended to signify the kind of transformational PPP for which there has been considerable and increasing support among G20 countries. The enthusiasm for transformational cross-border infrastructure PPPs with the promise of ‘positive, transformational impact on entire countries and regions’ has led established development banks to step up their commitment to financing regional infrastructure PPPs.13 But, as James Leigland cautions, these concerted multi-country PPPs are still very exceptional.14 An example is the N4 Toll Road Concession, awarded in 1997, which was led by South Africa as part of a multi-country effort to link South Africa’s industrialized provinces and Mabuto in Mozambique. This article envisions that BRIPPPs are less ambitious and lower-value projects substantially localized in a host country and conceived and implemented by that country with recourse by private investors to funds provided by China and other BRI participants through multilateral development banks and other funds like the Silk Fund. Finally, the term BRIPP is not intended to exclude hybrid PPPs. As Leigland points out, difficulties in attracting private investors to developing countries must be overcome by a hybridized combination of private money and governmental and multilateral development bank provisions of guarantees and other public or concessional money as well as a strong governmental role in project development and oversight.15 This article will focus, of course, on problems unique to the BRIPPP as opposed to a national PPP. What distinguishes the BRIPPP as a global PPP is its predominant or, rather, pre-eminent, focus on international trade, related foreign investment, and close economic cooperation16 and, of course, its cross-border element (or that further spatial element or horizontal dimension in which national governments and transnational non-State actors, both builders and bankers, forge a permanent world-spanning network or trade connectivity for mutual economic gain). This focal point of the BRIPPP must not be lost sight of.17 The already substantial literature, both academic and popular, on transnational as well as global PPPs has quickly embraced socio-political considerations transcending matters of contractual architecture as well as considerations of legitimacy of transnational co-governance mechanisms lacking in inclusiveness and accountability.18 There is probably now not much doubt about the role that infrastructure can play in globalization and sustainable cross-border development. Frank Schipper and Johan Shot, among others, have made a strong case for what they call infrastructural Europeanism or ‘the ways in which infrastructures have constituted, connected, and contradicted “Europe” in its various forms’.19 But the alleged unpalatable side effects of global PPPs on global politics, production of public goods and services, and global accountability in developing countries may already have moved to occupy centre stage. The motivations to thus view the BRIPPP in a multifaceted kaleidoscope that transforms and reveals different combinations and patterns of private and public law and public international law with the slightest turn of the fingers are very real. This article would not deny that despite the BRIPPP’s pre-eminent focus, a multiplicity of legal and non-legal perspectives is attracted nor that a degree of permeation of contract and social and environmental sectors has already occurred. Human rights violation issues have certainly been admitted into the vocabulary of PPP contracts. There is also growing engagement with environmental degradation issues in transnational private law litigation. These may become contractual PPP issues in diverse ways; among them, a common occurrence is that PPP financing contracts may specify human rights observance or environmental protective standards of compliance as part of a human rights or environmental protection risk mitigation strategy.20 This article, therefore, cannot ignore the effects and prospects of permeation and must consider it. Politics and international relations are also noticeably implicated.21 But this article will not deal with them since, for the time being, PPP contracts are unlikely to specify political terms and conditions as part of an elaborate political risk mitigation strategy. The subject of this article, then, is the contractual law of a BRIPPP—not the entirety of it but with special reference to its horizontal positioning along a spectrum of several national and non-national laws. The fact that there is a multiplicity of levels of engagement with national laws provides the perfect foil for the discipline known as the conflict of laws (COL). It is the task of COL to resolve horizontal differences in national laws. Just looking over the shoulder, COL already provides ‘the legal infrastructure of cross-border economic markets, exchanges and value chains’.22 So there seems little reason that the same ambition should not be held out for the BRIPPP. It is also the task of COL to resolve the problems of juridical cross-border boundaries between private and public law and private and public contexts. This makes it, in principle, a suitable means of coping with the public and private law complications that are integral to the contractual architecture of BRIPPPs.23 Put shortly, there are two aspects under study in this article: first, how should the role of party autonomy be qualified to promote cooperative conflict resolution under BRIPPPs and, second, how should the boundaries between private and public law be drawn in BRIPPPs to promote solidarity, trust, and continuance of relationship? In exploring how the demands under both aspects might be satisfied or how techniques of COL can evolve to solve problems that arise around a shared network or community of economic interests and mixed public and private endeavour, this article is unavoidably conjectural. It must be content with introductory suggestions as to how COL can move forward. Rigorous demonstrations and criticisms may be left to others and to another day. To an extent, the suggestions that this article would make are counter-intuitive. Traditional COL is constructed as a neutral and apolitical problem-solving methodology that allocates legal contractual rights and principles in an orderly but piecemeal fashion in order to promote the stability of commercial expectations, in particular, and conflicts justice, in general, when doing cross-border business. This article, however, contends that the BRIPPP poses a conceptual challenge to traditional methods of COL. In the experience thus far, where guest and host States lack a well-developed commercial law, or where a neutral, well-established commercial law is desired, or where project financiers so insist to prevent a race to the bottom, the choice of English law or some other well-established and highly regarded commercial law as the law to govern the contractual legal foundations of the BRIPPP is almost a fait accompli. But the flexibility to accommodate the management of risks of loss or non-fulfilment of public service goals and objectives arising from diversity in third-party connections and involvement and differences in public governance systems is just as important to success.24 It is COL that can help develop the necessary or expedient qualifications to party autonomy so as to minimize combative conflict resolution and restrain the use of unilateral State power. On its shoulders also rests the salutary assurance that foreign public governance norms can be imported into PPPs for the sake of promoting solidarity and trust. On COL, at the same time, lies the important task of ensuring that BRIPPPs have an existence embedded in, but distinct from, domestic governance systems, institutions, and policies, so that no distortion will result from the use of BRIPPPs as a means of transnational governance. The suggestions in this article for moving forward, therefore, are for a new way of conceptualizing and administering COL in relation to BRIPPPs. If there is a thesis, it is that COL, suitably empowered, is up to the daunting task and, moreover, is a necessary step to success. A familiar limitation must be stated up front. COL, of course, is municipal law, which means that an abstract discussion that is not tied to any municipal account is either too theoretical or merely an exercise in comparative reform or evolution. This article is intended to have a practical value and it is, therefore, posited that a court in Singapore, when seized with jurisdiction, may be called upon to decide issues arising in connection with a BRIPPP dispute by reference to the Singapore COL.25 What is said about the Singapore COL may have cross-national implications; after all, COL is probably the most conceptual of the many branches of law and also the most receptive to the cross-fertilization of ideas in the name of comity of nations. This article, however, will leave such further implications to others who are experts in their own national COLs. The rest of the article is organized as follows. The first part identifies the essential conflicts that underlie the bundle of contracts that makes up the PPP, both national and global. These indicate that PPPs are essentially incomplete contractual structures with contents necessarily engaging formal and informal mechanisms as well as public governance systems. The second part concludes on a helpful note in that, because the essential conflict is reducible to a conflict of discretionary contractual powers of governance, COL techniques can be redirected and reforged for specialized effect and purposes without losing their essential characteristics. The third part shortly examines the inadequacies of traditional COL as yielding effective solutions to BRIPPP problems generally. How these inadequacies can be overcome is elucidated in the fourth part, which, though lengthy, is appropriately selective in treatment. The fifth part concludes with a recapitulation of the challenges and possible fundamental solutions. Conflict of decisional authorities PPPs as hybrids and the incompleteness of contract as a key characteristic A recent monograph study of the PPP is especially valuable to understanding the essential characteristics that mark out the PPP from other public procurement options for the delivery of infrastructural services. Its authors, Darrin Grimsey and Mervyn Lewis, explain that PPPs ‘are not really partnerships, in the same way that alliance contracts are; rather, they are more partnerships in a legal sense, in that PPPs embody strong legal protections for the two main parties involved (government and the private special-purpose vehicle), and rest on a firm contractual basis’.26 Strong legal protections are necessary because PPPs ‘embrace the whole-of-life (design, construction, operation and maintenance)’ in a partnership between the public sponsor and the private investor. This, in turn, means that they are most suitable for ‘greenfield’ projects that involve the construction and operation of new infrastructure and ‘less suited to “brownfield” infrastructure projects, particularly where existing infrastructure needs to remain fully operational during construction’.27 An early example of application of the PPP approach to infrastructural development, noted in the US Department of Trade’s Case Studies on Transportation Public-Private Partnerships around the World, was the 1995 Route 3 Country Park Motorway (Hong Kong) PPP project.28 It had the standard features expected of PPPs conceived in the 1990s. The model chosen was Build-Operate-Transfer. To implement the project, a private contractor consortium was set up. It shared the responsibility with the public sector for the expedited project, which would mark the return of Hong Kong to China. The public sponsor was able to rely on technological, managerial, and financial resources of the consortium, which included a private financier. There were reduced risks of project delivery to the public sector as well as the injection of private funding. However, the private consortium had the right to collect the tolls to pay for the project costs of US $930 million over a 30-year franchise period, during which the public sponsor retained ownership of the facility. Even on their face, leaving aside the contents complications alluded to in the introduction, PPPs are complex organizational and financial structures. They are hybrids made up of public, or State, and private, or non-State, actors and resources. They are that much more complex because of the importance of the alignment of public goals and private objectives and the ease and frequency of misalignment. Experience has shown that there is a need for formalized frameworks or structures of rights and obligations and standardized operational modes. But informal structures are also indispensable. A large variety of combined formal and informal structures, thus, will be found spanning the initial phases of elaboration and specification and procurement, the intermediate phases of construction, and the final phases of operation and maintenance and termination. So as far as the eye can see, the formalized structures are contractual. Premised on reducing transaction costs and efficient risk allocation, they are long-term bundling contracts, some internal and some external. Without in any way intending to underestimate the diversity in PPPs, in the infrastructure sector, there is typically a private sector consortium made up of a building contractor, a maintenance company, and one or more equity investors, which may include both guest and host governments. It forms a special purpose vehicle (SPV) to design, develop, build, reconstruct, maintain, and operate the asset or facility for the contracted period. There are internal contracts that will define the parties’ several interests and capital commitments. Among these, equity investors are just as diverse, including institutional investors and specialist infrastructure funds that have been established and are investing in PPPs. On the project financing side, of which more will be said below, there may be further internal contracts binding the several private banks that have formed a loan syndicate to finance the PPP project. We expect, of course, a lot of external contracts. The primary bundle comprises those that the SPV signs with the host government. A similar combination of public and private elements and the bundling of formal and informal structures into a composite whole can be found in the PPP experience. A degree of heterogeneity exists because there are several models of PPPs, ranging from Build, Own, Operate, Transfer (BOOT) to Design, Build, Finance, Operate (DBFO), which is a subset of BOOT, to Design, Build, Operate (DBO) models. The choice will depend on a number of varied factors; cultural preferences are not excluded. The ‘bankability’ of the PPP is a fundamental concern because, in addition to equity investments, project financing will be essential as a means of limiting the risk exposure of equity investors. This is not only because of the nature of infrastructural