International Project Finance International Business Law

International Project Finance General Editor Dennis Campbell Center for International Legal Studies Salzburg, Austria

Editors Fiona Scott Center for lnternational Legal Studies Salzburg, Austria

Claus-Peter Martens Clifford Chance Punder Berlin, Germand

7m

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Library of Congress Cataloging-in-Publication Data International project finance I general editor, Dennis Campbell; editors, Fiona Scott, Claus-Peter Martens. p. cm. -- (International business law practice series) "Published under the auspices of the Center for International Legal Studies." ISBN 1-57105-139-2 (title) -- ISBN 1-57105-1 10-4 (series) 1. Economic development projects--Finance-Law and legislation 2. Public Works--Law and legislation. 3. Privatization--Law and legislation. 4. Infrastructure (Economics)--Finance. I. Campbell, Dennis. 11. Scott, Fiona. 111. Martens, Claus-Peter,1960-IV. Series.

00-053678 CIP

Copyright O 2000 by Transnational Publishers, Inc.

All rights reserved. This book may not be reproduced, in whole or in part, in any form (beyond that copying permitted by U.S. Copyright Law in Section 107, "fair use" in teaching and research, Section 108, certain library copying, and except in published media by reviewers in limited excerpts), without written permission from the publisher. Manufactured in the United States of America

TABLE OF CONTENTS Authors.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ix

Preface.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix

Chapter 1, International Standard Form Contracts by William Karl Wilbum . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .1

Chapter 2, UNCITRAL Legislative Guide for Privately Financed Infrastructure Projects by Tore Wiwen-Nilsson . . . . . . . . . . . . . . . . . . . . . . . . Chapter 3, Foreign Financing of Infrastructure Projects in Brazil by Marcos Chaves Ladeira . . . . . . . . . . . . . . . . . .

. . . . .7

. . . . . . . . . 15

Chapter 4, Project Financing in Canada: Project Developer and Financing Methods by Bogdan Teofilovici . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . 29

Chapter 5, The Colombian Power Sector - Project Finance and Investment by Maria M. Zuleta . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . 45

Chapter 6, Project Finance in a Troubled Chinese Market by Anthony W.Y. Chan andElaine Yu . . . . . . . . . . . . . . Chapter 7, Project Finance -The German View by Ulf R. Siebel . . . . . . . . . . . . . . . . . . . .

. . . . . . . . 57

. . . . . . . . . . . . . 81

Chapter 8, Privatization Aspects of Project Finance in Greece by Gus J. Papamichalopoulos . . . . . . . . . . . . . . . . . . . .

. . . . . . 91

Chapter 9, The New Italian Law on Project Finance by Fabrizia Maurici . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . 115

Chapter 10, Guarantees in Project Finance in Spain by Javier Perez-Ardb Criado . . . . . . . . . . . . . . .

. . . . . . . . . . . 123

Chapter 11, Build, Operate, Transfer Project Financing in Emerging Countries by Peter Neumann . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . 133

viii lntemational Project Finance

Chapter 12, Towards Sustainable Build Operate Transfer Projects in Asia by Austin I. Pu116. . . . . . . . . . . . . . . . . . . . . . . . .

.......

Chapter 13, Securing United States Assets on Multinational Projects by Justin Weisberg. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 14, Public Procurement in Germany by Gabriele Heise . . . . . . . . . . . . . . . . Chapter 15, Privatization in Romania by Dragos Vilau . . . . . . . . . . . . .

.

165

181

. . . . . . . . . . . . . . . 201

. . . . . . . . . . . . . . . . . . . 215

Chapter 16, Environmental Legal Issues in Project Finance and Mergers and Acquisitions by John M. Scagnelli . . . . . . . . . . . . . . . . . . . . . . . Chapter 17, European Environmental Law Public and Major Projects by Michael Redman. . . . . . . . . . . . . . . .

. . . . . . . 233

..............

Chapter 18, Water and Wastewater Resource and Infrastructure Master Planning, Financing, and Conflicts by Kevin Patrick. . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 19, Cultural Issues in International Arbitration by David A. Lawson . . . . . . . . . . . . . . . . . . . . . .

243

. . . . . 255

. . . . . . . . 269

Chapter 20, Dispute Resolution in Major Infrastructure Projects by Christian Camboulive . . . . . . . . . . . . . . . . . . . . . . . . Chapter 21, Dispute Resolution and Construction Contracts by T i Reynolds . . . . . . . . . . . . . . . . . . . . . . . . .

