Middle East Legal Insight: Lebanese Private Public Partnership Projects Law


LNB News 16/01/2019 125

Published Date 16 January 2019 Jurisdiction Lebanon

Related Legislation

 Lebanon Law No. 48/2017; Lebanon Law No. 304/1942

Relevant Companies

 Melki & Associates Law Firm


 On 7 September 2017, the Lebanese Parliament enacted Lebanon Law No 48/2017, the Private Public Partnership Law that introduced, among other things, the Higher Council of Privatisation and Public Private Partnerships (the Council) and regulated public private partnership projects (the Projects). This commentary constitutes a brief legal study of Lebanon Law No 48/2017 with an emphasis on the main practical issues that stakeholders focus on the most.


 Lebanon Law No. 48/2017 was enacted while the Lebanese government was pushing and preparing for what was later called ‘the international conference in support of Lebanon development and reforms’ (CEDRE) that took place in Paris on 6 April 2018, and pursuant to which the participating countries committed to grant Lebanon approximately US$ 11 billion in funding for various infrastructure projects mainly in the telecommunication, electricity and oil and gas sectors. Most of such projects  were intended to be carried out through Public Private Partnerships. The aim was also to draw foreign direct investments to the country, to create jobs and to develop its infrastructure. This context confers a significant importance to this law that is likely to prove very useful in the upcoming years.


Lebanon Law No. 48/2017 is tailored for the Lebanese legal and economic framework, it was very much inspired by neighbouring jurisdictions in the EMEA region.

Definition and current trends

 Public Private Partnerships (commonly known as PPP, 3P or P3) are contractual arrangements entered into between a governmental institution, be it the State or a or any other moral person of the public law (the Public Partner) and one or more entities of the private sector (the Private Partner) the collaboration of which should result in the establishment (or construction or renovation or operation or maintenance) of public utility projects in a wide array of regulated and unregulated sectors of public service. The main idea behind it is for the public sector to benefit from the skills and efficiency of the private sector, while avoiding the lengthy administrative and budgeting procedures that may sometimes prove counter- productive. Over the past decade, the PPP method gained a lot of traction in Europe and the GCC countries, who began to embrace the private sector’s participation in public projects. One of the reasons is the ability for the Public Partner to swiftly deliver state-of-the art public service to its citizens with little or no governmental funding. Moreover, global infrastructure is projected to require an estimated US$ 57 trillion in investment by 2030, which means that the public sector alone is not likely to be able to cater for such a  demand.  (Article: edited transcript of symposium on public-private partnerships, ‘public- private partnerships: a vehicle for economic development and promotion of the rule of law’, 4 u. balt. j. land & dev. 103)


 Lebanon Law No. 48/2017 regulates most aspects and phases of a PPP transaction and set a clear legal framework thereto. It thoroughly describes the full process that starts with the submission of a proposal through its approval, execution and operation until the final handover of the Project back to the Public Partner. It also regulates the creation and activity of the Project Company and the relationships between the different stakeholders in every transaction.

Project Proposal

 The Prime Minister or any minister responsible for the administration or supervision of a public institution (the Concerned Minister) may introduce a Project proposal (the Project Proposal) to the General Secretariat of the Council of Privatisation and PPP (the General Secretariat). If a Private Partner wishes to introduce a Project Proposal, it may only do so by submitting it to through the Concerned Minister. The Project Proposal should include a preliminary study of the project including a brief description of its public utility, an overview of its technical and financial aspects and the estimated timelines for completion. Upon receipt, the General Secretariat must carry out a thorough study of the proposed Project and submit a final report to the Council. Such report has to include the General Secretariat’s recommendations regarding the feasibility of the Project and the estimated interest of the private  sector  in  financing  it.  The  Council  reviews  the  General  Secretariat’s  report  and  makes  a determination on whether the Project Proposal is accepted or not.

In the event the Project Proposal is accepted, the Council establishes a project committee (the Committee) presided by the Secretary General of the Council and composed of a representative of the Concerned Minister, a representative of the Ministry of Finance and the president of the concerned sector’s regulatory authority.