projects as a staged development, which lends itself to discrete project financing. There is also heavy reliance on it for the sake of economically stretching the financing commitments over a long time frame so that profits earned over the facility’s life cycle can be used to repay the hefty initial financing outlay.29 Last but not least, project financing would seem, in any case, to be indispensable in BRI economies where direct host government or public debt financing is unavailable at competitive cost. Additional public or government participation on both sides in non-contractual form almost goes without saying. These can take various forms, including a capital subsidy or one-time grant, which is apparently common in infrastructural PPPs.30 Other forms include host government support in the form of revenue subsidies such as tax breaks or guaranteed annual revenues for a fixed period or other guarantees as well as host government transfer of land rights and guest government assumption of certain project expenditures or provision of guarantees not capitalized as equity in the SPV. Credit enhancement schemes are likely to be more popular in some projects. These include the guest government raising the credit rating of bonds floated by the SPV, guaranteeing long-term borrowing costs, and the host government allowing the creation of infrastructure investment trusts or providing special last-mile funding to stalled projects. We cannot omit the impact and significance of third-party relationships. They are both direct and indirect. Direct relationships fall into two groupings: (i) subcontractors and the SPV and (ii) users and the SPV. Contracts are made with subcontractors to build the facility and, perhaps, also to maintain it thereafter, and users contract for provision of the public service when the facility becomes operational. Third parties other than users may also be brought within the protective ambit or be left out with recourse solely to non-contractual rights against injury or damage. Relationships may be procedural only or solutions may be afforded on the basis of public law techniques of accountability and regulation, enabling third parties to challenge public decisions of the government and, to the extent that the SPV, through its subcontractors, exercises public functions, their exercise by the SPV. Plurality of conflicts in national PPPs From the standpoint of COL, then, the contract is an essential starting-point consideration. But while getting the contract right is important to legal success, this is far from being the whole or real story to a PPP. It is crucial to negotiate what lies behind it. This is described in the general literature on national PPPs as three tensions or conflicts: (i) public and private (status and identity) conflicts; (ii) flexibility and stability (time and uncertainty) conflicts; and (iii) conflicts over polycentric issues and differentiated multiple public interests and which to satisfy. These tensions manifest in all stages of the infrastructural PPP—from elaboration and design, to construction, to operation of the facility. The first underlies the design choice of a particular combination of what may be called the market analogue and the State analogue. The former is chiefly concerned with efficiency and private profitability; the latter with governance and accountability. If the former is adopted exclusively, formal contractual processes and governance mechanisms will predominate; in the latter, public law techniques of control and coordination and inclusiveness and accountability. These extreme positions are, of course, ex hypothesi, rejected in a PPP. Some phases or aspects of the PPP will have more features of one than the other, although no phase is clearly free from admixture. Elaboration, for example, which involves formulating procurement procedures and selecting and awarding a successful bidder, is likely to be highly formal in order to ensure competitive bidding and terms. Formal public law requisites, at the same time, are likely to be at the forefront, especially where a strong culture of transparency prevails. Even so, it will be hard to escape the need for some complementary, but less formal, elements. For example, procurement is unlikely to be formally based on selecting the lowest-price bidder. Qualitative factors, including non-price factors, will be taken into account under the value-for-money (VfM) criterion, which appears to be the preferred test if Europeans and Americans are targeted investors, if international credibility is important, or if project financing from multilateral development banks such as the Asian Infrastructural Investment Bank is intended.31 During the construction and operation and maintenance phases, a different combination of formal contractual and informal governance might be expected. In the management of listed risks, procedures for monitoring performance and fine-tuning performance expectations as part of managing the risks will be formal. The solutions, however, will probably be informal in the sense that the manner in which the discretionary powers to formulate and implement solutions should be exercised will not be specified.32 Even where the outcomes are also specified, a large space may be created between the procedures and specified outcomes for solutions to be found without having to resolve clashing differences by a binary preference and with maximal flexibility unhampered by pre-determined substantive fixed solutions. The second tension is reflected in the impossibility of writing a complete description of the future in an ex ante contractual document. The time spans associated with PPPs are nothing like those germane to short-term and medium-term contracts. The life cycle of an infrastructure facility is anywhere between 25 and 35 years; ex ante identification, evaluation, and allocation of the risks of incomplete contracting over such time span will be expensive and inefficient.33 The long stretch of time will also breed opportunism to exploit contractual drafting ambiguities, making complete contracting a self-defeating strategy.34 How, then, can parties to a PPP achieve the potential mutual benefits that are promised? These devices are common in PPPs. A necessary mechanism is to specify broad contractual standards as key performance indicators. The problems that it generates are those of interpretation and opportunistic interpretation calculated to protract disputation.35 Another is to allocate property rights as collateral for contractual performance. This can act as deterrence against opportunism but will not always be possible until a later stage of implementation, when the facility is up. Another is to draw up a list of expected risks and allocate the burden to one or the other party, according to which party is best placed to bear the pertinent risk. Relational mechanisms will play an important part in suppressing opportunism and in promoting solidarity and trust in the relationship. Invariably, however, whichever initial contractual technique is chosen, allocation of decision-making rights will also be an indispensable complement if the PPP is to cope with unforeseeable or unexpected risks as well those that are foreseeable in type but not in scale or time of incidence. But the problems that then arise are expensive monitoring costs and opportunism. The first is caused by the non-observable nature of key data. The second is derivative. Nor are these all. The possibility of change in political circumstances and conditions must be mentioned, though it will not be dwelt upon at great length for reasons previously given. Even if the guest State is not directly involved in the PPP, the SPV and successful bidder may be a compound corporation, as the term has been used, in which it has a controlling stake.36 Over time, what may have begun as an amicable alignment of interests between the SPV and the host State may transform into hostility between governments, leading to the expropriation of the SPV’s assets in the host territory. There is, once more, recourse to both formal and informal mechanisms to pre-empt such risks from emerging and, in the worst-case scenario, resolve them in a low cost BRIPPP dispute if possible.37 The third tension is best exemplified in the now more than four decades of experience with national PPPs.38 National PPPs first developed in industrialized country settings in the wake of a wide-scale breakdown of welfare services as a means to rejuvenate and restructure the provision of public services.39 The result is that these issues are typically polycentric, affecting many segments of the public in diverse ways. By reason of this, Richard Common, writing in 2001, saw little prospect for PPPs to take root in East Asia.40 He saw PPPs as reshaping social problems in a welfare State and, therefore, as irrelevant or unpromising given East Asia’s central preoccupation with economic growth and development. Underestimating recourse to PPPs by local Chinese governments in the 1980s, he appears also to have ignored subsequent recourse in China on a much larger national scale to several State-approved PPPs after 1995 in the water supply sector.41 Common was obviously too dismissive of the PPP as a force in the globalization of trade. But he was not alone in this persuasion. In the late 1990s, the idea of harnessing the PPP as a means not of broad social reform of a broken-down welfare society but, rather, of international development was barely countenanced. When broached in the early 2000s, it could not easily shed the PPPs’ preoccupation with social policies. To this it added the political dimensions. For example, when the PPP was used to reconstruct Iraqi infrastructures, the objectives were not only to safeguard oil supplies as Iraq’s key strategic asset and provide the infrastructure to assure supplies to international markets but also to deliver wartime promises to the Iraqi public. As with national PPPs, the PPP was top-down and centred on the USA underwriting almost the entire project.42 Horizontal conflicts of authority as key to the BRIPPP The final bit of the scaffolding calls for us to appreciate that not everything true of top-down national PPPs is relevant to the BRIPPP. As already noted, the BRIPPP is envisaged to stand apart from the national PPP in its concentrated design, conception, and ambition. Avoiding polycentricity, its ambition is deliberately distanced from social policy reform in the delivery of public services. Nor is its goal to substitute for multilateral or bilateral development assistance. Its predominant, or, rather, preeminent, focus on international trade is signified by the objective of establishing a permanent world-spanning trade network.43 The isolationist rejection of non-trade issues is an essential premise.44 But, while there is apparent simplification on one front, there is increased complexity on another because BRIPPPs do not have the simplifying force of top-down reconciliations of conflicts. Top-down PPPs have a structural and contents unity that ensures that uniform solutions to polycentric conflicts are possible by blending public and private law elements of a single national law. Verticality implies that effective legislative solutions can be adopted to bridge gaps and impose effective top-down solutions. Both formal and informal mechanisms can be given orchestrated roles under the singular national law. In sharp contrast, the horizontality of the BRIPPP is a critical dimension. There must be no imposition of one government on another. At least two States join together as co-equals in a contractual bilateral agreement on the centrality of trade and in specifying the nature and essential parameters of the network facility. Together, and in varying degrees, they establish the bilateral framework of economic cooperation and commitment under which the private and public actors come together.45 This too is incomplete. It would be a mistake to insist that something approaching a bilateral or multilateral treaty detailing terms of engagement and disengagement must be emplaced before concrete steps can be taken to implement the PPP. The framework, whether formulated as a memorandum of understanding or as a joint statement, is not a legally enforceable agreement, and the notion of a master agreement under which a PPP is a scheduled operative must be dismissed. It would be an even greater mistake to suppose that apparent national obligations contained in the framework must or will have operational status in the form of constitutional or quasi-constitutional constraints. The unmistakable implication of this horizontality is that all of the tensions that characterize the BRIPPP are actually foreshadowing another, more significant, basal tension. As was said, it is not possible to manage all legal risks by writing a complete framework of formal and informal mechanisms for managing risks as well as enumerating all possible relational norms to govern the exercise of authority when managing risks. A complete framework must allocate the decision-making authority, which is to preclude or overcome the pertinent risk. But there are institutional constraints with respect to the incidence of authority that cannot be eliminated in a top-down fashion by a singular national law. The very nature of governmental authority implies that certain discretions are not transferable. There can only be a more or less general ex ante allocation of risks according to which party is best placed to assess and bear them. This allocation of risk can be set out contractually. But that is only of a provisional nature. In a contract with a life cycle of more than 25 years, the risks will change over three sites at least since there will be at least two governments and one private party. So, one must expect that the initial framework of decision-making rights may itself be altered under the circumstances. There will also be constraints affecting the exercise of discretion. Public authorities are not fully free to derogate to the contractual commitments they agreed to with the contractor. For instance, changes in the contract may require observance of a new public procurement procedure. Public authorities are also subject to external control over the good use of public money, constraining how contractual rights may be waived for the sake of preserving a relationship or continuing a public service. On the other hand, ‘the site of transnational governmentality [regarding service performance and quality] is displaced to private entities which are unaccountable to the “constituencies” they affect and, indeed, in many cases, unchecked even by the risk of private (tort) liability’.46 As decision-maker, the non-State actor will have to consider the risk that that public responsibilities transferred to him as the unaccountable private party may disappear down a hole. If this is a problem of accountability that national PPPs face, it is even more pronounced for global PPPs47 in view of the heightened risks, which will be discussed below, and of course, the ubiquitous premise of horizontality. There is a