Public procurement and concessions – new legal framework
Four new laws1 regarding public procurement and concessions (the Public Procurement and Concessions Laws) have been recently enacted to transpose EU Directives 2014/24/EU on public procurement, 2014/23/EU on the award of concession contracts and 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors. The Public Procurement and Concessions Laws expressly repeal the existing PPP legislation.
The changes brought by the Public Procurement and Concessions Laws aim at improving several areas, such as awarding criteria, procedures for amendment of contracts and dispute resolution.
- Awarding criteria: there is a shift from the "the lowest price" to the "most technically and economically advantageous offer", taking into consideration elements such as the best quality-price ratio and the best quality-cost ratio.
- Amendment of contracts: if the concession agreement includes the option for the financial institutions acting as lenders to assign the agreement to a new operator, such a new operator will need to fulfil the qualification and selection criteria provided by the awarding documentation. This clarifies the status of "direct agreements" used in project finance transactions.
- Submission to arbitration: it is expressly provided that disputes in relation to the interpretation, entering into, execution, amendment and termination of the public procurement and concession contracts can be subject to arbitration.
These changes have been long awaited and are generally viewed positively by market participants. However, since these laws are still in their early stages of application and additional secondary legislation will need to be enacted, it is likely that further changes will be made to the public procurement and concessions procedures.
Unrest on the retail loan market – the Giving in Payment law
A highly controversial and widely debated law2 (the Giving in Payment Law) entered into force on 13 May 2016 and regulates a special procedure for the termination of consumer loan agreements by allowing a debtor unilaterally to decide to give, in repayment, the immovable assets securing the repayment of the loan. The new law provides that, in doing this, the debtor extinguishes its repayment obligations irrespective of the value and/or the current value of the assets. The lender may not refuse the giving in payment of the assets if the relevant admissibility criteria set by the Giving in Payment Law are fulfilled.
The admissibility criteria relate both to (1) the parties to the loan agreement, ie, the debtor must be a consumer with no criminal convictions relating to the loan agreement. The lender may be a credit institution, a non banking financial institution or the assignee of the receivables under the loan agreement, and to (2) the scope of the loan agreement, ie, (i) the borrowed amount must be less than the RON equivalent of EUR 250,000 (calculated by reference to the exchange rate available on the date of signing of the loan agreement) and (ii) the purpose of the loan must have been the acquisition, building, expansion, modernisation, equipment, rehabilitation of an immovable residential property or, irrespective of the purpose of the loan, the loan was secured with at least one mortgage created over an immovable residential property.
Representatives of the Romanian banking system view the law as a significant deterrent to lending and as a major risk factor bringing uncertainty in the markets. A major point of debate is the fact that the law applies to consumer loan agreements concluded both before and after the date of entry into force of the Giving in Payment Law. The constitutionality of the Giving in Payment Law has also been questioned, and is currently under review by the Romanian Constitutional Court.
Corporate governance for public undertakings
The legal regime regulating corporate governance for public undertakings (including some finance parties) is changing further to the enactment of Law No. 111/2016 (the Corporate Governance Law) approving Government Emergency Ordinance No. 109/2011, regarding the corporate governance of public undertakings (the Ordinance) which entered into force on 4 June 2016. The Corporate Governance Law extends the scope of application of corporate governance rules to all public undertakings, including credit institutions, financial investment companies and investment management companies and insurance intermediaries which qualify as public undertakings.
The Corporate Governance Law sets out new rules regarding:
- the protection of shareholders – there are new rules on participation in general meetings, voting by correspondence and related parties transactions;
- the procedure for designating temporary directors and managers;
- extended powers for public supervisory authorities, such as the approval of performance ratios for management bodies;
- the composition of the management bodies of public undertakings, eg number of members, limits on the maximum number of management bodies of public undertakings of which a person may be a member, remuneration, powers and revocation.
1. Law No. 98/2016 on public procurement, Law No. 99/2016 on sectorial public procurement, Law No. 100/2016 on concessions and Law No101/2016 on remedies and appeals against the assignment of public procurement and concession contracts were published on 23 May 2016 in the Official Gazette of Romania and entered into force on 26 May 2016.
2. Law No. 77/2016 regarding the giving in payment (in Romanian, darea in plata) of certain immovable assets for extinguishing obligations arising under loan agreements.