Effective Constraints Placed on Future Policy Determinations Sample Clauses

Effective Constraints Placed on Future Policy Determinations. Interested parties should conceptually recast concession agreements as matters of public policy, rather than merely as bilateral contracts between private parties, because the agreements affect the countries’ future welfare policies by constraining, shaping, and determining future policy. Concession agreements formally constrain the choices of future actors in the areas surrounding the original concession agreement. Unlike most enacted laws, which allow an administration, legislature, or populace that disagrees with the policy to revoke it fairly easily, concession agreements must legally remain in force for the length of the agreement, often thirty to fifty years, or else the government must make severance payments to the corporation.128 As a result, concession agreements formally constrain government policy long after the agreements’ original governmental signatory has left office or retired. Thus, the concession agreement essentially leaves the future government with only 125. Id. at 8 box 2. 126. Xxxxxxx Xxxxxxxx & Xxxxxx Xxxxx, Review of PPI Projects To Identify Potentially “Pro- Poor” and “Anti-Poor” Provisions 9 (May 31-June 2, 2000) (unpublished manuscript), available at xxxx://xxx.xxxxx.xxx/conference/section1-paper5.pdf. 127. See supra notes 64-69 and accompanying text. 128. Most agreements contain an arbitration clause or a liquidated damages clause so that if the agreement is breached, the nonbreaching party, generally the company, receives damages. There are, however, two notable exceptions to the binding, binary nature of such agreements. First, some agreements contain buyout clauses whereby the government can gradually buy back the concession. Second, some companies have agreed to allow for renegotiation of contracts. two choices in the area governed by the concession if it cannot renegotiate the agreement; it must either continue with its portion of the agreement— regardless of the changed circumstances or uncalculated costs that may now make the agreement unnecessary, unprofitable, inefficient, or bad distributional policy—or violate the agreement and pay damages. Concession agreements also indirectly dictate future policy options by constraining the choices of actors in the economic sectors surrounding the original concession agreement. Concession agreements may lock in a policy that commands resources so as effectively to preclude the pursuit of alternative policies. For example, although the terms of a toll road concession may not expre...