Legal Challenges to Project Finance in Iraq – notes on Compliance and Enforceability

F K. Nesheiwat

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Upcoming in Vol. 17 of Fordham Journal of Corporate & Financial Law

Abstract

Many scholars and experts have addressed the issue of project finance, but one area that remains without detailed examination is its legal treatment under the legal systems of developing countries. This paper tackles the legal and strategic issues arising from the use of project finance in Iraq. Iraq is one of the most promising areas for project finance in the Middle East, and the world, as it is expected to be a net credit exporter due to its vast oil reserves, and its need to upgrade its infrastructure. In that respect, it offers greater potential than the Gulf States, which share Iraq’s dominance of the oil market.

This paper establishes priorities and examines the factors for completing a project finance in Iraq, and can be used as a “road map” in understanding those factors while, at the same time it addresses the special needs and interests of the lenders (private banks and international lending agencies), the sponsors (private or governmental entities championing the project and creating a special purpose entity (SPE) acting as the borrower), and the Iraqi counterparts. It focuses on risk factors, permits and concessions, ownership structures, the taking of collateral, and dispute resolution, with the goal of explaining the legal framework for each, and enhancing the project finance parties’ capacity to provide management and oversight.