Contractual Environment Research Articles

Прямое соглашение в проектах с государственным участием: сравнительно-правовой анализ

Over the past years, the Russian Federation has taken a number of measures aimed at developing existing legislation in order to create attractive, stable and transparent conditions for private investment in projects with state participation, on the one hand, and to reduce the financial burden on the budget system, on the other. Currently, the tools to provide investors with special legal regimes for carrying out economic activities (such as special economic zones, territories of priority social and economic development, industrial technology parks, clusters and industrial parks, special tax regimes, territorial development zones etc.) are sufficiently implemented in the system of Russian legislation and economic practice. However, it should be recognized that there are significant gaps in the use of internationally recognized instruments to assist investors in the framework of contractual relations. In other words, today, regarding supporting the implementation of investment projects with state participation, only the necessary institutional, but not contractual environment has been formed, the latter being an indispensable requirement for attracting private (including foreign) investors. In this regard, the article considers one of the key elements of the international practice in supporting the implementation of investment projects with state participation — a direct agreement with senior creditors, and also contains a comparative legal analysis of such practice with the Russian system of legal regulation. The article concludes that it is necessary to expand the possibilities of using direct agreements in investment projects with state participation in Russia, and formulates proposals to bring their provisions in line with the best international standards.

Outsourcing justice?

The paper takes an institutional logics theoretical approach to examine how an outsourcing scandal of overcharging for electronic monitoring of offenders was managed so that, despite public outrage, government was able to maintain its outsourcing policies. Using secondary data archival sources in the public domain, it examines the actions of the contractors and state agencies. The paper shows how organisations with different logics became co-dependent and worked together to resolve the scandal. Market logics were temporarily reined back and state logics emphasised as the contractual environment was stabilised. But ultimately their purpose was protection of the markets logics-driven policy.

Contextual Contracts: On a Context-sensitive Approach to Contract Theory

I propose a method for introducing ‘context’ within the contractual environment based on a simple and intuitive application of control theory. The approach permits looking at several interesting practical features of contracts, be they incomplete, complete or smart, within a single framework. I define a contextual environment with the help of an interaction between three distinct spaces: a market-based contractual space framed within a formal institutional space and an even larger cultural space. Each space is characterized by a governing law built on a selection of control mechanisms that differ in their approach as well as their reliance on information generated from feedback mechanisms. I suggest how these governing laws tie the contextual spaces together and present some ideas on how they evolve through their interactions with other spaces. JEL: D20, D86, P50, Z10

A Comprehensive Assessment Model for Critical Infrastructure Protection

Abstract International business demands seamless service and IT-infrastructure throughout the entire supply chain. However, dependencies between different parts of this vulnerable ecosystem form a fragile web. Assessment of the financial effects of any abnormalities in any part of the network is demanded in order to protect this network in a financially viable way. Contractual environment between the actors in a supply chain, different business domains and functions requires a management model, which enables a network wide protection for critical infrastructure. In this paper authors introduce such a model. It can be used to assess financial differences between centralized and decentralized protection of critical infrastructure. As an end result of this assessment business resilience to unknown threats can be improved across the entire supply chain.

State Control as a Substitute for Environmental Regulation? Evidence from Chinese Cities

We investigate the role of state control of industry following an increase in the stringency of an environmental policy in a large developing country. Focusing on a national sulfur dioxide (SO2) cleanup campaign in China, we find that the pre-existing extent of state control over the primary targeted industry, coal-fired power and heat generation, predicts superior cleanup performance in cities. We find this effect is specific to state capital controlled by higher (central and provincial) levels of government, while the state capital share controlled by lower (prefectural cities and below) levels of government is negatively correlated with cleanup performance. Our results suggest that in China’s incomplete contractual environment, central state control partly substitutes for regulatory enforcement, providing an important societal benefit but ultimately implying limits to the impact of environmental campaigns.

