1. Overview
1.1 What are the main trends/significant developments in
the project finance market in your jurisdiction?
The project finance market in the United States
(“U.S.”) remains mature and highly active, with a large
volume of transactions continuing to be executed across a diverse
range of industries and asset classes.
Russia’s invasion of Ukraine in 2022, and the unprecedented
sanctions that have followed from the Western world, have caused
substantial shifts in demand in global energy markets. The
continued need to find alternative sources to meet shortfalls in
European supply has underlined the importance of investment in
midstream and export oil and gas infrastructure in the U.S. In
electricity markets, innovation and the growing demand by state
governments, investors and energy consumers for a diverse and clean
energy mix are driving investment into offshore wind, solar and
battery storage.
There is also an increasing focus in the U.S. on bringing
critical components of the supply chain economy (for instance,
manufacture of semiconductors) onshore, which is driving investment
in domestic manufacturing capacity and associated infrastructure.
Notable are the “Build America, Buy America Act” signed
into law in 2021 (which established a domestic content procurement
preference applying to all infrastructure projects in receipt of
federal financial assistance) and the “Creating Helpful
Incentives to Produce Semiconductors and Science Act of 2022″
(CHIPS Act) signed into law in August 2022 (discussed in more
detail in Part III below).
Demand for clean energy from investors and consumers is driving
a continued transition in markets and associated infrastructure
rollouts. Consumers are increasingly choosing to purchase, and
governments are seeking to incentivize, electric and fuel-cell
powered vehicles. Clean energy sources are also proposed to power
significant investments in green hydrogen hubs planned in and
around traditional oil and gas centers on the Gulf Coast. While
supply chain bottlenecks have intensified capital investment in
ports, airports, rail and transit, capital sources continue to
redefine the traditional conception of “infrastructure”
with increasing investment in energy efficiency, data centers,
battery storage and communications infrastructure.
Crude and Natural Gas Midstream Infrastructure Under
Strain
U.S. crude exports have continued at a historically high level,
with exports hovering at around 3.5 bbl/day at the beginning of
2023. The consistent petroleum production growth since the shale
boom of 2008 continues to highlight constraints in the midstream
crude sector, particularly relating to transmission, treatment and
storage terminals. In recent years, prices for NYMEX WTI (a
physical futures contract) traded in negative territory for brief
periods, as buyers could not find sufficient storage at the
delivery point in Cushing, Oklahoma or transportation capacity from
Cushing to other storage hubs.
Long term solutions to these deficiencies are perhaps less
likely to be addressed under the Biden administration with its
focus on a continued transition to renewable energy sources –
and away from fossil fuels – as exemplified by the revocation
of the federal permit for TransCanada’s $9 billion Keystone XL
oil pipeline shortly after inauguration. We expect these headwinds
for oil transmission pipelines to spur greater demand for oil
storage infrastructure, oil pipeline infrastructure and “crude
by rail”. For example, in 2020, the 642-mile Wink to Webster
Pipeline commenced services, with capacity to export more than 1
million barrels per day of crude oil.
Gas transmission infrastructure remains similarly under strain
– while between 2012 and 2021, there was an 8% reduction in
the volume of vented or flared gas (a by-product of crude oil
production) in the U.S., the U.S. remains one of the top 10 flaring
countries globally, indicating a continued need for pipeline
infrastructure and capacity. Gas flaring is a key contributor to
U.S. carbon emissions and, increasingly, an ESG concern for
lenders, investors and offtakers of U.S. gas and LNG projects. In
recent years, some oil producers have resorted to paying third
parties with gas transportation capacity to take their gas so that
they can keep producing crude oil, with the Waha hub (located in
the Permian Basin) spot price dipping into negative figures on a
number of occasions in 2020 and 2019. The sharp growth in demand
for gas transportation infrastructure has led to various sponsors
pursuing large gas transmission projects, with Kinder Morgan having
brought its 2.1 Bcf/d Permian Highway project online on New
Year’s Day of 2021. In addition, the 2.0 Bcf/day Whistler
pipeline was commissioned in 2021. Both projects run from the Waha
hub towards the Gulf Coast. Gas transportation infrastructure is
crucial to the continued development of the U.S. LNG export
industry, which has been exporting record volumes to the European
Union following Russia’s invasion of Ukraine (in the first four
months of 2022, the U.S. exported 74% of its LNG to Europe,
compared with an annual average of 34% in 2021) and is expected to
continue to do so in 2023 following the cessation of the Nord
Stream 2 project for export of gas from Russia to Germany and
amidst continued geopolitical uncertainty in Europe. Notably in
2022, the United States and the European Commission, in a joint
statement, outlined commitments to increase U.S. LNG exports to
Europe through 2030, indicating that the demand for U.S. LNG will
continue to grow in the coming years.
U.S. Becomes the Leading Exporter of LNG
The shale boom has also fueled LNG export growth. In 2022, the
U.S. tied with Qatar as the world’s top exporter of LNG,
exporting 81.2 million tons of LNG in 2022. Train 6 of the Sabine
Pass LNG project completed commissioning in 2022 and the Calcasieu
Pass LNG project, which commenced commissioning in late 2021, is
due to complete commissioning in 2023. As of July 2022, the U.S.
had more LNG export capacity than any other country, averaging 11.1
Bcf/d during the first half of 2022. Upon completion of the Golden
Pass, Plaquemines and Corpus Christi Stage III LNG projects, all of
which are currently under construction, the U.S. LNG peak export
capacity is expected to expand by a further 5.7 Bcf/d by 2025.
Long-term contracting of offtake from U.S. LNG projects rose
sharply in 2022, with notable offtake agreements signed between
France’s Engie SA and NextDecade Corp. (15-year contract) and
between Polish Oil and Gas Co. and Sempra Infrastructure.
The LNG boom in the U.S. shows no sign of abating; global spot
gas prices hit record highs even before the onset of Europe’s
latest supply crisis. The expansion of export capacity from zero
(the U.S. first exported LNG as recently as February 2016) to
current global leading levels in a seven-year period has primarily
been financed by project finance capital, and new facilities
(including Golden Pass LNG, Plaquemines and Corpus Christi Stage
III) are expected to rely on project finance to meet their
considerable financing needs.
Politicization of Energy Regulatory Matters
It has become increasingly contentious and challenging to permit
and build natural gas infrastructure. Some local opposition to
energy infrastructure projects has always been anticipated,
however, the debate over energy infrastructure is no longer a local
issue. Interest groups have become more sophisticated and
coordinated and have taken a national approach, and many new
midstream and oil and gas assets are subjected to challenges by
environmental groups. Moreover, under the U.S. federal system,
where power is divided between Federal and state authorities, the
interests and objectives of those decision makers can often
conflict. FERC is typically the lead agency for the environmental
review that can be required under the National Environmental Policy
Act (“NEPA”) for a major federal action such as issuance
of a FERC license. Regulatory approvals from state authorities may
also be required.
Environmental groups and certain states (including New York, New
Jersey and Oregon) that have generally been opposed to further
midstream development have brought contentious litigation that has
led to delays, denials and vacation of regulatory permits. For
example, in December 2021, after over a decade of litigation
involving environmental groups and property owners, the Jordan Cove
project’s developer notified FERC that it would abandon the LNG
terminal and associated pipeline project, citing its inability to
obtain the necessary permits from the State of Oregon after FERC
declined to overrule the state’s denial of a water quality
permit in January 2021.
Key points of contention have recently included Section 401 of
the Federal Clean Water Act, which requires a state water quality
certification prior to construction of facilities that may result
in a discharge of pollution in that state, and Section 404 of the
Federal Clean Water Act, which requires a permit prior to discharge
of dredged fill material into wetlands or waters of the U.S.
(“WOTUS”). In January 2023, the Biden administration
issued a new rule to tighten the definition of WOTUS that had been
relaxed by the Trump administration. While the Trump administration
sought to curtail the scope of this authority, the Biden
administration has taken a different approach, largely relying on
the pre-2015 WOTUS regulations and interpretation of WOTUS but also
including distinct changes that potentially broaden the pool of
what may be considered WOTUS. The U.S. Department of Commerce, the
State of Texas, and several trade groups, including the National
Cattlemen’s Beef Association, have already filed multiple
lawsuits challenging the Biden rule, and there is a pending Supreme
Court case that could require the Biden rule to be wholly
reconsidered.
In addition to the revocation of the permit to complete the
Keystone XL pipeline mentioned above, within the first week of
President Biden’s inauguration, the administration also issued
an order (Executive Order 14008) suspending oil and gas leasing and
permitting on federal lands and waters. Oil and gas companies and
14 states sued over the order and, following extensive litigation
and an injunction issued by the U.S. District Court for the Western
District of Louisiana, federal oil and gas leasing resumed in June
2022. Nevertheless, the renewed leasing opportunities are marked by
an 80% decrease in the acreage available for leasing, as well as
increases to the royalty rate for new competitive oil and gas
leases.
In January 2023, President Biden named Willie Phillips, a
sitting commissioner and a Democrat, as acting chairman of FERC,
pending the nomination and confirmation of a permanent chairman.
Phillips has named grid reliability, expansion of electric power
transmission (including interregional transmission) and
environmental justice in the energy sector among his priorities.