Consulting firms

 After its establishment, the Committee starts by selecting financial, legal and technical consultants that will assist it in the performance of its duties. The Committee may also retain, on a need basis, the services of other consultants such as environmental, human resources and other. The selection process may be carried out through international open tender, private tender or by mutual consent.

The legal consultant’s role would be to ensure the ongoing compliance of the Project with applicable laws and regulations and to advise on its viability from a legal standpoint. The technical consultant’s role would be to advise on the technical aspects of the proposed Project including technology selection and the financial consultant’s role will mainly focus on the preparation of the Project’s financial models and projections that will help the Committee have a better visibility on its profitability and feasibility.

The committee will thereafter form a task force (the Task Force) that reports to the General Secretariat and that is composed of representatives from all the Project’s stakeholders, including the  Public Partner, the consultants, the experts and the regulatory authorities as the case may be from time to time and as the Committee deems appropriate.

The Committee and the Task Force prepares an elaborated study of the proposed Project addressing its technical, economic, legal and financial aspects. The study should also determine the qualification criteria of the potential Private Partner, the level of interest in the private sector to finance the Project, its ability to attract funds and the recommendation of the Committee. This report is submitted to the Council for consideration.

If the Council approves the Project Proposal, it submits it to the council of minister’s review. If approved, the Private Partner selection process is launched.

Private Partner selection process

 The Private Partner selection process must respect the principles of transparency, equal participation rights and equal treatment and the Council must ensure that the tender invitations reach as many interested candidates as possible.

  • First, the Council publishes a call for interest in local and international newspapers, specialised magazines, and on the official website of the Council allowing potential Private Partners who are interested in participating in the Project to submit their This call must be made at least one

month prior to applications deadline and must clearly mention the qualification criteria along with any and all necessary information and instructions.

  • Entities involved in bankruptcy or liquidation proceedings or entities against which a Lebanese or foreign judgement of collusion or corruption was rendered are prohibited from applying to any Project Proposal. In the event the Private Partner is constituted by a consortium of companies, the above mentioned restrictions apply to each It is unclear whether this requirement should be fulfilled by the Private Partner for the duration of the Project.
  • The Committee and the Task Force review the applications received and submit a draft report with their findings to the Council for its consideration.
  • The Council then makes its determination as to which candidates are qualified and which candidates are not, provided however that the number of qualified candidates is no less than In the event the qualified candidates are short of three, the call for interest is published again.
  • While the Committee has to inform the candidates that did not qualify the reasons behind such disqualification, Lebanon Law 48/2017 did not provide for a mechanism that allows disqualified candidates to object to, or appeal such decision. It is noteworthy that most PPP laws enacted in the region, including UAE and Kuwaiti laws provide for a grievance committee that is competent to review and decide candidates’ objections in a fast and efficient manner.
  • After having selected the qualified Private Partners, the Committee and the Task Force draft the tender document (the Tender Document) that includes all the details related to the Project including the evaluation criteria, the procedure to submit offers and a contract form and send it to the qualified candidates.
  • The Committee and the Task Force then conduct transparent and neutral consultations with the qualified candidates and the financing parties in order to obtain a better view of the technical requirements and the optimal financial structure for the execution of the Project.
  • The Committee submits the final Tender Document to the Council for its approval.
  • After approving the final Tender Document, the Council sends it to the council of ministers for final approval.
  • The qualified candidates then prepare and submit two separate offers: a technical offer and a financial offer. In the event the Committee receives less than three offers it republishes the call for Upon republication, the process may continue with two offers only.
  • The Committee members review the technical offers in the presence of the qualified candidates to ensure they are in compliance with the Tender The offers that are not in compliance with the Tender Document are automatically disqualified without the need to review their financial proposal. The

pre-qualified candidates are notified of the reasons behind the rejection of their offer.

  • The Committee evaluates the remaining offers and selects a minimum of In the event less than two offers were accepted, the Committee must re-publish the call for interest. The Committee submits thereafter a report to the Council ranking the qualified candidates in light of the technical and financial evaluation of the offers. The Committee attaches its recommendations to the report based on the qualification criteria prescribed in the Tender Document.