greater need for an ‘intertwined activity’ or decision-making process,48 a relational process or activity that cannot fully be specified in purely formal contractual terms.49 The essential problem of horizontality, thus, can be characterized from the legal and business perspective as a spatial horizontal autonomous management of risks through discretionary contractual powers. In a cross-border perspective, there are questions as to which law governs the allocation of decision-making rights; if authority to do so is conferred on a State actor, which public law regulates the exercise of the rights or, if the authority is conferred on a non-State actor, which public law regulates the exercise of the rights. To seek an answer concerning the exercise of private and public power beyond and across States by entities in a manner that does not fall to be neatly regulated by some national legal system is a paramount concern in what ensues. COL’s domain What law governs? Fortunately, there seems to be an emerging consensus in the literature that PPPs as frameworks for long-term commitments should endeavour to achieve the services to be delivered by developing solidarity, mutuality, and trust. The question then becomes much more focused: what kind of legal infrastructure is needed or expedient for generating the solidarity, mutuality, and trust between countries, their public authorities, and the non-State actors? A superficially attractive idea is to allow only one law to create, govern, and terminate the BRIPPP. Davinia Aziz propounded this solution for the delivery of global public goods. Arguing that global PPPs are a more efficient and effective option for delivering global public goods relative to treaty-based international organizations, she concluded with a recommendation.50 This was that, when a global PPP is established, its constituent instrument should clearly state that the partnership is to be governed by public international law. It is, however, obvious that the hybridity and heterogeneity of the global PPP for delivery of infrastructure will not admit a simplistic, one-law solution. A one-law solution may strengthen unity in conception and goal making but sacrifice diversity in implementation and development as well as privilege one public law over another. Short of one law, another possible solution is to identify the issues that should be grouped together for the sake of uniform legal treatment by way of a model law. A model law can be useful even when it does not purport to generate common postures on all salient issues and points. It can be drafted to be flexible here and there. Presumably under this belief, the United Nations Commission on International Trade Law (UNCITRAL), in the early 2000s, adopted a Legislative Guide on Privately Financed Infrastructure Projects (UNCITRAL Legislative Guide) and related Model Legislative Provisions on Privately Financed Infrastructure Projects. Since then, UNCITRAL has tried to upgrade these efforts to a universal model law on PPPs by putting the development of a universal model law on the UNCITRAL agenda twice: in 2013 and 2014. Success has eluded it. To date, there is only one regional model law on PPPs—namely, the Model Law on PPPs for the Commonwealth of Independent States (CIS) countries, developed and adopted by the Inter-Parliamentary Assembly of the CIS’ Member States.51 It is far too early to tell whether this model law can be presented as a template of a framework of issues, let alone a universal model law. But if the thesis in this article—which is that the fundamental questions that pertain to the governance of decision-making of a public or quasi-public nature are fairly intractable to admit of singular legal solutions—is right, any semblance of convergence will not be reached soon. The gulf between governance by objectives in some countries and governance by institutional competence in others, together with their diverse complements of inclusiveness and accountability, is too wide to bridge in a couple of years. Inadequacies of traditional COL The insights from reflection on the contractual nature of PPPs and the difficulties of a one-law or one-model law solution yield a host of questions as to how formal contractual, as well as informal relational, mechanisms should be governed. There is no question that we should differentiate between the formal and informal, given that informal relational mechanisms are a central complement indispensable to the PPP. The formal mechanisms will be determined in the usual manner by the chosen applicable law, but should there be necessary qualifications to ensure flexibility? Among the relational mechanisms, should we attempt to differentiate between the structural management of risks and the management of decision-making authority or governance? How can we select the law that will determine an issue of decision-making governance? No pun is intended when this article claims that what is needed is a legal infrastructure that can support the critical framework of both formal and relational risk management and the management of decision-making authority. That COL is the natural line of development, given its inherent comparative advantage for a task of this magnitude and nature, is hardly contestable.52 COL already has a natural aptitude for BRIPPP disputes. The strength of COL is in mediating differences and producing uniformity without sacrificing the diversity of substantive laws and policies. Its permanent features are techniques that aim to create a fair and just ad hoc substantive law—a law for the moment operating in the cracks between national laws or symbiotically with national laws. Some of its techniques are already fairly familiar. They are: (i) breaking down a problem into its substantial juridical realities at concurrent as well as successive levels of characterization as a means of handling complexity; (ii) analysing a claim at the several levels of jurisdiction, choice of law, and recognition of judgment so that different aspects are appropriately and proportionately coordinated in reaching reasonable and predictable outcomes; (iii) delineating true from false conflicts and appealing to comity of nations as secondary refinements to problems of characterization; (iv) developing stable connections to national law systems capable of accommodating the needs and interests of sites of greatest impact as well as suppressing harmful opportunism and abuse of its techniques; (v) identifying out-of-bounds markers by rejecting outrageous foreign State policies; and (vi) ensuring, as a general rule, a structured and neutral response appropriate to pertinent juridical needs and concerns of individuated justice, having regard to comity of nations. But if it is, thus, evident that we can and should find the solution to BRIPPP disputes in COL, it has also to be admitted that COL is inadequate as it stands.53 The rest of this article seeks to explore this idea. It proceeds by first identifying the inadequacies of COL with reference to BRIPPP problems. The remainder of this article then inquires as to whether new COL methodologies with substantive elements representing common substantive policies can be adapted or devised to surmount these inadequacies. The exercise is something of a surface excavation of the Singapore COL and a study of its amenability to evolution and development. Nothing like a sustained argument is attempted. What follows is more of a sketch of possibilities of development. First, traditional COL identifies and defines and articulates conflicts in terms of conflicts of jurisdiction and applicable law (this article is not concerned with conflict of judgments) and conceives in this structural sense that jurisdiction is State jurisdiction and applicable law is State law. This is the source of a string of problems. A fundamental problem is that what we need to tackle a BRIPPP dispute is to identify, define, and articulate conflicts in exercise of public authority and power. Traditional COL assumes that conflicts of public authority and power are resolvable purely in jurisdictional terms, not in choice-of-law terms. This traditional, unquestioned commitment to the private and public divide is a problem that Muir Watt laments in ‘Private International Law’s Shadow Contribution to the Question of Informal Transnational Authority’.54 Not only does it ignore the reality of the emergence of many hybrid assertions and exercises of authority, but it also leaves problems they raise unattended. One can reasonably doubt whether the notion of authority should be stretched as much as Watt would want us to do. Watt herself recognizes this when she concedes that the law’s internal perspective—it ‘can only think of itself through its own categories’—55 stands in the way of a larger conception of law and authority. By any reckoning, however, BRIPPP decision-making rights must qualify as a unequivocal species of transnational authority, making Watt’s thesis difficult to ignore. It does not help that the species of authority implicated is substantially administrative law authority. Traditional COL accepts State-based paradigms as premises and frames its questions by reference to apolitical premises. William Dodge explains this in terms of a difference between the internal and external perspective: ‘Choice of law rules are by definition external to the substantive law.’56 Courts do not take an external view of foreign public law by seeking answers in the choice of law process. COL rejects framing a question of which foreign public law is the governing law on an issue before the court. The only question is whether the court must apply the public law of the forum. Consistent with this, no special regard to foreign public law is entertained.57 A ‘public law taboo’, as coined by Andreas Lowenfeld, and to be considered more fully below, applies.58 Put at its broadest, forum courts serve no other country’s public interests, except their own. They will neither enforce parties’ choice of foreign public law59 nor enforce directly or indirectly a claim governed by foreign public law at the behest of the foreign State whose law it is. The resultant mismatch is obvious when we consider that global PPPs represent an intermingling of private and public interests. Traditional COL excludes public interests from its scope but any attempt to exclude public interests from COL in relation to global PPPs misses the whole point of a BRIPPP. Even assuming that conflicts of public authority and power are indistinguishable from conflicts of applicable law, the problem is that no private national law system has the complete answer we are looking for. National law systems themselves are struggling with the PPP concept of delivering public services, which straddles the public and private divide and challenges our existing modes of legal thinking. This underdevelopment means that the public law component rules of the chosen law will not contain all that is needed to solve BRIPP disputes. The second difficulty is that there are doubts as to whether a wholesale application of the foreign public law component of the applicable law is tenable.60 Arguments, of course, have been made that allowing parties freedom to choose regulatory law will promote global welfare.61 Andrew Guzman puts up a strong case but his own qualification cannot be ignored. The autonomy to choose a public law regime is welfare maximizing if there are no or negligible third-party effects. The problem that BRIPPPs pose is that the decisions to be made in the exercise of contractual discretion very often have significant third-party effects. So, we also do not have the luxury to assert that the conflicts solution in BRIPPP disputes is simply to choose the proper law and apply its public law component and that is all there is to it. The problem is exacerbated over time. Traditional COL contemplates the short time span. The problems BRIPPP engender, however, are problems of the long duration typically spanning the life cycle of the infrastructural facility. Like old pipes in an old building, points of rupture may unpredictably occur at any time along a more distant future. A familiar way of solving long-term problems is to internalize all disputes within a corporate structure and resolve them by a majority vote of the directors or, more exceptionally, of the shareholders. Some of the problems BRIPPP give rise to can be resolved in this manner. The problems of elaboration and foundational design and conception can be resolved by forming an SPV to internalize them over the long term. As a comprehensive solution, however, it is an unthinkable political proposition. What we need from traditional COL is a framework of resolving substantive conflicts of party discretion that is persistent—that it cannot deliver as it stands. More inadequacies surface when we probe further. Traditional COL remains an ex post not ex ante constructive conflict resolution law. It resolves past situations, and the lessons it has to guide future actions in an exact manner are limited. It also lacks the systematizing influence of ex ante systems that facilitate planning. For it to work, it has to be complemented by choice of jurisdiction, which gives some assurance of ex ante certainty. What we need in BRIPPP disputes, however, is a free-standing COL that can deliver ex ante planning effects without having to be tied to any one jurisdiction. Next, traditional COL accepts or tolerates fragmented solutions as opposed to holistic solutions. It breaks up a dispute between two parties into outcome-determinative issues and allocates to each issue an appropriate governing law. This process of characterization, for the conflicts lawyer, is the beginning and the end, but the description of it as COL’s primary operation is more sober and accurate.62 The consequence is that a dispute or claim decomposed into its pertinent issues may need to be decided by a patchwork of governing laws. The prospects of reaching an outcome that could not have been obtained under any single national system are high. We console ourselves by saying that that is the price to be paid for a more nuanced solution and for the sake of conflicts justice. The problem is that sometimes the price is too high, and fragmentation and excessive issue characterization become recipes for judicial manipulation and inconsistency, particularly in non-contractual disputes. One recalls that the American conflicts revolution was founded precisely in response to this flaw inherent in the primary operation of characterization.63 On the other hand, common law courts resist fragmentation when a contractual claim is pursued. They are reluctant to entertain further splitting of issues for the sake of applying different contract laws to different contractual issues of the same cause of action or dépeçage.64 For example, rather than dépeçage, courts will prefer to find incorporation of non-governing law and consider the manner in which provisions in contention are interpreted under non-governing law.65 They obviously do not wish to distort the singular objective that most contracts have. The