Phillips replaces Richard Glick, who had historically voted against
policy decisions that weakened clean energy production and
development, such as FERC’s original minimum offer price rule
order, which sets minimum bids for state-subsidized electricity
generators in PJM Interconnection, L.L.C. (“PJM”)
capacity auctions. Prior to Phillips being named to the chairman
role, FERC had five sitting commissioners, three Democrats and two
Republicans. With Phillips, a Democrat, removed from the sitting
commissioner position the resulting composition of two Democrats
and two Republicans could lead to splits in future policy decisions
and thereby introduce uncertainty. However, early FERC decisions
under Phillips’ leadership, including allowing natural gas
projects to move ahead with less rigorous environmental reviews,
signal increased bipartisan cooperation.
The Biden administration has been focused on bolstering domestic
production of critical components. The “Creating Helpful
Incentives to Produce Semiconductors and Science Act of 2022″
(CHIPS Act) was signed into law in August 2022. The CHIPS Act
directs $280 billion in spending through 2032 through direct
funding, loans and loan guarantees, with a significant portion of
those funds reserved for semiconductor manufacturing, research and
development, and workforce development, as well as tax credits for
semiconductor production. The first round of applications for
funding under the CHIPS Act opened in February 2023.
Challenges and Opportunities in Electricity
Markets
As investment and grid composition has moved from traditional
thermal generation sources towards a more intermittent but
emission-free renewable generation, reliability planning is
increasingly a challenge for regulators and market participants.
This challenge was brought into sharp focus in February 2021, where
Texas was confronted with unseasonably severe winter conditions
causing energy spot prices to spike by more than 10,000%,
highlighting the importance of a regulatory framework and market
design that are robust in allocating load, demand and grid
integrity during challenging weather events. In the face of these
challenges, we have seen increased interest in the development of
demand response and distributed generation and storage assets.
Storage solutions, such as pumped-storage hydro and battery
storage, can operate as alternatives to gas-peaking plants in
periods of peak demand, enhancing reliability and assisting to
manage the continual integration of renewable energy into the grid.
Offshore wind, which has greater consistency of wind resource and
is generally located closer to load centers, is also expected to
expand significantly in the U.S. with the Biden
administration’s support and as developers leverage technical
expertise from Europe. In 2022, the U.S. offshore wind energy
project pipeline, which is concentrated on the East coast of the
U.S., grew to a potential generating capacity of over 40,000 MW,
which is expected to increase in the next decade as new lease areas
are developed. The challenges in delivering and financing these
capital-intensive projects include the lengthy and multi-faceted
construction process, worldwide supply chain disruptions and a
multi-contract procurement model; as such, these projects rely on
certainty of financing and revenue sources (including access to
capacity markets and contracted pricing).
The enormous growth in the U.S. renewables market has been
assisted by a substantial amount of “tax equity”
investment, where financial institutions and large corporations
invest equity capital in renewable energy transactions (principally
wind and solar projects) with the return on their investments
derived in significant part from expected tax benefits (tax credits
and depreciation deductions). There are broadly two categories of
tax credits that “tax equity” investors seek: investment
tax credits (or ITCs); and production tax credits (or PTCs).
Investment tax credits are one-time tax credits based on the
overall cost of a project that are earned when the equipment is
placed into service. Production tax credits are fixed dollar
credits available for each unit of energy produced by the project.
Ordinarily, a “tax equity” investor will provide an
investment equal to 35–45% of the total construction costs
(in an investment tax credit project) and 55–75% of the total
construction costs (in a production tax credit project).
The IRA, passed in 2022, included sweeping changes and
expansions of tax credits. Tax credits for wind and solar and
similar renewable generation projects that were phasing out under
prior law were revitalized at non-phased out levels (i.e., 30%
investment tax credits based upon the cost to build projects and
production tax credits at $27 per MWh of electricity for projects
the construction of which satisfies certain prevailing wage and
apprenticeship requirements). The new law increased the credits for
projects in certain energy communities (generally those affected by
coal mine and generating plant closures or that are reliant on the
coal, oil and gas industries) and for projects utilizing sufficient
domestic source components. Furthermore, the new law added credits
for producing hydrogen and transportation fuels (with the value of
the credits increasing inversely to certain emissions thresholds),
significantly increased credits for carbon capture projects, and
made stand-alone storage projects eligible for investment tax
credits. Among the most significant changes is that the IRA made
most of this expanded scope of credits transferrable – that
is, rather than needing a “tax equity” investor (which is
a limited scope of participants) to efficiently monetize tax
credits, sponsors can sell the credits for cash. Additionally, with
respect to hydrogen production credits, carbon capture credits and
advanced manufacturing credits (credits for producing certain
solar, wind and storage components in the U.S.), sponsors can elect
to receive the value of the credit directly from the U.S.
government (certain tax-exempt entities can claim the value of
credits directly from the government also). The IRA provides
significant incentives to develop renewable generation projects,
lower carbon intensive fuels, carbon capture project in the U.S. as
well as to develop supply chains for renewable and storage project
components. However, guidance from the U.S. government is needed to
clarify how many of the rules will work in practice.
The hydrogen economy also continues to gather momentum as a
low-carbon fuel alternative to fossil fuels. The Department of
Energy issued its “Hydrogen Program Plan” in November
2020, with a particular focus on coordinating governmental efforts
to promote R&D for hydrogen technologies, and the Biden
administration’s return to the Paris Agreement has spurred
greater focus on green hydrogen capital investment. Further
policies and incentives for the development of the hydrogen market
were introduced as part of the Inflation Reduction Act of 2022 (the
“IRA”), enacted into law on August 16, 2022, including a
production tax credit targeted at growing the U.S. market for clean
hydrogen. Private equity investment in hydrogen related firms and
projects has also increased by more than 50% year-on-year in 2022
– amounting to $3.6bn in 2021 and $5.7bn in the first 11
months of 2022. Significant projects in the hydrogen space include
a joint venture between Mitsubishi Power Americas and Magnum
Development to develop the Advanced Clean Energy Storage project in
Utah which will produce 36,500 tons of renewable hydrogen per year.
Other renewable fuel sources are attracting capital, with renewable
natural gas, ethanol and isobutanol projects benefiting from
certain energy intensity tax credits in various states including
California.
Growth and Challenges in Renewable Energy
Generation
Renewable energy continues to be more broadly consumed than coal
across sectors in the U.S., and is used in the electric power,
industrial, transportation, residential as well as commercial
sectors. Wind and solar energy accounted for over two-thirds of
newly added generating capacity in the U.S. in the first half of
2022 (as compared to no new capacity from nuclear power or
coal).
Analysts expect fuel costs for natural gas and coal to continue
rising at a faster rate than renewable energy fuel costs. Coupled
with federal and state policies that favor renewable energy,
further growth in the renewable energy sector is projected.
Industry research groups estimate that the U.S. will add over 54GW
of new utility-scale generation capacity in 2023, of which more
than half (over 35 GW) is expected to be derived from solar and
wind power. The large percentage of solar power is notable given
pandemic-driven supply chain disruptions and can be attributed in
part to the IRA incentivizing domestic production of components
used in renewable energy generation, such as solar panels and wind
turbine components.
U.S. wind projects are predominantly developed by independent
power producers and are project financed. While the outlook for
offshore projects had been clouded by regulatory delays under the
prior administration, the 2023 outlook for offshore wind projects
in the U.S. is favorable. In January 2021, the Biden administration
issued an executive order directing the Secretary of the Interior
to identify steps to double renewable energy production from
offshore wind by 2030, to 30 GW. As of December 2022, 42 MW of
offshore wind are operational off the Eastern coast of the U.S.
The lead U.S. governmental agency responsible for issuing
permits for wind projects located on the outer continental shelf is
the Bureau of Ocean Energy Management (“BOEM”), an
administrative entity within the U.S. Department of the Interior.
BOEM held an auction in late February 2022 for offshore wind leases
totaling over 480,000 acres off the coast of New York and New
Jersey. In parallel, the states of New York and New Jersey are
conducting offshore renewable energy certificate offtake auctions.
On November 16, 2022, BOEM announced eight draft Wind Energy Areas
in the Central Atlantic, covering approximately 1.7 million acres,
for public review and comment. The resulting offshore wind
development is expected to create up to 7 GW of wind-powered
energy.
Many offshore projects in development have faced significant
permitting challenges. In a proceeding involving Vineyard Wind, an
800 MW project to be located off the coast of Massachusetts, a
Final Environmental Impact Statement (“EIS”) pursuant to
NEPA was expected in the June 2019 timeframe. However, BOEM
announced in the summer of 2019 that it would prepare a
Supplemental EIS in order to evaluate the cumulative environmental
impacts of multiple offshore wind energy projects. In December
2020, Vineyard Wind withdrew from the federal review process to
complete a study of its Construction and Operations Plan
(“COP”). That action allowed the determination on
permitting for the project to be deferred to the incoming Biden
administration and, on January 22, 2021, the company announced that
the results of its review demonstrated no need for changes to its
plan. On February 3, 2021, BOEM announced its intention to resume
review of the project and on July 15, 2021, issued its approval of
the project’s COP with the project reaching financial close in
September 2021 and beginning construction in November 2021.
Rising interest rates and commodity prices and supply shortages
are also causing delays in financing and construction of
large-scale wind projects. In January 2023, the developer of
Commonwealth Wind, a 1.2 GW offshore wind farm slated to be built
off the coast of Massachusetts, filed an appeal with the Department
of Public Utilities of Massachusetts asking the regulator to
dismiss their review of the project’s power purchase agreements
and citing challenges in the economic landscape.
Public Private Partnerships in the U.S.