Project Company

 The Private Partner must establish a joint-stock company (SAL) for the Project, all the shares of which are  in  registered  form  (the  Project  Company).  Lebanon  Law  No.  48/2017  provides  for  several exemptions  from  requirements  set  forth  in  Lebanon  Law  No.  304/1942  the  Lebanese  Code  of Commerce (the LCC). In fact, companies engaged in a public utility project may now be exclusively owned  by  non-Lebanese  shareholders  and  the  foreign  chairman/general  manager  of  the  Project Company is no longer required to obtain a work permit. Moreover, the Public Partner may participate in the incorporation of the Project Company and contribute in cash or in kind to its share capital and the contribution in kind is exempted from the lengthy valuation procedure required by Article 86 of Lebanon                                                                                                                                                                                Law No. 304/1942. The valuation of the contribution in kind is instead made by an independent international expert.


The Partnership Agreement

 The Public Partner and the Project Company must enter into a Partnership Agreement that should include at least the following provisions:

  • The parties’ respective rights and obligations;
  • The basis of the Project’s financing;
  • The term of the Partnership Agreement provided that it does not exceed thirty five years starting from the date of its execution;
  • The revenues to be generated by the Project Company or those to be generated by the Public Partner from the Project Company as the case may be depending on the nature of the Project and the mechanism of payment thereof;
  • The Project’s duties, fees and royalties that the Project Company is allowed to receive in the name and for the account of the Public Partner;
  • Key performance indicators of the Project Company;
  • The reports submitted by the Project Company to the Public Partner or the Council regarding the


execution of the Project;


  • The allocation of risks between the Public Partner and the Project Company and the policies and procedures to be adopted in order to mitigate such risks;
  • The framework governing the amendment of the Partnership Agreement;
  • Guaranties, undertakings and covenants that the Project Company, Private Partner or Public Partner may provide in the execution of the Project;
  • The Assets and properties that the Public Partner put at the disposal of the Project Company for the duration of the Partnership Agreement in addition to the rights and obligations of the Project Company with regards thereto;
  • When applicable a description of the procedure to be adopted when transferring the Project to the Public Partner at the end of the Partnership Agreement;
  • The procedure guaranteeing the continuity of the Project and the works provided for in the Partnership Agreement in the event of expiration, termination or default;
  • Events of default and remedies thereto;
  • Dispute resolution mode that may include mediation and domestic/international arbitration.


Allocation of risk

 The Public Partner may allocate the following guarantees to the Private Partner and/or the Project Company: loan guarantee and refinancing guarantee. The guarantees may be part of the Partnership Agreement such as guarantee a minimum use of the service provided by the Project, minimum of the service duties, guarantee to amend laws and regulations, guarantee to terminate the Partnership Agreement in the event of bankruptcy of the Project Company; the Public Partner may as well undertake to pay the debts.

The Private Partner provides the Public Partner with Performance Bonds as a guarantee where the Private Partner guarantees to the Public Partner the timely performance of its duties under the Partnership Agreement.

Project phases

The Public Partner is responsible for monitoring the execution of the Project as per the Partnership Agreement as outlined below:

A/ The Formation phase: Article 11 of Lebanon Law No. 48/2017 reads that the Formation Phase is the period that starts on the date of execution of the Partnership Agreement and ends on the date of

completion of the design and installation and/or construction and/or development and/or restoration and/or equipment and/or maintenance and/or rehabilitation processes as stipulated in the Partnership Agreement.

Once the Public Partner enters into the Partnership Agreement, it appoints during the Formation Phase the following entities:

  • A steering committee presided by a representative of the Public Partner and composed of a representative of the concerned minister, if applicable, a representative of the General Secretariat, a representative of the Ministry of Finance and a representative of the concerned sector’s regulatory authority. (The Steering Committee).
  • An office to manage the Formation Phase that includes in addition to its members local and international specialised experts and consultants depending on the nature of the project (the Managing Office). The Managing Office liaises between the Steering Committee and the Project Company.