Healthcare assistants and aged residential care: A challenging policy and contractual environment

IntroductionHealthcare assistants (HCAs) play a crucial role in the delivery of care and the well-being of older people living in aged residential care (ARC) facilities. In New Zealand (NZ) there are approximately 31,452 nursing support workers and personal care assistants working in nursing homes and in the community, with HCAs making up the majority of this workforce (Statistics New Zealand, 2013). Direct care in ARC is mainly provided by HCAs who are unregulated; a marginalized workforce, due to undervaluing of aged care services and low wages (McGregor, 2012). This aging, gendered and ethnically diverse workforce is expected to grow in response to the demands of the aging population (Kiata, Kerse, & Dixon, 2005; Ravenswood, Douglas, & Teo, 2014). There are concerns about recruitment and retention (Badkar, Callister, & Didham, 2009; Badkar & Manning, 2009; Grant Thornton New Zealand Limited, 2010; Ravenswood et al., 2014) but of equal concern is the landscape of care into which the HCA is recruited.Registered nurses (RNS) in aged care settings are responsible for the care delivered by HCAs and need to have an in-depth insight into the contemporary and evolving roles of HCAs, and the diverse challenges experienced by this workforce. Healthcare assistant responsibilities and workloads are expanding as they work with residents who have complex health conditions. Influential factors that shape the working environment of the NZ HCA were identified in a thorough review of the existing grey literature, current national policy, district health board (DHB) contract agreements and New Zealand Nursing Organization (NZNO) collective agreements. This article presents an overview of the role of HCAs in the current residential aged care environment. The authors argue that RNs need to be cognisant of the socio-political, economic and educational factors that influence HCA's ability to navigate the complexity of the aged care environment and the delivery of personcentred care in the New Zealand aged care context.Demand for aged caregivingThe demand for ARC is increasing, as are the associated costs for care and demands placed on the workforce. There were approximately 33,006 residents in aged care facilities for 2015-2016. This number is projected to increase to 40,619 for the period 2026-2027, and to 60,080 in 2031-2032 (Technical Advisory Services [TAS], n.d.-a). Currently there are 669 certified aged care facilities in NZ offering 38,742 beds (Ministry of Health [MOH], 2016a) with 90% overall occupancy rates for dedicated rest home beds, 88.8% occupancy for swing or dual beds which serve either rest home or hospital level care and 87.6% for specialist dementia beds (Kana, 2015). The DHB expenditure for the support of older people was $983 million with $590 million directed to ARC in 2016 (MOH, 2016b). The government weekly contribution for long term-residential care for individuals differs for each territorial district with the highest funding of $971.53 for Auckland City and the lowest $884.03 for Otorohanga, South Waikato, Buller, Grey, Waimate, Southland and Gore districts including Goods and Services Taxes (Chuach, 2016).The demand for ARC persists even with ageing-in-place initiatives aimed at reducing the need for rest home level care. The workforce that supports care in the home overlaps with the ARC workforce and shares similar issues. The 2002 Health of Older People Strategy (MOH, 2002) was created in response to ageing population projections and the need for a positive ageing strategy. Initiatives within the 2002 Health of Older People Strategy and the replacement Healthy Ageing Strategy (Associate Minister of Health, 2016) include improving community support so that older persons can stay in their homes longer and avoid costly ARC services. Care aimed to restore functional status is provided in the home or in the community by paid caregivers, delaying or preventing ARC admissions (Parsons et al. …

Towards a Cross-Disciplinary and Contextual Contract Theory

The paper proposes a method for introducing ‘context’ within the contractual environment based on a simple application of intuitive control theory. A market-based contractual space is framed within the larger formal institutional space and an even larger cultural space – the spaces together forming a contextual environment. Each space is characterized by a governing law built on a selection of control mechanisms that differ in their approach as well as their reliance on information from feedback. I suggest how these governing laws tie together the contextual spaces and present some ideas on how they might evolve over time through interaction with other spaces.