There is bipartisan recognition in the U.S. of a critical need
to repair, replace and expand the country’s ageing roads,
bridges, dams, and other infrastructure. The American Society of
Civil Engineers has estimated that the U.S. needs to spend some
$4.5 trillion by 2025 to fix existing infrastructure that has shown
significant deterioration. Increasingly, to assist in satisfying
infrastructure needs, procurement authorities have been looking to
the example of public-private partnerships (also known as
“PPPs” or “P3s”). In a PPP, public agencies and
private investors cooperate in financing, construction, operation
and maintenance of a project. This device is designed to transfer
risk and responsibility for infrastructure assets to private
operators under a competitive process that provides for appropriate
risk allocation between the parties and access to private capital
and expertise. Recent years have seen significant activity in the
PPP space; the New Terminal One at JFK airport in New York, which
closed in 2022, was the largest transportation P3 financing to date
in the U.S.
PPPs have been utilized in states such as California, Florida,
Illinois, Texas, and Virginia, where enabling statutes to undertake
substantial infrastructure projects have been enacted. Colleges and
universities have also turned to PPPs to unlock funding for capital
improvements to campus energy systems, parking assets and student
housing. In November 2020, the University of Idaho announced a
50-year concession with a private company to take over the
university’s centralized district energy system, following in
the footsteps of the University of Iowa (which transferred its
utility plant to a private concessionaire in March 2020). By
maintaining ownership of the physical assets but transferring
operations and maintenance of the facilities to the private
concessionaires, public participants in PPPs can make their
physical operations and energy use more efficient while accessing
long-term capital that enables them to upgrade capital facilities
and meet energy demands. The model has been applied most regularly
for transportation infrastructure (including roads, bridges,
airport facilities, rail projects and parking concessions), water
supply and treatment facilities and social infrastructure projects
(including courthouses, public universities and military housing).
Familiarity with the model and its adoption by procurement
authorities has been mixed in the U.S., and there is varying
consistency in terms across deals. This has meant that the model
has been used most often for mega-projects that can absorb the
transaction costs, though we expect the use of PPPs to be adopted
more widely as market participants become more familiar with this
procurement method.
The Infrastructure Investment and Jobs Act (the
“IIJA”) signed into law in November 2021 is a step in the
direction of standardizing project structures and terms. Among
other items, the IIJA sets out requirements for transportation
projects using the PPP model, which requirements include
performance of a value for money analysis and review of the project
and of the private investor for compliance with the applicable PPP
agreement. The significant funds made available through the IIJA
– $1 trillion – are likely to provide an incentive for
additional PPP projects to be undertaken in the U.S. Indeed, 2021
saw an uptick in PPP projects in the telecommunications industry,
which was not historically a major participant in PPP financings.
This increase can be attributed in part to the IIJA permitting
tax-exempt private activity bonds to be applied to broadband
projects. The legislation also streamlines the lengthy and complex
federal environmental review process for projects by codifying the
“One Federal Decision” initiative, which is expected to
improve the predictability of review processes, reduce unnecessary
delays, and generally minimize project development risks for
sponsors.
1.2 What are the most significant project financings
that have taken place in your jurisdiction in recent
years?
The USA remains one of the world’s oldest and largest
markets for project financings, with a constant volume of deals in
energy and infrastructure. There is an extraordinary diversity of
deals across industries and financing sources, including tax equity
investors, bank syndicates, bond markets and direct lenders.
Massive investment has been made in large-scale utility solar
facilities, including major financial closings for SB Energy’s
1.7 GW of projects in Texas and California. Substantial offshore
wind projects are also currently under development, such as the 2.1
GW Empire 1 & 2 Wind Project and 880 MW Sunrise Wind Project in
New York, both of which are expected to deliver first power in the
mid-2020s. Substantial investments have also been made in the
battery storage project space, including the 2022 financing of a
390 MW battery storage portfolio owned by Broad Reach Power.
Significant investments are also being made in large infrastructure
projects (including New Terminal One at JFK airport in New York,
which closed in 2022 as the largest transportation P3 financing to
date in the U.S.), the semiconductor manufacturing space (including
the $30 billion joint venture between Brookfield Asset Management
and Intel Corporation to expand Intel’s semiconductor
manufacturing capacity in Arizona signed in August 2022) and
development of new LNG projects (including the 950 MW Trumbull
Energy Center in Ohio) or the expansion of existing facilities.
Natural gas plants expected to start generating capacity in 2023
include the 1,836 MW Guernsey Power Station in Ohio and the 1,214
MW CPV Three Rivers Energy Center in Illinois.
2. Security
2.1 Is it possible to give asset security by means of a
general security agreement or is an agreement required in relation
to each type of asset? Briefly, what is the procedure?
Several different tools are typically used to provide
lenders’ security in the project assets, including a security
agreement covering personal property of the project company.
The Uniform Commercial Code (“UCC”) provides a
well-developed and predictable framework for lenders to take a
security interest in personal property assets. Each U.S. state has
adopted Article 9 of the UCC, which governs secured transactions,
with some non-uniform amendments. Under the UCC, for a security
interest to be enforceable, the borrower must have rights in the
personal property, the lender must give value and the parties must
enter into a security agreement. Such security agreement must,
among other elements, describe the collateral and the obligations
being secured in order for the lender’s security interest in
the collateral to attach to a grantor’s personal property
assets. Filing a UCC-1 financing statement describing the
collateral in the appropriate filing office perfects the
lender’s security interest in most personal property assets
owned by the applicable grantor.
Lenders usually also require the direct owner(s) of the project
company to grant a pledge of its ownership interests. The grant of
an equity pledge allows lenders to exercise remedies over the
ownership and governance rights in the project company in addition
to the assets owned by that company.
2.2 Can security be taken over real property (land),
plant, machinery and equipment (e.g. pipeline, whether underground
or overground)? Briefly, what is the procedure?
A lien may be taken over real property, subject to the real
property laws of the state in which the real property is located,
through a mortgage, deed of trust, deed to secure debt, leasehold
mortgage or leasehold deed of trust. In most states, the recording
of these instruments will also perfect a security interest in
fixtures; however, depending on the jurisdiction, a UCC-1 fixture
filing may also be required.
To create a lien on real property by mortgage or deed of trust,
such instrument will: (i) identify the legal names of the lender
and the borrower; (ii) describe the obligations being secured by
such instrument; (iii) contain a granting clause describing the
secured property; (iv) contain a legal description of the land
being mortgaged; and (v) be signed and notarized. Such instrument
must be recorded in the recorder’s office of the county where
the real property is located in order to provide notice to third
parties of the existence of the lien created thereby and to perfect
the security interest in the fixtures described therein. For
pipeline, electric transmission, railway and similar financings it
is also customary practice to file a central “transmitting
utility” filing with the Secretary of State in the applicable
state where the real property is located. This filing perfects a
security interest in fixtures with respect to transmitting
utilities throughout the applicable state and affords certain other
benefits under the UCC.
2.3 Can security be taken over receivables where the
chargor is free to collect the receivables in the absence of a
default and the debtors are not notified of the security? Briefly,
what is the procedure?
Yes, depending on the nature of the receivable. A security
interest in assets classified under the UCC as
“accounts”, “chattel paper”, “commercial
tort claims” and “general intangibles” is generally
perfected by filing a UCC-1 financing statement, although for
“commercial tort claims” the claims subject to the
security interest must be specifically identified. A security
interest in “letter of credit rights” that serve as a
“supporting obligation” to other collateral (such as an
account) is automatically attached and perfected if the security
interest in the underlying collateral is attached and perfected. If
the “letter of credit rights” do not constitute a
“supporting obligation”, the security interest in such
letter of credit rights must be perfected by control and requires
the consent of the issuer of the letter of credit. There are
provisions in the UCC that override certain (but not all)
restrictions on assignment and specific statutory requirements may
apply in respect of the assignment of receivables from governmental
entities (the Assignment of Claims Act applies in respect of
Federal claims).
2.4 Can security be taken over cash deposited in bank
accounts? Briefly, what is the procedure?
Yes. Perfection of rights in deposit accounts and money
deposited in those accounts is achieved by control rather than by
the filing of a UCC-1 financing statement (subject to special rules
that apply to proceeds of collateral in which the secured party had
a perfected interest). Control in accounts is generally achieved by
the secured party entering into an agreement with the debtor and
the depositary bank under which the depositary bank agrees to
comply with the secured party’s instructions on disbursement of
funds in the deposit account without further consent by the
debtor.
2.5 Can security be taken over shares in companies
incorporated in your jurisdiction? Are the shares in certificated
form? Briefly, what is the procedure?
Yes. Filing of a UCC-1 financing statement can perfect a
security interest in the shares of a company; however, it is common
for the lender to take possession of a stock certificate and a
signed blank transfer power to ensure it has priority over other
secured creditors. In respect of limited liability companies or
limited partnerships (as distinct from corporations), the
applicable entity would need to “opt in” to Article 8 of
the UCC under its organizational documents to elect to have the
ownership interests in that entity treated as a
“security” that can be perfected by possession of a
certificate and transfer power. If an ownership interest is an
“uncertificated security”, then the lender can achieve a
priority position through a control agreement with the issuer and
holder of the ownership interest.
2.6 What are the notarisation, registration, stamp duty
and other fees (whether related to property value or otherwise) in
relation to security over different types of assets (in particular,
shares, real estate, receivables and chattels)?
Depending on the relevant state, city and county laws, recording
fees and taxes for perfecting a security interest in certain
property may apply.
