Meaning Of Concession Agreement

Muhammad Ali, from Egypt, used contracts called concessions to build cheap infrastructure – dams and railways – that would allow foreign European companies to raise capital, build projects and collect most of the operating revenue, but Ali`s government would provide some of that revenue. [3] For more examples of concessions, see Gibbons v. Ogden and U.S. rail policy. A common area of concession agreements between governments and private companies provides for the right to use certain parts of public infrastructure, such as railways.B. Rights may be granted to individual companies, resulting in exclusive rights, or several organizations. As part of the agreement, the government may have construction and maintenance rules as well as current operating standards. Concession agreements are sometimes used to exploit other nations. For example, foreign countries and companies forced China to make various concessions in the 19th and early 20th centuries. These concessions have given foreign companies the right to develop and operate railways and ports within China.

In addition, citizens of other countries have often appreciated extraterritoriality as part of their concessions. Extraterritoriality meant that foreign laws and tribunals settled disputes between Chinese and foreigners in concessions. Of course, the decisions of these courts have tended to oppose Chinese businesses and consumers. Concession agreements generally define operating time, insurance requirements and royalties. Payments to a landowner may include location rent, a percentage of turnover, or a combination of the two. Additional expectations may also be set out in the agreement. The agreement may specify, for example. B, which of the parties is responsible for procurement, maintenance and repair services. Complex private financing initiative (PFI) projects may include a concession agreement granting private contractors the right to use certain assets. However, when these rights are transferred, the government or judicial authority may set certain expectations about the extent of the maintenance and investments made, as well as the operational standards to be met. The right to use lanes for a defined period of time may also be part of a concession (or franchise) agreement.

These agreements generally combine the construction, maintenance and operation of a rail network and involve considerable investment. As a result, they grant the railway manager the right to operate certain networks or lines for a longer period than access agreements and often grant exclusivity to the railway operator. In India, the Supreme Court recognized the doctrine of essential facilities for concession agreements in the case of VST Industries Limited against VST Industries Workers` Union and Anr. In this case, the Supreme Court held that a private body controlling or operating infrastructure in India under a concession agreement should be considered a public service and that these entities are required to act in the public interest. Concession contracts are provided by administrative means to provide services or build infrastructure. Concessions include a contractual agreement between a public authority and an economic operator (concessionaire).

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