Legal issues of general applicationGovernment permission
What government approvals are required for typical project finance transactions? What fees and other charges apply?
There is no requirement to report project financing deals to the government or to obtain its consent or approval, nor is there a requirement to pay certain fees to the government.
For PPP projects, changes in investment ratios frequently occur along with refinancing at the end of the construction phase and start of the operation phase. It is common for the concessionaire’s shareholders to change at this point. In such cases, the government, the concessionaire, investors and lenders must agree on the terms and conditions of the overall restructuring. It is mandatory that the concession agreement with the government be amended to reflect the changes in the investment ratios, and often the government is perceived to be in a superior position in negotiation, as such amendment is subject to the government’s approval. This is why, in practice, the process of obtaining the government’s consent is similar to receiving its approval or a permit.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?
There is no such requirement, as the government is merely a party to the concession agreement and is not directly involved with project or finance agreements (to avoid being directly liable for the relevant project).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?
If an arbitral award is obtained from a foreign arbitral tribunal, it will be recognised by Korean courts and enforceable against the Korean party in Korean courts without re-examination of the merits, provided that the recognition and enforcement of the award may be refused by Korean court where: the award is governed by the New York Convention and does not satisfy the conditions for recognition and enforcement as set forth in article V; or the award is not governed by the New York Convention and does not satisfy the following conditions:
- such award was finally and conclusively given by an arbitral tribunal having valid jurisdiction in accordance with Korean laws or international treaties;
- the party against whom such award was rendered was served with process (other than by publication or a similar method) in sufficient time to enable such party to prepare its defence, in conformity with the laws of the arbitral tribunal rendered the award or responded to the proceeding without being served with process;
- recognition of such award is not contrary to the public policy of Korea; and
- awards of the arbitral tribunal of Korea are accorded reciprocal treatment under the laws of the arbitral tribunal that rendered such award; or
- awards of the arbitral tribunal of Korea in the country of the arbitral tribunal that rendered such award are not treated in a manner that is highly prejudicial to their recognition and their treatment is substantially the same as the treatment by the Korean court of such award in material respect.
Which jurisdiction’s law typically governs project agreements? Which jurisdiction’s law typically governs financing agreements? Which matters are governed by domestic law?
For projects in Korea, the governing law for project agreements and the financing agreements is Korean law. There are instances where there may be an offshore financing component. The governing law of offshore financing is usually English law.Submission to foreign jurisdiction
Is a submission to a foreign jurisdiction and a waiver of immunity effective and enforceable?
Submission by the parties to the jurisdiction of the foreign court under a project contract or financing agreement is, as a matter of contract law, duly recognised and enforced by Korean courts, provided that submission to the jurisdiction of the foreign court by the Korean party is deemed to be valid and binding under the laws of the foreign jurisdiction.
Waiver of immunity is recognised and enforceable in Korea. In other words, a claim for immunity from the court’s jurisdiction cannot be made.