For transactions involving a real estate mortgage, lenders will
almost always require the borrower to purchase a title insurance
policy insuring the lien and priority of the mortgage as shown on a
report prepared by a private title company. Title insurance rates
are set on a statutory basis and vary from state to state but are
generally the most significant cost incurred by borrowers in
relation to security over project assets. A real estate mortgage
(or comparable instrument depending on the jurisdiction) needs to
be notarized, and in some jurisdictions signed by one or more
witnesses, and recorded in the county and state in which the real
property is located. In addition, some states impose mortgage
recording taxes, intangibles taxes, stamp taxes or other similar
taxes, in addition to per page recording fees, in connection with
the recording of the mortgage, which are generally calculated based
on the amount secured by the mortgage. In states that impose such
taxes, the amount secured by a mortgage is generally capped at the
lesser of the fair market value of the property and the loan
amount.
2.7 Do the filing, notification or registration
requirements in relation to security over different types of assets
involve a significant amount of time or expense?
Please see question 2.6 above. A UCC-1 financing statement is
typically filed on the same day as closing and may be filed prior
to that date. For transactions involving a real estate mortgage,
the longest lead-time item is typically the process of obtaining a
real estate survey and preliminary title report and obtaining
certain deliverables necessary for the title insurance company to
provide requested endorsements. This process can take one to two
months depending on how large the property is or the location of
the property.
2.8 Are any regulatory or similar consents required with
respect to the creation of security over real property (land),
plant, machinery and equipment (e.g. pipeline, whether underground
or overground), etc.?
Requirements for regulatory consents are specific to the
location and nature of the project and the identity of the project
parties.
3. Security Trustee
3.1 Regardless of whether your jurisdiction recognises
the concept of a “trust”, will it recognise the role of a
security trustee or agent and allow the security trustee or agent
(rather than each lender acting separately) to enforce the security
and to apply the proceeds from the security to the claims of all
the lenders?
Yes. Under New York law-governed security documents where there
are multiple lenders or syndication is contemplated, a collateral
agent is nearly always appointed to act on behalf of the lenders
with respect to the collateral.
3.2 If a security trust is not recognised in your
jurisdiction, is an alternative mechanism available (such as a
parallel debt or joint and several creditor status) to achieve the
effect referred to above which would allow one party (either the
security trustee or the facility agent) to enforce claims on behalf
of all the lenders so that individual lenders do not need to
enforce their security separately?
See question 3.1 above. New York law recognizes the concept of a
security trust, although a collateral agent is customarily
appointed to hold collateral for the benefit of lenders.
4. Enforcement of Security
4.1 Are there any significant restrictions which may
impact the timing and value of enforcement, such as (a) a
requirement for a public auction or the availability of court
blocking procedures to other creditors/the company (or its trustee
in bankruptcy/liquidator), or (b) (in respect of regulated assets)
regulatory consents?
The cost and time required to execute enforcement decisions
depends on the location and nature of the project and the identity
of the project parties. For example, a direct or indirect change in
control over electric power assets subject to the jurisdiction of
FERC must be approved by FERC. FERC has jurisdiction over most
sellers into wholesale electric markets and electric power
transmission facilities in the contiguous U.S. states other than in
the ERCOT region, which is subject to the jurisdiction of the State
of Texas. Certain small power generators known as “qualifying
facilities” may qualify for exemption from FERC approval of
changes in control. Moreover, if the remedies to be exercised
involve direct taking of assets subject to FERC hydroelectric
licensing rules, or an interstate natural gas pipeline or
underground gas storage facility that holds a FERC certificate of
public convenience and necessity, transfer of the license or
certificate may be required. Certain state laws and regulations may
also require approvals, such as New York State, which generally
parallels FERC regulations. Most states, however, require approval
only if the assets are in the nature of a “traditional”
public utility serving captive customers under cost-based rates or
are subject to a certificate of public convenience and necessity
issued under state law.
Similar considerations arise with nuclear facilities, for which
the operator will hold a license from the Nuclear Regulatory
Commission (“NRC”), and any transfer of such license that
might need to accompany an enforcement action would require
separate NRC approval, recognizing that only the licensed operator
may operate a nuclear power plant. It should be noted that foreign
entities are not allowed to hold an NRC nuclear power plant
operating license or to exercise control over the licensee. Many
energy facilities include a radio communication system licensed by
the Federal Communications Commission (“FCC”), and a
transfer of ownership of the FCC license related thereto will
require prior approval from the FCC. In addition, there are
restrictions on the grant of a security interest in an FCC license;
generally, such security interests are limited to an interest in
the proceeds thereof rather than the license itself.
Any foreclosure or enforcement action is also subject to: (i)
the possible imposition of the automatic stay under the Federal
Bankruptcy Code, Title 11 of the U.S. Code (“Bankruptcy
Code”), if the title-holder commences a case under the
Bankruptcy Code; and (ii) more generally, for any non-judicial
foreclosure, the obtaining of a specified injunction halting the
auction or other proceeding. The consummation of collateral
disposition transactions may require notification under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended)
and expiration or termination of a waiting period prior to
completion. An exemption applies to certain acquisitions by a
creditor in the ordinary course of business (such as in connection
with an acquisition in foreclosure, default, or a bona
fide debt workout). There are certain restrictions on the
exemption’s applicability to sales out of bankruptcy and
subsequent disposals by the creditor.
Finally, note that certain incentives or benefits in favor of a
project company may be affected by enforcement action. For example,
in California, newly constructed solar systems benefit from a
one-time exclusion from a property tax reassessment, which can
greatly reduce property taxes payable because, for local property
tax purposes, the subject property’s value is determined
without reference to its improvement by the newly added solar
system. The benefit of this property tax exclusion may be lost
where, as a result of a foreclosure, a person or entity directly or
indirectly obtains more than 50% of the project company’s
capital and more than 50% of the project company’s profits (or
more than 50% of the voting shares if the project company is a
corporation). Lenders to back-leverage renewable energy
transactions upstream of a tax equity investment also need to be
familiar with the potential consequences of certain tax-exempt and
other disqualified persons taking an indirect ownership interest in
the project company, which can result in a partial recapture of the
tax credits and a corresponding reduction in cash flows received
from the tax equity investment.
4.2 Do restrictions apply to foreign investors or
creditors in the event of foreclosure on the project and related
companies?
See section 6 below. As noted in question 4.1 above, foreign
investors or creditors may also need to structure their holdings to
avoid adverse consequences of taking a direct or an indirect
ownership interest in any tax equity investment. Additionally,
foreign equity investors are subject to a different tax regime than
foreign lenders.
5. Bankruptcy and Restructuring Proceedings
5.1 How does a bankruptcy proceeding in respect of the
project company affect the ability of a project lender to enforce
its rights as a secured party over the security?
Once a bankruptcy case is commenced under the Bankruptcy Code in
respect of a project company, the Bankruptcy Code imposes an
“automatic stay”, or statutory injunction, which
immediately stops all enforcement actions outside of the Bankruptcy
Court against the debtor project company or its property. The
automatic stay applies to secured creditors, although it is
possible for a secured creditor to obtain relief from the automatic
stay in certain circumstances, but only through an order of the
Bankruptcy Court. In addition, in certain limited circumstances,
the Bankruptcy Court may extend the automatic stay to protect
entities that are not debtors in a bankruptcy case, or assets of
such non-debtor entities.
A secured creditor is not, however, without protection in a case
under the Bankruptcy Code. For instance, a secured creditor is
generally entitled to “adequate protection” of its
interest in a debtor’s collateral, and there are limits on the
ability of the project company to use some types of collateral, or
to dispose of collateral, without the secured creditor’s
consent. In particular, the project company will not be permitted
to use cash collateral (cash and cash equivalents) without the
agreement of the secured party or an order of the Bankruptcy Court.
In any sale of collateral (other than ordinary-course-of-business
sales, such as sales of inventory in normal business operations)
during a bankruptcy case, the secured creditor generally has the
right to “credit-bid” its claim against the debtor,
although that right can be limited by the Bankruptcy Court for
cause. The determination of cause is fact-intensive, and in several
recent cases Bankruptcy Courts have found that such cause existed,
in order to facilitate an auction with active, competitive bidding.
It should also be noted that in the context of a plan of
reorganization, a secured creditor cannot be compelled to accept a
plan through a “cramdown” when the plan provides for the
auction of the secured creditor’s collateral without giving the
secured creditor the right to credit-bid. However, it is still
possible to cramdown a secured creditor by providing it with the
indubitable equivalent of its secured claim, which can include
substitution of collateral.
5.2 Are there any preference periods, clawback rights or
other preferential creditors’ rights (e.g. tax debts,
employees’ claims) with respect to the security?
Generally speaking, the holder of a perfected security interest
is entitled to payment from its collateral ahead of all other
creditors (other than the holder of a security interest that is
prior in right to it). Although particular creditors, such as
taxing authorities or employees, may be entitled to priority claims
under the Bankruptcy Code, such claims do not come ahead of a
secured claim with regard to the collateral. Under certain
circumstances, a debtor (or trustee) may surcharge collateral for
the costs of preserving or disposing of it.