problem, then, is that what BRIPPP disputes need is precisely the opposite: a liberal dépeçage reflecting the need to maintain essential diversity of public law governance, as will be shown below. Again, traditional COL relies heavily on the closest and most significant geographical connection as its exclusive allocatory method of selecting the governing law where party autonomy is not acknowledged, or not availed of, though acknowledged. This is a drawback when both jurisdictions are closest and most significant jurisdictions, as will likely be true of BRIPPPs. It may be supposed that, to some extent, the Gordian knot can effectively be cut in favour of the community of greatest impact if that localization is circumstantially possible. There are reasons to think that the supposition is simplistic in the case of global PPPs. First, PPP assessments are made in terms of VfM, which does not fully crowd out non-price considerations affecting both guest and host States. Even if they did, where trade is the primary objective, courts will struggle to identify the community in which the issues have their greatest impact. Do they not impact both countries to the trading relationship fairly equally? Second, the idea of the BRI in the larger perspective is to connect multiple trading communities not restricted to the countries immediately connected to the infrastructural link in question. This complicates assessments of the interests of affected trading communities. Third, BRIPPPs represent an allocation of public and private resources and risks attendant upon pursuing the trade goals. Courts may be expected to be reluctant to be drawn into politically motivated allocations of resources and risks, as must happen if they are to determine in which of the affected communities such allocations have predominant impact for the purposes of localizing the closest and most significantly connected community. Re-imagining COL for BRIPPPS Harnessing and re-imagining COL From a strategic perspective, COL’s impressive credentials cannot directly be mapped onto the BRIPPP but must be harnessed and focused on the gaps between formal and informal spaces as well as gaps created by the blending of public and private authority or power. Where the formal space is governed by the parties’ chosen law, cooperative conflict resolution or restraint on unilateral State power will be a major undertaking. In the informal spaces, the key functions that COL must perform will lie in discerning who has the discretionary power to decide a relevant question, what relevant considerations must be taken into account and what are ignored, what evidence or information must exist before decisions are made, and, without being exhaustive, what consultative processes are complied with. There is no shortage of conceptual challenges to achieve the goal of integrating the public and private dimensions of the BRIPPP by selecting the appropriate governing law that can satisfy the requisite undertaking, and this article must be selective. Identifying and demarcating a conflictual space One emerging challenge will be for COL to acknowledge a conflictual space for global PPPs in a distinctive characterization. The advantage to be gained is that solutions that are adopted within this space will not threaten other established conflicts relationships and categories. Cross-percolation may be possible, of course. Techniques appropriate within this space may percolate to a smaller or greater extent to spaces occupied by other integrated and interconnected markets. The converse percolation can also be helpful in casuistic fashion. But, for all this to succeed, a working definition for appropriate characterization is needed. This must not be too rigid since characterization as a tool must be predictable but must also accommodate the very flexible nature of the global PPP. It is conceivable that only three basic requirements are needed: (i) the fact that both public and private parties consent to be bound in a legally binding relationship for mutual benefit; (ii) the fact that both public and private parties share in the exercise of authority and power in the elaboration and delivery of public services; and (iii) that management of risk expectations by formal and informal allocation of power is fundamental to the objects to be attained. The first element acknowledges that there are global PPPs that are not legally binding contracts for implementing specific projects and ensures that these are excluded from legal analysis and disposition. There need not be any further restriction to for-profit actors since the essential criterion is mutual and contractual commitment to pecuniary expenditure and liability for breach. There is also no need for an in-built definitional criterion that the relationship must be effectively and mutually beneficial; just as a contract is made for mutual benefit but may eventuate in one-sided loss, so also is a BRIPPP. It follows that the fact alone that the key private actor is constituted as a compound corporation invested with public and private law powers will not result in internal disputes within the corporation being characterized as a PPP dispute.66 The demarcation of a distinctive conflictual space will not only serve jurisdictional ends. It can also, more importantly, open the path to dépeçage in BRIPPP contracts, bringing like issues together for uniform choice of law treatment and avoiding conflation with unlike issues. The second and third elements recognize this. In composite or conjunctive fashion, they accommodate the fact that the boundary between formal and informal management of risks needs to be delineated. Those risks that are formalized must be left to the governance of the proper law of the contract, and techniques to deal with informal discretionary power to manage or preclude risks should not intrude into this subspace. Coordinating autonomy for cooperative conflict resolution Within the distinctive space, courts can be expected to deal with formalized fixed rights as well as informal decision-making rights. Some definitional difficulties can be anticipated, but they will not be insuperable if what is formal and informal will depend on the reasonable intentions and expectations of all pertinent parties construed in the light of BRI commercial purposes. Needless to say, substance must prevail over form. BRIPPP contracts may specify formal allocations of risk of change in the law or political risk or delay in approval risk, corruption risk, or expropriation risk and without being exhaustive force majeure risk. These are critical risk factors affecting the success of a BRIPPP. But these are also equally amenable to management by decision-making rights; indeed, prospective and unrealized risks may be better managed in that way, depending on the circumstances. Only one example need be given to illustrate the significance of contractual construction. A clause specifying political risk management in terms of rights to request adjustment upon changes in law with material effect or substantially altering the rights or obligations of the requesting party poses many questions if read as a provision fixing rights. These include incidence of the burden of proof of material change in the law, the meaning of change, and the meaning of substantial alteration. With the possible exception of the first mentioned issue, the rest, which are private law matters, will straightforwardly be determined by reference to the proper law of the parties. If, however, the clause is construed as a conferral of a qualified decision-making right to affect the other party’s interest, coupled with a duty to consult the affected party before exercise of the power to decide, the issues that arise will be matters of management of decision-making rights or public law governance. The second point is about the need to coordinate party autonomy with general principles of commercial law predicating cooperative conflict resolution where a conflict arises in the space occupied by the parties’ chosen law. It is a shortsightedness of many conflict lawyers that they continue to perpetuate an all-or-nothing viewpoint or framework where applicable law is either State law or nothing. Presently, there is a sharp dichotomy between the reception of non-national lex mercatoria by arbitrators and its rejection or disavowal by the courts, save by specific incorporation as terms of the contract.67 There is, consequently, considerable dismantling to be done if lex mercatoria is to be governing in the same manner as the parties’ chosen State law. Among those who support dismantling, Watt writes of COL’s blind spots arising from selectively focusing on State sovereignty. Traditional COL cannot see, let alone recognize, non-State actors. For her, this is a serious problem and irony: This denial of private authority and lawmaking in the global arena, while designed to ensure the supremacy of state sovereignty, leaves private power supreme. Thus, emergent codes of conduct, technical standards, financial benchmarks, and standardized contract practice all denote the existence of diffuse forms of non-state authority that wield economic leverage while escaping effective regulation.68 Here, too, Ralf Michaels has an interesting thesis that, if accepted, will take us into ‘the third stage’ of development of the lex mercatoria.69 The acceptance of lex mercatoria by arbitrators is only ‘the second stage [which] describes the renaissance of the idea as a “new lex mercatoria” in the 20th century, an informal and flexible net of rules and arbitrators establishing a private international commercial law’.70 The third stage has been ‘described as a “new new lex mercatoria,” moving from an amorphous and flexible soft law to an established system of law with codified legal rules (first and foremost the UNIDROIT Principles of International and Commercial Law) and strongly institutionalized court-like international arbitration’.71 Can one dare suggest a fourth stage where the new ‘new new lex mercatoria’ lifts off its moorings in institutionalized dispute settings and starts to fill the conflictual space where the global PPPs reside? Arguments both ways have their specific merits. Perhaps, despite objections, a case can be made that a global PPP that predicates two sovereign States in a long-term contractual or quasi-contractual relationship that is expressed to be governed by lex mercatoria seems different and sufficiently distanced from the objections to governance by lex mercatoria, and that the legitimacy of lex mercatoria as governing law should be recognized. Be that as it may, in the present state of things, it will be exceptional for the lex mercatoria to be chosen as the governing law of a BRIPPP. What this article considers more likely is a moderating role for the lex mercatoria that would be well within BRIPPP expectations. This role, facilitated by dépeçage, is limited to ensuring that the interpretation of formalized management of risks in the form for example of invocations of broad contractual standards of performance will be governed lex mercatoria—in particular, its principles of good faith interpretation and performance of contract. It is important to stress that the result is not to replace autonomized choice of law nor to undermine the importance of ensuring that BRIPPPs must be free to erect their risk structures and framework of sharing risks according to chosen national law. Nor is it supposed that trade usages will cease to play their role as facts informing the interpretation of the parties to the BRIPPP contract, which is subject to State law. In its application, there is a narrow and a broader conception of trade usage. ‘The narrow conception is restricted to contractual practices usually followed in a particular trade or industry, which serve to interpret the intent of the parties’.72 This role of the trade usage will not be out of a job just because lex mercatoria is admissible as a normative force capable of moderating the interpretation of contractants’ rights and duties.73 On the other hand, there is the broader conception that ‘also includes principles and rules of law observed in or inferred from international instruments, arbitral awards, and comparative law’.74 Application of the broader conception also will not happen on a wide scale. In the conflictual space of concern to us, lex mercatoria is still not a free-standing ideation but, rather, a body of corrective general principles to refine the autonomized contract, making for a closer fit for the sake of realizing the shared expectations embodied in the contract and bringing the contractual construal better into alignment with these expectations. Because lex mercatoria is a loaded expression, it would be better to speak of general mercantile principles to avoid any suggestion of a positive claim that those general principles are applicable in their own right. The case for general mercantile principles is to counter extreme interpretations of formalized mechanisms, which lend themselves to opportunism contrary to the parties’ shared expectations. Same autonomized law to govern third-party non-contractual claims Another innovation in relation to non-contractual party autonomy seems important as much for the sake of risk management as for the popular success of BRIPPPs. User liability in tort law as between contracting parties is already predictable since infrastructural torts are likely to be localized in the country where the infrastructure is operational.75 This is helpful in predicting the scope and extent of non-contractual risk management. Risk management between contracting parties can further be enhanced by alignment of the applicable tort law to the chosen contractual law. This can be achieved by upholding non-contractual party autonomy as between contracting parties. If, however, BRIPPPs are to win popular favour, they will need to be perceived as not taking advantage of lower safety and health standards of the host country, if this be the case, but elevating them to those applicable under the tort law of the law chosen to govern the contracts of elaboration, construction, and operation. There are some minor methods for achieving this. These methods predicate that the contracting parties bind themselves to the same proper law as governing both contractual and tortious liabilities as between them. 76 They can then stipulate that the choice of the same contractual law to govern tort liability is made for the benefit of stipulated third parties or specify that the Contract (Rights of Third Parties) Act shall apply to such third parties. Another method is to invoke the tort law of the country of the proper law as an exception to the double actionability rule.77 A third, more controversial, method is to invoke the doctrine of renvoi under the governing tort law. This does not look like a very promising route but may not be as unarguable as attempting renvoi from the proper law of the contract.78 Is it possible to do more by developing a COL rule allowing the chosen law governing non-contractual claims between the direct parties to