Consortium and Special Purpose Vehicle Evolution Within French Partnership Contract Legal Framework

Abstract

As in many European countries, French public authorities can contract out certain public functions through public-private partnerships. However, each public authority’s decision to contract out its public functions needs to be carefully taken to ensure that the entity entrusted with public tasks will fulfill them. Mindful of these considerations, the French parliament enacted an order on partnership contracts in June 2004 (2004 Act) which provides for guidance to public authorities as to the way to secure such contracts. The 2004 Act defines a partnership contract as “an administrative contract by which the State or a State entity entrusts a third party, for a period fixed depending on the investment amortization or the agreed financing terms, with a comprehensive project related to the construction, modification, sustainment, maintenance, operation or management of works, equipment or intangible assets necessary for the public service, as well as with their total or partial financing, excluding any form of equity financing.” It also provides that partnership contracts may “relate to – in total or in part - the design of such works, equipment or intangible assets as well as to the provision of services contributing to the realization by the public entity of a public sector mission it was charged with”.