Legal issues of general application

Government permission

What government approvals are required for typical project finance transactions? What fees and other charges apply?

No government approvals are required for project finance transactions per se under Swedish law. The implementation of a project may, however, require different types of approval. For example, a building construction project will generally require a building permit and an electric transmission project will require a network concession. Typically, projects will also be required to obtain environmental approvals. Foreign investors seeking permission will be treated as domestic parties.

Registration of financing

Must any of the financing or project documents be registered or filed with any government authority or otherwise comply with legal formalities to be valid or enforceable?

In Sweden, there are no documentation formalities per se within project finance. However, any transfer of real estate must be in writing. The transfer must be registered at the Swedish Mapping, Cadastral and Land Registration Authority and a transfer levy will apply. Other types of agreements relating to land may also require registration. The incorporation of a SPV may also require registration with the Swedish Companies Registration Office.

Arbitration awards

How are international arbitration contractual provisions and awards recognised by local courts? Is the jurisdiction a member of the ICSID Convention or other prominent dispute resolution conventions? Are any types of disputes not arbitrable? Are any types of disputes subject to automatic domestic arbitration?

An arbitration agreement or clause is governed by the law chosen by the parties, but in the absence of such choice it is governed by the law of the country where the arbitration proceedings have taken place or are to take place pursuant to the agreement. Even if the agreement is valid according to the applicable law, it will not preclude Swedish judicial proceedings unless the dispute is of a kind that can be subjected to arbitration even according to Swedish law. Any type of dispute that the parties may settle by agreement can be arbitrated according to the Swedish Arbitration Act (1999:116). Matters of public interest and subject to public laws (eg, administrative decisions and permits) cannot be arbitrated. Arbitration can be initiated in Sweden only if it follows from the arbitration agreement, the defendant has consented to it or the defendant could be sued in a Swedish court (provided that the arbitration agreement does not stipulate that the proceedings shall take place abroad). All arbitration proceedings taking place in Sweden are subject to the rules of Swedish law as far as procedure is concerned, but many of these Swedish procedural rules are not mandatory and can be contracted out by the parties, even by means of a reference to foreign law. Sweden has ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and is also a member of the ICSID Convention.

Law governing agreements

Which jurisdiction’s law typically governs project agreements? Which jurisdiction’s law typically governs financing agreements? Which matters are governed by domestic law?

Generally, Swedish law will govern the project agreements as well as the financing agreements. However, the parties may freely agree to choose any other law that shall apply to an agreement provided that they do not intend to circumvent public order and that their agreement is not in conflict with mandatory law. Swedish law will mandatorily govern property, tax, customs, labour and environmental aspects. If the lender, or a syndicate of lenders, is a foreign entity, it is not unusual for the parties to choose that English law shall apply to the financing agreements.

Submission to foreign jurisdiction

Is a submission to a foreign jurisdiction and a waiver of immunity effective and enforceable?

Submission to a foreign jurisdiction is permissible in respect of the purely commercial terms of the project, such as the contract between the project company and its lenders. However, all matters of a public law nature, such as incorporation of companies or handling of permits, will be subject to Swedish rules and authorities. Because of the connection to public law aspects (bankruptcy, priority) all matters of securing collateral in Sweden must also be handled according to Swedish law, regardless of the law of the project contract.