also govern non-contractual claims between direct and indirect parties? This will not merely be a minor method of promoting the objective of an integrated market based on common community safety standards throughout the BRI. A significant challenge to traditional COL is posed. Lest it be thought, however, that non-contractual party autonomy in this sense is heretical, reference may be made to an idea to which the European Rome II Regulation jurisprudence has given carriage.79 The idea is already a conflicts reality in Article 14(3), which allows the contractual choice of law to govern non-contractual issues between all third parties who are engaged in a common commercial activity provided that the choice is freely negotiated between those who are contracting parties, and its application will not prejudice third parties.80 Doubts, of course, are possible as to whether common law courts applying tort choice of law rules can boldly march along a similar path that the European Union (EU) has opened up by legislative reform. These doubts are quite formidable in the general perspective. But though the BRIPPP is by no means a legally and constitutionally integrated market in the same sense as the EU, its underpinnings will be strengthened by an integration of tort and contractual liability. Could this be sufficient State-initiated ground to support a similar court-initiated conflicts rule? Developing solidarity and surmounting the public law taboo Not only is there a need to moderate interpretation of formal risk allocation in accordance with general principles, but there is also the formidable and challenging task for COL to ensure that essential diversity of governance of public decision-making rights is not sacrificed. By way of re-capitulation, the basic structure of the transfer of risks from public to private sector and the retention of un-transferred risks by the public sector has to be accomplished by the choice of a private law of contract. This is essential to VfM principles, which require the terms of the contract, including performance standards, to be struck up front. So the broad-level risk management undertaken predictively and competitively (to ensure bids are as close as possible to production costs), and all predictable possibilities of change in context, circumstances, and operating conditions, must be factored in, and the pertinent risks distributed according to the chosen law, operating in a cross-cutting coherent manner across all component contracts. But, as to the degree of flexibility in responding to and otherwise managing materialized risks and especially in tackling imminent and unforeseen risks, there is no ‘one-size-fits-all’ device. The only common device is conferment of unilateral discretionary power to make decisions. One model allows either party to unilaterally propose a change, and after considering and discussing with the counterparty the relevant effects of such change on performance and costing on the project, to implement a solution (sometimes) by reference to certain criteria. Under an even more highly discretionary model, the government, or, in some instances, the non-State actor, may unilaterally decide whether to provide fresh assistance or bear the costs of and risks associated with specific changes such as capital additions or refinancing solutions or extend or reduce the term of the project. Such unilateral authority is prone to opportunistic abuse, as was said, and the advantage of affording contractual parties control over the misuse of public decision-making rights through combined operations of public law and private law remedies is hard to gainsay. Perhaps more ominous is the fact that public law, nowadays, is more likely to envisage a degree of third-party involvement or intervention in order to control the exercise of public discretion.81 It may be incompatible with the nature of a BRIPPP to suppose that third-party interested persons will have directly enforceable contractual rights to compel decision-making in their interests. Public law, however, may require their interests to be taken into account indirectly through standing provisions and public remedies such as judicial review. This may be variable; greater intervention may be possible in the elaboration (gestation and development) phase than in the implementation.82 Some see a further complication arising from the fact that the allocation of decision-making authority represents a diffusion of accountability across multiple public and private actors.83 In our context, this means that a court not sitting in the country of a relevant foreign public actor may be restricted in the type of orders that it can make against the foreign public actor. In addition to the complexities of incidence of authority to decide and type and availability of remedies, the open texture of decision-making that implicates both public and private interests is neither last nor least in significance. Put simplistically, the State actor as decision-maker must consider profitability alongside public interests, while the private actor as decision-maker must consider inclusiveness and accountability alongside profitability. These must be coordinated, not balanced, according to the appropriate national public law. Public law may, for example, require social and environmental interests to be taken into account or set certain mandatory priorities. Additionally, it may require taking steps to obtain further information to foster trust in the information processed, such as supplementation through consultation and other participatory proceedings. The purposes and effects of types of decision-making may vary. Some may have pedagogic effects serving to strengthen public trust in the accountability process. Others have reflective adjustment value, allowing improvements to be made to current performance. To put it shortly, there is a whole law to be constructed if we are to be able to re-imagine BRIPPP parties as wielding authority and as being accountable or responsible to one another for deliberate consideration and, in some instances, to third parties. This will be a new law because it has hitherto been excluded from COL by the public law taboo. So the dismantling of the public law taboo will have to be the first step, and the first step of that first step must be to clarify what the taboo really is. The problem is that the public law taboo can mean any one of four or five things. The early view of FA Mann compared it to the absence of international enforcement jurisdiction as prescribed by public international law.84 In the wake of subsequent criticisms, that view is little heard of today. The bare language of jurisdiction is still employed and the rule stated as Rule 3 in Dicey, Morris & Collins on Conflict of Laws continues to be formulated in jurisdictional terms.85 But as Briggs and others correctly show, the subject of the taboo is not so much the jurisdiction of the foreign court or the forum court but the claim by a foreign State to public law rights of its own creation.86 The second view is advanced by Dodge in his rationalization of the American public law taboo while seeking to promote the enforceability of antitrust as well as securities regulation claims by private plaintiffs.87 He asserts that there is an important distinction between penal and revenue law claims on the one hand and antitrust and securities regulation claims on the other. Justiciability over the former claims in the sense of subject matter justiciability lies with the executive and not with the courts. This, however, does not sit well with the judicial opinion in Shergill v Khaira,88 to the effect that territorial limits of competence furnish the basis for the public law taboo, as opposed to constitutional competence and subject matter non-justiciability. Briggs has also suggested a promising third view that the revenue rule is a choice-of-law rule that revenue claims are governed by the lex fori.89 This does not tell us whether penal and public law claims are of a similar character. Nor does it exhaust all possible views and, in particular, one that comes closer to the BRIPPP context of administrative law governance.90 This is Philip McConnaughay’s view, which is also the broadest formulation of the taboo. He identifies four rules: (1) the forum will confine its conflict of laws analysis to categories of private law, thus limiting the forum’s possible application of foreign law to private law, (2) the forum will not apply foreign public law to the transaction, but instead will dismiss the case if the dispute is governed exclusively by foreign public law, (3) the forum will not displace applicable forum public law in favor of any other law, and (4) the applicability of the forum’s public law will turn on the intended reach of the law and not on private contractual election or on whether other nations do or do not regulate the same transaction’.91 With respect to (1), and, in fact, also to (3), where McConnaughay’s position is more distinctive of BRIPPP disputes than the other views, he maintains that ‘the court will neither apply the public law of the designated foreign jurisdiction nor decline to apply applicable, but nondesignated, forum public law’.92 The position in Singapore is more qualified. The courts in Singapore give effect to foreign proper law illegality;93 it is not an objection that foreign law illegality is foreign public law. They also do not see any difficulty in applying the foreign public law to the question of whether a foreign public official or legal person has capacity to make a contract.94 These Singaporean qualifications, however, are too modest to get us to the point where courts can freely and legitimately inquire into and enforce foreign administrative law. For the sake of the BRIPPP, courts need to dismantle the taboo, especially in the first and third senses. Can they do so? Can the bilateral or multilateral government consensus undergirding the BRIPPP relevantly imply consent to mutual enforcement of public laws?95 This is a big question that COL must answer. Getting over the public law taboo is only the beginning. A host of new inquiries must next be entertained—particularly with respect to how to judge the contents and legitimacy of exercise of unilateral decision-making power. Can self-regulation through structured negotiations before expert panels provide the answer? The experience of derivative traders in an established global and integrated market platformed on the International Swaps and Derivatives Association agreement indicates that self-regulation is effective to a considerable extent through arbitration, so long as insolvency does not occur.96 BRIPPPs are far more complex. The kind of discretionary authority that is implicated calls for decision-making in accordance with private considerations, such as profitability and efficiency, and public considerations, such as inclusiveness and accountability for substantive public policies. It would not be unreasonable to say that the impossibility of hermetically sealing off these decision-making rights from public scrutiny is a major factor suggesting the limited value of the derivative trading experience. If not self-regulation, how can the exercise of discretionary authority be governed by the appropriate public law? Can principles of dépeçage be of assistance if both diversity and unity are critical? The idea of splitting up decision-making rights and, therefore, the discretionary public decision-making space is attractive if account is taken of a distinction that is now fairly well acknowledged in public management between value-claiming and value-creating norms.97 The former norms stress cooperative conflict resolution and can be found in the parties’ shared expectations and commitment. It was previously shown that such norms as trade practices and usages or general mercantile principles are a necessary complement for construing specifications of broad contractual standards for the sake of avoiding ex post transaction costs as a result of contentious breach of contract. More intense forms of such norms are a necessary complement where discretionary authority is conferred for value-claiming purposes. For the sake of restraint from the improper use of unilateral decision-making power, recourse to shared expectations and commitment will be apposite. An example is where one party has discretion to determine whether a performance standard has been achieved to his subjective satisfaction. Value-creating norms, on the other hand, stress solidarity, mutuality, trust, and continuance of relationship, and include especially those that allow one party unilateral discretion to create new terms and conditions, as it were, for the mutual benefit of both parties or for the sake of the PPP’s purposes. These go beyond cooperative conflict resolution or restraint from improper use of unilateral power in predicating affirmative action, not necessarily conditioned on the prior existence of conflict, to enhance opportunities for moving forward towards, and forging, greater mutual satisfaction and goal accomplishment. Based on the distinction between value claiming and value creating, two broad categories of dépeçage can be isolated. The first has regard to the impact of the decision-making on third parties. There is good reason to isolate issues of third-party control over public discretion. This will differentiate them from issues concerned with value creating since third-party issues are essentially value-claiming issues concerned with requirements of inclusiveness and accountability. Although we may broadly divide public governance systems into those that govern by objectives and those that govern by personal and subject matter competences, more varied and subtle differences in degree and kind of inclusiveness and accountability may be expected. A range will be found with more extensive and especially procedural controls in one State and the barest or minimalist control in another in terms of inclusiveness and accountability. Third-party control is also known to vary in availability or threshold standing requirements. It is more likely in the elaboration phase and may be unusual in the implementation and operation phases. With the termination decision, it may be pretty much non-existent—especially if this is going to be a politically sensitive decision. Practically speaking, the actual consequences of exercise of decision-making authority will also affect availability. Some form of third-party intervention, thus, may be probable in exceptional and crisis situations, especially where third-party vulnerabilities are substantially impaired. From what has been said, it would be reasonable that the substantive law to be applied to such value-claiming issues should be the law that best promotes commitment to the shared expectations of the contracting parties having regard to the nature of the decision-making authority in question. The second category for dépeçage will be concerned with promoting solidarity and trust between the contractants inter se by ensuring that decision-making aimed at creating value