Product variety and vertical integration

Research summary: In vertical relationships, the potential for scale economy in manufacturing often calls for specialization and outsourcing. Specialization, however, depends critically on the stability of the task and contractual environment. In a highly uncertain environment, the need for frequent mutual adjustments favors integration instead of outsourcing. To evaluate vertical relationships in value chains where one stage competes on product variety under great uncertainty and the other stage competes on scale, we compare operations data at about 300 distribution centers within a major soft-drink bottler before and after it was integrated into an upstream concentrate producer. We find that vertical integration improved coordination for the integrated firm by aligning incentives and reducing strategic information asymmetry, but it worsened coordination for upstream rivals that shared the same downstream facilities. Managerial summary: Managers make frequent decisions about outsourcing versus integration. This article helps to crystalize the costs and benefits of integration by pointing to two important factors: the potential for economies of scale and the need for coordination under uncertainty. It studies an industry where one stage of the value chain competes on product variety under great uncertainty and the other stage competes on scale. Based on operations data at about 300 distribution centers within a major soft-drink bottler before and after it was integrated into an upstream concentrate producer, we find that vertical integration improved coordination for the integrated firm (by reducing both stockouts and inventory, and improving sales forecasts), but it worsened coordination for upstream rivals that shared the same downstream facilities. Copyright © 2016 John Wiley & Sons, Ltd.

Combating oil spill accidents in Northeast Asia: A case of the NOWPAP and Hebei Spirit oil spill

Since its inception in 1994, the Northwest Pacific Action Plan (NOWPAP) of the UNEP has devoted its efforts to prepare for and prevent oil spill accidents in the region. In 2008, it adopted the Regional Oil and HNS Spill Contingency Plan and has expanded its geographical scope for the purpose of application of the Plan. These efforts are aimed at implementing global and other regional agreements on protecting the marine environment, in particular, addressing oil spills in Northeast Asia. However, it is still unclear to what extent the NOWPAP has contributed to regional efforts in addressing regional oil spill accidents as demonstrated in the case of Hebei Spirit. Through analyzing the effectiveness of NOWPAP by focusing on the its role in boosting concern, building national capacity, and providing a contractual environment, this paper argues that NOWPAP played a limited role in responding to the Hebei Spirit accident, one of the most serious oil spill cases throughout the history of oil spill accidents in Northeast Asia.

Contractual Environment and Development of Services

This paper establishes a three-stage principal-agent model to analyze the decision-making mechanism of producing services,and then uses ordinary least squares and instrumental variable approach combining with the 2012 data of Chinese provincial services sub-sectors and drawing on difference-in-difference method to study the relationship between contractual environment and services output & producer services output.The empirical results show that the contractual environment is an important factor affecting services output,and there is a higher level of services output in the more privileged areas of contractual environment,because a better contractual environment can help to maintain normal execution of contracts and guarantee service enterprises enthusiasm for production.And this role in a high dependence of services on contracts is more obvious.It draws the same conclusions in testing the sample of producer services.The previous results are still robust after controlling a series of factors such as human capital,physical capital,trade liberalization,investment in industrial infrastructure,and the level of regional infrastructure development.

Moral hazard and sorting in a market for partnerships

We examine how equilibrium sorting patterns in a matching market for partnerships are impacted by the presence of bilateral moral hazard in a repeated production setting. We find that this impact depends on how the cost of moral hazard manifests itself—whether efficient effort is not feasible or desirable from the beginning, or whether inefficient effort is resorted to only as a punishment equilibrium. Which of these is the case depends on both the details of the technology and the contractual environment. In the former case, the presence of moral hazard moves the market away from positive sorting. In the latter case, whether moral hazard favors positive or negative sorting depends on how the power of incentives needed to implement effort varies with the observable types of the agents.

When Australian defence procurement goes wrong: Improving outcomes in a troubled contractual environment

AbstractDefence procurement is a notoriously difficult and often controversial field of public management. In Australia, problems with schedule and budget overruns have been addressed through business process reforms aimed at tightening control and improving professionalism. However, studies of complex contracting in other contexts show the importance of relational factors of trust, collaboration and risk-sharing. These factors are not encouraged by the predominantly transactionally based contractual environment of Defence. Based on a detailed examination of three case studies, we suggest that there is a disjunct between the types of controls that are applied by Defence and the requirements of delivering complex, long-term projects involving multiple stakeholders. The need for both improved flexibility as well as heightened accountability is evident. We argue that balancing these values involves processes that encourage, rather than discourage, communication, risk-sharing and trust.