The Managing Office receives and evaluates the reports related to the execution of the Project and the progress of the work and submits detailed monitoring reports (the Monitoring Reports) to the Steering Committee reviewing the Project Company’s performance, its compliance with the contractual timeframe and including urgent recommendations, if any.

The Steering Committee must convene quarterly or anytime upon the occurrence of an urgent matter to review the Monitoring Reports, give necessary instructions and transfer the reports to the Public Partner or to the concerned minister and to the General Secretariat.


B/ The Operational phase: After the completion of the Formation Phase, the operation and maintenance of the PPP Project (the Operational Phase) commences.

The Public Partner must create a Managing Office for the operational phase (the Operational Office). The Operational Office must be composed of a representative of the concerned sector’s regulatory authority in addition to its members and local and international specialised experts and consultants depending on the nature of the project.

The duties of the Operational Office include, but are not limited to the following:

  • Monitoring the performance of the Project Company;
  • Suggesting remedies to any defaults attributable to the Project Company and imposing sanctions in accordance with the Partnership Agreement;
  • Participating in the management of dispute resolution;

The  Operational  Office  sends  monitoring  reports  on  a  semi-annual  basis  or  whenever  it  deems

necessary to the Public Partner, the Concerned Minister and the General Secretariat for their review and opinion.

Real estate properties

The Public Partner may put at the Project Company’s disposal, for the term of the Partnership Agreement, its real estate properties that are necessary for the execution of the Project.

If the execution of the Project requires the ownership of private real estate properties, the Council or the Project Company may request the Public Partner to expropriate them. Regular expropriation procedures will be applicable. The acquired properties will be owned by the Public Partner who will grant the Project Company the right to use them for the term of the Partnership Agreement.


Dispute resolution

 Article 10 of Lebanon Law No. 48/2017 provides that the parties may elect to settle their disputes arising from the Partnership Agreement through domestic or international arbitration without the need for any authorisation. Other jurisdictions like Kuwait, the UAE and Egypt reserve such competence to local courts through the insertion of an exclusive jurisdiction provision in their respective PPP laws.



 Lebanon Law No. 48/2017 does not provide for a specific timeline for the completion of each phase of the Project starting from the Project Proposal until its final execution. We expect  implementation decrees to fill this void in the future.



 Private Public Partnerships are more and more becoming the cornerstone for economic development around the world and are an efficient model for the achievement of critical infrastructure projects within developing countries. Although Lebanon Law No. 48/2017 is hardly irreproachable, its gives Lebanon the legal platform it needs to kick-start its (re)construction process and repay the trust vested in it in the CEDRE conference.



 William G. Melki – Partner, Melki & Associates Law Firm (Beirut, Lebanon) william@melkilawfirm.com

+961 5 45 45 84

William  is  admitted  to  practice  law  in  Lebanon,  his  practice  focuses  mainly  on  cross-  Mergers  & Acquisitions (including Venture Capital and Private Equity transactions), Project Finance (including PPP) and capital markets. He represents several corporate groups, start-ups and individuals based out of Beirut, the GCC countries and Europe. Prior to joining the firm, William worked at Dewey & Leboeuf LLP’s corporate finance department in London.


Nicolas G. Melki – Partner, Melki & Associates Law Firm (Beirut, Lebanon) nicolas@melkilawfirm.com

+961 5 45 45 84

Nicolas is a New York qualified lawyer who is also admitted to practice law in Lebanon. His main area of expertise is corporate and commercial law and his client base is composed of local and international corporations and investment holdings. Prior to joining the firm, Nicolas was an associate at Pillsbury Winthrop Shaw Pittman LLP and Baker Botts LLP in the United Arab Emirates, where he advised on M&A, project finance and corporate finance deals. Nicolas has also worked in-house at Petrofac International.


Dima A. Sarkis – Associate, Melki & Associates Law Firm (Beirut, Lebanon) d.sarkis@melkilawfirm.com

+961 5 45 45 84

Dima is admitted to practice law in Lebanon and she has a Master’s in corporate law from Universite Aix-Marseille. Dima regularly assists in most Project Finance, Capital Markets and M&A matters. She has participated in the research and drafting of several publications.