will be deferential to the substantive policies that define that value. Individual public law systems will have their processes and detailed rules concerning the identification and formulation of considerations that are relevant, the rejection of irrelevant considerations, and the respective weighting and priorities of relevant considerations. These seek to delineate the metes and bounds within which public interest factors and profitability will be balanced and substantive public justice in the allocation of resources and efficient delivery of public services achieved. Since substantive public justice can only be dispensed according to pertinent substantive policies, it would be reasonable to expect that the law to be applied should be the law that best promotes the pertinent substantive policies or best moderates those that detract from them. For this effort to come within reach, two modern developments are particularly useful in lighting and opening the way to plausible possibilities. Since the second half of the 20th century, it has become possible to contemplate that substantive justice, as opposed to conflicts justice, is also an influencing consideration in the choice-of-law process. First, the American conflicts revolution abandoned the formalistic processes, urging us to penetrate beyond them to consider and analyse the substantive policies in conflict.98 The prescriptions for resolving true conflicts of policies described as State interests now vary from pursuing a balance of public interests to preferring the forum policies, unless a conflicting policy is compelling. Later in time, the EU conflicts revolution has been perceived as a revival in formalism in pursuit of an institutional agenda to create a common law and market for Europe.99 This revolution thus assumes a distinctive regulatory and governance stance or dimension. It involves, among other things, identifying a consensus on substantive policies deemed essential to that stance and infusion of those substantive policies under the favour principle in order to create a uniform choice-of-law rule for consumer contracts, individual employment contracts, and so on, for the EU. There is some resemblance between the role of COL in creating an efficient internal market through decisional harmony under certainty of applicable law and the role of COL envisaged for BRIPPPs. It is doubtful, of course, whether either the pursuit of balance of public interests or the EU brand of integrative formalism is appropriate for the integrated trade connectivity that a BRIPPP predicates. But the inspiration of both (especially the latter) teaches that there may be a place in COL for advancing substantive policies and that solidarity and trust are legitimate grounds for weighing in substantive policies in determining the applicable law. A second development is observed and supported in Alex Mills’ article ‘The Dimensions of Public Policy in Private International Law’.100 His attractive thesis explains the exclusionary role of public policy in terms of variable levels of conflict, instead of binary, true-or-false conflict. The result is a compelling two-dimensional imagery of concentric and widening circles of substantive policies and proximity of dispute to the forum. These circles reflect the forum willingness to apply another State’s policy either to exclude or include in proportion to the closeness or lack thereof of the substantive policy to the forum’s own policy as well as the degree of proximity of the dispute to the forum. Shared or absolute norms can affirmatively be enforced despite a low degree of proximity of dispute to the forum. Those that are not of that character are deserving of greater attention only if they are contested in disputes that have a high proximate situation to the forum. For want of a better word, we might think of a notion of ‘relational distance’ in contradistinction to the closest and most significant relationship. Relational distance comprises degrees of similarity or difference between substantive policies. We might include in this notion the distance between the parties defined by their division of labour, network of interaction both in scope and frequency, and length of interaction and integration. Between parties close to the heart of the risk sharing in a BRIPPP, there will be less law to regulate them and more discretion and responsibility. There will be more law between less distant parties. In short, the question is whether the fostering of solidarity and trust can be regarded as a function of the relational distance between the parties to the disputed decision-making and any pertinent ex ante allocation of risks. It is possible to paint a picture of how COL could respond to considerations of shared expectations and commitment, as well as solidarity and trust, by taking account of both ex ante allocation of risks and solidarity and relational distance. Three selections from a spectrum of examples will be offered by way of illustration. To simplify the discussion, these are examples where ex ante allocation of risks is held constant and is, therefore, a matter of indifference. At one end of the spectrum, the exercise of unilateral power in accordance with the governing public law threatens to injure shared expectations and impair commitment to BRI objectives. Suppose the host government has unilateral decision-making authority to decide whether to pay the SPV an annual subsidy in US dollars during the operational phase of the BRIPPP. The host government claims it is entitled to make its decision solely for the purposes of protecting its general economy against speculators. It decides peremptorily, as it may by virtue of the host State’s public law, to terminate the subsidy with knowledge that this will cause the SPV to default on its loan obligations to pay its foreign financier in US dollars. A court could refuse to give full effect to the decision at the behest of the SPV on the ground that even if the host State public law is governing, peremptory application of the host State public law is an abuse of unilateral power. In terms of relational distance, the exchange control policies that form the basis for the decision are not at the core of the parties’ shared expectations and commitment to the BRIPPP. In the absence of deliberate consideration of whether the pursuit of exchange control policies could be achieved with minimal prejudice to the SPV, the decision would lack justification in the face of the shared expectations and commitment as between the parties. The second example posits the exercise of public authority by the non-State SPV in a manner alleged to fall short of accountability principles. Suppose the SPV is empowered to determine service standards in the operational phase of the BRIPPP and decides to cut spending on erecting safety barriers along substantial stretches of the facility, which is an expressway. This decision is primarily based on improving profitability. The contract provides that the governing law includes the public law rules of the chosen law.101 Under these rules, there is a duty to consider whether to inform, involve, and consult with representatives of local persons identified as affected by, or having an interest in, the operation of the facility by virtue of public law requirements of due process and public participation. The rules do not specify any modality of consultation but leave it to the discretion of the decision-maker in the event consultation is considered beneficial. Under both guest and host public law rules, a duty to consult arises as to matters related to the economic, social, and environmental well-being of potentially affected persons during the pre-procurement stage of service contracts. We will assume that under all public laws that are implicated, the duty to consult and consider is detachable from public office and transferable to any private person exercising the pertinent public function. In terms of consensus of policies, there is some agreement on some form of due process, and in terms of relational distance, there is significant contact with, or proximity to, the objectives of the BRIPPP. A court could determine that in the circumstances the chosen law is the best law for the sake of solidarity and, therefore, the applicable law with respect to due process requirements and require compliance at the behest of the host government and possibly a third party. At the other end of the spectrum, consider the example of the host country government building a competing expressway that the SPV complains is a breach of the host government’s obligation to avoid changing the law, thereby imposing excessive economic burdens on the SPV in the operational phase.102 The host government claims that it has unilateral authority to decide whether and how the service standards should be modified during the operational phase. Under the constitutional law of the host country, the government cannot be constrained from exercising its sovereign power to regulate for the general public good. Under the constitutional law of the guest State, the government may surrender its sovereign powers by undertaking contractual obligations for the public good. Under the constitutional law of the chosen law, the government cannot be constrained from exercising its sovereign power at any time and under any circumstance but must compensate for reasonable loss flowing from a change from the policy to which it has previously secured the SPV’s commitment.103 In these circumstances, there is only modest agreement on substantive constitutional policies, but the relational distance is nevertheless strong. A court could attempt an approach based on reasonable balance of interests or best interests of the PPP, depending on the relational distance and, in our case, apply the constitutional principles of the chosen law.104 Exit strategies and wicked problems Naturally, it is also the function of COL to defend the integrity of its system of orderly conflicts resolution. The way this function is discharged is to ‘black box’ the problem, isolating it and shunting it to diplomacy if alternative judicial recourse is impossible. Traditional COL employs a variety of devices for this purpose, including the public law taboo, the rules of foreign law illegality, and the doctrine of truly international public policy. This resolve is tested when it has to deal with challenging and wicked problems, to borrow the terminology of design theorists. As a preliminary explanation, the use of this terminology stems from the 1973 work of Horst Rittel and Melvin Webber, who jointly coined the term ‘wicked problem’ to refer to problems that are difficult to define and inherently unsolvable.105 A simplistic view posits that a wicked problem cannot be solved because it cannot be stated. This happens when the apparent solution to the question alters the very question that is answered. In their original work, Rittel and Webber suggested that wicked problems are typically those pertaining to governmental, social, or policy planning. Much of the subsequent literature has borne this out, and the theory of wicked problems has been applied widely in the social sciences. It has been less conspicuous in the law, presumably because law confines itself to problems that it can define and that admit of a solution by legally manageable standards and because it depends ultimately on its own self-validating internal perspective.106 The law governing BRIPPPs, however, appears to be different and to lend support to the theory of wicked problem for several reasons. Under the horizontal paradigms of the BRIPPP, not only does the same question admit of many competing solutions, but also, as will be shown, black box strategies will not work where the decision-maker is himself the violator. Among them, the rules of foreign law illegality come to the fore when COL has to address the problem of corruption. There is no doubt at all about the central importance of corruption-free bidding for a seamless, efficient, long-term, infrastructural experience. Corruption in procuring a one-off or series of discrete contracts is a tame problem, relatively speaking. Corruption in procuring a PPP project is either challenging or wicked. It is challenging when the corrupt partner has the means to solve the problem of inefficiency he has caused, but the understanding of the problem, and, therefore, the ability to solve it depends on co-evolution during the full length of the PPP project. While this evolution continues, problem formulation is not complete, but the evolution terminates at the end of the project when the solution becomes otiose. COL offers a strong international solution to illegality. Under the rule in Foster v Driscoll, the court will not enforce a contract procured by corruption, but this exit strategy brings about social consequences that may be irreparable.107 COL’s answer, in fact, is doubly strong since the rule in Foster v Driscoll will not brook any party agreement to expunge the illegal parts of their contract. The victim of corruption may have no real option but to proceed with a makeshift replacement SPV, limping along to the end of the life cycle. It is then that the full scale of the corruption will be known—too late for effective redress. The problem can turn wicked if the only people minded to complain of corruption and to invest in the resources of proof and evidence to expose it are a few unsuccessful bidders and informed public third parties. In countries that recognize the critical advantage of early intervention, anti-corruption in procurement strategies have been put in place in the public law. These typically provide for judicial solutions to be initiated by unsuccessful bidders invoking procurement remedies and informed interested parties seeking judicial review. Documented experience tends to confirm the intractability of the problem.108 Courts take a cautious approach to procurement remedies legally open to bidders. They take an even more cautious approach towards third-party-initiated judicial reviews by imposing high thresholds for standing: ‘The traditional position of courts in this regard has been spelt out in Kathro, where the judge stated that compliance with procurement regulation is a primary concern for economic actors, not for third parties who would use the regulation as “a fall-back way of trying to stop [a] project”.’ 109 Judges have been criticized for having ‘not taken the opportunity of creatively welcoming the new remedies directive or the recently emerging challenges in exercising a higher level of scrutiny of procurement’.110 But then their hands are tied. Far more often, challenges come just a little too late, when massive investment costs have sunk in and expectations have become hard to reverse.111 It would take too many more pages to dwell on other prominent wicked problems. Only a brief mention of two other examples will be attempted. These are human rights violations and environmental degradations. Two features make human rights violations difficult to resolve with traditional COL techniques. First, there are the problematic cases wherein the private decision-maker who commits the violations is also the party entrusted with its resolution in the place of the public authority. Second, traditional conceptions of human rights posit State violations and the need to be re-conceptualized by reference to private non-State actors. 