Sensitivity of hydropower performance to climate change: A case study of a Brazilian Company

This paper presents an overview of the energy sector, which is characterized by centralized institutional management in the Federal Government, a regulated contractual environment and heavy reliance on hydroelectric power and the concentration of the energy matrix in hydroelectric power. The focus of this study centers on strategic risk because of the issues of global climate change. Our goal is to show that while the government planning gives priority to meeting growing demand, it ignores the possible long-term effects of climate change, which may have a crucial impact on the hydroelectric power industry. We discuss this question in the context of a major player in this segment, the Sao Francisco Hydroelectric Company (CHESF). To show the importance of adapting the competitive strategy to the possible impacts of climate change, we constructed a strengths, weaknesses, opportunities and threats (SWOT) matrix with various scenarios that might be inferred by the year 2050. The results show that the reduction of water flows and reservoir levels due to climate change represent the main strategic risks of the company and could threaten energy security throughout Brazil unless some preventive procedures to mitigate climate change are implemented. Key words: Business risk, hydroelectric power generation, climate vulnerability.

Holdouts in Sovereign Debt Restructuring: A Theory of Negotiation in a Weak Contractual Environment

Negotiations between a country in default and its international creditors are modeled as a dynamic game in an environment of weak contractual enforcement. The country cannot borrow internationally until it settles with all creditors. Delay arises in equilibrium as creditors engage in strategic hold-up. The model a¢ rms the conventional wisdom that delay increases with more creditors, and with the advent of vulture creditors. Contrary to conventional wisdom, putting collective action clauses into bond contracts may increase delay via free-riding on negotiation costs, even while preventing strategic holdup and reducing total negotiation costs. Secondary debt markets consolidate debt with high— and disperse debt with low— creditor bargaining power. Whether secondary markets reduce or increase delay, depends on the interaction between strategic holdup and debt

On the contractual governance of research collaborations: Allocating control and intellectual property rights in the shadow of potential termination

Abstract This paper investigates the governance design problem of a large company that wants to engage a small and cashless firm into a research collaboration. This analysis reflects the frequently observed collaborations between pharma companies and biotechs, and an actual research contract is assessed to link theory to practice. The governance form refers to the allocation of control rights over the research process and property rights over research output(s), as determined by the initial contract; yet this contract is incomplete. The parties negotiate at a later stage from bargaining positions that depend on the initial choice of the governance, but they also contemplate the possibility that the collaboration will be terminated. By means of a simple model that captures the core aspects of the contractual environment, I answer a key research question: How should governance be designed in the shadow of potential termination to provide the research firm with the incentives to invest in the collaboration? First, it is in the company’s interest to choose a governance form that eliminates the possibility of termination and stabilizes the collaboration whenever possible. Second, if the collaboration cannot be stabilized, the company faces a trade-off between reducing the probability of termination and providing incentives, which is ultimately resolved by making the collaboration highly unstable. Third, property rights and control are substitutes in the governance design: If the company collects more property rights, it must relinquish more control rights.

Contracting for Indigenous Health Care: Towards Mutual Accountability

In Australia and other industrialised countries, governments contract with the non‐government sector for the provision of primary health care to indigenous peoples. Australian governments have developed policies and funding programs to support this health sector, but the current arrangements are unduly complex and fragmented. The results of our study show that the complex contractual environment for Aboriginal Community‐Controlled Health Services (ACCHSs) and their funders is an unintended but inevitable result of a quasi‐classical approach to contracts applied by multiple funders. The analysis in this article highlights potential policy and program changes that could improve the effectiveness of funding and accountability arrangements, based on the use of an alliance contracting model, better performance indicators and greater clarity in the relative roles of national and jurisdictional governments.

Should Courts Always Enforce What Contracting Parties Write?