Under the Bankruptcy Code, the term “transfer” is
broadly defined, and includes the grant or perfection of a security
interest. The grant of a security interest to a lender may be
“avoided”, or set aside, if the security interest is
unperfected. In addition, a lender’s perfected security
interest may be avoided as either a “preference” or a
“fraudulent transfer”. It is important to note that there
is no requirement for there to be actual fraud or wrongdoing for a
transfer to be avoided under either of these theories. A
lender’s security interest in a project company’s property
may be avoided as a preference if (i) the lender perfects the
security interest during the 90 days (or one year, if the lender is
an “insider” of the project company) preceding the
commencement of the project company’s bankruptcy case, (ii)
that transfer is made for or on account of an antecedent debt owed
by the project company to the lender, (iii) the transfer enables
the lender to receive more than it otherwise would have received in
a liquidation of the project company, and (iv) the lender has no
affirmative defense (which includes that the transfer was a
contemporaneous exchange for new value, that the lender gave
subsequent new value, or that the transfer was in the ordinary
course of business) to such preference. Under the Bankruptcy Code
and applicable state laws, a constructive fraudulent transfer claim
can be asserted to avoid a transfer that the project company made
to the lender if both (i) the project company made the transfer in
exchange for less than reasonably equivalent value, and (ii) the
project company at the time of the transfer was, or was thereby
rendered, insolvent, inadequately capitalized, or unable to pay its
debts as they matured. For this purpose, the securing or
satisfaction of a present or antecedent debt of the project company
will generally constitute reasonably equivalent value (although it
may be an avoidable preference). Under the Bankruptcy Code, the
look-back period for constructive fraudulent transfer claims is two
years before the commencement of the bankruptcy case. Under state
laws, the look-back period can vary, depending on the state, and
can be up to six years. If a transfer is avoidable as either a
preference or a fraudulent transfer, the project company may be
able to cancel the security interest and force a return of the
property, which may be used to pay all creditors. It should be
noted that not all transfers made during the applicable look-back
period are avoidable, and these inquiries are generally
fact-intensive.
5.3 Are there any entities that are excluded from
bankruptcy proceedings and, if so, what is the applicable
legislation?
The Bankruptcy Code excludes from the category of entities that
are eligible to be debtors in a bankruptcy case: governmental
entities (other than municipalities); domestic insurance companies;
domestic banks; foreign insurance companies engaged in such
business in the U.S.; and foreign banks with a branch or agency in
the U.S. In addition, the Bankruptcy Code has special provisions
for particular types of eligible entities, such as railroads,
municipalities, stockbrokers and commodity brokers.
5.4 Are there any processes other than court proceedings
that are available to a creditor to seize the assets of the project
company in an enforcement?
Outside of court proceedings, creditors may be permitted to
exercise self-help remedies depending upon the nature of the
collateral, provisions of the applicable security agreements, and
the governing law. For example, the UCC generally authorizes a
secured creditor, after default, to take possession of, to collect
on, and to dispose of (such as by public or private sale),
personal-property collateral without first commencing a court
proceeding, provided that the secured creditor complies with
particular formalities and proceeds without breach of the
peace.
5.5 Are there any processes other than formal insolvency
proceedings that are available to a project company to achieve a
restructuring of its debts and/or cramdown of dissenting
creditors?
One possibility is a consensual, out-of-court debt
restructuring, which can be used to recapitalize or reorganize the
capital structure (debt and/or equity) of an entity and its
subsidiaries outside of a bankruptcy case. Under such a debt
restructuring, cramdown of dissenting creditors is not
available.
5.6 Please briefly describe the liabilities of directors
(if any) for continuing to trade whilst a company is in financial
difficulties in your jurisdiction.
The U.S. does not impose personal liability on directors for
insolvent trading. Under the law of some states, however, directors
of an insolvent company may be found to have fiduciary duties not
only to the company’s shareholders, but also to its creditors,
and a director’s breach of those fiduciary duties may give rise
to personal liability.
6. Foreign Investment and Ownership Restrictions
6.1 Are there any restrictions, controls, fees and/or
taxes on foreign ownership of a project company?
While the U.S. generally has a liberal policy toward foreign
direct investment, there are certain restrictions with respect to
ownership of land with energy resources, as well as energy
production facilities, assets and transmission infrastructure,
under both state and Federal laws. For instance, only U.S.
citizens, corporations and other U.S. entities are permitted to
mine coal, oil, oil shale and natural gas on land sold by the
Federal government. Ownership and control of nuclear power
facilities and leasing of geothermal steam and similar leases of
Federal land, or licenses to own or operate hydroelectric power
facilities, are also generally restricted to U.S. persons only.
However, a U.S.-registered corporation that is foreign-owned or
-controlled may own hydroelectric power facilities.
Under the Defense Production Act of 1950, as amended by the
Exon-Florio Act of 1988 and the Foreign Investment Risk Review
Modernization Act of 2018, the President of the U.S. maintains
authority to review any foreign investment in a U.S. business in
order to assess associated impacts on U.S. national security. Such
authority has been delegated to the Committee on Foreign Investment
in the U.S. (“CFIUS”), an inter-agency committee
coordinated by the U.S. Department of the Treasury that monitors
foreign investment activity for U.S. national security concerns and
may initiate investigations of, and order the unwinding of, certain
foreign investment transactions that raise U.S. national security
concerns that cannot be effectively mitigated. U.S. project
companies, and their potential foreign investors, may be exposed to
obligations and risks relating to the CFIUS regulatory regime in
the context of merger, acquisition, and investment transactions,
particularly given the sensitive nature of the energy and
infrastructure sectors in which such companies operate.
As noted in question 4.1 above, a foreign entity cannot hold a
U.S. nuclear plant operating license issued by the NRC or otherwise
control the licensee. A foreign entity cannot directly hold a FERC
hydroelectric license but may own or control a U.S. company that
holds such a license.
6.2 Are there any bilateral investment treaties (or
other international treaties) that would provide protection from
such restrictions?
The U.S. has concluded a number of bilateral treaties that
protect investor rights to establish and acquire businesses,
freedom from performance requirements, freedom to hire senior
management without regard to nationality, rights to unrestricted
transfer in convertible currency of all funds related to an
investment, and, in the event of expropriation, the right to
compensation in accordance with international law.
6.3 What laws exist regarding the nationalisation or
expropriation of project companies and assets? Are any forms of
investment specially protected?
Under the doctrine of eminent domain, the U.S. Federal
government or any of the U.S. state governments may take private
property without the property owner’s consent, so long as just
compensation is paid to the property owner.
7. Government Approvals/Restrictions
7.1 What are the relevant government agencies or
departments with authority over projects in the typical project
sectors?
Regulatory jurisdiction over the electric power sector in the
U.S. is bifurcated between Federal and state authorities. State
regulatory authorities retain jurisdiction over the siting of
electric power generation, transmission and distribution
facilities. In most of the U.S., FERC has authority over wholesale
sales of electric power, and power may not be sold at wholesale
until FERC has granted authority to sell at negotiated,
“market-based rates” (“MBR Authority”). The
owners of certain small (not larger than 20 MW) qualifying
facilities are exempted from the need to obtain MBR Authority,
although owners of such facilities larger than 1 MW must file a
form with FERC in order to qualify. As noted in question 4.1 above,
FERC lacks jurisdiction over wholesale sales of electric power in
the non-contiguous states (Alaska and Hawaii) and in the
intrastate-only ERCOT region, although FERC maintains books and
records jurisdiction under the Public Utility Holding Company Act
of 2005 in such regions.
Dams and hydroelectric facilities on navigable waters are also
subject to licensing by FERC, subject to exemption for very small
projects. Interstate natural gas pipelines and underground natural
gas storage projects are subject to FERC certificate authority.
FERC has jurisdiction over the rates charged by petroleum
pipelines for interstate shipments. The states retain jurisdiction
over petroleum pipeline permitting and over rates for intrastate
shipments. A separate Federal authority, the Pipeline and Hazardous
Materials Safety Administration, under the Department of
Transportation, has jurisdiction over pipeline safety regulation
for both natural gas and petroleum pipelines.
Nuclear energy projects and the operators of such projects are
subject to licensing by the NRC.
The Environmental Protection Agency (“EPA”) governs
the issuance and enforcement of federal environmental water and air
permits, although it has delegated its authority to the states for
some permits. The EPA is also responsible for enforcing federal
environmental statutes such as the Comprehensive Environmental
Response, Compensation and Liability Act and the Resource
Conservation and Recovery Act. The U.S. Army Corps of Engineers
oversees permits relating to federally jurisdictional wetlands,
construction of infrastructure crossing over water, and water
quality certifications (although water quality certification is
often delegated to the states). The U.S. Fish and Wildlife Service
administers incidental take permits and eagle take permits where
projects would cause the incidental take of endangered or
threatened species or eagles. Where NEPA review is required, the
federal agency responsible for the federal action triggering the
NEPA review becomes responsible for reviewing the potential adverse
environmental impacts of a project, e.g., the Bureau of Land
Management serves as the lead agency where project siting requires
a lease of Bureau of Land Management managed lands. Environmental
permits can also be required by state and local governmental
authorities.
7.2 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 are a number of registration and filing requirements for
financing or project documents that depend on the nature of the
project and identity of the parties. For example, pursuant to
Section 204 of the Federal Power Act, FERC requires approval of
issuances of securities or assumptions of liabilities (e.g.,
incurrence of debt), subject to certain exceptions, for companies
subject to its electric power jurisdiction. FERC customarily grants
electric power generators with MBR Authority blanket approval for
jurisdictional financings, and the owners of certain qualifying
facilities are exempt from FERC regulation of financings. It should
be noted that FERC will not regulate such financing approvals if a
state regulatory authority with jurisdiction actively regulates the
proposed financing.
Please refer to question 18.2 below for Securities and Exchange
Commission (“SEC”) related requirements.
7.3 Does ownership of land, natural resources or a
pipeline, or undertaking the business of ownership or operation of
such assets, require a licence (and if so, can such a licence be
held by a foreign entity)?