112 There is no shortage in the literature broaching how this should be done in order to concretize the notion of third-party rights to enforce human rights violations, directly and indirectly against transnational corporations. But concrete results are lacking. More pertinent for COL is enforcement in relation to private actors exercising public functions and assuming public responsibilities. The incorporation of human rights observance as terms of project financing is now becoming commonplace as between contracting parties. But there is considerable uncertainty over important points. It may not be obvious that breach of such principles is always enforceable under the proper law as between the contracting parties or that the governance of the proper law is appropriate in the first place. Consistently with what has been said about the drawbacks of exit strategies, it seems more appropriate to regard human rights mitigation strategies embedded in global PPP contracts as collaborative strategies to ensure minimal damage to human rights, minus third-party intervention. The last example of degradation of the environment or the negative impact of globalization on environmental sustainability practice is graded a ‘super wicked’ problem. It is not only a problem that cannot be formulated definitively and is impossible to solve; Benjamin Cashore and others point out that it is super wicked because the agent trying to solve it finds that time is running out, there is no central authority, he is also causing the problem, and his policies discount the future irrationally.113 For reasons already given, COL’s exit strategies are inappropriate. Market-driven pathways have already found their way into loan documentations. As an example, Equator Principles are now a familiar part of project financing loans from international organizations such as the Asian Infrastructural Investment Bank, and PPP contracts may provide in tandem for environmental assessments (EAs) to be conducted and approved prior to commencement of final design, land acquisition, and construction.114 This means that parties are bound by EAs whether or not the host country has environmental legislation mandating EAs before construction can begin. It does not, however, follow that these are necessarily perfect contractual duties to protect the environment.115 They are constructed, more likely, as imperfect duties to avoid harming the environment, though it would, of course, be possible to construct perfect duties as between contracting parties. Conclusions The BRI may be likened to a crucible for the simultaneous, but focused, pursuit of public and private interests on a global basis. There is little doubt about the potential for synergy by combining market and State analogues in the delivery of a global trade connectivity and, equally, the difficult balancing act that is entailed. To put all of this in a word, this article maintains that the central problems posed by the BRI involve aligning public and private objectives in the allocation and management of decision-making authority. This ultimately calls for the management of conflicts of private and public power and authority. The tools and concepts needed to perform this integrative task seem to be missing but the thesis, broadly, is that they are within arm’s reach. The conceptual challenge is to develop a framework that commits BRIPPPs to ongoing coordination and the exchange of accumulated experience for the sake of building solidarity and trust in constructing and operating the connectivity. We need to deal with a conflict of processes, of governance, and of administration, not necessarily of laws stricto sensu. COL, thus, has to move beyond its allocatory methods of creating diversity among diversity, which are presently aimed at achieving substantive outcomes consonant with conflicts justice. It is good at dividing to conquer. It now has to discover zones of diversity and, identifying them, develop principles of adhesion, solidarity, and trust to unite them, creating unity in diversity. There are heaps of questions to be answered. This is to be expected because the model that is needed is not the tidy and facile scientific model whose clear order and distillated concepts will be imposed on disputes that have arisen. This article has suggested that the tools for a different kind of COL are already in existence in US and EU contexts. Here, and especially in the latter context, are signs of recognizing and developing more inclusive techniques that emphasize shared experiences and community of interests and cultivate their projection onto the legal realities. It is only by further exploiting and evolving these fledgling concepts more widely that COL can produce a structure that supports, as well as limits, the new and ambitious creation in BRIPPPs of a conflictual space that is neither institutional nor purely discretely transactional and that is neither fully private nor public. Footnotes 1 This seems to be the more widely used short form for ‘The Silk Road Economic Belt and the 21st Century Maritime Silk Road’ proposed by Chinese President Xi Jinping in 2013 and formally declared on 28 March 2015. 2 It is said that ‘[t]ransnational PPP (TPPP) is an inevitable concept for global infrastructure and investment in the construction industry because it is a crucial way for developing countries to attract foreign investors to address the huge financing gap and enhance the efficiency of capital allocation’. Y Yu and others, ‘Critical Risk Factors of Transnational Public-Private Partnership Projects: Literature Review’ (2018) 24(1) J Infrastructure Systems 04017042-1; see also World Bank, Belt and Road Economics: Opportunities and Risks of Transport Corridors (World Bank 2019) and its recommendation to ‘[d]esign public investment to avoid crowding out the private sector from commercially viable ventures’, suggestive of a wider role for public-private partnerships (PPPs). 3 D Aziz, ‘Global Public-Private Partnerships in International Law’ (2012) 2 Asian J Intl Law 339. 4 See Michael Likosky, Law, Infrastructure and Human Rights (CUP 2006). 5 The World Bank defines PPP as a ‘long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management, and payment is linked to performance.’ World Bank, Public-Private Partnerships Reference Guide, version 3 (2017) 1 <https://openknowledge.worldbank.org/handle/10986/29052> accessed 16 April 2020. 6 See Philip Pattberg and others (eds), Public-Private Partnerships for Sustainable Development: Emergence, Influence & Legitimacy (Edward Elgar 2017) 3. 7 Though often touted as new; see Dominique Custos and John Reitz, ‘Public-Private Partnerships‘ (2010) 58 AJCL 555, 569–70. 8 Some of the literature criticizes the rush to embrace PPPs as leading to weakening the protections afforded to the public interest. See Custos and Reitz (n 7). For a survey of the literature, see Graeme Hodge and Carsten Greve, ‘PPPs: The Passage of Time Permits a Sober Reflection’ (2009) 29(1) Economic Affairs 33. 9 ‘[T]heir performance has been poor, with a consistent history of cost overruns (box table 1) for both private and public sector projects. Average cost overruns are of 96 percent for dams and 45 percent for railways (Flyvbjerg 2014). Only one to two of every 10 are delivered on schedule, and about the same share achieve the expected economic and social benefits, with demand often below expectations. Successful megaprojects, delivering the promised benefits on budget and on time, are then approximately one to eight in every 1,000 projects (Flyvbjerg 2017). World Bank (n 2) 101. 10 Two recent examples are the US $3.7 billion Makati subway PPP (which the city government of Makati awarded in June 2018 to the IRC Properties’ consortium, which had Chinese partners) and the 2017 CHEC Port City tunnel link PPP (which was a partnership between the Sri Lankan government and a subsidiary of China Harbour Engineering). A much earlier example was the 1995 Hong Kong Route 3 Country Park Motorway PPP. 11 Huping Shang, The Belt and Road Initiative: Key Concepts (Peking University Press 2019). Admittedly, very little data is available on the regulations and practices of both host countries and the major provider of funding for BRI projects; T Ghossein, B Hoekman and A Shingal, ‘Public Procurement in the Belt and Road Initiative’ Background paper, World Bank, Washington, DC (2018) 5 estimate that ‘more than 60 percent of Chinese-funded BRI projects are allocated to Chinese companies’. 12 One is noted in note 2 above. Compare those in notes 35 and 41 below. 13 James Leigland, ‘Public-Private Partnerships in Developing Countries: An Emerging Evidence-Based Critique’ (2018) 33(1) World Bank Research Observer 103. 14 Ibid 122. 15 Ibid 129. 16 Compare Shang’s more expansive description of the BRI objectives in note 11 above. This article will not attempt to distinguish the BRI from other overtures such as Hillary Clinton’s Greater Central Asia and the New Silk Road, the European Union’s New Silk Road Plan of 2009, the Russian initiative known as the North-South Corridor with India and Iran of 2002, and Japan’s Eurasian Diplomatic Strategy of 1997, Central Asia + Japan dialogue mechanism of 2004, and Arc of Freedom and Prosperity of 2006. 17 This is not to say that a BRI project cannot be undertaken as a guest public investment in a recipient State. It is hard, though, to see that public investment can consistently serve as the primary platform for constructing a transport corridor conceived on a shared basis. 18 See Shang (n 11). Compare the interesting survey conducted by Chao Xi, ‘Legal and Regulatory Risks in Belt and Road Countries: An Index-Based Approach’ in Lutz-Christian Wolff and Chao Xi (eds), Legal Dimensions of China’s Belt and Road initiative (Wolters Kluwer 2016) ch 3, concluding at 31, that measures by certain well-established rule of law and governance indices that Belt and Road countries ‘are, on a whole, not riskier than the global average’. 19 Frank Schipper and Johan Shot, ‘Infrastructural Europeanism, or the Project of Building Europe on Infrastructures: An Introduction’ (2011) 27(3) History & Technology 245, 247. 20 For example, those provided by the Asian Infrastructure Investment Bank. 21 See Marco Schaeferhoff and others, ‘Transnational Public-Private Partnerships in International Relations: Making Sense of Concepts, Research Frameworks and Results’ (2009) 11 Intl Studies Rev 451. 22 Horatia Muir Watt, ‘Private International Law’s Shadow Contribution to the Question of Informal Transnational Authority’ (2018) 25 Indiana J Global Legal Studies 37, 42. 23 See generally Poomintr Sooksripaisarnkit and Sai Ramani Garimella (eds), China’s One Belt one Road Initiative and Private International Law (Routledge 2018). 24 In this article, references to flexibility are restricted to the context of risk management. The notion of flexibility can be considered from a more architectural perspective as in Lutz-Christian Wolff, ‘Flexibility in Chinese Law: Trick or Treat for the Belt and Road Initiative’ in Wolff and Xi (n 18) ch 24. 25 For a related account of choice of jurisdiction, see Yip Man, ‘Navigating Singapore’s Private International Law Rules in the Age of Innovative Cross-border Commercial Litigation Framework’ in Sooksripaisarnkit and Garimella (n 23) ch 4, 55–69. This article does not consider the arbitration of BRIPPP disputes. For examples of what appear to be arbitration of national PPP disputes, see Tamil Nadu Electricity Board v ST-CMS Electric Co Pte Ltd [2008] 1 Lloyd’s Rep 93; AES Ust-Kamenogorsk Hydropower Plant LLC v Ust-Kamenogrosk Hydropower Plant JSC [2012] 1 WLR 920. 26 Darrin Grimsey and Mervyn K Lewis, Global Developments in Public Infrastructure Procurement (Edward Elgar 2017) at 311. 27 Ibid 312. 29 Project financing is probably the most efficient instrument for matching a stream of reasonably projected cashflows and earnings and definite assets to the huge initial outlays that will be committed to a specific infrastructural development. Financing alternatives, where these conditions do not fully obtain include hybrid annuity models, where the host government bears a significant share of the costs and collects income in the form of tolls or other service payments and the special purpose vehicle (SPV) receives stipulated annual payments over the life cycle of the infrastructure. 30 This paragraph does not take into account indirect contributions to project financing funds such as the China Silk Road Infrastructure Fund and those available from multilateral development banks—in particular, the China-initiated Asian Infrastructure Investment Bank (in which China holds a substantial 26 per cent shareholding), the New Development Bank, and the Asian Development Bank. 31 Shang (n 11) 87 explains that ‘[f]or example, in China the standard for the return pricing in the regulations and instructions of multi PPP projects places extra emphasis on the passenger volume of the operation. European and American PPP projects, on the other hand, take a functional and available approach to infrastructure projects, which makes a great difference in the calculation of enterprise economic benefits and risk control during the operation’. 32 In contrast to more rigid formulas, such as those that prescribe the financing impact of any required change in advance by reference to certain base case input rates and maximum rates of return or based on a pricing mechanism for additional components to be added on as and when they become necessary. 33 Studies on Chinese PPPs show that risks are higher in project execution than conception and termination. See Yongjian Ke and others, ‘Risk Management Practice in China’s Public-Private Partnership Projects’ (2012) 18(5) J Civil Engineering & Management 675. 34 Particularly in relation to political risks. 35 See eg Shou Qing Wang, ‘Political Risks: An Analysis of Key Contract Clauses in China’s Build-Operate-Transfer (BOT) Projects’ (1995) 125(3) J Construction Engineering & Management 190. 36 It may be a State-owned enterprise (SOE) altogether. 37 Relational norms also feature in other situations marked by a high level of inter-organizational interdependence such as supply chain contracts. 38 The precursors to the PPPs were the 19th-century and early 20th-century private construction projects with government support or under concession contracts. While PPPs involve privatized projects that go beyond construction to delivery and operation, it is admitted that one definitional problem is the prescription of the mix of active public and private roles that must exist before the mix can be denoted a PPP. See Joshua Newman’s ‘definition’ in Governing Public-Private Partnerships (Edward Elgar 2017) 3. 39 This preoccupation with social issues has persisted. 