. . . 281

. . . . . . 299

THE AUTHORS

Christian Camboulive Gide Loyrette Nouel 26, Cours Albert, ler, 75008 Paris, France Telephone: (33 1) 40 75 60 00 Telefax: (331) 43 59 37 79 Email: [email protected] Partner, Gide Loyrette Nouel. Admitted: Avocat la Cour, France. Education: Institut d'Etudes Politiques of Bordeaux; Paris Law University (Post Grad Degree in Business Law).

Anthony W.Y. Chan Koo and Partners 22lF Bank of China Tower, 1 Garden Road, Hong Kong Telephone: (852) 2867 9988 Telefax: (852) 2868 10 17 Email: [email protected] Partner, Koo and Partners. Admitted: England and Wales (1989); Hong Kong (1993). Member: Law Societies of England and Wales, Hong Kong, International Bar Association, Beijing Law Society Committee of International Law. Publications: China Finance Manual (Asia Law & Practice, 2nd Edition, Contributor, 1998); Nightmare in Guangdong: Project lending after GITIC published by Asia Law & Practice in Project Finance Models for Greater China (Co-author, 1999); Asian Telecoms Project Finance: An Overview (February 1997); Power Plant and Power Purchase Agreements (February 1998); The Adventures of Mr. Cyberspace Man: Causing Havoc on the Employer (Co-author, April 1998); Debugging the Millennium Bug-Some Pointers (February 1999); The Euro: Points of Substance for Financial Documents (Co-author, April 1999); China Lending after GITIC (April 1999); PRC Law Alert: New Contract Law and New Securities Law of the PRC (Co-author, June 1999); The Role of Private International Law in Cross-Border Transactions (August 1999); Electronic Commerce and the Shape of Problems to Come (October 1999); Contract Creation in Cyberspace and Effective Risk Management (Co-author, December 1999). Education: University of London (LL.B (Hons), 1986).

x International Pmject Finance Marcos Chaves Ladeira Pinheiro Neto, Advogados Rua Boa Vista, 254,9 Andar, 01014-907, Silo Paulo, Brazil Telephone: (55 11) 237 8400 Telefax: (55 11) 237 8600 Email: [email protected] Partner, P i e i r o Neto, Advogados. Admitted: SBo Paulo Chapter, Bar Association; Rio de Janeiro Chapter, Bar Association; District Federal Chapter. Education: Universidade de S%oPaulo (L.LB, 1988); Fundaqno G e ~ l i oVargas (C.E.A.G., 1991).

Gahriele Heise Busse & Miessen Wilhelmstra!3e 46, 10117 Berlin, Germany Telephone: (49 30) 226 3360 Telefax: (49 30) 226 33650 Email: [email protected]

Partner, Busse & Miessen. Admitted: Amts- und Landgericht Bonn; Amts- und Landgericht Berlin; Kammergericht Berlin. Member: Federal German Association of Lawyers; International Working Group on Law of Medicine; Berlin Association of Lawyers; American Chamber of Commerce; Committee Member of the Reunification of Female Employers, Berlin; Federal Association of Law of Telecommunication. Publications: various articles in JuristischeSchulungon European Community Law; various articles on public procurement in Germany. Education: University of Passau (Law and Languages, First Legal State Exam, 1991); University of London, King's College (Diploma in Legal Studies, 1990); OLG Cologne (Second Legal State Exam, 1994).

The Authors. xi David A. Lawson Byme-Sutton Bonnard Lawson Meakin & Associds 11 rue du General Dufour (4th floor), CH-1211 Geneva, Switzerland Telephone: (41 22) 322 2500 Telefax: (41 22) 322 25 15 Email: [email protected] Partner, Byrne-Sutton Bonnard Lawson Meakin & Associds. Admitted: California (1972); US Supreme Court (1978); Registered with the Geneva Bar Association (1990). Member: Swiss Arbitration Association;AmericanBar Association. Publications: "Governmental Interest Analysis and Other Policy-Oriented Choice-of-Law Theories," Oxford University, 1974; "On the road to Babcock: policy-oriented choice of law," GGU Law Review, 1978; "Commercial law and EDI, Paperless Trading," Dublin, 1988; "Trading and Transport with computers," US Prop. Cleb, 1990; "The Use of Trusts by Swiss Residents," Havelet, 1997; "Legal culture and International Arbitration", ABA 2000. Education: Rensselaer Polytechnic Institute, Troy, NY (B.S, (Nuclear Physics), 1965); Golden Gate University, San Francisco (J.D., 1971); Hague Academy of International Law (Diploma, 1972); Oxford University (D.Phi1 (Law), 1974).

