Legal issues of general application

Government permission

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

The government approvals required for project finance transactions vary, depending on the sector the transaction covers. For example, for offshore wind transactions, the project company must have a valid operating permit granted by the BSH. In principle, a banking licence is required to make loans available in Germany. However, these restrictions apply generally and are not specifically directed at project finance transactions owned or controlled by foreign 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?

As discussed in question 2, certain securities require notarisation; pledges over rights must be notified to the company whose rights are being pledged to become valid. In some specific instances, the language used must be German (eg, decommissioning guarantees in offshore wind transactions).

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?

Foreign arbitral awards are recognised and enforced in Germany in accordance with applicable international treaties, in particular the 1958 New York Convention and the ICSID Convention. Moreover, Germany is party to the 1927 Geneva Convention on the Execution of Foreign Arbitral Awards and the 1961 European Convention on International Commercial Arbitration.

Domestic arbitration awards are enforced pursuant to sections 1059 and 1060 of the German Code of Civil Procedure (ZPO). These provisions, as with Germany’s entire arbitration law (contained in Book 10 of the ZPO), are based on the UNCITRAL Model Law of 1985.

The arbitrability or non-arbitrability of disputes is regulated by section 1030 of the ZPO. Basically, any claim under property law and any non-pecuniary claim the matter of which could be settled by parties can be submitted to arbitration. Non-arbitrability is therefore limited to very few instances such as disputes relating to tenancy relationships for residential space, most labour law disputes (except disputes between management and unions) and civil status matters (in particular, in family law). Corporate disputes are arbitrable, but in particular disputes relating to shareholder resolutions must fulfil certain formal and procedural requirements to be arbitrable.

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?

In general, parties may contractually agree on the governing law of their agreements. However, if the relevant assets are located in Germany, the corresponding project agreements will usually be governed by German law to ensure their enforceability in Germany.

Submission to foreign jurisdiction

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

Generally, any enforcement in Germany will be subject to the domestic and international rules of civil procedure and enforcement arising by statute or otherwise by operation of law, each as applied by the courts or other competent authorities in Germany. This, among other things, may require the translation of foreign language documents into the German language and may apportion costs between the parties otherwise than as contemplated in any document. The recognition and enforcement of a foreign judgment or arbitration award in Germany is, in particular, subject to the requirements and restrictions of:

  • the European Council Regulation (EC) No. 1215/2012 of 12 December 2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (recast), as amended from time to time;
  • sections 328, 723 and 724, 1054, 1060 and 1061 of the ZPO; and
  • the UN Convention of 10 June 1958 on the Recognition and Enforcement of Foreign Arbitration Awards.

The enforcement of rights with the assistance of a German court is subject to an advance on court fees and, if the petitioner is a foreign person domiciled outside the European Union and certain other countries benefiting from treaty exemptions, and the other party so requests, is also subject to the posting of a bond for anticipated costs of the litigation in an amount to be determined by the court.