40 Richard Common, ‘The East Asia Region: Do Public-Private Partnerships Make Sense?’ in Stephen Osborne (ed), Public-Private Partnerships: Theory and International Practice (Routledge 2000) ch 8. 41 See C Chen and H Doloi, ‘BOT Application in China: Driving and Impeding Factors’ (2008) 26(4) Intl J Project Management 388; see also C Chen, ‘Can the Pilot BOT Project Provide a Template for Future Projects? A Case Study of the Chengdu No 6 Water Plant B Project’ (2009) 27 Intl J Project Management 573. The period here described is regarded as the first stage of China’s development strategy. The BRI that launched in 2013 would seem to be China’s third stage of development strategy. Between 2000 and 2013, China pursued a public investment policy of bilateral lending overseas on the principles of the South–South cooperation. 42 Likosky (n 4) ch 4. 43 This is still not the narrowest way of formulating the key objective: that is, to establish trade interconnectivity that will lay the foundation for free movement of people, resources, and information. In fact, China’s vision and actions on jointly building the Silk Road Economic Belt and 21st-Century Maritime Silk Road more broadly envisioned is not only limited to political and economic goals but also places priority on ‘closer people-to-people ties’ and advocates ‘multilevel and multichannel communication and consultation’, ‘enhancing people-to-people and cultural exchanges, and mutual learning among the peoples of the related countries, and enabling them to understand, trust and respect each other and live in harmony, peace and prosperity’, and ‘promoting opening-up, communication and integration among countries in a larger scope, with higher standards and at deeper levels’. 44 Whether BRIPPPs can garner popular support if they do not deliver popular social outcomes for ‘affected’ persons in BRI economies is therefore a different issue. 45 For some details, see Lutz-Christian Wolff, ‘China’s Belt and Road Initiative: An Introduction’ in Wolff and Xi (n 18) ch 1, 13 and following. Even so, the intention is not to establish a framework of co-governance or improve the effectiveness and legitimacy of global governance. Compare Schaeferhoff and others (n 21). 46 To borrow the words of Watt (n 22) 37, 47. 47 The notion that PPPs involve co-governance by private and State actors was broached as early as the late 1990s and early 2000s. See A Claire Cutler and others, ‘Private Authority and International Affairs’ in A Claire Cutler and others (eds), Private Authority and International Affairs edited by (SUNY Press 1999). 48 In the words of Geert Teisman and Erik-Hans Klijn, ‘Public-Private Partnerships in the European Union: Officially Suspect, Embraced in Daily Practice’ in Osborne (n 40) ch 10, 175. 49 Up until 1998, when Kinnock drew up the principles to govern the PPP for Europe, as Teisman and Klijn (n 48) point out at 177 and 178, there was still a belief that the problem of governance of decision-making was purely a matter of allocation of risk to the actor, whether the public or private actor, best able to manage it. The beginning of the 21st century seems to have brought about a change of perspective from allocation of risk management to allocation of decision-making authority reflecting governance based on ‘embeddedness and flexibility’. 50 Aziz (n 3). 51 The Inter-Parliamentary Assembly of the Commonwealth of Independent States (CIS) Member States is a CIS inter-State body created on 27 March 1992 and consisting of national parliamentary delegations of the Member States. 52 Watt (n 22) 42 argues that ‘this field arguably comes the closest of all legal disciplines to understanding, framing, and governing the “transnational” (as opposed to the international or again the purely domestic) in any systematic way’ (footnote omitted). 53 For reasons given in this article, the problems of conflict of laws in relation to BRIPPPs cannot be solved by simple attempts to harmonize the conflict of laws of BRI countries. Compare Poomintr Sooksripaisarnkit ‘Harmonisation of Choice of Law Rules in Commercial Contracts in the One Belt One Road Countries: Will the Hague Principles of Choice of Law in International Commercial Contracts Serve as a Good Model?’ in Sooksripaisarnkit and Garimella (n 23) ch 2, 19–35. 54 Watt (n 22) 37. 55 Ibid 41. 56 William Dodge, ‘Public-Private Distinction in Conflict of Laws’ [2008] Duke J Comp & Intl L 371, 378. 57 See Hans Baade ‘The Operation of Foreign Public Law’ (1995) 30 Texas Intl LJ 429. Compare Dodge (n 56) 371. 58 See Andreas Lowenfeld, ‘Public Law in the International Arena: Conflict of Laws, International Law, and Some Suggestions for Their Interaction’ (1979) 163(2) Recueil des cours 311, 322–6. 59 The broadest formulation does not require that the principal party in a foreign public law case must be the foreign State in one of its four manifestations—namely, not applying foreign public law to private law. See Philip McConnaughay, ‘Reviving the Public Law Taboo in International Conflict of Laws’ (1999) 35 Stan J Intl L 255, 261. 60 Baade (n 57) 447 distinguishes between four strata of public law: (i) constitutional and administrative law; (ii) penal and revenue law; (iii) national economic and service institutions law; and (iv) regulatory law. 61 Andrew Guzman, ‘Choice of Law: New Foundations’ (2002) 90 Georgetown L J 883. 62 As stated by Christian Joerges and endorsed by Ralf Michaels, ‘Post-Critical Private International Law: From Politics to Technique’ in Horatia Muir Watt and Diego Arroyo (eds), Private International Law and Global Governance (OUP 2015) ch 3, 65. 63 See Symeon Symeonides, The American Choice-of-Law Revolution: Past, Present and Future (Martinus Nijhoff 2006). 64 See Libyan Arab Foreign Bank v Manufacturers Hanover Trust Co (No 2) [1989] 1 Lloyd’s Rep 608; Libyan Arab Foreign Bank v Bankers Trust Co [1989] 1 QB 728. Compare para 188(1) of the Restatement (Second) of Conflict of Laws, which states that the rights and duties of the parties with respect to an issue are determined by the law that has the most significant relationship with respect to that issue. See also William Reese, ‘Dépeçage: A Common Phenomenon in Choice of Law’ (1973) Columbia L Rev 58. 65 On a question of formation of contract, courts can refer to the law of the place of contracting as interpretative material. 66 Michael Likosky, ‘Compound Corporations: The Public Law Foundations of Lex Mercatoria’ (2003) 4 Non-State Actors & Intl L 251. 67 See Shamil Bank of Bahrain EC v Beximco Pharmaceuticals Ltd (No 1) [2004] 1 WLR 1784. 68 Watt (n 22) 45. 69 Ralf Michaels, ‘The True Lex Mercatoria: Beyond the State’ (2007) 14 Indiana J Global Legal Studies 447. 70 Ibid 448. 71 Ibid. 72 Fabien Gélinas, ‘Trade Usages as Transnational Law’ in Fabien Gélinas (ed), Trade Usages and Implied Terms in the Age of Arbitration (OUP 2016) ch 11, 258. 73 But application is narrowly circumscribed. Under UCC § 1– 303(c) and Restatement (Second) of Contracts § 222 (1), a usage of trade requires such a regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question. A custom is more than a mere trade practice. It is notorious, certain, and reasonable and not contrary to law. See Kum v Wah Tat Bank Ltd [1971] 1 Lloyd’s Rep 439; PT Soonlee Metalindo Perkasa v Synergy Shipping Pte Ltd (Freighter Services Pte Ltd , Third Party) [2007] 4 SLR 51, para 48. 74 Gélinas (n 72) ch 11, 258. 75 See Rickshaw Investments v Nicolai Baron von Uexkull [2007] 1 SLR(R) 377. 76 See Yeo Tiong Min, ‘The Effective Reach of Choice of Law Agreements’ (2008) 20 Singapore Academy LJ 723. 77 See Trafigura Beheer BV v Kookmin Bank Co [2006] 2 Lloyd’s Rep 455. 78 See Neilson v Overseas Projects Corp of Victoria Ltd (2005) 221 ALR 213. Compare Ong Ghee Soon Kevin v Ho Yong Chong [2017] 3 SLR 711. 79 EC Regulation no 864/2007 on the Law Applicable to Non-Contractual Obligations (Rome II). 80 See T Graziano, ‘Freedom to Choose the Applicable Law in Tort: Articles 14 and 4(3) of the Rome II Regulation’ in W Binchy and J Ahern (eds), The Rome II Regulation and the Law Applicable to Non-contractual Obligations: A New International Litigation Regime (Martinus Nijhoff 2009) 113. 81 Robert Wai, ‘Transnational Liftoff and Jurisdictional Touchdown: The Regulatory Function of Private International Law in an Era of Globalization’ (2002) 40 Columbia J Transnatl L 209, 260 points out that ‘[n]on-state systems may be less nationalistic and fairer between the participants directly involved, but there is a cost to those who are not included’. 82 See Yseult Marique, Public-Private Partnerships and the Law: Regulations, Institutions and Community (Edward Elgar 2014) 173: ‘Therefore, to the extent that judicial control over procurement applies, it mainly hinges on the self-interest of private contractors, either directly in the legal challenges or in the time limits on challenging a decision, set in accordance with the declared preferences of private contractors.’ 83 See ibid 196. 84 FA Mann, ‘The International Enforcement of Public Rights’ (1987) 19 NYUJ Intl L & Policy 603. 85 See Dicey, Morris & Collins on the Conflict of Laws 1 (5th edn, Sweet & Maxwell/Thomson Reuters 2012) Rule 3 and Comment at paras 5-020–5-042. 86 See Adrian Briggs, ‘The Revenue Rule in the Conflict of Laws: Time for a Makeover’ [2001] SJLS 280; Baade (n 57) refers consistently to unenforceability of such claims. 87 William Dodge ‘Breaking the Public Law Taboo’ (2002) 43 Harvard Intl L J 161. 88 Shergill v Khaira [2015] AC 359, para 41. 89 Briggs (n 86) 280. 90 See also McConnaughay (n 59) 255. 91 Ibid 261. 92 Ibid 261, 262. In fact, the position seems to be more of an assumption. 93 See Kahler v Midland Bank [1950] AC 24. 94 No one supposes that Singapore law is different from English law on this point. See JX Holdings Inc v Singapore Airlines Ltd [2016] 5 SLR 988, 21; see also Haugesund Kommune v Depfa ACS Bank (Wikborg Rein & Co, Pt 20 Defendant) [2012] QB 549; Marubeni HK & South China Ltd v Mongolian Government [2002] EWHC 2369 (Comm) where the public law of Mongolia was considered on the question whether the Minister for Finance and the Economy (a legal person under Mongolian law) had expressed actual authority to bind the Mongolian Government to a guarantee. The HC(E) accepts that the question was one of legal capacity to enter into a contract binding on the Mongolian government (para 19). 95 Baade (n 57) at 447 suggests that ‘[n]o sovereign state can permit the operation of its organs of government or its governmental machinery to be governed by the law of other sovereign states’. 96 See Bukhard Hess, ‘Regulatory Challenges: Competing Institutions and Legal Orders’ in The Private-Public Divide in International Dispute Resolution (Brill 2016) 149. 97 The distinction comes from Patrick Kaufmann, ‘Commercial Exchange Relationships and the “Negotiator’s Dilemma”’ (1987) 3(1) Negotiation J 73. For an application to international supply chains, see Michael Burkert, Björn Sven Ivens and Jialu Shan, ‘Governance Mechanisms in Domestic and International Buyer-Supplier Relationships: An Empirical Study’ (2012) 41 Industrial Marketing Management 544. 98 See Symeonides (n 63). 99 See Alex Mills, ‘The Identities of Private International Law: Lessons from the US and EU Revolutions’ (2013) 23 Duke J Intl & Comp Law 445. 100 Alex Mills, ‘The Dimensions of Public Policy in Private International Law’ [2008] JPIL 201. 101 English law, for example, has evolved principles of controlling discretionary contractual powers. See Jeannie Patterson, ‘Implied Fetters on the Exercise of Discretionary Contractual Powers’ [2009] Monash UL Rev 45. 102 Compare United States v Winstar Corporation 518 US 839 (1996). 103 Compare NML Capital v Argentina 699 F 3d 246 (2d Cir 2012), cert denied, 134 S Ct 2819 (2013), where the question was one of interpretation. 104 But it is doubtful if it can go as far as Muir Watt recommended in ‘“Party Autonomy” in International Contracts: from the Making of a Myth to the Requirements of Global Governance’ (2010) 3 ERCL 250. 105 Horst Rittel and Melvin Webber, ‘Dilemmas in a General Theory of Planning’ (1973) 4(2) Policy Sciences 155. 106 Compare Judith Wegner, ‘Reframing Legal Education’s Wicked Problems’ (2009) 61 Rutgers L Rev 867. 107 See [1949] 1 KB 470; see also Peh Teck Quee v Bayerische Landesbank Girozentrale [1999] 3 SLR(R) 842. Compare Thomas John and Rishi Gulati, ‘The “One Belt One Road” Strategy: the Role of Private International Law in Combatting and Strengthening Anti-corruption Standards Transnationally’ in Poomintr Sooksripaisarnkit and Garimella (n 23) ch 10, 182–95, which explores the possibility of formulating a model anti-corruption law for BRI projects along the lines of the United Nations Convention against Corruption (UNCAC), 9 December 2003, in Report of the Ad Hoc Committee for the Negotiation of a Convention Against Corruption on the work of its first to seventh sessions, GA Res 58/4, UN GAOR, 58th Sess, 50th & 51st plen mtgs, Annex, Agenda Item 108, UN Doc A/58/422 (2003) and the Council of Europe’s 2003 Civil Law Convention on Corruption ((COE Civil Convention), done at Strasbourg, 4 November 1999, (entered into force 1 November 2003), ETS 174). 108 See Marique (n 82) ch 4. 109 Ibid 171; see also R (Kathro) v Rhondda Cynon Taff Country BC [2002] Env LR 15. 110 Marique (n 82) 172–3. 111 Not to mention ongoing corruption. A developer unable to perform efficiently has every incentive to continue to bribe public officials to ignore contract breaches and if also entrusted with monitoring responsibilities for reasons of the public purse will create a super wicked problem. 112 Certainly, in national law. It is said this is likewise in international law. See Jilles Hazenberg, ‘Transnational Corporations and Human Rights Duties: Perfect and Imperfect’ (2016) 17 Human Rights Rev 479. 113 Kelly Levin and others, ‘Overcoming the Tragedy of Super Wicked Problems: Constraining our Future Selves to Ameliorate Global Climate Change’ (2012) 45(2) Policy Sciences 123. 114 It is said that more than 90 banks and financial institutions apply the Equator Principles in project financing. The Equator Principles are based on performance standards on environmental and social sustainability drawn up by the International Finance Corporation. 115 For distinctions between perfect and imperfect duties, see Hazenberg (n 112). 28 US Department of Transportation, Federal Highway Administration, Case Studies of Transportation Public-Private Partnerships around the World, Final Report Work Order 05-002 (7 July 2007)<http://www.fhwa.dot.gov/ipd/pdfs/p3/int_ppp_case_studies_final_report_7-7-07.pdf> accessed 16 April 2020. © The Author(s) (2020). Published by Oxford University Press. All rights reserved. For permissions, please email: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model)
TI - Global PPPs and the Choice of Law Challenge
JF - The Chinese Journal of Comparative Law
DO - 10.1093/cjcl/cxaa011
DA - 2020-06-01
UR - https://www.deepdyve.com/lp/oxford-university-press/global-ppps-and-the-choice-of-law-challenge-0U1bPDCDla
SP - 79
EP - 115
VL - 8
IS - 1
DP - DeepDyve
ER -