Application of the Concept of Project Finance in Iraq- A Comparative and Analytical Study

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. The legal concepts applied under project finance are Western and are not necessarily identical to or compatible with legal concepts in Middle Eastern countries in general or Iraq in particular. In that sense, project finance is a transplanted legal concept when examined in the Middle Eastern legal framework. Although this Paper tackles the legal and strategic issues arising from the use of project finance in Iraq, its analysis and comparative approach is equally applicable to many other Middle Eastern countries whose legal systems are based on the civil code. This Paper establishes priorities and examines the factors for completing a project finance in Iraq. It 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 vehicle (“SPV”) 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. Further, this Paper seeks to explain the legal framework for these categories and enhance project finance parties’ capacity to provide management and oversight