LEGAL MECHANISMS OF MINIMIZATION OF PROJECT RISKS ARISING WITHIN INTERNATIONAL PROJECT FINANCE

  • O. I. Vygovskyy Institute of International Relations at Taras Shevchenko National University of Kyiv

Abstract

This article examines, classifies and categorizes various types of project risks inherent to international project finance and discusses legal techniques employed by the key participants of project finance to mitigate each of these risks based on thorough examination of project documentation typically elaborated for this purpose. It covers both commercial (internal and external) and non-commercial risks, in particular, completion risk, risk of excess expenditure, operational risk, environmental risk, risk of insufficient revenues, supply risk, currency risk, inflation risk, interest rate risk and others. The author argues that non-commercial risks, including political or country risks, present even greater peril for an international project and offers a complex of protective legal measures which could be used for diminishing such risks in the long run. The conclusions formulated at the end of the article present the author’s personal attitude towards legal solution of the problem of minimization of the project risks arising within international project finance.
Key words: project finance, project company, commercial risks, non-commercial risks, contractual remedies.

References
1. Convention Establishing the Multilateral Investment Guarantee Agency 1985 accessed at: https: // www.miga.org / sites / default / files / archive / Documents /miga_convention_november_2010.pdf.
2. Brealey R.A. (2014) Principles of Corporate Finance. New York: McGraw-Hill Irwin.
3. Delmon J.J. (2008) Increasing the Efficiency of Risk Allocation in Project Financed Infrastructure Transactions by Reducing the Impact of Rick Noise. Thesis (Ph.D): King’s College London.
4. Hoffmann S.L. (2007) The Law and Business of International Project Finance. Cambridge: Cambridge University Press.
5. International Project Finance: Law and Practice. (2011). Dewar J. (ed.) Oxford: Oxford University Press.
6. Mubaydeen I. Y. (2003) ‘Legal Aspects of Project Finance Transactions under the Laws of the United Arab Emirates’, Journal of International Banking Law and Regulation 18: 219-224.
7. Nevitt P.K. (2000) Project Financing. London: Euromoney Books.
8. Orta P.A. (2011) “Project Finance Securizations: Market Shift or Market Anamoly?’, Revue des droits des affaires internationales, 167-175.
9. Sin K.F. (1987) Building Project Finance in Hong Kong: Law and Practice. Singapore: Butterworths, 1987.
10. Tinsley C.R. (2000) Advanced Project Financing: Structuring Risk. London: Euromoney Books.
11. Vinter G.D. (2006) Project Finance: A Legal Guide. London: Sweet & Maxwell.
12. Wood Ph.R. (2007) Project Finance, Securitisations, Subordinated Debts. London: Sweet & Maxwell.
13. Yescombe E.R. (2014) Principles of Project Finance. Oxford: Academic Press.
14. Кузнецов С.В. (2016) Правовые формы участия институтов развития в организации проектного финансирования в России [Legal Forms of Participation of Development Institutions in Organization of Project Finance] Право и экономика, 2: 16-21.
15. Кузяк Д. (2010) Джерела проектного фінансування в Україні [Sources of Project Finance in Ukraine] Ринок цінних паперів. Вісник Державної комісії з цінних паперів та фондового ринку, 9-10: 41-46.
16. Негода А. (2012) Світовий досвід розвитку проектного фінансування [World Experience of Development of Project Finance] Вісник Київського національного університету імені Тараса Шевченка. Міжнародні відносини, 38-39: 58-60.
17. Овсянникова Я. О. (2011) Зарубіжний досвід використання проектного фінансування та перспективи його розвитку в Україні [Foreign Experience of Using Project Finance and Prospects of Its Development in Ukraine] Наукові праці НДФІ, 2: 119-129.
Актуальні проблеми міжнародних відносин. Випуск 140. 2019. .
57
18. Тищенко В.Ф. (2013) Проектне фінансування як форма публічно-приватного партнерства [Project Finance as a Form of Public and Private Partnership] Вісник Університету банківської справи Національного банку України, 1: 141-144.
19. Шамраев А.В. (2009) Правовое регулирование международных банковских сделок и сделок на международных финансовых рынках [Legal Regulation of International Banking Transactions and Transactions at International Financial Markets]. Москва: Кнорус.
20. Юнко О.М. (2014) Банківське проектне фінансування в Україні: проблеми, реалії і перспективи розвитку [Banking Project Finance in Ukraine: Problems, Realias and Prospects of Development] Вісник Університету банківської справи Національного банку України, 1:121-125

Author Biography

O. I. Vygovskyy, Institute of International Relations at Taras Shevchenko National University of Kyiv


Doctor of Jurisprudence, Associate Professor of Law, Department of Private International Law, 

Published
2020-01-28