Please see questions 4.1, 6.1 and 7.1 above. In addition, the
operation of certain U.S. telecommunications infrastructure that is
licensed by the FCC may be subject to direct or indirect foreign
ownership restrictions, and, with the exception of broadcast radio
and television assets, in many cases waivers of such foreign
ownership restrictions are available for investors that are
domiciled in countries that provide reciprocal market access for
U.S. investors to own or invest in similar telecommunications
infrastructure.
7.4 Are there any royalties, restrictions, fees and/or
taxes payable on the extraction or export of natural
resources?
Federal, state and private royalties are payable on the
extraction of natural resources, as applicable.
In general, no specific Federal taxes are imposed on the
extraction of natural resources, although income taxes are imposed
on profits from sales. Domestic crude oil used in or exported from
the U.S. is also subject to Federal tax. Income taxes may apply to
sales outside of the U.S. to the extent such sales are related to
business conducted in the U.S.
7.5 Are there any restrictions, controls, fees and/or
taxes on foreign currency exchange?
The U.S. does not generally impose controls or fees on foreign
currency exchange. However, U.S. persons and foreign persons
engaged in business in the U.S. are subject to U.S. Federal and
state income taxes on foreign currency exchange gains.
7.6 Are there any restrictions, controls, fees and/or
taxes on the remittance and repatriation of investment returns or
loan payments to parties in other jurisdictions?
Other than the withholding taxes discussed in question 17.1
below, there are no such generally applicable restrictions.
However, under the U.S. tax laws, certain very large U.S. companies
that make deductible payments of interest to foreign affiliates may
be subject to minimum taxes.
7.7 Can project companies establish and maintain onshore
foreign currency accounts and/or offshore accounts in other
jurisdictions?
Yes, they can. A company that establishes an account with a U.S.
financial institution is generally required to provide information
regarding its “beneficial owners” to such financial
institutions, and to provide certain other information in
accordance with U.S. AML laws. Additionally, in January 2021,
Congress enacted the Corporate Transparency Act (the
“CTA”), which will require certain U.S. companies and
foreign companies registered to do business in the U.S. to provide
information regarding their beneficial owners to the U.S. Financial
Crimes Enforcement Network (“FinCEN”). The CTA requires
the U.S. Treasury Department to issue regulations implementing
these reporting requirements by January 1, 2022.
7.8 Is there any restriction (under corporate law,
exchange control, other law or binding governmental practice or
binding contract) on the payment of dividends from a project
company to its parent company where the parent is incorporated in
your jurisdiction or abroad?
Corporate law restrictions will depend upon the laws of the
state in which the project company is incorporated or formed and
its corporate form. In most project finance transactions, project
companies are pass-through entities and typically the
organizational form used is a Delaware limited liability company.
Delaware limited liability companies are subject to a restriction
under the Delaware Limited Liability Company Act (the
“Delaware Act”) on paying distributions where the
liabilities of the limited liability company to third parties
exceed the fair value of its assets. However, this protection does
not effectively extend to creditors, as the Delaware Act limits
standing to bring derivative claims against the manager of the
limited liability company to its members (i.e., the owners) and
their assignees (see CML V, LLCv. Bax, 6 A.3d 238
(Del.Ch. 2010)).
Apart from the withholding taxes discussed under question 17.1
below, New York law financing documents, which often impose
restricted payment conditions on the issuance of dividends, and
shareholders’ agreements, typically contain restrictions. In
addition, project companies subject to FERC regulation of issuances
of securities and assumption of liabilities under Section 204 of
the Federal Power Act, other than blanket authority under MBR
Authority (discussed at question 7.2 above), are subject to certain
restrictions, such as restrictions requiring parent debt
obligations to follow up to the parent company if a project company
borrows at the public utility level and “dividends up”
the proceeds to its non-public utility parent.
7.9 Are there any material environmental, health and
safety laws or regulations that would impact upon a project
financing and which governmental authorities administer those laws
or regulations?
The Clean Air Act and the Clean Water Act are generally the most
material Federal statutes that would impact power project
construction and operation. Permits related to air emissions and
water discharges under these statutes and similar state laws may be
required by the EPA or by other Federal, state or local
governmental authorities prior to the start of construction and for
operation. In addition, known or likely contamination could be
governed by the Federal Superfund statute and other laws.
Any major Federal action or decision, including the granting of
certain permits by the U.S. Fish and Wildlife Service and the U.S.
Army Corps of Engineers, or the approval of a loan guarantee by the
DOE, may be subject to a comprehensive environmental review under
NEPA. Some states, notably California and New York, require a
similar state-level comprehensive environmental review of
discretionary governmental actions relating to power project
permitting and siting. There are opportunities for public notice,
comment and challenge in the application process for some permits
and pursuant to NEPA and similar state environmental review
laws.
While not administered by a governmental authority, the Equator
Principles are a voluntary international framework that may be
applied to a project by a participating financial institution and
serves as a benchmark for determining, assessing and managing
environmental and social risk in projects. As of March 1, 2023, 138
financial institutions in 38 countries have adopted the Equator
Principles. Historically, domestic projects have often been
excluded from additional requirements, based on an assumption that
compliance with the federal and state environmental laws would be
sufficient to satisfy the Equator Principles’ due diligence and
operational requirements. As a result, representations and
covenants expressly related to the Equator Principles were often
either not included in the applicable project/financing agreements
or limited to general statements of material compliance with the
Equator Principles. However, the most recent version of the Equator
Principles, referred to as Equator Principles IV or EP4, took
effect in October 2020 and imposes additional obligations and a
higher level of scrutiny on U.S. projects. This, in turn, could
increase the scope and extent of Equator Principles-specific
representations and covenants in U.S. projects’ construction,
operation and financing agreements. In addition, EP4 increased the
scope of the assessment of a project’s environmental and social
impact that must be conducted for each transaction (potentially
beyond an Independent Engineer’s review), which could pose
significant timing considerations for a transaction.
7.10 Is there any specific legal/statutory
framework for procurement by project companies?
Outside of the nuclear industry, privately owned and financed
project companies are not subject to governmental oversight for
procurement.
8. Foreign Insurance
8.1 Are there any restrictions, controls, fees and/or
taxes on insurance policies over project assets provided or
guaranteed by foreign insurance companies?
Such restrictions are applicable on a case-by-case basis
depending on the location and nature of the project, the type of
project and the identity of the project parties.
8.2 Are insurance policies over project assets
payable to foreign (secured) creditors?
Yes, subject to any case-specific restrictions, insurance
policies over project assets may be payable to foreign (secured)
creditors where policies designate such person as a loss
payee.
9. Foreign Employee Restrictions
9.1 Are there any restrictions on foreign
workers, technicians, engineers or executives being employed by a
project company?
Generally, and subject to state law, foreign persons may be
appointed as corporate officers or directors of a project company.
To be employed by a project company or receive a salary or
compensation for services provided within the U.S. as a foreign
person, there is a requirement to have work authorization in
accordance with U.S. immigration laws. This can be achieved via
various “non-immigrant” or temporary visa categories,
which are typically based on employer sponsorship. In addition,
work authorization might be obtained via permanent resident status
(also known as green card or immigrant status), often through
sponsorship from an employer (which can be a difficult and lengthy
process) or from sponsorship by an immediate family member who is a
U.S. citizen (which may be less difficult than employer sponsorship
but is generally a lengthy process).
Note that for most project finance transactions, employees are
engaged by the operator and asset manager and not directly by
project companies.
10. Equipment Import Restrictions
10.1 Are there any restrictions, controls, fees and/or
taxes on importing project equipment or equipment used by
construction contractors?
There may be customs duties on imported project equipment, which
are determined based upon the country of origin of the equipment
unless a relevant trade agreement eliminates or reduces certain of
these tariffs.
The Jones Act generally requires that that U.S. flagged ships be
used to transport goods between U.S. ports, which may affect
development of offshore projects.
See question 12.2 for a summary of the Uyghur Forced Labor
Prevention Act. The Xinjiang Region is a major global source of
polysilicon, which is a key component of photovoltaic solar modules
and is a high-priority sector for enforcement of this Act. As a
result, the solar development industry has now generally adopted
extensive diligence procedures on the source of photovoltaic
modules to avoid procuring this equipment from manufacturers with
known connections to the Xinjiang Region.
10.2 If so, what import duties are payable and
are exceptions available?
The Harmonized Tariff Schedule provides duty rates based on the
classification of the imported equipment.
11. Force Majeure
11.1 Are force majeure exclusions available and
enforceable?
Yes, force majeure exclusions are available and
enforceable and are applied such that one or both parties are
excused from performance of the project agreement, in whole or in
part, or are entitled to suspend performance or claim an extension
of time for performance. Invocation of a force majeure
clause can trigger force majeure across other related
project agreements, and thus it is important to ensure that the
force majeure provisions “mesh” with those found
in related project agreements. Force majeure provisions
typically do not excuse parties from any monetary payments that
mature prior to the occurrence of the force majeure
event.
A typical force majeure provision will set forth a
non-exhaustive list of events that constitute force
majeure, which often include natural force majeure,
such as acts of God, and political force majeure, such as
war or terrorism, as well as the effect on the parties’ rights
and obligations if a force majeure event occurs.
12. Corrupt Practices, Sanctions, Trade Controls, and Money
Laundering
12.1 Are there any rules prohibiting corrupt business
practices and bribery (particularly any rules targeting the
projects sector)? What are the applicable civil or criminal
penalties?
