Legal issues of general applicationGovernment permission
What government approvals are required for typical project finance transactions? What fees and other charges apply?
Government approvals for a typical project finance transaction may include: planning permission (generally within the remit of the local authority unless the project is an NSIP - see question 17) and environmental approvals and permissions from various governmental agencies and bodies. Further detail on governmental authorities is given in question 16.
If the project finance transaction is public infrastructure being privately financed (eg, through the MIM model), HM Treasury approvals are likely to be needed if the value of the financing transaction exceeds the delegated authorities of the public body procuring the infrastructure.
In the 2019 budget, the Chancellor of the Exchequer announced that the PF2 infrastructure procurement model was being discontinued, and there is a very limited number of projects that will be procured through ‘traditional’ PFI/PF2-type PPP models.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?
Subject to the need to register debentures at Companies House to ensure that the security interests are not void against a liquidator, administrator or creditor, and the debt secured by that charge does not become payable immediately (see above - while not technically a requirement, failure to register accordingly has very serious practical consequences), there are as a matter of course no requirements to register or file any financing or project document, nor any other similar legal formality (outside the document’s due execution) to ensure that it is valid and enforceable.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?
The English courts are supportive of arbitration and will generally seek to uphold contractual agreements to arbitrate. The UK is a party to the New York Convention and the Geneva Convention relating to recognition and enforcement of foreign arbitration awards. The UK has ratified the Washington Convention (ICSID) and has enacted the Arbitration (International Investment Disputes) Act 1966, which provides for the recognition and enforcement of ICSID awards. Most types of commercial disputes can be arbitrated. There are some very limited cases in which disputes are not arbitrable, including employment (where an employee has statutory rights to have his or her case heard before an employment tribunal), and insolvency proceedings that are subject to the statutory regimes set out in the Insolvency Act 1986 and criminal matters. There no types of commercial disputes that are automatically subject to domestic arbitration. The Arbitration Act 1996 governs all arbitrations seated in England, Wales or Northern Ireland, both domestic and international.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?
While not mandatory, both project and financing agreements are typically governed by the laws of England and Wales where the project is based in England or Wales. Where the project is based in Scotland or Northern Ireland, the real estate elements of the project (eg, leases) will be governed by the domestic law of that jurisdiction (though often the other project and finance documents will be governed by the laws of England and Wales). Real-estate-related security interests should also be governed by domestic of the relevant jurisdiction in which they are located.
There are some other statutory restrictions on governing law (including public policy requirements), primarily that the constitution of an entity incorporated in one of the jurisdictions in the UK must be governed by the law of that jurisdiction, and that both employment and insolvency-related matters will be governed by the domestic jurisdiction. English law is also often used for financing agreements (though not necessarily security agreements) for projects based outside the UK.Submission to foreign jurisdiction
Is a submission to a foreign jurisdiction and a waiver of immunity effective and enforceable?
Submission to a foreign jurisdiction to settle disputes under a commercial contract is a valid choice under the laws of England and Wales, and the judgments of that foreign jurisdiction may be effective and enforceable subject to the relevant formalities. Broadly, the judgments of other EU states are enforceable under Regulation (EU) 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil commercial matters, known as the ‘Recast Brussels Regulation’. In the case of Denmark, the regulation is applicable by separate agreement rather than it having direct effect. Iceland, Norway and Switzerland (ie, the European Free Trade Association members excluding Liechtenstein) reciprocally recognise the jurisdiction of other European states through the (similar but less developed) 2007 Lugano Convention.
There is also a separate regime for the simplified recognition of Scottish and Northern Irish judgments under the Civil Jurisdiction and Judgments Act 1982, while the judgments of some (mainly Commonwealth states and UK Overseas Territories) are (subject to formalities) recognised variously under the Administration of Justice Act 1920, Foreign Judgments (Reciprocal Enforcement) Act 1933 and Civil Jurisdiction and Judgments Act 1982 (Gibraltar) Order 1997. The judgments of the courts of Mexico and Singapore (for example) can be recognised in the jurisdiction through the operation of the Hague Convention on the Choice of Court Agreements. In the absence of any specific reciprocal arrangement (eg, most notably in the United States, Russia and China) foreign judgments may only be recognised and enforced by separate proceedings in the domestic jurisdiction.
Sovereign immunity under the laws of England and Wales is primarily derived from the State Immunity Act 1978. Subject to the relevant domestic law (and whether this permits the sovereign entity to waive immunity), and provided the clause is properly drafted, immunity from adjudication and enforcement can be effectively waived and enforced. Though in practice there are few differences to the State Immunity Act 1978, it should be noted that the UK is also a signatory to the United Nations Convention on Jurisdictional Immunities of States and their Property, though it is not yet in force under the laws of England and Wales.
We do not anticipate material changes to these arrangements on any UK exit from the EU, but this remains to be confirmed.