The need to pre-empt administrative disputes – Sérvulo & Associados
The economic downturn is inevitably prompting an increase in public and administrative law disputes, as financial challenges put contractual agreements between private companies and the authorities under strain, but strategies do exist to help manage them, says Ricardo Guimarães, partner at Sérvulo & Associados in Lisbon.
‘The financial downturn may clearly make the performance of private entities more difficult in public contracts, and has raised considerable difficulties for public authorities also. In times where margins are thinner and projects much less likely to assure bank financing, or generate predicted revenues, issues affecting their financial structure and economic-financial equilibrium may inevitably arise. ‘
The challenge therefore is how to help clients avoid or, if necessary, manage such issues either before, during or after they occur, he says. Notable are the pressures now emerging among road and infrastructure projects, and those related to public services, with further issues likely to emerge in the concessions arena, he predicts. Portugal’s Audit Court – Ricardo Guimarães responsible for scrutinising public expenditure – is already seeing a significant upturn in disputes.
‘In such an environment preventative legal services assume a much more important role. This kind of advice should focus on the detail of contractual relations in order to avoid disputes – either judicial or arbitral – arising in the first place. The aim should always be to maintain or strengthen business security in such delicate times.’
In challenging economic times it is obviously much better to prevent disputes than have to deal with them, says Guimarães. Not only in terms of the management and financial costs associated with their resolution, but significantly also the effects that may derive from the extraordinary time it may require to reach a final decision.
‘A pre-emptive strategy not only offers businesses more comfort in the efficient running of their businesses in more tense periods, but if clients embrace it, then it can offer extraordinary help if disputes do progress.’