The Foreign Corrupt Practices Act of 1977 (“FCPA”)
contains two sets of relevant provisions: (i) its anti-bribery
provisions prohibit U.S. persons and persons otherwise subject to
U.S. jurisdiction from making corrupt payments (including bribes,
kick-backs, and other improper payments) to officials and agents of
foreign governments and state-owned enterprises; and (ii) its
accounting provisions require companies whose securities are listed
on stock exchanges in the U.S. to (a) make and keep books and
records that accurately and fairly reflect the transactions of the
company (including transactions involving foreign government
officials or agents), and (b) devise and maintain an adequate
system of internal accounting controls.
Among other penalties, (i) for violations of the FCPA’s
anti-bribery provisions, the U.S. Department of Justice
(“DOJ”) may impose criminal penalties of up to $2 million
against offending companies and fines of up to $250,000 and
imprisonment for up to five years for offending officers,
directors, stockholders, employees, and agents, and (ii) for
violations of the FCPA’s accounting provisions, the DOJ and the
SEC may bring civil and criminal actions, which include criminal
penalties of up to $25 million against offending companies and of
up to $5 million and imprisonment for up to 20 years for offending
directors, officers, employees, or agents of such firm.
The projects sector can involve heightened risk from an FCPA
perspective, particularly in contexts involving meaningful
interactions with non-U.S. governments, including through suppliers
or distributors. Infrastructure and energy projects often involve
greater government oversight, which incrementally enhances the risk
of corrupt or improper payments in dealings with government
officials. Project companies should be mindful of their exposure to
compliance risks under the FCPA and other anticorruption laws and
should develop policies and procedures to promote ethical behavior
and prevent bribes and other corrupt practices.
12.2 What are the relevant U.S. economic sanctions and
import/export control laws and regulations (particularly those
relevant for the projects sector)?
Under U.S. economic sanctions laws and regulations, U.S. persons
(which include U.S. companies and, under certain programs, their
foreign subsidiaries and branches) are generally prohibited from
engaging in transactions involving persons targeted under U.S.
sanctions programs, subject to limited exceptions. Such persons
targeted under U.S. sanctions programs include foreign individuals
or entities that are, or are owned or controlled by one or more
individuals or entities that are, (i) identified on a U.S.
sanctions-related list of designated parties (including the
Specially Designated Nationals and Blocked Persons List (“SDN
List”) maintained by the Office of Foreign Assets Control of
the U.S. Department of the Treasury (“OFAC”)), (ii)
organized or resident in a country or territory that is the subject
of comprehensive sanctions imposed by the U.S. (currently, the
Crimea, Donetsk and Luhansk regions of Ukraine, Cuba, Iran, North
Korea, and Syria), or (iii) otherwise the subject or target of
economic or financial sanctions imposed by the U.S. government
(including OFAC and the U.S. Department of State). U.S. sanctions
programs prescribe trade and commercial restrictions focused on
individuals, entities, commodities, and economic sectors of
concern, including the energy sectors of certain targeted
jurisdictions, based on involvement in or connection to activities
or developments that threaten U.S. national security or foreign
policy interests, such as human rights abuses, narco-trafficking,
terrorism, and nuclear proliferation.
U.S. export control laws and regulations govern the export and
re-export of U.S.-origin commodities, software, and technology. The
U.S. Department of Commerce’s Bureau of Industry and Security
administers U.S. laws and regulations governing the export of items
falling under the purview of the Export Administration Regulations,
while the U.S. Department of State’s Directorate of Defense
Trade Controls regulates the export of defense articles and defense
services, which are covered by the United States Munitions List and
the International Traffic in Arms Regulations. Primary
responsibility for the administration of import controls rests with
Customs and Border Protection (“CBP”), which can issue
Withhold Release Orders preventing goods from being released from
U.S. ports of entry.
U.S. economic sanctions and import/export control laws may
change based on evolving foreign policy considerations and national
security interests. For example, in recent years, the U.S. has
responded to developments relating to forced labor and human rights
abuses in the Xinjiang province of China by imposing blocking
sanctions on a number of Chinese individuals and entities. Also,
the passage of the Uyghur Forced Labor Prevention Act in December
2021 created a rebuttable presumption that all goods manufactured,
wholly or in part, in the Xinjiang province are produced through
forced labor and therefore barred their release by CBP from U.S.
ports of entry.
More recently, beginning in February and March 2022, in response
to actions by Russia that threaten the territorial integrity of
Ukraine, the United States implemented a number of new sanctions-
and export controls-related measures targeting Russia, including
the Russian government and its officials and Russian state-owned
entities, banks and oligarchs, among others, including members of
the Belarusian government and certain regions of Ukraine. Such
measures have included blocking sanctions, restrictions on banking
transactions, prohibitions on dealings relating to new debt and
equity, prohibitions on the provision of certain services, a price
cap on Russian petroleum products and heightened export
restrictions on wide categories of items. Specifically, OFAC added
Nord Stream 2 AG, the project company established to construct and
operate the Nord Stream 2 gas pipeline from Russia to Germany, to
the SDN List. In December 2022, an international coalition
including the United States agreed to a price cap for Russian
petroleum products. The price cap generally prohibits U.S. persons
from providing covered services relating to the maritime transport
of Russian oil unless the purchaser buys such Russian oil at or
below the price cap. Further, OFAC has targeted several sectors of
the Russia’s economy, including much of its banking and
financial services sector. Designations of entities and individuals
on the SDN List as part of such Russia-related measures have
resulted in broad prohibitions on dealings involving such entities
or individuals or any entity that is 50 percent or more owned,
directly or indirectly, by any of them individually or
collectively.
Project companies should be mindful of their compliance
obligations under U.S. economic sanctions and import/export
controls that would restrict their ability to engage with certain
counterparties, provide certain services or to import or export
certain items. For example, solar panels used by solar project
companies are produced using polysilicon, a raw material that is
often sourced from the Xinjiang province, raising concerns and
implicating risks under U.S. economic sanctions and import
controls. Project companies should be aware of relevant
restrictions and implement appropriate due diligence and screening
procedures for compliance with U.S. economic sanctions and
export/import controls, including with respect to their dealings
with agents and suppliers.
12.3 What are the relevant ‘know-your-customer’
and customer identification obligations for investors providing
financing to project companies?
Under the Currency and Foreign Transactions Reporting Act of
1970 (as amended by the USA PATRIOT Act of 2001) and the
implementing regulations issued thereunder (collectively referred
to as the U.S. Bank Secrecy Act), U.S. financial institutions are
required to establish and implement an effective anti-money
laundering (“AML”) compliance program. The elements of an
effective AML compliance program include, among others, internal
policies and procedures designed to detect and report suspicious
activity and ensure the identification, recordation, and reporting
of currency transactions that exceed certain monetary
thresholds.
13. Applicable Law
13.1 What law typically governs project
agreements?
Project agreements may be governed by the law of any state but
may be subject to the doctrine of lex situs (i.e., the
rule that the law applicable to proprietary aspects of an asset is
the law of the jurisdiction where the asset is located).
13.2 What law typically governs financing
agreements?
New York law typically governs financing documents given the
status of New York City as a major financial center that provides
for a reasonably settled and certain application of commercial laws
and legal precedents and which permits liberal enforcement of the
choice of New York law. Certain security documents, such as a real
estate mortgage, may be legally required to be governed by the law
of the state in which the collateral is located.
13.3 What matters are typically governed by domestic
law?
Please see questions 13.1 and 13.2 above.
Jurisdiction and Waiver of Immunity
14.1 Is a party’s submission to a foreign
jurisdiction and waiver of immunity legally binding and
enforceable?
Yes, foreign law may govern a contract. However, the Foreign
Sovereign Immunities Act provides an exception to immunity through
waiver, which may be explicit or implicit.
14. International Arbitration
15.1 Are contractual provisions requiring submission of
disputes to international arbitration and arbitral awards
recognised by local courts?
Yes, they are typically recognized by local courts.
15.2 Is your jurisdiction a contracting state to the New
York Convention or other prominent dispute resolution
conventions?
Yes, the U.S. is a Contracting State to the New York Convention,
which requires courts of Contracting States to give effect to
arbitration agreements and recognize and enforce awards made in
other states, subject to reciprocity and commercial reservations.
The U.S. made a reservation that it will apply the New York
Convention only to awards made in the territory of another
Contracting State and only to disputes arising out of legal
relationships (whether contractual or not) that are considered
commercial under the relevant national law.
The U.S. is also party to: (i) the Inter-American Convention on
International Commercial Arbitration (“Panama
Convention”), which governs international arbitral awards
where expressly agreed by the parties or where “a majority of
the parties to the arbitration agreement are citizens of a state or
states that have ratified or acceded to the Panama Convention and
are member states of the Organization of American States”
only; and (ii) the International Convention on the Settlement of
Investment Disputes (“Washington Convention”), which is
applicable to disputes between a government entity and a national
of another Signatory State.
15.3 Are any types of disputes not arbitrable under
local law?
Yes, certain disputes involving family law and criminal law are
not arbitrable. Claims under securities laws, Federal antitrust
laws and the civil provisions of the Racketeer Influenced and
Corrupt Organizations Act have been found by the U.S. Supreme Court
to be arbitrable.
15.4 Are any types of disputes subject to mandatory
domestic arbitration proceedings?
With few exceptions, such as small disputes at the local court
level, there are no broad categories of commercial disputes that
must be resolved by arbitration, absent an agreement of the parties
to that effect.
