Conflict of Interest in Public-Private Partnership (PPP) Contracts: A Contemporary Challenge in Private Law

In the era of institutional transformation and expanding cooperation between the public and private sectors, Public-Private Partnership (PPP) contracts have emerged as a modern legal instrument for financing and implementing infrastructure projects. However, one of the fundamental challenges in this domain is the issue of conflict of interest between contracting parties and third-party stakeholders—a challenge that, if left unaddressed, may undermine public trust, violate the rule of law, and jeopardize public interest

Defining Conflict of Interest in PPP

A conflict of interest arises when the personal or organizational interests of a party contradict its legal duties or contractual obligations. In PPP contracts, such conflicts may surface at various stages, including design, implementation, supervision, or operation. For instance, when a public official simultaneously holds shares in the private entity involved in the contract, or when a legal advisor provides counsel to both parties concurrently.

Legal Gaps and Challenges

Despite the presence of general principles in Iranian law—such as good faith, prohibition of abuse of rights, and fairness—there remains a lack of specific legal frameworks for identifying, preventing, and managing conflicts of interest in PPP contracts. This regulatory vacuum can lead to corruption, discrimination in tender processes, and erosion of public rights.

Reform Proposals

1. Drafting a Dedicated Regulation for Conflict of Interest in PPP

Drawing on the experiences of leading jurisdictions such as France, Canada, and Singapore, a legal framework can be developed to mandate disclosure of interests, define conflict scenarios, and establish oversight mechanisms.

2. Establishing an Independent Oversight Body for PPP Contracts

A specialized entity with legal and technical authority to investigate conflicts of interest, handle complaints, and publish transparent reports for public scrutiny.

3. Ensuring Civil Society and Media Participation in Oversight Processes

Transparency and accountability can be enhanced through the active involvement of non-governmental organizations and media outlets in monitoring PPP projects.

Conclusion

Conflict of interest in PPP contracts is not merely an ethical concern but a legal challenge with direct implications for contractual justice and public welfare. Addressing this issue through innovative legal mechanisms is essential for sustainable development and strengthening public confidence in legal and executive institutions