We find an economic rationale for the common sense an- swer to the question in our title — courts should not always enforce what the contracting parties write. We describe and analyze a contractual environment that allows a role for an active court. An active court can improve on the outcome that the parties would achieve without it. The institutional role of the court is to maximize the parties' welfare under a veil of ignorance. We study a buyer-seller model with asymmetric information and ex-ante investments, in which some contingencies cannot be contracted on. The court must decide when to uphold a contract and when to void it. The parties know their private information at the time of contracting, and this drives a wedge between ex-ante and interim-ecient contracts. In par-

Between Fair and Equitable Treatment and Stabilization Clause:

One of the most challenging questions in contemporary international Investment law relates to the balance between the competing needs of allowing a reasonable policy space for host states and enabling foreign investors to plan their operations in advance. The central question addressed by this article is whether and under what circumstances should regulatory changes undertaken by host states constitute a breach of the fair and equitable (FET) clause.Contemporary investment law anchors the balance between those competing interests in the contractual and semi-contractual sphere. An analysis of investment tribunals case law on 'stable legal environment' (or 'regulatory framework') indicates that this term includes three central components: (i) contractual and semi-contractual arrangements (e.g., contracts, licenses, concessions); (ii) unilateral promissory statements or specific representations (often made in a contractual environment); and (iii) the host state's regulatory measures at the time of the investment. The first two components are certainly the predominant components of 'legal environment.' Investors expectations created either by contractual arrangements, semi-contractual arrangements or promissory statements - are considered 'legitimate expectations' and are protected by the FET principle. As for the third component, host states' regulatory measures alone are insufficient in forming legitimate expectations protected by FET clauses. Only when such regulatory measures are accompanied by additional and exceptional factors, may the combination thereof amount to a breach of legitimate expectations protected by the FET principle.A brief review of the primary functions of contractual arrangements indicates that contractual and semi-contractual instruments are suitable for the advance allocation of risks involved in regulatory changes

Risk Management for Energy Efficiency Projects in Developing Countries

The present paper addresses risk management fundamentals for energy efficiency (EE) projects in developing countries. The starting point for this paper is that there are many profitable EE projects in nearly every industrial enterprise that are simply not implemented. Four problems are often identified as the culprits for failing to harvest such projects: 1) lack of a rational and feasible approach to finance these projects; 2) lack of a rational internal management approach in the enterprise to package these projects in such a manner that they can be identified and implemented while the “plant is running”; 3) the high perceived risk of these projects; and 4) the fact that management is often simply unaware of the existence of EE projects of value. This paper is primarily focused on the third of these failure factors, risk, but touches also on the fourth factor since reducing project risk is predicated on understanding and measurement of EE benefits. The paper begins with a simple framework that emphasizes two dimensions of the organizational and contractual environment of EE projects. The first dimension is the energy intensity (measured, say, in terms of the ratio of energy costs to the total cost of goods sold) for the focal company initiating an EE project - the higher the energy intensity, the larger the potential payoff from EE, and the greater the ease of focusing management attention on EE. The second dimension is the level of organizational and contractual complexity of a project. Generally, the larger the number of external parties involved in a project (both financial and technical), the greater the complexity of assuring the ability to satisfy constraints necessary for successful project completion and the greater the transactions costs of contracting. After elaborating this framework and providing examples to illustrate required risk management, the paper discusses best practices for EE project risk management with illustrative case studies. Thereafter behavioral and other impediments to effective risk management are described, together with methods for overcoming these impediments. The paper then considers the role of carbon offsets as a possible source of co-financing of EE projects, and the risks associated with obtaining such carbon offsets under the CDM process. Finally, the paper considers the role of Energy Service Companies (ESCOs) in identifying profitable EE projects, in managing these projects and in reducing their risks. The paper concludes with recommendations for both companies executing EE projects as well as for international organizations like UNIDO attempting to promote EE in industry in emerging economies.

Workshop report – A successful contractual setting

Successful public transport service contracts can be judged against procedural and outcome criteria, located within an integrated strategic, tactical and operational level framework for planning and delivery. Clear goal setting at the strategic level sets the basis for supportive tactical system planning and for service delivery that meets goals. The workshop considers relevant success criteria and key matters that need to be resolved for their achievement. Market growth potential and the governmental attitude to supporting service growth are important issues shaping the contractual environment. The growing interest in negotiated performance-based contracts and the role of trust between the operator and the authority are also matters for particular attention.