15. Change of Law / Political Risk
16.1 Has there been any call for political risk
protections such as direct agreements with central government or
political risk guarantees?
Generally, no.
16. Tax
17.1 Are there any requirements to deduct or withhold
tax from (a) interest payable on loans made to domestic or foreign
lenders, or (b) the proceeds of a claim under a guarantee or the
proceeds of enforcing security?
Withholding of U.S. Federal income tax at a rate of 30% is
generally required on payments of interest, dividends, royalties
and other amounts (not including principal on loans or
distributions by corporations that are treated as returns of
capital) to foreign persons unless attributable to a branch office
maintained by the recipient within the U.S. The U.S. maintains
treaties with numerous jurisdictions that reduce or eliminate these
withholding taxes on amounts paid to qualified residents of the
counterparty treaty country. In addition, interest paid to foreign
persons, other than banks on loans made in the ordinary course of
business, is exempt from this withholding tax if certain
requirements are satisfied, including that the loan is not in
bearer form and the lender is unrelated to the borrower.
Even where an exemption may be available, under the Foreign
Account Tax Compliance Act (“FATCA”), interest paid to a
foreign financial institution (whether such foreign financial
institution is a beneficial owner or an intermediary) may be
subject to U.S. Federal withholding tax at a rate of 30% unless:
(x) (1) the foreign financial institution enters into an agreement
with the U.S. Internal Revenue Service to withhold U.S. tax on
certain payments and to collect and provide to the U.S. Internal
Revenue Service substantial information regarding U.S. account
holders of the institution (which includes, for this purpose, among
others, certain account holders that are foreign entities that are
directly or indirectly owned by U.S. persons), or (2) the
institution resides in a jurisdiction with which the U.S. has
entered into an intergovernmental agreement (“IGA”) to
implement FATCA, and complies with the legislation implementing
that IGA; and (y) the foreign financial institution provides a
certification to the payor for such amounts that it is eligible to
receive those payments free of FATCA withholding tax. The
legislation also generally imposes a U.S. Federal withholding tax
of 30% on interest paid to a non-financial foreign entity (whether
such non-financial foreign entity is a beneficial owner or an
intermediary) unless such entity (i) provides a certification that
such entity does not have any “substantial United States
owners”, or (ii) provides certain information regarding the
entity’s “substantial United States owners”, which
will in turn be provided to the U.S. Internal Revenue Service.
Additionally, partnerships (or entities treated as partnerships
for U.S. tax purposes) that are engaged in a U.S. trade or business
must generally withhold on income allocated to owners regardless of
whether there are distributions made to such owners.
From a U.S. tax perspective, amounts received from a guarantor
or from the proceeds of property pledged as collateral are
characterized and taxed in the same manner as amounts paid on the
underlying claim would have been taxed.
17.2 What tax incentives or other incentives are
provided preferentially to foreign investors or creditors? What
taxes apply to foreign investments, loans, mortgages or other
security documents, either for the purposes of effectiveness or
registration?
There are very few Federal incentives targeted at foreign
investors or lenders other than the broad exemption from
withholding tax on interest payment described in question 17.1
above.
No Federal taxes are required for the effectiveness or
registration of an agreement. Various documentary recording and
transfer taxes apply at the state level.
17. Other Matters
18.1 Are there any other material considerations which
should be taken into account by either equity investors or lenders
when participating in project financings in your
jurisdiction?
The above questions and answers address most of the main
material considerations for project financings governed by New York
law in the U.S.
18.2 Are there any legal impositions to project
companies issuing bonds or similar capital market instruments?
Please briefly describe the local legal and regulatory requirements
for the issuance of capital market instruments.
Project bonds are securities and therefore are subject to the
various U.S. securities offering and fraud laws (principally the
Securities Act of 1933 (“Securities Act”) and the
Securities Exchange Act of 1934). Under the Securities Act,
securities in the U.S. must be sold pursuant to an effective
registration statement filed with the SEC or pursuant to an
exemption from filing. Very few, if any, project bonds are sold in
SEC-registered offerings. The most common exemptions are offerings
pursuant to Section 4(a)(2) of the Securities Act and Rule 144A and
Regulation S thereunder. Rule 144A project bond offerings require a
comprehensive offering document that describes in detail the
project, the project and finance documents, the risks associated
with the project along with a summary of the bond terms, a
description of project modelling, limited information about the
sponsors and offtakers and various other disclosures. The
underwriters and their legal counsel perform due diligence (in
order for counsel to provide 10b-5 statements) to mitigate
securities law fraud liability. Offerings solely under Regulation S
and Section 4(a)(2) typically have much less disclosure and
diligence and the disclosure is more similar to that used in a
typical bank deal.
18. Islamic Finance
19.1 Explain how Istina’a, Ijarah,
Wakala and Murabaha instruments might be used in
the structuring of an Islamic project financing in your
jurisdiction.
While Islamic project financing is relatively new to the U.S.
market, there are generally three types of financing structures
used in Islamic project financing globally: (i)
Istisna’a (or Istina’a)-Ijarah
(construction contract-lease); (ii) Wakala-Ijarah
(agency-lease); and (iii) Sharikat Mahassa-Murabaha (joint
venture-bank purchase and sale) structures.
Under the Istisna’a-Ijarah structure, which is
believed to be the more popular structure in Islamic project
financing, an Istisna’a instrument (similar to a sales
contract) is usually applied to the construction phase and an
Ijarah instrument (similar to a lease-to-own agreement) is
usually applied to the operations phase. During the construction
phase, the borrower procures construction of project assets and
then transfers title to assets to the lenders. As consideration, a
lender makes phased payments to the borrower (equivalent to loan
advances). During the operations phase, the lenders lease project
assets to the borrower. The borrower, in turn, makes lease payments
(equivalent to debt service). Unlike in traditional project
financing, the lender, as the owner of the underlying assets, can
be exposed to a number of potentially significant third-party
liabilities, including environmental risk.
The Wakala-Ijarah structure differs from the
Istisna’a-Ijarah structure as the borrower is employed
as the lender’s agent per an agency (Wakala)
agreement. The borrower/lender relationship is different from the
Istisna’a-Ijarah structure in that the borrower
procures the construction as the lender’s agent.
A less commonly used structure is the Sharikat
Mahassa-Murabaha structure. Under this structure, the borrower
and the lenders enter into a joint venture (Sharikat
Mahassa) agreement which is not disclosed to third parties. A
Murabaha transaction is one in which a bank finances the
purchase of an asset by itself purchasing that asset from a third
party and then reselling that asset at a profit to the borrower
pursuant to a cost-plus-profit agreement, akin to a loan. Each
member of the joint venture holds Hissas (shares) in the
joint venture purchased by capitalizing the Sharikat
Mahassa. The Murabaha portion of the transaction
involves sales of Hissas from time to time by the lenders
to the borrower in compliance with Shari’ah law.
19.2 In what circumstances may Shari’ah law
become the governing law of a contract or a dispute? Have there
been any recent notable cases on jurisdictional issues, the
applicability of Shari’ah or the conflict of
Shari’ah and local law relevant to the finance
sector?
Generally, under U.S. State and Federal law, contracting parties
may select any law as the governing law of the contract so long as
it is sufficiently defined and capable of enforcement. However,
there is limited case law and no conclusive rulings by U.S. courts
on whether Shari’ah law would be recognized as a
system of law capable of governing a contract.
In the U.S. Bankruptcy Court case of In re Arcapita Bank,
B.S.C.(c), et al., Case No. 12-11076 (SHL) (Bankr. S.D.N.Y.),
an investor of the debtors objected to the debtors’ motion to
approve debtor-in-possession and exit financing, asserting, among
other things, that the financing was not
Shari’ah-compliant. In statements made on the record,
the court noted that the financing agreement was governed by
English law and expressly provided that no obligor was permitted to
bring a claim based on Shari’ah compliance of the
finance documents. The court then appeared to adopt the English
courts’ approach of avoiding ruling or commenting on compliance
of an agreement with Shari’ah law, citing a recent
English court case that found that, irrespective of
Shari’ah compliance, Shari’ah law was not
relevant in determining enforceability of a financing agreement
governed by English law, and that Shari’ah principles
are far from settled and subject to considerable disagreement among
clerics and scholars. However, the precedential value of the
Arcapita Bankruptcy Court’s refusal to consider
whether the financing was Shari’ah-compliant may be
limited, given that the district court dismissed the objector’s
appeal of the Bankruptcy Court’s approval of the financing
(along with an appeal asserted by the objector of confirmation of
the debtors’ chapter 11 plan of reorganization) as equitably
moot.
19.3 Could the inclusion of an interest payment
obligation in a loan agreement affect its validity and/or
enforceability in your jurisdiction? If so, what steps could be
taken to mitigate this risk?
No, subject to state usury laws restricting excessive
interest.
Acknowledgments
The authors would like to thank Javad Asghari
([email protected]), James C. Liles ([email protected]), Anya
Andreeva-Quirk ([email protected]) and Beryl Yan
([email protected]) for their substantial assistance in preparing
this chapter. Javad is a partner in the Los Angeles office of
Milbank LLP and a member of the firm’s Corporate Group. James,
Anya and Beryl are members of the firm’s Global Project, Energy
and Infrastructure Finance Group. The authors would also like to
thank Matthew Ahrens, Drew Batkin, Lisa Brabant, Bijan Ganji, Janet
Nadile, Dara Panahy, Fiona Schaffer, Alan Stone, Ethan Heben and
Allison Sloto for their input on specific areas of this
chapter.
Originally published by ICLG.com.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