Claus-Peter Martens Clifford Chance PUnder Katharina-Heinroth-Ufer I, D-10787 Berlin, Gemany Telephone: (43 30) 254 65 800 Telefax: (43 30) 254 65 900

Partner, Clifford Chance Pander. Admitted to Frankfurt and Berlin Bars. Member: German Bar Association and International Bar Association. Publications: Environmental Liabilities and Regulation in Europe; European Environmental Markets; German Environmental Law for Practitioners; lntemational Judicial Assistance in Civil Matters; among others. Educated: University of Bochum (Dr. jur.) and University of Cambridge (LL.M, 1989).

xii International Project Finance

Fabrizia Maurici Studio Legale Bemascone & Soci Piazza San Babila, 3,20122 Milan, Italy Telephone: 02 7772 1511 Telefax: 02 7772 1515 Email: [email protected] Partner, Graham & James LLP. Admitted Milan bar. Education: University of Pavia, Italy (LL.B (magnacum laude), 1986); College of Europe, Bruges, Belgium (Diploma of Higher European Law Studies, 1988).

Peter Neumann International Legal Consultant Elisabethstrasse 6315, Baden A-2500, Austria Telephone: (43 2252) 43 119 Telefax: (43 2252) 43 119 Email: [email protected] International law consultant. Consultant to the Preparatory Commission for the Comprehensive Nuclear Test-Ban-Treaty Organization, Vienna, Austria. Member: Danish Foreign Policy Association; American Society for International Law; Fellow, Center for International Legal Studies. Education: h u s University, Denmark (Cand. Jur., 1965); City of London College, England (Certificate of International Law, 1965); John Hopkins University, United States (M.A. (InternationalRelations), 1968).

Gus J. Papamichalopoulos KyriakidesGeorgopoulos 6 Queen Sophias Avenue, Athens, Greece 10674 Telephone: (301) 724 3072 Telefax: (301) 7250 6701 Email: [email protected] Partner, Kyriakides Georgopoulos. Admitted: Athens Bar (1991). Member: Athens Bar Association; International Bar Association; American Bar Association; Member of the Industrial Interface Group of NATO (representing Greece). Publications: "Protection of Industrial and Intellectual Propem in Greece" (Kluwer, 1993); "Legal Aspects of Doing Business in Europe" (Kluwir, 1994); "~ntellectualProperty World Desk Reference" (Kluwer, 1994); "European Product Liability" (Butterworths, 1995); "Bankable Gas supply &ree&nts" (Butterworths). ducat ion: Aristotelian University of Thessaloniki, Greece (LL.B 1988).

The Authors. xiii

Kevin Patrick Patrick & Stowell, P.C. 730 East Durant Street, Aspen, Colorado 81611, United States Telephone: (970) 920 1028 Telefax: (970) 925 6847 Email: [email protected] Shareholder, Patrick & Stowell, P.C. Education: Virginia Tech University (B.A, 1974); University of Tulsa School of Law, National Energy Law & Policy Institute (J.D, 1978).

Javier PBrez-Ardh Criado J. & A. Garrigues Andersen y Cia, S.R.C. Jose Abascal, n 45,28003, Madrid, Spain Telephone: (34 91) 514 52 00 Telefax: (34 91) 399 24 08 Email: [email protected] Partner, J&A Garrigues Andersen y Cia, S.R.C. Admitted: Madrid and La Corufla Bars. Member: Spanish Civil and Commercial Court ofhbitration: Panel of S~orts Arbitration of the Spanish Olvm~ics - . Committee. Publications: Numerous 'oublications on Spainish law. Including International seminar on the financing of renovation works, organized by the World Bank and the Generalitat Valenciana, "henda de crkditos: nueva jurisp&dencia tarea del legislador concursal" (The pledge of credits: new case law and the task of the legislature on insolvency) (September 1997); Management and risk control of project finance: "La Financiacidn de Plantas de Tratamiento de Residuos", (International Research Institute. Madrid, May 1999); Project Finance 2000: "Esquema contractual y rdgimen de garantias en el marco de una Project Finance" (Recoletos Conferencias y Formaci6n, Madrid, January 2000). Education: University of Santiago de Compostela, (LL.B, 1976).

Austin I. Pull6

Nanyang Business School Blk 53 #B2A-04, Namyang Avenue, Singapore 639798, Republic of Singapore Telephone: (65) 790 6140 Telefax: (65) 7935 189 Email: [email protected] Associate Professor, Nanyang Business School. Admission: Solicitor & Proctor of the Supreme Court of New South Wales, Australia; Attorney of the District of Columbia and Massachusetts. Education: University of Sri Lanka (LL.B); Haward University (LL.M, SJD).

xiv International Project Finance Michael Redman Clifford Chance LLP 200 Aldersgate Street, London, EClA 4JJ, England Telephone: (44 207) 600 1000 Telefax: (44 207) 600 5555 Email: [email protected] URL: http://www.cliffordchance.com SolicitorAdvocate, Clifford Chance LLP. Admission: English Bar, 1975,Solicitor, 1986. Member: English Law Society, Planning Panel. Publications: "planning Uses and Use Classes". Education: Oxford University (M.A, 1974).

Tim Reynolds Constant & Constant Sea Containers House, 20 Upper Ground, Blackffiars Bridge, London, SEl 9QT, England Telephone: (44 207) 261 0006 Telefax: (44 207) 401 2161 Email: [email protected] Partner, Constant & Constant. Admitted: Solicitor of England and Wales (1971). Member: Law Society; International Bar Association; Society for Construction Law, and Technology & Construction Courts Solicitors' Association. Education: University of Wales (Aberystwyth) (LL.B (Hons) 1968).

John M. Scagnelli Scarinci & Hollenbeck 500 Plaza Drive, Secaucus, New Jersey 07096, United States Telephone: (201) 392 8900 Telefax: (201) 348 3877 Email: [email protected] URL: www.njlegalink.com Partner, Scarinci & Hollenbeck. Admitted: New York and New Jersey State Bars. Member: Commissioner on the Interstate Sanitation Commission; Executive Director of the Land Administration, Commonwealth of Puerto Rico; American Bar Association, section of International Law and Practice working group reviewing proposed environmental laws for the Country of Cambodia; New York and New Jersey State Bar Associations; Association of the Bar ofthe City ofNew York. Publications: Editor, "Environmental Compliance & Litigation Strategy"; co-writer "Environmental Law Handbook", 14th edition; and numerous articles on natural resource damages, pollution prevention and waste minimization, lender environmental liability, environmental auditing, international environmental legal issues, underground storage tanks, and regulation of sanitary landfills. Education: Yale University (Bachelor's Degree with summa cum laude and Phi Beta Kappa, 1972); Yale University (J,D., 1975).

The Authors xv

Ulf R. Siebel Heuking KUhn LUer Wojtek Lindenstrasse 37,60325 Frankfurt am Main, Germany Telephone: (49 69) 97 56 10 Telefax: (49 69) 97 56 1200 Email: [email protected] Partner, Heuking KUhn LUer Heussen Wojtek. Admitted: Solicitor of England and Wales. Member: Foreign Trade Council Frankfurt Chamber of Industry and Commerce; Listing Committee Frankfurt Stock Exchange; Panel ofconciliators ICSID; President German Ghanaian Economic Association; Honorary President Association for the Protection of Foreign Investments; German Afrika Association; International Bar Association; International Law Association; Center for Intemational Legal Studies. Publications: Questions of Harmonization of Company Law; Foreign Trade Law in the Federal Republic of Germany; Restrictions of Capital Transactions with Foreigners; Capital and Quasi-Capital of Credit Institutions; Legal Aspects of International Bonds. Education: University of Bonn (Dr. iuris, 1950), Law School of the Law Society of London (Diploma of Legal Practice, 1950).

Bogdan Teofilovici Ogilvy Renault 77 King Street West, Suite 2100, P.O. Box 141, Royal Trust Tower, Toronto Dominion Centre, Toronto, Ontario M5K 1H1, Canada Telephone: (416) 216 4000 Telefax: (416) 2 16 3930 Email: [email protected] Partner, Ogilvy Renault. Admitted: Quebec Bar (1984); Ontario Bar (1996). Member: Canadian Bar Association (1984); Law Society of Upper Canada (1996). Publications: Product Liability in Canada; AsseWEquipment Finance & Leasing Recent Developments of Importance; "Legal Aspects of Doing Business in Ontario"; "Aircraft Financing, andLeasingW.Education: University of Ottawa (B.A (Psychology), 1980);University of Ottawa(LL.L (Civil Law), 1983); University of Ottawa (LL.B (Common Law), 1992).

xvi International Project Finance Dragos Vilau Musat & Asociatii Piata Chalres de Gaulle, 8 Major Gheorghe Sontu Street, 1st District, 71264, Bucharest, Romania Telephone: (401) 223 3717 Telefax: (401) 223 3957 Email: [email protected] Partner, Musat & Asociatii. Admitted: Bucharest Bar (1996). Member: Romanian Bar Association; Fellow of the Center for International Legal Studies. Publications: Doing Business in Romania (Bucharest, 1999); "Romania - New Investment Regime", Impact